SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 8, 2000
(January 28, 2000)
LASERSIGHT INCORPORATED
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Exact name of registrant as specified in its charter
Delaware
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State or other jurisdiction of incorporation
0-19671 65-0273162
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Commission File Number I.R.S. Employer
Identification No.
3300 University Boulevard, Suite 140, Winter Park, Florida 32792
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Address of Principal Executive offices
Registrant's telephone number, including area code: (407) 678-9900
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Item 5. Other Events
On January 31, 2000, LaserSight completed a $12.5 million private placement of
common stock. A copy of the securities Purchase Agreements and Registration
Rights Agreements with TLC Laser Eye Centers Inc., BayStar Capital, L.P. and
BayStar International, Ltd. are included as exhibits hereto and are incorporated
by reference herein.
In conjunction with its sale of securities to TLC Laser Eye Centers Inc.,
LaserSight amended its Rights Agreement as of January 28, 2000. The amendment
is included as an exhibit hereto and is incorporated by reference herein.
On February 1, 2000, LaserSight issued a press release describing the private
pleacement and patent-related litigation updates. The press release is included
as an exhibit hereto and is incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
Exhibit 99.1 Press Release dated February 1, 2000
Exhibit 99.2 Securities Purchase Agreement dated January 31, 2000
by and between LaserSight Incorporated and TLC
Laser Eye Centers Inc. The Company undertakes to
provide to the Commission upon its request the
schedules omitted from this exhibit.
Exhibit 99.3 Registration Rights Agreement dated January 31, 2000
by and between LaserSight Incorporated and TLC
Laser Eye Centers Inc.
Exhibit 99.4 Securities Purchase Agreement dated January 31, 2000
among LaserSight Incorporated, BayStar Capital,
L.P. and BayStar International, Ltd. The Company
undertakes to provide to the Commission upon its
request the schedules omitted from this exhibit.
Exhibit 99.5 Registration Rights Agreement dated January 31, 2000
among LaserSight Incorporated, BayStar Capital,
L.P. and BayStar International, Ltd.
Exhibit 99.6 Second Amendment dated as of January 28, 2000 to
Rights Agreement, dated as of July 2, 1998, between
LaserSight Incorporated and American Stock Transfer
& Trust Company as Rights Agent.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LaserSight Incorporated
Date: February 7, 2000 By: /s/Michael R. Farris
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Michael R. Farris
Chief Executive Officer
EXHIBIT 99.1
LASERSIGHT WITHDRAWS FROM LICENSE NEGOTIATIONS AND FILES PATENT
LAWSUIT AGAINST VISX
-- Company Raises Additional $12.5 Million --
-- Company to Ship LaserScan LSX(R) Systems this Quarter --
Winter Park, FL (February 1, 2000) -- LaserSight Incorporated (Nasdaq:
LASE) announced that it has filed suit against Visx Incorporated (Nasdaq: VISX),
claiming non-infringement and invalidity of the Visx L'Esperance `418 patent. In
addition, LaserSight's suit claims that Visx infringes the Machat `810 patent.
LaserSight has withdrawn from its negotiations for a license with VISX. The
Company will sell and ship its LaserScan LSX systems in the U.S. before the end
of this quarter, as previously announced.
Michael R. Farris, President and Chief Executive Officer of LaserSight
Incorporated, commented, "After extensive legal review, we are highly confident
about our position that LaserSight does not infringe the Visx L'Esperance `418
patent. We further believe that Visx infringes the Machat `810 patent and
have taken action to enforce the Company's intellectual property rights."
LaserSight also announced today that it has received $12.5 million from
the private placement of its common stock priced at a 10% discount to the
average closing bid for the past five days. TLC Laser Eye Centers Inc. (Nasdaq:
TLCV), the largest provider of laser vision correction services in North
America, provided $10 million of the $12.5 million raised, bringing TLC's total
investment in LaserSight to $20 million. This represents the third round of
investment by TLC and is indicative of TLC's strong vote of confidence.
Mr. Farris continued, "Given the increasing demand for LaserSight's
state-of-the-art technology, we will launch our product into the U.S. market
during this quarter as planned. The market has grown at an extremely rapid pace.
We believe this expansion will continue."
The market for laser vision correction procedures continues to be
strong, with growth averaging approximately 20% per quarter over the last two
years, and the number of eyes undergoing laser surgery projected to grow to
approximately 1.9 million in 2002, from approximately 480,000 performed in 1998.
The total number of installed lasers in the U.S. has grown from around 150
systems in 1995 to nearly 900 systems in place at the end of 1999.
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LaserSight will market and sell its lasers and complimentary blades and
keratomes through distribution agreements with BD Ophthalmic Systems (a
Worldwide Business of Becton Dickinson, NYSE: BDX) and other distributors who
specialize in medical capital equipment, along with its own direct sales and
marketing organization. The Company has expanded its manufacturing capabilities
in Orlando, Florida, to complement its international production capabilities in
Costa Rica.
Mr. Farris concluded, "There is a need for the best technology to
service the anticipated procedure growth and to meet the needs of a very
demanding market. Clearly, we believe procedure volumes are not slowing.
Physicians are anticipating LaserSight's new technology, and will be extremely
receptive to its availability within the framework of a more competitive
economic environment."
LaserSight Incorporated provides quality technology solutions for laser
refractive surgery and other innovative applications, mainly in the vision
correction industry. The Company markets its products in more than 30 countries.
In the United States, the Company's LaserScan LSX excimer laser system has been
approved for treatment of low to moderate myopia (nearsightedness) by
photorefractive keratectomy.
This press release contains forward-looking statements regarding future
events and future performance of LaserSight, including statements with respect
to licensing of intellectual property, intellectual property litigation, and the
timing of commercialization of our products, which involves risks and
uncertainties that could materially affect actual results. In addition,
investors should refer to documents that LaserSight files from time to time with
the Securities and Exchange Commission for a description of certain factors that
could cause the actual results to vary from current expectations and the forward
looking statements contained in this press release. Such filings include,
without limitation, the company's Form 10-K, Form 10-Q and Form 8-K reports.
EXHIBIT 99.2
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
January 31, 2000, by and among LaserSight Incorporated, a Delaware corporation
(the "Company"), with its headquarters located at 3300 University Boulevard,
Suite 140, Winter Park, Florida 32792 and TLC LASER EYE CENTERS INC., an Ontario
corporation (the "Purchaser"), with its headquarters located at 5600 Explorer
Drive, Suite 301, Mississauga, Ontario, Canada L4W 442, with regard to the
following:
RECITALS
A. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Section 4(2) of the Securities Act of 1933 (the "Securities
Act") and Regulation D ("Regulation D") of the Securities and Exchange
Commission (the "SEC") promulgated under the Securities Act.
B. The Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, a total of 1,015,873 shares (the "Placement Shares")
of the Company's common stock, $.001 par value per share ("Common Stock"). The
Placement Shares are referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
of even date herewith in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and applicable
state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals (which are
incorporated into and deemed a part of this Agreement), their respective
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF COMMON STOCK
1.1 Purchase of Common Stock. Subject to the terms and conditions
of this Agreement, on January 31, 2000 (the "Closing Date"), the Company agrees
to issue and sell to the Purchaser, and the Purchaser agrees to purchase from
the Company (the "Closing"), 1,015,873 shares of Common Stock at a price which
shall be in the aggregate $10,000,000 (the "Purchase Price").
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The Closing shall take place on the Closing Date at 10:00 A.M., Eastern
Time, at the offices of the Company, or at such other time and place as shall be
agreed upon by the parties.
At the Closing, the Company shall deliver to the Purchaser a
certificate representing the Placement Shares. Delivery of such certificate to
the Purchaser shall be made against receipt at the Closing by the Company from
the Purchaser of the Purchase Price, which shall be paid by wire transfer to an
account designated at least one business day prior to the Closing by the
Company.
1.2 Form of Payment. Upon satisfaction of the conditions contained
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in Section 7.1, the Purchaser shall pay the Purchase Price by wire transfer to
the account designated by the Company.
1.3 Transfer of Securities. The Securities shall, when issued,
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be unregistered and therefore subject to the restrictions on sale, distribution
and transfer imposed under the Securities Act and under applicable securities
laws or blue sky laws of any state or foreign jurisdiction.
1.4 Registration of the Securities. The Securities shall have
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those registration rights as are set forth in the Registration Rights Agreement.
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company as set forth in
this Article 2. The Purchaser does not make any other representations or
warranties, express or implied, to the Company in connection with the
transactions contemplated hereby and any and all prior representations and
warranties, if any, which may have been made by the Purchaser to the Company in
connection with the transactions contemplated hereby shall be deemed to have
been merged in this Agreement and any such prior representations and warranties,
if any, shall not survive the execution and delivery of this Agreement.
2.1 Investment Purpose. The Purchaser is purchasing the Securities
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for the Purchaser's own account for investment only and not with a view toward
or in connection with the public sale or distribution thereof. The Purchaser
will not, directly or indirectly, offer, sell, pledge or otherwise transfer the
Securities or any interest therein except pursuant to transactions that are
exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act. The Purchaser understands that it must bear
the economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable securities laws or
blue sky laws of any state or foreign jurisdiction or an exemption from such
registration is available, and that the Company has no intention or obligation
to register any of the Securities other than as contemplated by Section 1.4
hereof and the Registration Rights Agreement.
2.2 Accredited Investor Status. The Purchaser represents and
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warrants that it is an Accredited Investor (as that term is defined in Rule 501
promulgated by the SEC under the Securities Act), that it has such knowledge and
experience in business and financial matters as to be capable of evaluating the
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merits and risks of the investment contemplated to be made hereunder, and that
it (i) was not formed or organized for the specific purpose of investing in the
Company; (ii) understands that such investment bears a high degree of risk and
could result in a total loss of its investment; and (iii) has sufficient
financial strength to hold the same as an investment and to bear the economic
risks of such investment (including possible loss of such investment) for an
indefinite period of time.
2.3 Reliance on Exemptions. The Purchaser acknowledges that the
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Securities being sold to it hereunder are being sold pursuant to a private
offering exemption under the Securities Act and are not being registered under
the Securities Act or under the securities laws or blue sky laws of any state or
foreign jurisdiction and understands that the Company is relying upon the truth
and accuracy of, and the Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Securities.
2.4 Information. The Purchaser has been furnished all materials
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relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which it has specifically
requested, including, without limitation, the Company's Annual Report on Form
10-K and 10-K/A for the year ended December 31, 1998, its Quarterly Report on
Form 10-Q and 10-Q/A, as applicable, for the periods ended March 31, 1999, June
30, 1999, September 30, 1999, its Current Reports on Form 8-K filed with the SEC
on December 20, 1999; November 17, 1999; October 27, 1999; the description of
the Common Stock contained in the Company's Form 8-A/A (Amendment No. 4) filed
with the SEC on June 25, 1998; the description of the Company's Series E
Preferred Stock contained in the Company's Form 8-A filed with the SEC on July
7, 1998 and on Form 8-A/A (Amendment No. 1) filed with the SEC on March 29,
1999; Proxy Statement dated May 26, 1999 (such documents, including any
financial statements and related notes included in such documents, collectively
the "Furnished SEC Documents"). In addition, the Purchaser has received and
considered certain non-public information disclosed in confidence by the Company
to Purchaser (the "Confidential Disclosure"). The Purchaser and its advisors
have been given the opportunity to obtain information and to examine all
documents referred to herein and to ask questions of, and to receive answers
from, the Company or any person acting on its behalf concerning the Company and
the terms and conditions of this investment, and to obtain any additional
information, to the extent the Company possesses such information or could
acquire it without unreasonable effort or expense, to verify the accuracy of any
information previously furnished. All such questions have been answered to the
Purchaser's full satisfaction, and all information and agreements, documents,
records and books pertaining to this investment which the Purchaser has
requested have been made available to the Purchaser or its advisors. The
Purchaser understands that its investment in the Securities involves a high
degree of risk. In making its investment decision, the Purchaser has not relied
on any oral or written representation, other than those contained in the
Furnished SEC Documents, the 1999 Disclosure, this Agreement (including the
schedules hereto) and the Registration Rights Agreement, with respect to the
Securities, the Company, its business or prospects, or other matters. In making
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its decision to invest in the Company, the Purchaser has relied solely upon
independent investigations made by the Purchaser and its advisors.
2.5 Governmental Review. The Purchaser understands that no United
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States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
2.6 Transfer or Resale. The Purchaser understands that (i) the
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Securities have not been and are not being registered under the Securities Act
or under the securities laws or blue sky laws of any state or foreign
jurisdiction, and may not be offered, sold, pledged or otherwise transferred
unless subsequently registered thereunder or an exemption from such registration
is available, and neither the Company nor any other person is under any
obligation to register the Securities under the Securities Act or under the
securities laws or blue sky laws of any state or foreign jurisdiction or to
comply with the terms and conditions of any exemption thereunder (in each case,
other than pursuant to this Agreement or the Registration Rights Agreement), and
(ii) any sale of the Securities made in reliance on Rule 144 under the
Securities Act, or a successor rule ("Rule 144"), may be made only in accordance
with the terms of Rule 144 and Article 5 hereof and further, if Rule 144 is not
applicable, any resale of the Securities without registration under the
Securities Act under circumstances in which the seller may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.
2.7 Authorization. The Purchaser represents and warrants that as of
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the Closing Date the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein have been duly
authorized by it. The fulfillment of and compliance with the terms of this
Agreement will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, or (iii) result in
a violation of, breach of or default under (A) its charter or constituent
document, (B) any law, statute, rule or regulation to which it is subject, or
(C) any agreement, instrument, order, judgment or decree to which it is subject
or is a party or by which it is bound.
2.8 Binding Effect. The Purchaser represents and warrants that
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this Agreement constitutes its valid and binding obligation, enforceable in
accordance with its terms, except (i) as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights generally or by
equitable principles in any action (legal or equitable), (ii) that the
availability of equitable relief is subject to the discretion of the court
before which any proceeding thereof may be brought, and (iii) that the
enforceability of the indemnification provisions may be limited by applicable
securities laws or public policy.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser, except as
disclosed (including, in the case of financial statements, provided for) in the
disclosure schedules delivered herewith, as set forth in this Article 3. The
Company does not make any other representations or warranties, express or
implied, to the Purchaser in connection with the transactions contemplated
hereby and any and all prior representations and warranties, if any, which may
have been made by the Company to the Purchaser in connection with the
transactions contemplated hereby shall be deemed to have been merged in this
Agreement and any such prior representations and warranties, if any, shall not
survive the execution and delivery of this Agreement.
3.1 Organization and Qualification. Each of the Company and its
---------------------------------
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted or are presently expected to be conducted during the Company's current
fiscal year. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
where the failure so to qualify or be in good standing would have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means
any material adverse effect on the business, operations, assets, properties,
liabilities, condition (financial or otherwise), the Common Stock price or
operating results of the Company and its subsidiaries, taken as a whole on a
consolidated basis, or on the transactions contemplated hereby.
3.2 Authorization; Enforcement.
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(a) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, and to issue, sell and
perform its obligations with respect to the Securities in accordance with the
terms hereof and thereof;
(b) the execution, delivery and performance of this Agreement,
the Warrants and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action and, except as set forth on
Schedule 3.2 hereof, no further consent or authorization of the Company, its
board of directors, or its stockholders or any other person, body or agency is
required with respect to any of the transactions contemplated hereby (whether
under rules of The NASDAQ Stock Market (the "NASDAQ"), the National Association
of Securities Dealers, Inc. or otherwise);
(c) this Agreement, the Registration Rights Agreement,
and the certificates for the Securities have been duly executed and delivered by
the Company; and
(d) this Agreement and the Registration Rights Agreement
constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except (i) to the
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extent that such validity or enforceability may be subject to or affected by any
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement thereof, creditors' rights
or remedies of creditors generally, or by other equitable principles of general
application, (ii) that the availability of equitable relief is subject to the
discretion of the court before which any proceeding thereof may be brought, and
(iii) that the enforceability of indemnification provisions may be limited by
applicable securities laws or public policy.
3.3 Capitalization. The capitalization of the Company as of the date
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hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of Common Stock is set forth on Schedule 3.3. All of such shares of
capital stock have been, or upon issuance in accordance with the terms of the
relevant security will be, validly issued, fully paid and nonassessable. Except
as disclosed in Schedule 3.3, no shares of capital stock of the Company
(including the Securities) are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances imposed
or suffered by the Company. Except as disclosed in Schedule 3.3, as of the date
of this Agreement, there are no outstanding options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries. The Company shall provide the
Purchaser with a written update of this representation signed by the Company's
Chief Executive Officer or Chief Financial Officer on behalf of the Company as
of the Closing Date. Except as set forth in Schedule 3.3, since December 31,
1999, the Company has not declared or paid any dividend or made any other
distribution of cash, stock or other property with respect to the Common Stock.
Except as set forth in Schedule 3.3 or as contemplated by this Agreement or the
Registration Rights Agreement or except for the right to vote its shares of
Common Stock for the election of directors, no person has the right to nominate
or elect one or more directors of the Company.
3.4 Issuance of Shares. As of the Closing the Securities will be
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duly authorized, validly issued, fully paid and non-assessable with no personal
liability attaching to the owners thereof, and free from all taxes, liens,
claims and encumbrances imposed or suffered by the Company and except as
disclosed in Schedule 3.3, will not be subject to preemptive rights or other
similar rights of stockholders of the Company.
3.5 No Conflicts. The execution, delivery and performance of
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this Agreement and the Registration Rights Agreement by the Company, and the
consummation by the Company of transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance, as
applicable, of the Securities) will not (i) result in a violation of the
Company's Certificate of Incorporation or By-laws, or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
<PAGE>
would become a default) under, result in any loss of benefit under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any Material Contract (as defined herein) to which the Company or any of its
subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries, or
by which any property or asset of the Company or any of its subsidiaries, is
bound or affected, or (iv) result in the creation or imposition of an
Encumbrance (as defined herein) upon the Company's properties or assets (except
with respect to items (ii), (iii) and (iv) of this Section 3.5 such possible
conflicts, defaults, terminations, amendments, accelerations, cancellations,
violations and Encumbrances as would not individually or in the aggregate, have
a Material Adverse Effect). Neither the Company nor any of its subsidiaries is
in violation of its Certificate of Incorporation or other organizational
documents, and neither the Company nor any of its subsidiaries, is in default
(and no event has occurred which has not been waived which, with notice or lapse
of time or both, would put the Company or any of its subsidiaries in default)
under, nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, except for possible violations, defaults or rights as
would not individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations the sanctions for which either singly or in the
aggregate would not have a Material Adverse Effect. Except as set forth on
Schedule 3.5, or except (i) as may be required under the Securities Act in
connection with the performance of the Company's obligations pursuant to the
Registration Rights Agreement, (ii) filing of a Form D with the SEC, and (iii)
compliance with the state securities laws or blue sky laws of applicable
jurisdictions, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to perform its
obligations in accordance with the terms hereof. The Common Stock is listed on
the NASDAQ, the Company is not in violation of the listing requirements of the
NASDAQ and the Company is not aware of any fact (including any proceedings
pending or, to the best of the Company's knowledge, contemplated) that could
result in the Common Stock being delisted from the NASDAQ. The Company is not
aware of any fact that could result in a refusal by the NASDAQ to approve the
Securities for listing.
3.6 SEC Documents. Except as disclosed in Schedule 3.6, since
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December 31, 1996, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934 (the
"Exchange Act") (all of the foregoing filed after December 31, 1995 and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being referred to herein as the
"SEC Documents"). The Company has delivered to the Purchaser true and complete
copies of the Furnished SEC Documents, except for exhibits, schedules and
incorporated documents. Each of the SEC Documents as originally filed or as
amended complied
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in all material respects with the requirements of its respective report or form
and did not on the date of filing contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and as of the date hereof, there is no fact or facts
not disclosed in the SEC Documents or disclosed in writing to the Purchaser
which relate specifically to the Company which individually or in the aggregate,
may have a Material Adverse Effect. The consolidated financial statements of the
Company (including any related schedules or notes thereto) included in the SEC
Documents were prepared in accordance with generally accepted accounting
principles, consistently applied, and the applicable rules and regulations of
the SEC during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they do not include footnotes or are condensed
or summary statements) and present accurately and completely, in all material
respects, the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, year-end audit adjustments). To the
extent required by the rules of the SEC applicable thereto, the SEC Documents
contain a complete and accurate list of all material undischarged written or
oral contracts, agreements, leases or other instruments to which the Company or
any subsidiary is a party or by which the Company or any subsidiary is bound or
to which any of the properties or assets of the Company or any subsidiary is
subject (each a "Material Contract"). Except as set forth in Schedule 3.6, none
of the Company, its subsidiaries or, to the best knowledge of the Company, any
of the other parties thereto, is in breach or violation of any Material
Contract, which breach or violation would have a Material Adverse Effect. To the
best knowledge of the Company, no event, occurrence or condition exists which,
with the lapse of time, the giving of notice, or both, would become a default by
the Company or its subsidiaries thereunder which would have a Material Adverse
Effect. Except as set forth in Schedule 3.6 or disclosed in writing to the
Purchaser, there are no liabilities or obligations (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due and
regardless of when asserted), except (i) liabilities and obligations in the
respective amounts reserved against in the 1999 Disclosure or the Company's
balance sheet or the footnotes thereto as of September 30, 1999 included in the
Furnished SEC Documents, (ii) liabilities and obligations incurred after
December 31, 1999 in the ordinary course of business consistent (in amount and
kind) with past practice (none of which is a liability resulting from breach of
contract, breach of warranty, tort, infringement, claim or lawsuit), (iii)
liabilities and obligations disclosed in the Furnished SEC Documents, and (iv)
liabilities and obligations which would not individually or in the aggregate,
have a Material Adverse Effect. Since December 31, 1999, the Company has
operated its business only in the ordinary course and there has not been
individually or in the aggregate, any change that would have a Material Adverse
Effect (a "Material Adverse Change") other than changes disclosed in the SEC
Documents or otherwise set forth in Schedule 3.6.
3.7 Absence of Certain Changes. Except as disclosed in Schedule 3.7
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or in the 1999 Disclosure, since December 31, 1999, the business of the Company
and its subsidiaries has been conducted in the ordinary course, consistent with
past practice and there has not been (a) any Material Adverse Change, nor has
any event or change occurred which could reasonably result in a Material Adverse
Change, in the condition (financial or otherwise), results of operations,
<PAGE>
business, assets, liabilities or prospects of the Company or its subsidiaries or
any event or condition which could reasonably be expected to have such a
Material Adverse Change, (b) any waiver or cancellation of any valuable right of
the Company or its subsidiaries, or the cancellation of any material debt or
claim held by the Company or its subsidiaries, (c) any payment, discharge or
satisfaction of any claim, liability or obligation of the Company or its
subsidiaries other than in the ordinary course of business except where such
payment, discharge or satisfaction would not, individually or in the aggregate,
have a Material Adverse Effect, (d) the placement of any Encumbrance upon the
assets of the Company or its subsidiaries other than any Permitted Encumbrance
(as defined herein), (e) any declaration or payment of dividends on, or other
distribution with respect to, or any direct or indirect redemption or
acquisition of, any securities of the Company, (f) any issuance of any stock,
bonds or other securities of the Company or its subsidiaries which is not
disclosed in Schedule 3.3 or the Furnished SEC Documents, (g) any sale,
assignment or transfer of any tangible or intangible assets of the Company or
its subsidiaries except in the ordinary course of business, (h) any loan by the
Company or its subsidiaries to any officer, director, employee, consultant or
shareholder of the Company or its subsidiaries (other than advances to such
persons in the ordinary course of business in connection with travel and travel
related expenses), (i) any damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the assets, property, condition
(financial or otherwise), results of operations or prospects of the Company or
its subsidiaries, (j) any increase, direct or indirect, in the compensation paid
or payable to any officer or director of the Company or its subsidiaries, other
than in the ordinary course of business, to any other employee, consultant or
agent of the Company or its subsidiaries, (k) any change in the accounting
methods, practices or policies of the Company or its subsidiaries, (l) any
indebtedness incurred for borrowed money by the Company or its subsidiaries
other than in the ordinary course of business, (m) any amendment to or
termination of any material agreement to which the Company or its subsidiaries
is a party other than the expiration of any such agreement in accordance with
its terms or as disclosed in the Furnished SEC Documents, (n) to the Company's
knowledge, any change in the laws or regulations governing the Company or its
subsidiaries, (o) any Material Adverse Change in the manner of business or
operations of the Company or its subsidiaries (including, without limitation,
material accelerations or material deferrals of the payment of accounts payable
or other current liabilities or material deferrals of the collection of accounts
or notes receivable), (p) any capital expenditures or commitments therefor by
the Company or its subsidiaries other than in the ordinary course of business,
(q) any amendment of the certificate of incorporation, bylaws or other
organizational documents of the Company or its subsidiaries which is not
disclosed in the Furnished SEC Documents, (r) any material transaction entered
into by the Company or its subsidiaries other than in the ordinary course of
business or any other material transactions entered into by the Company or its
subsidiaries whether or not in the ordinary course of business which is not
disclosed in the Furnished SEC Documents, or (s) any agreement or commitment
(contingent or otherwise) by the Company or its subsidiaries to do any of the
foregoing. For purposes of this Agreement, "Permitted Encumbrance" shall mean
(i) Encumbrances for unpaid taxes that either (A) are not yet due and payable,
or (B) for which a reserve with respect to such obligation is established on the
books of the Company, (ii) the interests of lessors under operating leases and
purchase money liens of lessors under capital leases, (iii) Encumbrances arising
<PAGE>
by operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or other similar encumbrances in the ordinary course of
business of the Company, (iv) Encumbrances arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(v) with respect to any real property, easements, rights of way, zoning and
similar covenants and restrictions, and similar Encumbrances and that do not
individually or in the aggregate materially impair the property of the Company,
(vi) Encumbrances resulting from any judgment or award that would not result in
a Material Adverse Change, and (vii) other Encumbrances which arise in the
ordinary course of business and which individually and in the aggregate do not
materially impair the Company's use of such property or its ability to obtain
financing by using such asset as collateral.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8 or as
---------------------
disclosed in the Furnished SEC Documents, there is no civil, criminal or
administrative action, suit, proceeding, inquiry, claim, notice, hearing or
investigation at law or in equity (a "Litigation") before or by any court,
arbitrator or similar panel, public board, government agency, or self-regulatory
organization or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company, any of its
subsidiaries, or any of their respective assets (including Intangibles (as
defined herein)) or directors or officers in their capacities as such. There are
no facts known to the Company which, if known by a potential claimant or
governmental authority, could give rise to a claim or proceeding which, if
asserted or conducted with results unfavorable to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect.
Except as set forth in Schedule 3.8, neither the Company nor its subsidiaries is
subject to any order, writ, injunction or decree of any court of any federal,
state, municipal or other domestic or foreign governmental department,
commission, board, bureau, agency or instrumentality which could have a Material
Adverse Effect.
3.9 Disclosure. Neither this Agreement, the SEC Documents nor any
----------
certificate, instrument or written statement furnished or made to the Purchaser
by or on behalf of the Company in connection with this Agreement or the
Registration Rights Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading as of the date such statements were
made. There is no fact which is not disclosed in the Furnished SEC Documents or
fact which the Company has not disclosed to the Purchaser or its counsel and of
which the Company is aware which materially and adversely affects, or which
could materially and adversely affect, the Company or its subsidiaries or the
business, financial condition, operations, property, affairs or prospects of the
Company or its subsidiaries or the ability of the Company or its subsidiaries to
perform its obligations under the Agreement or any of the Registration Rights
Agreement.
3.10 S-3 Registration. The Company is currently eligible to register
-----------------
the resale of the Securities by the Purchaser pursuant to a registration
statement on Form S-3 under the Securities Act.
<PAGE>
3.11 No General Solicitation. Neither the Company nor any person
-----------------------
acting for the Company has conducted any "general solicitation," as described in
Rule 502(c) under Regulation D, with respect to any of the Securities being
offered hereby.
3.12 No Integrated Offering. Neither the Company, nor any of its
------------------------
Affiliates (as defined herein), nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would prevent the
parties hereto from consummating the transactions contemplated hereby pursuant
to an exemption from registration under the Securities Act pursuant to the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the Securities Act, assuming the accuracy of
the representations and warranties herein contained of the Purchaser. For
purposes hereof, "Affiliate" shall mean any entity controlling, controlled by or
under common control with a designated person or entity; for the purposes of
this definition, "control" shall have the meaning presently specified for that
word in Rule 405 promulgated by the SEC under the Securities Act. With respect
to any entity which is a limited partnership, Affiliate shall also mean any
general or limited partner of such limited partnership, or any person or entity
which is a general partner in a general or limited partnership which is a
general partner of such limited partnership.
3.13 No Brokers. The Company has taken no action which would give rise
----------
to any claim by any person for brokerage commissions, finder's fees or similar
payments by the Purchaser relating to this Agreement or the transactions
contemplated hereby.
3.14 Intellectual Property. Each of the Company and its subsidiaries
----------------------
owns or possesses adequate and enforceable rights to use all material patents,
patent applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") used or necessary for the conduct of its
business as now being conducted and as described in the Company's Annual Report
on Form 10-K and Form 10-K/A for the year ended December 31, 1998. Except as set
forth on Exhibit 3.14, to the Company's knowledge, neither the Company nor any
subsidiary of the Company infringes on or is in conflict with any right of any
other person with respect to any Intangibles nor is there any claim of
infringement made by a third party against or involving the Company or any of
its subsidiaries, which infringement, conflict or claim, individually or in the
aggregate, could reasonably be expected to result in an unfavorable decision,
ruling or finding which would have a Material Adverse Effect.
3.15 Employee Benefit Plans.
----------------------
(a) Identification. Schedule 3.15(a) contains a complete and
--------------
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
sponsored by the Company or to which the Company contributes on behalf of its
<PAGE>
employees (the "Employee Benefit Plans") and each employment, severance or
change in control agreement to which the Company is a party. The Company has
provided or made available to the Purchaser copies of all plan documents,
determination letters, pending determination letter applications, VCR Submission
(as defined below), trust instruments, insurance contracts, administrative
services contracts, annual reports, actuarial valuations, summary plan
descriptions, summaries of material modifications, administrative forms and
other documents that constitute a part of or are incident to the administration
of the Employee Benefit Plans. In addition, the Company has provided or made
available to the Purchaser a written description of all existing practices
engaged in by the Company that constitute Employee Benefit Plans. Except as set
forth on Schedule 3.15(a) and subject to the requirements of the Internal
Revenue Code of 1986, as amended (the "Code") and ERISA, each of the Employee
Benefit Plans can be terminated or amended (without material cost to the
Company) at will by the Company. Except as set forth on Schedule 3.15(a), no
unwritten amendment exists with respect to any Employee Benefit Plan. The
Company has no plan or commitment, whether legally binding or not, to establish
any new Employee Benefit Plan, to enter into any employment severance or change
in control agreement or to modify or to terminate any Employee Benefit Plan or
agreement.
(b) Administration. Each Employee Benefit Plan has been
--------------
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. To the
best of the knowledge of the Company, the Company has (i) made all necessary
filings with respect to such Employee Benefit Plans, including the timely filing
of Form 5500 if applicable, and (ii) made all necessary filings, reports and
disclosures pursuant to and have complied with all requirements of the Internal
Revenue Service ("IRS") Voluntary Compliance Resolution Program ("VCR
Submission"), if applicable, with respect to all profit sharing retirement plans
and pension plans in which employees of the Company participate.
(c) Examinations. Except as set forth on Schedule 3.15(c), the
------------
Company has not received any notice that any Employee Benefit Plan is currently
the subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency.
(d) Prohibited Transactions. To the best of the knowledge of
------------------------
the Company, no prohibited transactions (within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA) have occurred with respect to any
Employee Benefit Plans.
(e) Claims and Litigation. No pending or, to the actual
-----------------------
knowledge of the Company, threatened claims, suits, or other proceedings exist
with respect to any Employee Benefit Plan other than normal benefit claims filed
by participants or beneficiaries.
(f) Qualification. As set forth in more detail on Schedule
-------------
3.15(f), the Company has applied for a favorable determination letter or ruling
from the IRS for each of the Employee Benefit Plans intended to be qualified
<PAGE>
within the meaning of Section 401(a) of the Code and/or tax-exempt within the
meaning of Section 501(a) of the Code. Except as set forth on Schedule 3.15(f),
no proceedings exist or, to the actual knowledge of the Company has been
threatened that could result in the revocation of any such favorable
determination letter or ruling.
(g) Funding Status. Neither the Company nor any member of a
---------------
"Controlled Group" (within the meaning of Section 412(n)(6)(B) of the Code) with
the Company sponsors any plans which (i) are subject to the minimum funding
requirements of Code Section 412 or ERISA Section 302, or (ii) are subject to
Title IV of ERISA assumptions.
(h) Excise Taxes. To the best of the knowledge of the Company,
------------
neither the Company nor any member of a Controlled Group has any liability to
pay excise taxes with respect to any Employee Benefit Plan under applicable
provisions of the Code or ERISA.
(i) Multi-Employer Plans. Neither the Company nor any member
---------------------
of a Controlled Group is or ever has been obligated to contribute to a
multi-employer plan within the meaning of Section 3(37) of ERISA and neither the
Company nor the Controlled Group has ever contributed to any plan subject to
Title IV of ERISA.
(j) Pension Benefit Guaranty Corporation. None of the
------------------------------------
Employee Benefit Plans are subject to the requirements of Title IV of ERISA.
(k) Retirees. The Company has no obligation or commitment to
--------
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and Sections 601 through 608 of ERISA.
(l) Change in Control. The execution of, and performance of
-----------------
the transactions contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute an event under
an Employee Benefit Plan or employment, severance or change in control agreement
that will or may result in any, payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee of the
Company. No payment or benefit which will or may be made by the Company, any of
its subsidiaries, the Purchaser or any of its affiliates by reason of such
execution or performance may be characterized as an "excess parachute payment,"
within the meaning of Section 28OG(b)(1) of the Code or which will not be
deductible for federal tax purposes by virtue of Section 162(m) of the Code.
(m) Insurance. With respect to each Employee Benefit Plan
---------
which is an employee welfare benefit plan (within the meaning of Section 3(l) of
ERISA), all claims incurred by the Company are (i) insured pursuant to a
<PAGE>
contract of insurance whereby the insurance company bears any risk of loss with
respect to such claims, or (ii) covered under a contract with a health
maintenance organization which bears the liability for claims.
(n) Labor Disputes. No work stoppage or labor strike against
---------------
the Company is pending or threatened. The Company is not now, nor has been in
the past (i) involved in or threatened with any labor dispute, grievance, or
litigation relating to labor matters, including, without limitation, violation
of any federal, state or local labor, safety or employment laws (domestic or
foreign), charges of unfair labor practices or discrimination complaints which
could have a Material Adverse Effect; (ii) engaged in any unfair labor practices
within the meaning of the National Labor Relations Act or the Railway Labor Act,
or (iii) a party to, or bound by, any collective bargaining agreement or union
contract and no such agreement or contract is currently being negotiated by the
Company or any of its affiliates. No employees of the Company are currently
represented by any labor union for purposes of collective bargaining and no
activities the purpose of which is to achieve such representation are threatened
or ongoing. The Company (i) is in compliance with all applicable federal, state
and local laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of employment and
wages and hours, except for such possible non-compliance as would not,
individually or in the aggregate, have a Material Adverse Effect; (ii) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments; (iii) is not liable for any arrears of wages
or any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits.
3.16 Equity Investments; Subsidiaries. Set forth on Schedule 3.16 is a
------------------
list of all of the Company's subsidiaries. Except as set forth on Schedule 3.16,
the Company does not own, whether directly or indirectly, any capital stock or
other proprietary interest directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity which is
currently involved in the Company's ordinary course of business.
3.17 Title to Assets and Properties; Insurance.
-----------------------------------------
(a) The Company has good and marketable title, or a valid
leasehold interest in or contractual right to use, all of its assets and
properties, free and clear of any mortgages, judgments, claims liens, security
interests, pledges, escrows, charges or other encumbrances of any kind or
character whatsoever ("Encumbrances") except in each case for Permitted
Encumbrances and such defects in title and such other liens and Encumbrances
which do not individually or in the aggregate materially detract from the value
to the Company of the properties and assets of the Company and its subsidiaries
taken as a whole.
(b) The Company and its subsidiaries maintain insurance
(including D&O insurance) in such amounts (to the extent available in the public
market), including self-insurance, retainage and deductible arrangements, and of
such a character as is reasonable for companies engaged in the same or similar
business.
<PAGE>
3.18 Compliance with Laws; Permits. Except as provided in Schedule
-------------------------------
3.18, the Company and its subsidiaries are in compliance, and have been
conducted in compliance with, all federal, state, local and foreign laws, rules,
ordinances, codes, consents, authorizations, registrations, regulations,
decrees, directives, judgments and orders applicable to it except where the
failure to comply would not individually or in the aggregate have a Material
Adverse Effect. The Company has all federal, state, local and foreign
governmental licenses, permits, qualifications and authorizations ("Permits")
necessary in the conduct of its business as currently conducted. All such
Permits are in full force and effect and no violations have been recorded in
respect of any such Permit; no proceeding is pending or, to the best knowledge
of the Company, threatened to revoke or limit any such Permit and no such Permit
will be suspended, cancelled or adversely modified as a result of the execution
and delivery of this Agreement or the Registration Rights Agreement and the
consummation of the transactions contemplated hereby or thereby, except where
failure to have such Permit would not individually or in the aggregate have a
Material Adverse Effect.
3.19 Taxes.
-----
(a) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith) (including,
without limitation, federal, state, city, county, local, foreign, or other
income, franchise, ad valorem, value added, excise, real or personal property,
asset, franchise taxes withheld, capital, withholding, real or tangible
property, employment, unemployment compensation, transfer, sales, use, excise
and all other taxes of any kind whatsoever imposed by the United States or any
state, city, county, country or foreign government or subdivision or agency
thereof, whether disputed or not, and (ii) "Transaction" means one or more
transactions, acts, events, or omissions of whatever nature.
(b) The Company has filed on a timely basis all returns and
reports, including all estimated returns and reports of every kind and have
timely given all notices, in respect of Taxes required to be filed or given
under applicable law within the applicable statute of limitations period by any
of them, or except where proper action has been taken by the Company to extend
the relevant filing deadline. Such returns, reports and notices are complete and
accurate in all material respects. All Taxes shown on such returns or reports
have been, and all Taxes subsequently assessed with respect to the periods
and/or Transactions to which such returns or reports relate have been or will
be, timely, and fully paid, except for amounts which the Company is contesting
in good faith. The provisions in the financial statements (and the notes and
schedules related thereto) contained in the Furnished SEC Documents for Taxes
currently payable and for deferred Taxes are adequate in all material respects
to provide for such Taxes for which the Company and its Subsidiaries taken as a
whole may be liable in respect of periods or Transactions through the dates
thereof.
(c) No fact or condition relating to any past or present
Transaction, except as set forth in the Company's disclosure schedules delivered
herewith, which, if known to any tax authority having jurisdiction, would likely
<PAGE>
result in a successful challenge by such authority of the treatment or omission
of such factor or condition on any tax return, report or notice of the Company
or its subsidiaries, and no issue has arisen in any examination of the Company
by the IRS that, in either case, if raised with respect to any other period not
so examined would result in a proposed material deficiency for any other period
not so examined, if upheld. The Company and its subsidiaries have made all
payments or estimated Taxes required to be made under Section 6655 of the Code
and any comparable provisions of state, local or foreign law. Except as set
forth on Schedule 3.19, there is no pending nor, to the Company's knowledge,
threatened or contemplated action, audit, proceeding or investigation for the
assessment or collection of Taxes from the Company. There are no requests for
rulings, outstanding subpoenas or requests for information with respect to Taxes
of the Company, proposed reassessments of any property owned or leased by the
Company, or similar matters pending with respect to any taxing authority.
3.20 Environmental Matters. Except as listed in Schedule 3.20:
---------------------
(a) There are, with respect to the Company and its
subsidiaries, or any predecessor of the foregoing, no present violations of
Environmental Law (as defined herein), any actions, activities, circumstances,
conditions, events, incidents, or contractual obligations which may give rise to
any liability of the Company pursuant to any Environmental Law and neither the
Company nor its subsidiaries has received any notice with respect to any of the
foregoing nor is any Litigation pending or threatened in connection with any of
the foregoing.
(b) To the knowledge of the Company and except in the normal
course of the Company's or its subsidiaries' business, (i) no Hazardous
Materials (as defined herein) are present on or about any real property
currently owned, leased or used by the Company or its subsidiaries, and (ii) no
Hazardous Materials were present on or about any real property previously owned,
leased or used by the Company or its subsidiaries during the period the property
was owned, leased or used by the Company or its subsidiaries.
(c) To the knowledge of the Company, no Hazardous Materials
have been released on or about, or where they may pose a threat of migration to,
any real property currently owned, leased or used by the Company or its
subsidiaries and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or its subsidiaries
during the period the property was owned, leased or used by the Company or its
subsidiaries, except as may be required in the normal course of business and in
material compliance with applicable Environmental Law.
(d) To the knowledge of the Company, no asbestos-containing
materials or PCBs are present on or about any property currently owned, leased
or used by the Company or its subsidiaries.
<PAGE>
(e) To the knowledge of the Company, there are not now, nor
have there ever been, any underground storage tanks or similar facilities of any
kind on or under any real property currently or previously owned, leased or used
by the Company or its subsidiaries.
(f) For purposes of this Section 3.20, capitalized terms used
herein shall have the following meanings:
"Environmental Laws" shall mean, at any date, all provisions
-------------------
of federal, state, local or foreign law (including applicable principles of
common and civil law), statutes, ordinances, rules, regulations, published
standards and directives that have the force and effect of laws, statutes,
regulations, permits, licenses, judgments, writs, injunctions, decrees and
orders enacted, promulgated or issued by any Public Authority, and all indemnity
agreements and other contractual obligations, as in effect at such date,
relating to (i) the protection of the environment, including the air, surface
and subsurface soils, surface waters, groundwaters and natural resources, and
(ii) occupational health and safety and exposure of persons to Hazardous
Materials. Environmental Laws shall include the Comprehensive Environmental
Response, Compensation and Liability Act 42 U.S.C. ss.ss.9601 et seq., and any
other laws imposing or creating liability with respect to Hazardous Materials.
"Environmental Liability" shall mean any liabilities,
-------------------------
obligations, costs, losses, payments or damages, including compensatory and
punitive damages, incurred (i) to contain, remove, clean up, assess, abate or
otherwise remedy any actual or alleged release or threatened release of
Hazardous Materials, any actual or alleged contamination (by Hazardous
Materials) of air, surface or subsurface soil, groundwater or surface water, or
any personal injury or damage to natural resources or property resulting from
any such release or contamination, pursuant to the requirements of any
Environmental Law or in response to any claim by any Public Authority or other
third party under any Environmental Law; (ii) to modify facilities or processes
or take any other remedial action in response to any claim by any Public
Authority of non-compliance with any Environmental Law, (iii) as a result of the
imposition of any civil or criminal fine or penalty by any Public Authority for
the violation or alleged violation of any Environmental Law, or (iv) as a result
of any action, suit, proceeding or claim by any third party under any
Environmental Law. The term "Environmental Liability" shall include: (i)
reasonable fees of counsel and consultants (but not any corporate allocation for
management time or for the use of similar in-house services or facilities), and
(ii) the costs and expenses of any investigation undertaken to ascertain the
existence or extent of any potential or actual Environmental Liability.
"Hazardous Material" shall mean any substance regulated by any
------------------
Environmental Law or which may now or in the future form the basis for any
Environmental Liability.
"Public Authority" shall mean any supranational, national,
-----------------
regional, state or local government court, governmental agency, authority,
board, bureau, instrumentality or regulatory body.
<PAGE>
3.21 Suppliers and Customers. Except as set forth on Schedule 3.21,
-----------------------
the Company does not have any knowledge of any termination, cancellation or
threatened termination or cancellation or limitation of, or any material
modification or change in, or expressed material dissatisfaction with the
business relationship between the Company or its subsidiaries and any supplier
or vendor of the Company or its subsidiaries, in each case, of materials or
services in an amount in excess of $50,000 per year.
3.22 Holding Company Act and Investment Company Act. Neither
---------------------------------------------------
the Company nor its subsidiaries is: (i) a "public utility company" or a
"holding company," or an "affiliate" or a "subsidiary company" of a "holding
company," or an "affiliate" of such a "subsidiary company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility," as defined in the Federal Power Act, as amended, or (iii) an
"investment company" or an "affiliated person" thereof or an "affiliated person"
of any such "affiliated person," as such terms are defined in the Investment
Company Act of 1940, as amended.
3.23 Foreign Corrupt Practices. To the Company's best knowledge,
--------------------------
the Company has no notice and neither the Company, nor any of its subsidiaries,
nor any director, officer, agent, employee or other person acting on behalf of
the Company or any subsidiary has violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended. To the Company's
best knowledge, the Company has no notice and neither the Company, nor any of
its subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any subsidiary has, in the course of his
actions or, on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity, made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
3.24 Shareholder Rights Plan. The Company's Board of Directors
------------------------
has approved an amendment to the Company's Rights Agreement, dated July 2, 1998
(the "Rights Agreement"), pursuant to which the transactions contemplated by
this Agreement will (i) not result in Purchaser becoming an Acquiring Person (as
defined in the Rights Agreement), and (ii) not be deemed to have caused a Shares
Acquisition Date (as defined in the Rights Agreement), a Triggering Event (as
defined in the Rights Agreement) or a Distribution Date (as defined in the
Rights Agreement).
ARTICLE 4
COVENANTS
4.1 Best Efforts. The parties shall use their best efforts timely
------------
to satisfy each of the conditions described in Articles 6 and 7 of this
Agreement.
4.2 Securities Laws. The Company shall file a Form D with
----------------
respect to the Securities with the SEC as required under Regulation D and
shall provide acopy thereof to the Purchaser within 15 days after the Closing
<PAGE>
Date. The Company shall file a Form 8-K disclosing this Agreement and
the transactions contemplated hereby with the SEC within five business days
following the Closing Date. The Company shall, on or prior to the Closing Date,
take such action as is necessary to sell the Securities to the Purchaser under
applicable securities laws of the states of the United States, and shall
provide evidence of any such action so taken to the Purchaser on or prior to the
Closing Date.
4.3 Reporting Status. So long as the Purchaser beneficially owns
----------------
any ofthe Securities, the Company shall use its best efforts to timely
file all reports required to be filed by it with the SEC pursuant to the
Exchange Act, and make and keep public information available as those terms
are defined in Rule 144 and the Company shall not terminate its status as an
issuer required to file reports under the Exchange Act even if the Exchange
Act or the rules and regulations thereunder would permit such termination.
4.4 Use of Proceeds. The Company shall use the Purchase Price for
---------------
general corporate purposes.
4.5 Expenses. Except as may otherwise agreed to, the Company
--------
and the Purchaser shall pay all the costs and expenses incurred by it or on
its behalf in connection with this Agreement and the consummation of the
transactions contemplated hereby.
4.6 Listing. The Company shall use its best efforts to continue
-------
the listing and trading of its Common Stock on the NASDAQ, the New York
Stock Exchange or American Stock Exchange; and comply in all respects
with the Company's reporting, filing and other obligations under the by-laws or
rules of the NASDAQ or such exchange, as applicable. Within five (5)
business days following the Closing the Company shall take all actions
necessary to have the Securities approved for quotation on the NASDAQ.
4.7 Prospectus Delivery Requirement. The Purchaser understands
-------------------------------
that the Securities Act requires delivery of a prospectus relating to the
Securities in connection with any sale or other disposition thereof pursuant to
a registration statement, and the Purchaser shall comply with the
applicable prospectus delivery requirements of the Securities Act in
connection with any such sale or other disposition.
4.8 Transactions with Affiliates. The Company will not, and
------------------------------
will not permit any subsidiaries to, engage in any transaction or group of
related transactions (including, without limitation, the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service)
with any affiliate (other than the Company), except in the ordinary course and
pursuant to the reasonable requirements of the Company's or the subsidiaries'
business and upon fair and reasonable terms no less favorable to the
Company or such subsidiaries than would be obtainable in a comparable
arm's-length transaction with a person not an affiliate. The Company will
not be deemed in default of this Section 4.8 in connection with carrying out
its obligations pursuant to those agreements or transactions described in the
Furnished SEC Documents.
<PAGE>
4.9 Other Transactions. For a period of 30 days following the
------------------
Closing the Company agrees that it will not, without Purchaser's prior
consent, issue Common Stock (or securities exchangeable or exercisable for, or
convertible into Common Stock) to a third party at a price less than $9.84375
per share. For purposes of this Section 4.9 the per share price at which
securities are issued shall be determined by adding (i) the cash consideration
received by the Company in connection with the issuance, and (ii) the cash
consideration the Company would receive if all securities exercisable for
Common Stock were exercised in accordance with the terms thereof utilizing the
exercise price in effect as of the date of the issuance in question, and then
dividing the results of such addition by the total number of shares of Common
Stock so issued including the Common Stock that would have been issued
if on such date all securities exchangeable or exercisable for, or
convertible into Common Stock were exchanged, exercised or converted in
accordance with the terms thereof utilizing the exchange, exercise or
conversion price in effect as of the date of the issuance in question.
ARTICLE 5
TRANSFER OF SECURITIES
The Securities shall not be transferable except upon the conditions
specified in this Article 5, which conditions are intended to insure compliance
with the provisions of the Securities Act and state securities laws in respect
of the transfer of any such Securities.
5.1 Restrictive Legend.
------------------
(a) Unless and until otherwise permitted by this Article 5,
each certificate for the Securities issued to the Purchaser or to any subsequent
transferee of the Securities shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"These shares have not been registered under the Securities
Act of 1933 and may not be offered for sale, sold, transferred
or otherwise disposed of unless registered under such Act or
unless an exemption from such registration is available.
Further, such transfer is subject to the conditions specified
in a Securities Purchase Agreement dated as of January 31,
2000 pursuant to which such shares were issued and sold by
LaserSight Incorporated (the "Company"), a copy of which
Agreement will be furnished by the Company to the holder
hereof upon request and without charge."
(b) The Company may order its transfer agent for the Common
Stock to stop the transfer of any of the Securities bearing the legend set forth
in Subsection (a) of this Section 5.1 until the conditions of this Article 5
with respect to the transfer of such securities have been satisfied.
<PAGE>
5.2 Notice of Proposed Transfer. If, prior to any transfer or
----------------------------
sale of any the Securities, the Purchaser shall deliver a written notice to the
Company describing briefly the manner of such transfer or sale and a written
opinion of counsel for the Purchaser (provided that such counsel, and the form
and substance of such opinion, are reasonably satisfactory to the Company) to
the effect that such transfer or sale may be effected without the registration
of such Securities under the Securities Act, the Company shall thereupon permit
or cause its transfer agent to permit such transfer or sale to be effected;
provided, however, that if in such written notice the Purchaser represents and
warrants to the Company that the transfer or sale is to a purchaser or
transferee whom the Purchaser knows or reasonably believes to be a "qualified
institutional buyer," as that term is defined in Rule 144A promulgated by the
SEC under the Securities Act ("Rule 144A"), no opinion shall be required unless
reasonably requested in writing by the Company within five days after receipt of
such written notice, in which case the Purchaser shall deliver to Company such a
written opinion of counsel.
5.3 Termination of Restrictions.
---------------------------
(a) Notwithstanding the foregoing provisions of this Article
5, the restrictions imposed by this Article 5 upon the transferability of the
Securities shall terminate as to any particular share of such securities when
(i) such security shall have been effectively registered under the Securities
Act and sold by the Purchaser thereof in accordance with such registration, or
(ii) a written opinion to the effect that such restrictions are no longer
required or necessary under any federal or state securities law or regulation
has been received from counsel for the Purchaser thereof (provided that such
counsel, and the form and substance of such opinion, are reasonably satisfactory
to the Company) or counsel for the Company, or (iii) such security shall have
been sold without registration under the Securities Act in compliance with Rule
144, or (iv) the Company is reasonably satisfied that the Purchaser of such
security shall, in accordance with the terms of Subsection (k) of Rule 144, be
entitled to sell such security pursuant to such Subsection, or (v) a letter or
an order shall have been issued to the Purchaser thereof by the staff of the SEC
or the SEC stating that no enforcement action shall be recommended by such staff
or taken by the SEC, as the case may be, if such security is transferred without
registration under the Securities Act in accordance with the conditions set
forth in such letter or order and such letter or order specifies that no
subsequent restrictions on transfer are required.
(b) Whenever the restrictions imposed by this Article 5 shall
terminate, as hereinabove provided, the Purchaser who then holds any particular
Securities then outstanding as to which such restrictions shall have terminated
shall be entitled to receive from the Company, without expense to the Purchaser,
one or more new certificates for such securities not bearing the restrictive
legend set forth in Section 5.1(a) hereof.
5.4 Compliance with Rule 144 and Rule 144A. At the written
---------------------------------------
request of the Purchaser who proposes to sell any of the Securities in
compliance with Rule 144, the Company shall furnish to the Purchaser, within 10
days after receipt of such request, a written statement as to whether or
not the Company is in compliance with the filing requirements of the SEC as
set forth in such Rule. For purposes of effecting compliance with Rule 144A,
<PAGE>
in connection with any resales of any Securities that hereafter may be
effected pursuant to the provisions of Rule 144A, the Purchaser desiring to
effect such resale and each prospective institutional purchaser of such shares
designated by the Purchaser shall have the right, at any time the Company is
not subject to Section 13 or 15(d) of the Securities and Exchange Act, to
obtain from the Company, upon the written request of the Purchaser and at
the Company's expense the documents specified in Section (d)(4)(i) of Rule
144A, as such rule may be amended from time to time.
5.5 Non-Applicability of Restrictions on Transfer.
---------------------------------------------
Notwithstanding the provisions of Section 5.2 hereof, any record owner of
Securities may from time to time transfer all or part of such record owner's
Securities (i) to a nominee identified in writing to the Company as being the
nominee of or for such record owner, and any nominee of or for a beneficial
owner of Securities identified in writing to the Company as being the nominee of
or for such beneficial owner may from time to time transfer all or part of the
Securities registered in the name of such nominee but held as nominee on behalf
of such beneficial owner, to such beneficial owner, (ii) to an Affiliate of such
record owner, or (iii) if such record owner is a partnership or limited
liability company or the nominee of a partnership or limited liability company,
to a partner, member, retired partner or member, or estate of a partner, member
or retired partner or member, of such partnership or limited liability company,
so long as such transfer is in accordance with the transferee's interest in such
partnership or limited liability company and is without consideration; provided,
however, that (A) such record owner shall deliver a written notice to the
Company describing in reasonable detail the manner of such transfer or sale
prior to the consummation of such transfer or sale, (B) each such transferee
shall remain subject to all restrictions on the transfer of Securities herein
contained, and (C) if reasonably requested in writing by the Company within five
days after receipt of such written notice, such record owner shall deliver to
the Company such additional information requested by the Company or its counsel
(in form and substance satisfactory to the Company and such counsel) that the
proposed transfer is within the scope of this Section 5.5 or a written opinion
of counsel for such record owner (provided that such counsel, and the form and
substance of such opinion, are reasonably satisfactory to the Company) to the
effect that such transfer or sale may be effected without the registration of
such securities under the Securities Act.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The
-----------------------------------------------
obligation of the Company hereunder to issue and sell the Securities to the
Purchaser at the Closing is subject to the satisfaction, as of the Closing Date
and with respect to the Purchaser, of each of the following conditions
thereto, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
(a) The Purchaser shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
<PAGE>
(b) The Purchaser shall have wired same-day funds to the
account designated by the Company equal to the Purchase Price.
(c) The representations and warranties of the Purchaser shall
be true and correct as of the date when made and as of the Closing as
though made at that time (except for representations and warranties
that speak as of a specific date), and the Purchaser shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Purchaser at or prior to
the Closing.
(d) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE
7.1 The obligation of the Purchaser hereunder to purchase
the Securities to be purchased by it on the Closing Date is subject to
the satisfaction of each of the following conditions, provided that
these conditions are for the Purchaser's sole benefit and may be waived
by the Purchaser at any time in the Purchaser's sole discretion:
(a) The Company shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Purchaser.
(b) The Company shall have directed its transfer agent to
deliver to the Purchaser duly executed certificates for the Securities
being so purchased by the Purchaser.
(c) The Trading in the Common Stock shall not have been
suspended by the NASDAQ or the SEC or other regulatory authority.
(d) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing as
though made at that time and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
The Purchaser shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as
of the Closing Date to the foregoing effect.
(e) The Purchaser shall have completed to its satisfaction all
business, legal, accounting and financial due diligence with respect to
the Company.
<PAGE>
(f) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
(g) The Purchaser shall have received the Officer's
Certificate described in Section 3.3 dated as of the Closing Date.
(h) The Purchaser shall have received an opinion of
Sonnenschein Nath & Rosenthal, dated as of the Closing Date, in the
form attached hereto as Exhibit B.
(i) The Company shall have delivered to the Purchaser
certificates of good standing of the Company and the subsidiaries which
are organized pursuant to the corporate laws of a State within the
United States as of a date no earlier than ten days prior to the
Closing.
(j) The Company shall have delivered to the Purchaser a
certificate executed by a duly authorized officer certifying (i) a copy
of the Company's certificate of incorporation and the by-laws, (ii)
resolutions authorizing the execution of this Agreement and the
Registration Rights Agreement, and (iii) incumbency matters.
(k) Without limiting the generality of Section 7.1(d), no
Material Adverse Effect shall have occurred, nor shall any event or
events have occurred which would reasonably likely to have a Material
Adverse Effect.
ARTICLE 8
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction. This Agreement shall be
----------------------------
governed by and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in the State of Delaware,
without giving effect to the principles of conflicts of law. The parties
hereto irrevocably consent to the jurisdiction of the United States federal
courts and state courts located in the County of New Castle in the State of
Delaware in any suit or proceeding based on or arising under this
Agreement or the transactions contemplated hereby and irrevocably agree
that all claims in respect of such suit or proceeding may be determined in such
courts. The Company and the Purchaser irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. Service of
process upon the Company or the Purchaser mailed by certified mail, return
receipt requested, shall be deemed in every respect effective service of
process upon the Company in any suit or proceeding arising hereunder. Nothing
herein shall affect the Purchaser's right to serve process in any other manner
permitted by law. A final non-appealable judgment in any such suit or proceeding
<PAGE>
shall be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
8.2 Counterparts. This Agreement may be executed in two or
------------
more counterparts, including, without limitation, by facsimile transmission, all
of which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
8.3 Headings. The headings of this Agreement are for convenience
--------
of reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.4 Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
8.5 Entire Agreement; Amendments. This Agreement, the Schedules
-----------------------------
hereto and the instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor the
Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived other than
by an instrument in writing signed by the party to be charged with enforcement
and no provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Purchaser.
8.6 Notice. Any notice herein required or permitted to be given
------
shall be in writing and may be personally served or delivered by
nationally-recognized overnight courier or by facsimile-machine confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission). Each party shall provide
notice to the other party of any change in address. The addresses for such
communications shall be:
If to the Company:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Winter Park, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Executive Officer
with a copy to:
<PAGE>
The Lowenbaum Partnership, L.L.C.
222 South Central Avenue
Suite 901
St. Louis, Missouri 63105
Telecopy: (314) 746-4848
Attention: Timothy L. Elliott, Esq.
and
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Telecopy: (312) 876-7934
Attention: Paul Miller, Esq.
If to the Purchaser:
TLC Laser Eye Centers Inc.
5600 Explorer Drive
Suite 301
Mississauga, Ontario L4W4Y2
Canada
Telecopy: (905) 602-7956
Attention: Elias Vamvakas
with a copy to:
Arent, Fox, Kintner, Plotkin & Kahn, P.L.L.C.
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Telecopy: (202) 857-6395
Attention: Jeffrey E. Jordan, Esq.
8.7 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Purchaser shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other. The
provisions of this Agreement which are for each of the Purchaser's benefit as a
purchaser of holder of Securities are also for the benefit of, and enforceable
by, any subsequent holder of such Securities.
<PAGE>
8.8 Third Party Beneficiaries. This Agreement is intended for the
-------------------------
benefit of the parties heretoand their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 Survival. All representations and warranties in this
--------
Agreement shall survive the execution and delivery of this Agreement and the
Closing. All agreements contained herein shall survive the Closing until, by
their respective terms, they are no longer operative.
8.10 Indemnification.
---------------
(a) The Company shall indemnify and hold harmless the Purchaser,
its respective officers, directors, employees, attorneys, agents,
representatives, successors and assigns (each a "Purchaser Entity") from any
(a) Losses (as defined herein) insofar as such Losses (or actions in respect
thereof) incurred or suffered by the Purchaser Entity (whether incurred or
suffered directly or indirectly through ownership of capital stock of the
Company) arise out of or are based upon or are incurred as a result of (i) the
breach or falsity or incorrectness as of the Closing Date of any representation
or warranty, covenants or agreements of the Company contained in or made
pursuant to this Agreement, or (ii) the existence of any condition, event or
fact constituting, or which with notice or passage of time, or both, would
constitute a default in the observance of any of the Company's undertakings or
covenants hereunder, under the Registration Rights Agreement or the Company's
Certificate of Incorporation and By-laws. The Company shall also pay all
reasonable attorney's and accountant's fees and costs and court costs incurred
by the Purchaser in enforcing the indemnification provided for in this Section
8.10. Notwithstanding the foregoing, the Company expressly agrees and
acknowledges that the right of indemnification granted herein to the Purchaser
shall not be deemed to be the exclusive remedy available to the Purchaser for
any of the matters described in this Section 8.10.
(b) For purposes of this Section 8.10, "Losses" shall mean each
and all of the following items: claims, losses, (including, without limitation,
losses of earnings) liabilities, obligations, payments, damages (actual,
punitive or consequential), charges, judgments, fines, penalties, amounts paid
in settlement; costs and expenses (including, without limitation, interest which
may be imposed in connection therewith, costs and expenses of investigation,
actions, suits, proceedings, demands, assessments and fees, expenses and
disbursements of counsel, consultants and other experts). Any payment (or deemed
payment) by the Company to the Purchaser pursuant to this Section 8.10 shall be
treated for federal income tax purposes as an adjustment to the Purchase Price.
(c) Within five days after a party seeking indemnification under
this Section 8.10 shall become aware of the facts indicating that a claim for
indemnification may be warranted, such party shall give to the party from whom
indemnification is being sought a claim notice relating to such Losses (a "Claim
Notice"). Each Claim Notice shall specify the nature of the claim, the
applicable provision(s) of this Agreement or other instrument under which the
claim for indemnity arises and, if possible, the amount or the estimated amount
thereof.
<PAGE>
8.11 Stamp Tax and Delivery Costs. The Company will pay all stamp
-----------------------------
and other taxes, if any, which may be payable in respect of the sale or other
transfer of the Securities to the Purchaser and the issuance thereof to the
Purchaser or its nominee, and will save the Purchaser harmless against any loss
or liability resulting from nonpayment or delay in payment of any such tax. The
Company will also pay all reasonable costs of delivery to the Purchaser, or the
Purchaser's nominee, of the Securities to be purchased by the Purchaser or
otherwise transferred to the Purchaser.
8.12 Public Filings; Publicity. No party hereto shall make any
--------------------------
public statement regarding the transactions contemplated hereby unless the
language and timing of such statement has been approved by both the Company and
the Purchaser or unless such party has been advised by its securities counsel to
make such statement. Notwithstanding the foregoing, each of the parties hereto
may, in documents required to be filed by it with the SEC or other regulatory
bodies, make such statements with respect to the transactions contemplated
hereby as each may be advised is legally necessary upon advice of its counsel;
provided, however, that the party making such determination shall immediately
notify the other party that it intends to make a public announcement and the
parties hereto shall, in good faith, attempt to agree on any public
announcements or publicity statements with respect thereto (which approval shall
not be unreasonably withheld or delayed).
8.13 Further Assurances. Each party shall do and perform, or
-------------------
cause tobe done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.14 Remedies. No provision of this Agreement providing for any
--------
remedy to the Purchaser shall limit any remedy which would otherwise be
available to the Purchaser at law or in equity. Nothing in this Agreement shall
limit any rights the Purchaser may have with any applicable federal or state
securities laws with respect to the investment contemplated hereby.
8.15 Termination. In the event that the Closing shall not have
-----------
occurred on or before February 15, 2000, this Agreement shall terminate at
the close of business on such date.
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be duly executed as of the date first above written.
LASERSIGHT INCORPORATED TLC LASER EYE CENTERS INC.
By: /s/Gregory L. Wilson By: /s/Peter Kastelic
--------------------------- ------------------------
Name: Gregory L. Wilson Name: Peter Kastelic
Title: Chief Financial Officer Title: Chief Financial Officer
SIGNATURE PAGE TO SECURITIES
PURCHASE AGREEMENT
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Registration Rights Agreement
Exhibit B - SN&R Opinion
Schedule 3.2 - Consents
Schedule 3.3 - Capitalization
Schedule 3.5 - Conflicts
Schedule 3.6 - SEC Filings
Schedule 3.7 - Certain Changes
Schedule 3.8 - Litigation
Schedule 3.14 - Intellectual Property
Schedule 3.15(a) - Employee Benefit Plans - Identifications
Schedule 3.15(c) - Employee Benefit Plans - Examinations
Schedule 3.15(f) - Employee Benefit Plans - Qualification
Schedule 3.16 - Subsidiaries
Schedule 3.18 - Compliance with Laws; Permits
Schedule 3.19 - Tax Matters
Schedule 3.20 - Environmental Matters
Schedule 3.21 - Suppliers and Customers
EXHIBIT 99.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
January 31, 2000, by and among LaserSight Incorporated, a Delaware corporation
(the "Company"), with its headquarters located at 3300 University Boulevard,
Suite 140, Orlando, Florida 32792 and TLC LASER EYE CENTERS INC., an Ontario
corporation (the "Purchaser"), with its headquarters located at 5600 Explorer
Drive, Suite 301, Mississauga, Ontario, Canada L4W 442, with regard to the
following:
RECITALS
A. In connection with the Securities Purchase Agreement dated of even
date herewith by and among the Company and the Purchaser (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Purchaser 1,015,873
shares (the "Placement Shares") of the Company's common stock, par value $.001
per share (the "Common Stock").
B. To induce the Purchaser to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide to the Holders certain
rights to registration by the Company under the Securities Act of 1933 and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "Securities Act") and applicable state securities laws.
AGREEMENTS
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchaser agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified:
Advice: See Section 4 hereof.
------
Agreement: See the introductory paragraphs hereto.
---------
Blackout Event: means a determination by the Board made in good faith,
--------------
after consulting with outside securities counsel, that the registration of
Registrable Securities under the Securities Act or the continuation of the
disposition of Registrable Securities pursuant to an effective Registration
Statement at such time (i) would have a material adverse effect upon a proposed
material sale of all (or substantially all) of the assets of the Company or a
material merger, reorganization, recapitalization or similar current transaction
materially affecting the capital structure or equity ownership of the Company,
or (ii) would require the Company to make a public disclosure of information,
which disclosure a majority of the outside directors determine in good faith
would have a material adverse effect on the Company.
Blackout Period: See Section 3(a) hereof.
---------------
<PAGE>
Board: The Board of Directors of the Company.
-----
Claim: See Section 6(a) hereof.
-----
Common Stock: See the introductory paragraphs hereto.
------------
Company: See the introductory paragraphs hereto.
-------
Exchange Act: The Securities Exchange Act of 1934 and the rules and
------------
regulations of the SEC promulgated thereunder.
Form S-3: Form S-3 of the SEC under the Securities Act or any successor
--------
form.
Holdback Period: See Section 3(b) hereof.
---------------
Holder: Any registered holder of a Registrable Security or
------
Registrable Securities.
Indemnified Person: See Section 6(c) hereof.
------------------
Indemnifying Person: See Section 6(c) hereof.
-------------------
Losses: See Section 6(a) hereof.
------
NASD: See Section 4(j) hereof.
----
Other Holders: See Section 2.2(a) hereof.
-------------
Other Shares: See Section 2.2(a) hereof.
------------
Participant: See Section 6(a) hereof.
-----------
Person: An individual, trustee, corporation, partnership, limited
------
liability company, trust, unincorporated association, business association, firm
or other legal entity.
Piggyback Registration Statement: See Section 2.2(a) hereof.
--------------------------------
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchaser: See the introductory paragraphs hereto.
---------
<PAGE>
Registrable Securities means the Placement Shares and any other
-----------------------
securities issued or issuable with respect to any of the foregoing by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable Securities held by a Holder, such securities shall
cease to be Registrable Securities when (i) a Registration Statement with
respect to the offering of such securities by the Holder thereof shall have been
declared effective under the Securities Act and such securities shall have been
disposed of by such Holder pursuant to such Registration Statement, or (ii) such
securities may at the time of determination be sold to the public pursuant to
Rule 144 without any restrictions or limitations whatsoever (including
restrictions or limitations related to affiliates) on the amount of securities
which may be sold by such Holder without the lapse of any further time or the
satisfaction of any condition.
Registration Expenses: See Section 5(b) hereof.
---------------------
Registration Period: See Section 2.1(b) hereof.
-------------------
Registration Statement: Any registration statement of the Company filed
----------------------
with the SEC under the Securities Act, including the Prospectus, all amendments
and supplements to such registration statement, post-effective amendments, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC providing for public offers and sales of securities made in
compliance therewith resulting in offers and sales by subsequent holders that
are not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission or any successor federal
---
agency charged with the enforcement of the federal securities laws.
Securities Act: See the introductory paragraphs hereto.
--------------
Securities Purchase Agreement: See the introductory paragraphs hereto.
-----------------------------
Shelf Registration Statement: See Section 2.1(a) hereof.
----------------------------
Subsidiary: Any corporation of which the Company owns securities
----------
representing a majority of the outstanding voting power or any partnership of
which the Company (or a Subsidiary) holds a majority of the general partner
interest.
Underwritten Offering: A public offering of Common Stock, or other
----------------------
securities convertible into, or exercisable or exchangeable for, Common Stock
that is underwritten on a firm commitment basis.
<PAGE>
2. SHELF REGISTRATION
2.1 Shelf Registration Statement.
----------------------------
(a) The Company shall:
(i) prepare and, no more than 90 days after the date of this
Agreement, file with the SEC a Registration Statement in respect of all
the Registrable Securities on an appropriate form for a secondary
offering to be made on a continuous basis by the Company pursuant to
Rule 415 (the "Shelf Registration Statement"); and
(ii) subject to Section 3 hereof, use its best efforts to
cause the Shelf Registration Statement to become effective as soon as
practicable after such filing.
In addition to the Registrable Securities, the Company may include in the Shelf
Registration Statement shares of Common Stock held by any holder of equity
securities of the Company or any securities convertible into or exercisable or
exchangeable for such equity securities, which holder is entitled by written
agreement with the Company to have some or all of such securities included in
the Shelf Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective at all times until such date as is
the earlier of: (i) the date on which all of the Registrable Securities have
been sold, (ii) the date on which all of the Registrable Securities may be
immediately sold to the public without registration conditions or limitations
whatsoever (including limitations or restrictions related to affiliates),
whether pursuant to Rule 144 or otherwise, and (iii) subject to this Section and
Section 3, the date which is two years after the date hereof. (The period of
time commencing on the date the Shelf Registration Statement is declared
effective and, subject to this Section and Section 3, ending on the earliest of
the foregoing dates is referred to as the "Registration Period.") Subject to
Section 3 hereof, the Company shall use its best efforts to amend or supplement
the Prospectus contained in the Shelf Registration Statement in order to permit
such Prospectus to be lawfully delivered until the end of the Registration
Period. The Registration Period shall be extended by duration of (i) any period
during which a Holder is unable to utilize the Prospectus until the Company
amends or supplements the related Registration Statement pursuant to Section
4(h), and (ii) any Blackout Period.
(c) In addition to complying with the requirements of Section 4, in
connection with the Shelf Registration Statement, the Company shall (i) mail to
each Holder a copy of the Prospectus forming part of the Shelf Registration
Statement, and (ii) otherwise comply in all respects with all applicable federal
securities laws, rules and regulations.
(d) Each Holder shall notify the Company at least five business days
prior to any sale of Registrable Securities by such Holder pursuant to the Shelf
Registration Statement. During such five-day period, the Company shall have the
right to notify Holder that the Holder may not sell Registrable Securities
pursuant to the Shelf Registration Statement due to either a Blackout Period or
Holdback Period then being in effect or then being invoked. Upon such notice
being provided, Holder shall not sell any Registrable Securities pursuant to the
Shelf Registration Statement until the Company has notified Holder that the
Blackout Period or Holdback Period, as applicable, is no longer in effect.
<PAGE>
(e) Subject to Sections 3 and 4 hereof, the Company shall promptly
supplement or amend the Shelf Registration Statement if required by the
Securities Act to keep such Registration Statement effective during the
Registration Period, or if reasonably requested by the Holders of at least 30%
of the Registrable Securities then transferable pursuant to such Shelf
Registration Statement.
(f) Each Holder shall notify the Company promptly, but in any event
within three business days, after the date on which all Registrable Securities
owned by such Holder have been sold by such Holder so that the Company may
comply with its obligation to terminate the Shelf Registration Statement in
accordance with Item 512 of Regulation S-K.
2.2 Piggyback Registration Rights.
-----------------------------
(a) So long as the Holders hold Registrable Securities, if the Company
proposes or is required to file with the SEC a registration statement (the
"Piggyback Registration Statement") under the Securities Act in connection with
an Underwritten Offering of Common Stock (other than a registration statement on
a form that does not permit the inclusion therein of the Registrable
Securities), the Company will each such time give prompt written notice of its
intention to do so to each Holder. Upon the written request of any Holder given
within 10 days after the delivery or mailing of such notice by the Company, the
Company will use reasonable best efforts to include in such Piggyback
Registration Statement that number of the Registrable Securities specified by
Holder in such written request (subject to the limitations set forth in this
Section 2.2(a) and in Section 2.2(b) below) (the "Requested Shares") so as to
permit the public sale of such Requested Shares; provided that if the managing
underwriter or underwriters of such Underwritten Offering advise the Company
that marketing factors require a limit on the number of shares to be
underwritten, the Company may (subject to the limitations set forth in the
following sentence and based on the written recommendation of the underwriter)
exclude or limit the number of Requested Shares to be sold pursuant to such
Piggyback Registration Statement. In such event, the Company shall so advise
each requesting Holder, and the number of Requested Shares and other shares
("Other Shares") requested to be included in such Piggyback Registration
Statement and underwriting by other persons or entities that are then
stockholders of the Company ("Other Holders"), after providing for all shares
that the Company proposes to offer and sell for its own account, shall be
allocated among the Requesting Holders and Other Holders pro rata on the basis
of (i) the number of Requested Shares then held by the requesting Holders, and
(ii) the aggregate number of Other Shares then held by Other Holders.
(b) The right of any Holder to registration shall be conditioned upon
(i) such Holder's execution of the underwriting agreement agreed to among the
Company and the managing underwriters for such Underwritten Offering, (ii) such
Holder's completion and execution of all customary questionnaires and other
documents which must be executed in connection with such underwriting agreement,
and (iii) such Holder supplying the Company and the underwriter such additional
information as may be necessary to register such Holder's Registrable
Securities.
3. BLACKOUT AND HOLDBACK EVENTS
(a) During any period of up to 90 days' duration following the
occurrence of a Blackout Event (a "Blackout Period"), the Company shall not be
<PAGE>
required to file, or cause to be declared effective, under the Securities Act
any Registration Statement hereunder and, if applicable, the Holders will
discontinue the offer and sale of Registrable Securities pursuant to any
effective Shelf Registration Statement or a Piggyback Registration Statement.
(b) The Holders shall not, if requested by the managing underwriter or
underwriters of an Underwritten Offering, effect any public or private sale of
any Common Stock, including a sale pursuant to Rule 144, during the period
("Holdback Period") beginning 14 days prior to, and ending 90 days after, the
effective date of the registration statement relating to such Underwritten
Offering.
(c) The aggregate number of days during which one or more Blackout
Periods or Holdback Periods are in effect shall not exceed 225 days during the
Registration Period, provided that the aggregate number of days during which one
or more Blackout Periods or Holdback Periods are in effect shall not exceed 90
days during any 12-month period.
(d) The Company shall promptly notify the Holders in writing of any
decision not to file a Registration Statement or not to cause a Registration
Statement to be declared effective or to discontinue sales of Registrable
Securities pursuant to this Section 3, which notice shall set forth the reason
for such decision (but not disclosing any nonpublic material information) and
shall include an undertaking by the Company promptly to notify the Holders as
soon as sales may resume. If the Company shall give any notice of postponement
of the filing or effectiveness of any registration statement or shall request
the Holders not to sell Registrable Securities pursuant to an effective
Registration Statement, the Company shall not, during the period of postponement
or withdrawal, sell any Common Stock for its own account pursuant to a
Registration Statement or permit any stockholder of the Company to sell Common
Stock pursuant to an effective Registration Statement, in either case other than
pursuant to a registration statement on Form S-8 (or an equivalent registration
form then in effect).
4. REGISTRATION PROCEDURES
In connection with the filing of the Shelf Registration Statement or a
Piggyback Registration Statement by the Company, the Company shall effect such
registrations to permit the sale of the Registrable Securities covered thereby
in accordance with the intended method or methods of disposition thereof, and in
connection with such Registration Statement the Company shall:
(a) At least 3 business days before the filing of the Shelf
Registration Statement or Piggyback Registration Statement, and a reasonable
time before the filing of or any Prospectus or any amendments or supplements
thereto, the Company shall afford to the Purchaser an opportunity to review a
draft of the Shelf Registration Statement, Piggyback Registration Statement or
any Prospectus or any amendments or supplements thereto, as applicable, except
for such portions thereof which outside securities counsel to the Company has
advised the Company contain material non-public information. The Holders of
Registrable Securities included or intended to be included in a Registration
Statement shall have a reasonable opportunity to comment on the sections of any
such Registration Statement or related Prospectus captioned "Selling
Stockholders" or "Plan of Distribution" (or the equivalent) and the Company
shall not file any Registration Statement that includes in such sections
statements concerning any such Holder, its holdings of Registrable Securities,
or its intended method or methods of distribution as to which such Holder shall
reasonably object.
<PAGE>
(b) Notify the selling Holders of Registrable Securities promptly (but
in any event within five business days), and confirm such notice in writing: (i)
when a Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act, and (ii)
of the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose.
(c) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest practicable time.
(d) Furnish to each selling Holder of Registrable Securities and each
managing underwriter, if any, at the sole expense of the Company one conformed
copy of the Shelf Registration Statement or Piggyback Registration Statement, as
applicable, and each post-effective amendment thereto and, if requested, all
documents incorporated or deemed to be incorporated therein by reference and all
exhibits.
(e) Deliver to each selling Holder of Registrable Securities, and the
underwriters, if any, at the sole expense of the Company as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 4, the Company consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders of
Registrable Securities and the underwriters, agents or dealers, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(f) Prior to any public offering of Registrable Securities, to use its
reasonable best efforts to register or qualify, and to cooperate with the
selling Holders of Registrable Securities, the managing underwriter or
underwriters, if any, and respective counsel, in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities laws of such jurisdictions within the United States as any selling
Holder or the managing underwriter or underwriters reasonably request; keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
applicable Registration Statement; provided, however, that the Company shall not
be required to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 4(f), (B) subject itself
to general taxation in any such jurisdiction, (C) file a general consent to
service of process in any such jurisdiction, (D) provide any undertakings that
cause the Company unreasonable material expense or burden, or (E) make any
change in its charter or by-laws, which in each case the Board, in good faith,
determines to be contrary to the best interests of the Company and its
stockholders.
(g) Cooperate with the selling Holders of Registrable Securities and
the managing underwriter or underwriters, if any, to facilitate the timely
<PAGE>
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends and shall be
in a form in compliance with any applicable rules of a stock exchange on which
the Common Stock is then listed; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(h) Upon the occurrence of any event or any information becoming known
to the Company that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect, as promptly as practicable
prepare and (subject to Section 4(a) hereof) file with the SEC, at the sole
expense of the Company, a supplement or post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, any such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(i) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 90 days
after the end of any 12-month period (or 120 days after the end of any 12-month
period if such period is a fiscal year) commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(j) Cooperate with each seller of Registrable Securities covered by any
Registration Statement in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(k) Use its reasonable best efforts to cause all Registrable Securities
relating to any Registration Statement to be listed on each securities exchange
or national market system, if any, on which similar securities issued by the
Company are then listed.
(l) In connection with any Underwritten Offering, enter into an
underwriting agreement as is customary in underwritten offerings of common
equity similar to the Common Stock, and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or the disposition of such Registrable
Securities and, in such connection:
(i) make such representations and warranties to, and covenants
with, the underwriters with respect to the business of the Company and
its subsidiaries, as applicable (including any acquired business,
properties or entity, if applicable), and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily
made by issuers to underwriters in firm-commitment underwritten
offerings of common equity similar to the Common Stock, and confirm the
same in writing if and when requested;
<PAGE>
(ii) obtain the written opinions of counsel to the Company in
form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by the
managing underwriter or underwriters;
(iii) obtain "comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter
or underwriters from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary or of any business acquired by the
Company for which financial statements and financial data are, or are
required to be, included or incorporated by reference in the
Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested
by the managing underwriter or underwriters as permitted by the
Statement on Auditing Standards No. 72; and
(iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 6 hereof (or such other
provisions and procedures acceptable to Holders of a majority of the
Registrable Securities covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder.
(l) Make available for inspection by any underwriter participating in
any such disposition of Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Company and its
subsidiaries, as applicable, as shall be reasonably necessary to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act,
and cause the officers, directors and employees of the Company and its
Subsidiaries, as applicable, to supply all information reasonably requested by
any such inspector in connection with such Registration Statement.
(m) Enter into such customary agreements (including, if applicable, an
underwriting agreement) and take such other actions as the Holders of a majority
of the Registrable Securities participating in such offering shall reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities. The Holders of the Registrable Securities which are to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that the Company make to and for the benefit
of such Holders the representations, warranties and covenants of the Company
which are being made to and for the benefit of such underwriters and which are
of the type customarily provided to institutional investors in secondary
offerings.
(n) Use its reasonable best efforts to take all other steps reasonably
necessary or advisable to effect the registration of the Registrable Securities
covered by a Registration Statement.
<PAGE>
(o) Cause to be maintained a transfer agent and registrar for all
Registrable Securities covered by a Registration Statement.
(p) Deliver promptly to each Holder participating in the offering and
each underwriter, if any, copies of all correspondence between the SEC and the
Company, its counsel or auditors with the SEC or its staff with respect to a
Registration Statement, other than those portions of any such correspondence
which contain information subject to attorney-client privilege or a request for
confidential treatment with respect to the Company, and, upon receipt of such
confidentiality agreements as the Company may reasonably request, make
reasonably available for inspection by any underwriter, if any, participating in
any disposition to be effected pursuant to a Registration Statement and by any
attorney, accountant or other agent retained by any such underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by any such
underwriter, attorney, account or agent in connection with such registration
statement.
(q) Make reasonably available to its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into account
the needs of the Company's businesses and the requirements of the marketing
process) in the marketing of Registrable Securities in any unwritten offering.
(r) Promptly prior to the filing of any document which (i) is to be
incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement), and (ii) contains
disclosure specifically referring to the Holders provide copies of such document
to counsel for the selling Holders of Registrable Securities and to each
managing underwriter, if any, and make the Company's representatives reasonably
available for discussion of such information and make such changes in such
information concerning the selling Holders prior to the filing thereof as
counsel for such selling holders or underwriters may reasonably request.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request. The
Company may exclude from such registration the Registrable Securities of any
seller so long as such seller fails to furnish such information within a
reasonable time after receiving such request. Each seller as to which any
registration is being effected shall furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such seller not materially misleading.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon actual receipt of any notice from the Company
of the happening of any event of the kind described in Section 4(b)(ii) hereof
or any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect,
such Holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus to be sold by
such Holder until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(e) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the Company shall give any such notice, the
<PAGE>
Registration Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Securities covered by such Registration
Statement, as the case may be, shall have received (i) the copies of the
supplemented or amended Prospectus contemplated by Section 4(e) hereof, or (ii)
the Advice.
Each Holder of Registrable Securities understands that the Securities
Act may require delivery of a Prospectus in connection with any sale thereof
pursuant to a Registration Statement, and each such Holder shall comply with the
applicable Prospectus delivery requirements of the Securities Act in connection
with any such sale.
5. REGISTRATION EXPENSES
(a) All Registration Expenses shall be borne by the Company.
Notwithstanding the foregoing, the sellers of the Registrable Securities being
registered shall pay all (i) brokerage or underwriting fees, discounts and
commissions attributable to the sale of such Registrable Securities, (ii) the
fees and disbursements of any counsel or other advisors or experts retained by
such sellers (severally or jointly), and (iii) transfer taxes on resale of any
of the Registrable Securities by such sellers.
(b) For purposes of this Agreement, "Registration Expenses" shall mean
all fees and expenses incident to the compliance with this Agreement by the
Company (other than fees and expenses referred to in the second sentence of
Section 5(a) hereof), including, without limitation, (i) all registration and
filing fees, including, without limitation, (A) any SEC or NASD filing fees and
(B) fees and expenses of compliance with state securities or blue sky laws, (ii)
printing expenses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, as the case may be, duplicating and copying
expenses, (iii) messenger, telephone and delivery expenses incurred by the
Company, (iv) all fees and disbursements of counsel for the Company, (v) fees
and expenses of all other Persons retained by the Company, including annual or
special audit and "comfort" letters, (vi) stock exchange listing fees and
expenses, if any, and (vii) the expenses relating to printing and distributing
the Shelf Registration Statement, Piggyback Registration Statement and any other
documents necessary in order to comply with this Agreement.
6. INDEMNIFICATION AND CONTRIBUTION
(a) The Company shall indemnify and hold harmless each Holder of
Registrable Securities, the officers, partners (and directors, officers,
employees and stockholders thereof), employees, stockholders and directors of
each such Person (each, a "Participant"), from and against any and all losses,
claims, damages and liabilities, joint or several, actions or proceedings
(commenced or threatened) (collectively, "Losses") (including, without
limitation, the reasonable legal fees and other expenses (including settlements
made pursuant to the terms of Section 6(c)) actually incurred in connection with
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand (a "Claim")) caused by, arising out of or based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) or Prospectus
(as amended or supplemented from time to time) or any preliminary prospectus,
(ii) or caused by, arising out of or based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading, except insofar as such
<PAGE>
Losses are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information relating to any Participant furnished to the Company by such
Participant expressly for use therein, or (iii) any violation by the Company of
any federal, state or common law rule or regulation applicable to the Company
and relating to action required of or inaction by the Company in connection with
any such registration, and the Company will reimburse any such indemnified party
for any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending such Claim as such expenses are
incurred; provided, however, that the Company will not be liable if such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any preliminary prospectus and corrected in the Prospectus or any
amendment or supplement thereto and the Prospectus does not contain any other
untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and any such
Loss suffered or incurred by the Participants resulted from any Claim by any
Person who purchased Registrable Securities which are the subject thereof from
such Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Securities sold to such Person if required by applicable law,
unless such failure to deliver or provide a copy of the Prospectus (as amended
or supplemented) was a result of noncompliance by the Company with this
Agreement. Such indemnity and reimbursement of expenses shall remain in full
force and effect regardless of any investigation made by as on behalf of such
indemnified party and shall survive the transfer of such securities by such
Holder.
(b) Each Participant shall, severally and not jointly, indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, and each Person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each Participant, but only
with reference to information relating to such Participant furnished to the
Company, in writing by such Participant expressly for use in such Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the net proceeds received by such Participant from sales of
Registrable Securities giving rise to such obligations.
(c) If any Claim shall be brought or asserted against any Person in
respect of which indemnity may be sought pursuant to either of the two preceding
paragraphs, such Person (the "Indemnified Person") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Person") in
writing, and the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such Claim and
shall pay the reasonable fees and expenses actually incurred by such counsel
related to such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise. In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person or any affiliate and representation of both parties by the same counsel
<PAGE>
would be inappropriate due to actual or potential differing interests between
them. The Indemnifying Person shall not, in connection with any one such
proceeding or separate but substantially similar related proceedings in the same
jurisdiction arising out of the same general allegations, be liable for the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Indemnified Persons, and all such fees and expenses shall be reimbursed
promptly as they are incurred. If the Company shall be the Indemnifying Person,
any such separate firm for the Indemnified Persons shall be designated in
writing by Participants who sold a majority in interest of Registrable
Securities sold by all such Participants and reasonably acceptable to the
Company. If the Company shall be the Indemnified Person, any such separate firm
for the Company, its directors, its officers who sign a Registration Statement
and such control Persons of the Company shall be designated in writing by the
Company. No Indemnifying Person shall be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with such consent or if
there be a final judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
shall indemnify and hold harmless each Indemnified Person from and against any
loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Persons
(which consent shall not be unreasonably withheld or delayed), effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party, or indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
involves only the payment of money damages that are actually paid by the
Indemnifying Person or includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 6 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any Losses, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Person or Persons on the one hand
and the Indemnified Person or Persons on the other in connection with the
statements or omissions or alleged statements or omissions that resulted in such
Losses (or actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Person on the one hand or
such Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. If, however, the allocation provided in the second
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative fault,
but also the relative benefits of the indemnifying party and the indemnified
party as well as any other relevant equitable considerations.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
<PAGE>
paid or payable by an Indemnified Person as a result of the Losses referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Person in connection with investigating or
defending any such Claim. Notwithstanding the provisions of this Section 6, in
no event shall a Participant be required to contribute any amount in excess of
the amount by which net proceeds received by such Participant from sales of
Registrable Securities exceed the amount of any damages that such Participant
has otherwise been required to pay or has paid by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section shall be paid by the
Indemnifying Person to the Indemnified Person as such Losses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of any of Purchaser, any Holder, any person
who controls the Purchaser or any Holder, or any officers or directors of the
Purchaser or such Holder, and (ii) any termination of this Agreement.
(g) The indemnity and contribution covenants contained in this Section
6 are in addition to any liability which any Indemnifying Person may otherwise
have to any Indemnified Person.
7. RULE 144
The Company will file the reports required to be filed by it under the
Exchange Act in a timely manner in accordance with the requirements of the
Exchange Act. The Company will also take such further action as any Holder of
Registrable Securities issued by the Company may reasonably request, to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144(k).
8. MISCELLANEOUS
(a) The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of (i) the
Company, and (ii) the Holders of not less than a majority in aggregate amount of
the then-outstanding Registrable Securities; provided, however, that Section 4
and this Section 8(a) may not be amended, modified or supplemented without the
prior written consent of each Holder (including any person who was a Holder of
Registrable Securities disposed of pursuant to any Registration Statement)
affected by any such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority in aggregate amount of the Registrable Securities being sold by
such Holders pursuant to such Registration Statement.
<PAGE>
(b) Any notice herein required or permitted to be given shall be in
writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
If to the Company:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Winter Park, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Financial Officer
with a copy to:
The Lowenbaum Partnership, LLC
222 South Central Avenue
Suite 901
St. Louis, Missouri 63105
Telecopy: (314) 746-4848
Attention: Timothy L. Elliott, Esq.
and
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Telecopy: (312) 876-7934
Attention: Paul Miller, Esq.
If to the Purchaser:
TLC Laser Eye Centers Inc.
5600 Explorer Drive
Suite 301
Mississauga, Ontario L4W4Y2
Canada
Telecopy: (905) 602-7956
Attention: Elias Vamvakas
<PAGE>
with a copy to:
Arent, Fox, Kintner, Plotkin & Kahn, P.L.L.C.
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Telecopy: (202) 857-6395
Attention: Jeffrey E. Jordan, Esq.
(c) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto, and the Holders;
provided, however, that this Agreement shall not inure to the benefit of, or be
binding upon, a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Securities. If any Person shall acquire
Registrable Securities from any Holder, in any manner (except for any
acquisition in violation of this Agreement, the Securities Purchase Agreement or
applicable law) whether by operation of law or otherwise, such transferee shall
promptly notify the Company and such Registrable Securities acquired from such
Holder shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities such Person shall be entitled to
receive the benefits of and be conclusively deemed to have agreed to be bound by
and to perform all of the terms and provisions of this Agreement. If the Company
shall so request, any such successor or assign shall agree in writing to acquire
and hold the Registrable Securities acquired from such Holder subject to all of
the terms hereof.
(d) This Agreement may be executed in two or more counterparts,
including, without limitation, by facsimile transmission, all of which
counterparts shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
(e) The headings in this Agreement are for convenience of reference and
shall not form a part of, or affect the interpretation of, this Agreement.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed in such State. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and Delaware State courts
located in the County of New Castle in the State of Delaware, in any suit or
proceeding based on or arising under this Agreement and irrevocably agree that
all claims in respect of such suit or proceeding may be determined in such
courts. The parties hereto irrevocably waive the defense of an inconvenient
forum to the maintenance of such suit or proceeding. Service of process upon any
party hereto mailed by first-class mail shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding.
Nothing herein shall affect any party's right to serve process in any other
manner permitted by law. A final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(g) Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its affiliates (as such term is defined in
Rule 405 under the Securities Act) shall not be counted in determining whether
<PAGE>
such consent or approval was given by the Holders of such required percentage.
(h) Holders of Registrable Securities are intended third-party
beneficiaries of the agreements made hereunder among the Company and the
Purchaser and shall have the right to enforce this Agreement to the extent they
deem such enforcement necessary or advisable to protect their rights hereunder.
(i) This Agreement, together with the Securities Purchase Agreement and
the other agreements among the parties of even date herewith or therewith, is
intended by the parties as a final expression of their agreement and to be a
complete and exclusive statement of their agreement and understanding in respect
of the subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
among the parties with respect to such subject matter.
(j) During the time period beginning on the date hereof and continuing
until the Company has satisfied its obligations hereunder or until such
obligations have expired, the Company will not enter into any agreement related
to the registration of its securities which is inconsistent with the rights
granted to the Holders pursuant to this Agreement. The rights granted to the
Purchaser pursuant to this Agreement do not conflict with any other agreements
to which the Company is a party.
(k) If Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its option, be treated as
the Holder of such Registrable Securities for purposes of any request or other
action by any Holder or Holders of Registrable Securities pursuant to this
Agreement (or any determination of any number or percentage of shares
constituting Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement), provided that the Company shall have
received assurances reasonably satisfactory to it of such beneficial ownership.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
LASERSIGHT INCORPORATED TLC LASER EYE CENTERS INC.
By: /s/Gregory L. Wilson By: /s/Peter Kastelic
---------------------------- -----------------------------
Name: Gregory L. Wilson Name: Peter Kastelic
Title: Chief Financial Officer Title: Chief Financial Officer
SIGNATURE PAGE
TO REGISTRATION RIGHTS AGREEMENT
EXHIBIT 99.4
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
January 31, 2000, by and among LaserSight Incorporated, a Delaware corporation
(the "Company"), with its headquarters located at 3300 University Boulevard,
Suite 140, Winter Park, Florida 32792, and BayStar Capital, L.P. ("BSC") and
BayStar International, Ltd. ("BSI"), each with headquarters located at 1500 West
Market Street, Mequon, Wisconsin 53092 (BSC and BSI shall be referred to herein
collectively and individually as the "Purchaser"), with regard to the following:
RECITALS
A. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Section 4(2) of the Securities Act of 1933 (the "Securities
Act") and Regulation D ("Regulation D") of the Securities and Exchange
Commission (the "SEC") promulgated under the Securities Act.
B. The Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, a total of 253,968 shares (the "Placement Shares") of
the Company's common stock, $.001 par value per share ("Common Stock"). The
Placement Shares are referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
of even date herewith in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and applicable
state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals (which are
incorporated into and deemed a part of this Agreement), their respective
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF COMMON STOCK
1.1 Purchase of Common Stock. Subject to the terms and
-------------------------
conditions of this Agreement, on January 31, 2000 (the "Closing Date"), the
Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to
purchase from the Company (the "Closing"), an aggregate of 253,968 shares of
Common Stock at a price which shall be in the aggregate $2,500,000 (the
"Purchase Price"). The shares of Common Stock and the Purchase Price shall be
allocated between the Purchasers as follows:
<PAGE>
Shares of
Purchaser Common Stock Purchase Price
--------- ------------ --------------
BayStar Capital, L.P. 190,476 $1,875,000
BayStar International, Ltd. 63,492 625,000
------- ----------
TOTAL 253,968 $2,500,000
The Closing shall take place on the Closing Date at 10:00 A.M., Eastern
Time, at the offices of the Company, or at such other time and place as shall be
agreed upon by the parties.
At the Closing, the Company shall direct its transfer agent to deliver
to the Purchaser a certificate representing the Placement Shares. Delivery of
such certificate to the Purchaser shall be made against receipt at the Closing
by the Company from the Purchaser of the Purchase Price, which shall be paid by
wire transfer to an account designated at least one business day prior to the
Closing by the Company.
1.2 Form of Payment. Upon satisfaction of the conditions
-------------------
contained in Section 7.1, the Purchaser shall pay the Purchase Price by wire
transfer to the account designated by the Company.
1.3 Transfer of Securities. The Securities shall, when
-----------------------
issued, beunregistered and therefore subject to the restrictions on sale,
distribution and transfer imposed under the Securities Act and under applicable
securities laws or blue sky laws of any state or foreign jurisdiction.
1.4 Registration of the Securities. The Securities shall have
------------------------------
those registration rights as are setforth in the Registration Rights Agreement.
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company as set forth in
this Article 2. The Purchaser does not make any other representations or
warranties, express or implied, to the Company in connection with the
transactions contemplated hereby and any and all prior representations and
warranties, if any, which may have been made by the Purchaser to the Company in
connection with the transactions contemplated hereby shall be deemed to have
been merged in this Agreement and any such prior representations and warranties,
if any, shall not survive the execution and delivery of this Agreement.
2.1 Investment Purpose. The Purchaser is purchasing the
------------------
Securities for the Purchaser's own account for investment only and not with a
view toward or inconnection with the public sale or distribution thereof. The
Purchaser will not, directly or indirectly, offer, sell, pledge or otherwise
transfer the Securities or any interest therein except pursuant to transactions
that are exempt from the registration requirements of the Securities Act and/or
sales registered under the Securities Act. The Purchaser understands that it
must bear the economic risk of this investment indefinitely, unless the
Securities are registered pursuant to the Securities Act and any applicable
securities laws or blue sky laws of any state or foreign jurisdiction or an
exemption from such registration is available, and that the Company has no
intention or obligation to register any of the Securities other than as
contemplated by Section 1.4 hereof and the Registration Rights Agreement.
<PAGE>
2.2 Accredited Investor Status. The Purchaser represents and
---------------------------
warrants that it is an Accredited Investor (as that term is defined in Rule 501
promulgated by the SEC under the Securities Act), that it has such knowledge and
experience in business and financial matters as to be capable of evaluating the
merits and risks of the investment contemplated to be made hereunder, and that
it (i) was not formed or organized for the specific purpose of investing in the
Company; (ii) understands that such investment bears a high degree of risk and
could result in a total loss of its investment; and (iii) has sufficient
financial strength to hold the same as an investment and to bear the economic
risks of such investment (including possible loss of such investment) for an
indefinite period of time.
2.3 Reliance on Exemptions. The Purchaser acknowledges that
------------------------
the Securities being sold to it hereunder are being sold pursuant to a private
offering exemption under the Securities Act and are not being registered under
the Securities Act or under the securities laws or blue sky laws of any state or
foreign jurisdiction and understands that the Company is relying upon the truth
and accuracy of, and the Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Securities.
2.4 Information. The Purchaser has been furnished all
-----------
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which it has
specifically requested, including, without limitation, the Company's Annual
Report on Form 10-K and 10-K/A for the year ended December 31, 1998, its
Quarterly Report on Form 10-Q and 10-Q/A, as applicable, for the periods ended
March 31, 1999, June 30, 1999, September 30, 1999, its Current Reports on Form
8-K filed with the SEC on December 20, 1999; November 17, 1999; October 27,
1999; the description of the Common Stock contained in the Company's Form 8-A/A
(Amendment No. 4) filed with the SEC on June 25, 1998; the description of the
Company's Series E Preferred Stock contained in the Company's Form 8-A filed
with the SEC on July 7, 1998 and on Form 8-A/A (Amendment No. 1) filed with the
SEC on March 29, 1999; Proxy Statement dated May 26, 1999 (such documents,
including any financial statements and related notes included in such documents,
collectively the "Furnished SEC Documents"). In addition, the Purchaser has
received and considered certain non-public information disclosed pursuant to the
terms of the Confidentiality Agreement between Purchaser and the Company (the
"Confidential Disclosure"). Purchaser has directed the Company not to disclose
the Company's preliminary non-public financial results for the fourth quarter of
1999 and for the year ended December 31, 1999 and Purchaser represents to the
Company that it does not consider such information as material and therefore
will consummate the transactions contemplated by this Agreement without such
information being disclosed. The Purchaser and its advisors have been given the
opportunity to obtain information and to examine all documents referred to
herein and to ask questions of, and to receive answers from, the Company or any
person acting on its behalf concerning the Company and the terms and conditions
of this investment, and to obtain any additional information, to the extent the
Company possesses such information or could acquire it without unreasonable
effort or expense, to verify the accuracy of any information previously
furnished. All such questions have been answered to the Purchaser's full
satisfaction, and all information and agreements, documents, records and books
pertaining to this
<PAGE>
investment which the Purchaser has requested have been made available to the
Purchaser or its advisors. The Purchaser understands that its investment in the
Securities involves a high degree of risk. In making its investment decision,
the Purchaser has not relied on any oral or written representation, other than
those contained in the Furnished SEC Documents, the Confidential Disclosure,
this Agreement (including the schedules hereto) and the Registration Rights
Agreement, with respect to the Securities, the Company, its business or
prospects, or other matters. In making its decision to invest in the Company,
the Purchaser has relied solely upon independent investigations made by the
Purchaser and its advisors.
2.5 Governmental Review. The Purchaser understands that no United
-------------------
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
2.6 Transfer or Resale. The Purchaser understands that (i)
--------------------
the Securities have not been and (except as contemplated by the Registration
Rights Agreement) are not being registered under the Securities Act or under the
securities laws or blue sky laws of any state or foreign jurisdiction, and may
not be offered, sold, pledged or otherwise transferred unless subsequently
registered thereunder or an exemption from such registration is available, and
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or under the securities laws or blue sky
laws of any state or foreign jurisdiction or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to
this Agreement or the Registration Rights Agreement), and (ii) any sale of the
Securities made in reliance on Rule 144 under the Securities Act, or a successor
rule ("Rule 144"), may be made only in accordance with the terms of Rule 144 and
Article 5 hereof and further, if Rule 144 is not applicable, any resale of the
Securities without registration under the Securities Act under circumstances in
which the seller may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder.
2.7 Authorization. The Purchaser represents and warrants that as
-------------
of the Closing Date the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by it. The fulfillment of and compliance with the terms of this
Agreement will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, or (iii) result in
a violation of, breach of or default under (A) its charter or constituent
document, (B) any law, statute, rule or regulation to which it is subject, or
(C) any agreement, instrument, order, judgment or decree to which it is subject
or is a party or by which it is bound.
2.8 Binding Effect. The Purchaser represents and warrants that
---------------
this Agreement constitutes its valid and binding obligation, enforceable in
accordance with its terms, except (i) as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights generally or by
equitable principles in any action (legal or equitable), (ii) that the
availability of equitable relief is subject to the discretion of the court
before which any proceeding thereof may be brought, and (iii) that the
enforceability of the indemnification provisions may be limited by applicable
securities laws or public policy.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser, except as
disclosed (including, in the case of financial statements, provided for) in the
disclosure schedules delivered herewith, as set forth in this Article 3. The
Company does not make any other representations or warranties, express or
implied, to the Purchaser in connection with the transactions contemplated
hereby and any and all prior representations and warranties, if any, which may
have been made by the Company to the Purchaser in connection with the
transactions contemplated hereby shall be deemed to have been merged in this
Agreement and any such prior representations and warranties, if any, shall not
survive the execution and delivery of this Agreement.
3.1 Organization and Qualification. Each of the Company and
-------------------------------------
its subsidiaries is a corporation duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated, and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted or are presently expected to be conducted during the
Company's current fiscal year. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction where the failure so to qualify or be in good standing would
have a Material Adverse Effect. For purposes of this Agreement, "Material
Adverse Effect" means any material adverse effect on the business, operations,
assets, properties, liabilities, condition (financial or otherwise), the Common
Stock price or operating results of the Company and its subsidiaries, taken as a
whole on a consolidated basis, or on the transactions contemplated hereby.
3.2 Authorization; Enforcement.
--------------------------
(a) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, and to issue, sell and
perform its obligations with respect to the Securities in accordance with the
terms hereof and thereof;
(b) the execution, delivery and performance of this Agreement,
the Warrants and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action and, except as set forth on
Schedule 3.2 hereof, no further consent or authorization of the Company, its
board of directors, or its stockholders or any other person, body or agency is
required with respect to any of the transactions contemplated hereby (whether
under rules of The NASDAQ Stock Market (the "NASDAQ"), the National Association
of Securities Dealers, Inc. or otherwise);
(c) this Agreement, the Registration Rights Agreement, and the
certificates for the Securities have been duly executed and delivered by the
Company; and
(d) this Agreement and the Registration Rights Agreement
constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except (i) to the
extent that such validity or enforceability may be subject to or affected by any
<PAGE>
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement thereof, creditors' rights
or remedies of creditors generally, or by other equitable principles of general
application, (ii) that the availability of equitable relief is subject to the
discretion of the court before which any proceeding thereof may be brought, and
(iii) that the enforceability of indemnification provisions may be limited by
applicable securities laws or public policy.
3.3 Capitalization. The capitalization of the Company as of the
--------------
date hereof, including the authorized capital stock, the number of shares issued
and outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of Common Stock is set forth on Schedule 3.3. All of such shares of
capital stock have been, or upon issuance in accordance with the terms of the
relevant security will be, validly issued, fully paid and nonassessable. Except
as disclosed in Schedule 3.3, no shares of capital stock of the Company
(including the Securities) are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances imposed
or suffered by the Company. Except as disclosed in Schedule 3.3, as of the date
of this Agreement, there are no outstanding options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries. The Company shall provide the
Purchaser with a written update of this representation signed by the Company's
Chief Executive Officer or Chief Financial Officer on behalf of the Company as
of the Closing Date. Except as set forth in Schedule 3.3, since December 31,
1999, the Company has not declared or paid any dividend or made any other
distribution of cash, stock or other property with respect to the Common Stock.
Except as set forth in Schedule 3.3 or as contemplated by this Agreement or the
Registration Rights Agreement or except for the right to vote its shares of
Common Stock for the election of directors, no person has the right to nominate
or elect one or more directors of the Company.
3.4 Issuance of Shares. As of the Closing the Securities will be
------------------
duly authorized, validly issued, fully paid and non-assessable with no personal
liability attaching to the owners thereof, and free from all taxes, liens,
claims and encumbrances imposed or suffered by the Company and except as
disclosed in Schedule 3.3, will not be subject to preemptive rights or other
similar rights of stockholders of the Company.
3.5 No Conflicts. The execution, delivery and performance of
-------------
this Agreement and the Registration Rights Agreement by the Company, and the
consummation by the Company of transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance, as
applicable, of the Securities) will not (i) result in a violation of the
Company's Certificate of Incorporation or By-laws, or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in any loss of benefit under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any Material Contract (as defined herein) to which the Company or any of its
<PAGE>
subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries, or
by which any property or asset of the Company or any of its subsidiaries, is
bound or affected, or (iv) result in the creation or imposition of an
Encumbrance (as defined herein) upon the Company's properties or assets (except
with respect to items (ii), (iii) and (iv) of this Section 3.5 such possible
conflicts, defaults, terminations, amendments, accelerations, cancellations,
violations and Encumbrances as would not individually or in the aggregate, have
a Material Adverse Effect). Neither the Company nor any of its subsidiaries is
in violation of its Certificate of Incorporation or other organizational
documents, and neither the Company nor any of its subsidiaries, is in default
(and no event has occurred which has not been waived which, with notice or lapse
of time or both, would put the Company or any of its subsidiaries in default)
under, nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, except for possible violations, defaults or rights as
would not individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations the sanctions for which either singly or in the
aggregate would not have a Material Adverse Effect. Except as set forth on
Schedule 3.5, or except (i) as may be required under the Securities Act in
connection with the performance of the Company's obligations pursuant to the
Registration Rights Agreement, (ii) filing of a Form D with the SEC, and (iii)
compliance with the state securities laws or blue sky laws of applicable
jurisdictions, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to perform its
obligations in accordance with the terms hereof. The Common Stock is listed on
the NASDAQ, the Company is not in violation of the listing requirements of the
NASDAQ and the Company is not aware of any fact (including any proceedings
pending or, to the best of the Company's knowledge, contemplated) that could
result in the Common Stock being delisted from the NASDAQ. The Company is not
aware of any fact that could result in a refusal by the NASDAQ to approve the
Securities for listing.
3.6 SEC Documents. Except as disclosed in Schedule 3.6, since
-------------
December 31, 1997, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934 (the
"Exchange Act") (all of the foregoing filed after December 31, 1995 and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being referred to herein as the
"SEC Documents"). The Company has delivered to the Purchaser true and complete
copies of the Furnished SEC Documents, except for exhibits, schedules and
incorporated documents. Each of the SEC Documents as originally filed or as
amended complied in all material respects with the requirements of its
respective report or form and did not on the date of filing contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and as of the date
hereof, there is no fact or facts not disclosed in the SEC Documents or
disclosed in writing to the Purchaser which relate specifically to the Company
<PAGE>
which individually or in the aggregate, may have a Material Adverse Effect. The
consolidated financial statements of the Company (including any related
schedules or notes thereto) included in the SEC Documents were prepared in
accordance with generally accepted accounting principles, consistently applied,
and the applicable rules and regulations of the SEC during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they do not include footnotes or are condensed or summary statements) and
present accurately and completely, in all material respects, the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal, year-end audit adjustments). To the extent required by the rules of the
SEC applicable thereto, the SEC Documents contain a complete and accurate list
of all material undischarged written or oral contracts, agreements, leases or
other instruments to which the Company or any subsidiary is a party or by which
the Company or any subsidiary is bound or to which any of the properties or
assets of the Company or any subsidiary is subject (each a "Material Contract").
Except as set forth in Schedule 3.6, none of the Company, its subsidiaries or,
to the best knowledge of the Company, any of the other parties thereto, is in
breach or violation of any Material Contract, which breach or violation would
ave a Material Adverse Effect. To the best knowledge of the Company, no event,
occurrence or condition exists which, with the lapse of time, the giving of
notice, or both, would become a default by the Company or its subsidiaries
thereunder which would have a Material Adverse Effect. Except as set forth in
Schedule 3.6 or disclosed in writing to the Purchaser, there are no liabilities
or obligations (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due and regardless of when asserted), except
(i) liabilities and obligations in the respective amounts reserved for in the
Company's balance sheet or the footnotes thereto as of September 30, 1999
included in the Furnished SEC Documents, (ii) liabilities and obligations
incurred after December 31, 1999 in the ordinary course of business consistent
(in amount and kind) with past practice (none of which is a liability resulting
from breach of contract, breach of warranty, tort, infringement, claim or
lawsuit), (iii) liabilities and obligations disclosed in the Furnished SEC
Documents, and (iv) liabilities and obligations which would not individually or
in the aggregate, have a Material Adverse Effect. Since December 31, 1999, the
Company has operated its business only in the ordinary course and there has not
been individually or in the aggregate, any change that would have a Material
dverse Effect (a "Material Adverse Change") other than changes disclosed in the
SEC Documents or otherwise set forth in Schedule 3.6.
3.7 Absence of Certain Changes. Except as disclosed in Schedule
--------------------------
3.7 or in the Confidential Disclosure, since December 31, 1999, the business of
the Company and its subsidiaries has been conducted in the ordinary course,
consistent with past practice and there has not been (a) any Material Adverse
Change, nor has any event or change occurred which could reasonably result in a
Material Adverse Change, in the condition (financial or otherwise), results of
operations, business, assets, liabilities or prospects of the Company or its
subsidiaries or any event or condition which could reasonably be expected to
have such a Material Adverse Change, (b) any waiver or cancellation of any
valuable right of the Company or its subsidiaries, or the cancellation of any
material debt or claim held by the Company or its subsidiaries, (c) any payment,
discharge or satisfaction of any claim, liability or obligation of the Company
<PAGE>
or its subsidiaries other than in the ordinary course of business except where
such payment, discharge or satisfaction would not, individually or in the
aggregate, have a Material Adverse Effect, (d) the placement of any Encumbrance
upon the assets of the Company or its subsidiaries other than any Permitted
Encumbrance (as defined herein), (e) any declaration or payment of dividends on,
or other distribution with respect to, or any direct or indirect redemption or
acquisition of, any securities of the Company, (f) any issuance of any stock,
bonds or other securities of the Company or its subsidiaries which is not
disclosed in Schedule 3.3 or the Furnished SEC Documents, (g) any sale,
assignment or transfer of any tangible or intangible assets of the Company or
its subsidiaries except in the ordinary course of business, (h) any loan by the
Company or its subsidiaries to any officer, director, employee, consultant or
shareholder of the Company or its subsidiaries (other than advances to such
persons in the ordinary course of business in connection with travel and travel
related expenses), (i) any damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the assets, property, condition
(financial or otherwise), results of operations or prospects of the Company or
its subsidiaries, (j) any increase, direct or indirect, in the compensation paid
or payable to any officer or director of the Company or its subsidiaries, other
than in the ordinary course of business, to any other employee, consultant or
agent of the Company or its subsidiaries, (k) any change in the accounting
methods, practices or policies of the Company or its subsidiaries, (l) any
indebtedness incurred for borrowed money by the Company or its subsidiaries
other than in the ordinary course of business, (m) any amendment to or
termination of any material agreement to which the Company or its subsidiaries
is a party other than the expiration of any such agreement in accordance with
its terms or as disclosed in the Furnished SEC Documents, (n) to the Company's
knowledge, any change in the laws or regulations governing the Company or its
subsidiaries, (o) any Material Adverse Change in the manner of business or
operations of the Company or its subsidiaries (including, without limitation,
material accelerations or material deferrals of the payment of accounts payable
or other current liabilities or material deferrals of the collection of accounts
or notes receivable), (p) any capital expenditures or commitments therefor by
the Company or its subsidiaries other than in the ordinary course of business,
(q) any amendment of the certificate of incorporation, bylaws or other
organizational documents of the Company or its subsidiaries which is not
disclosed in the Furnished SEC Documents, (r) any material transaction entered
into by the Company or its subsidiaries other than in the ordinary course of
business or any other material transactions entered into by the Company or its
subsidiaries whether or not in the ordinary course of business which is not
disclosed in the Furnished SEC Documents, or (s) any agreement or commitment
(contingent or otherwise) by the Company or its subsidiaries to do any of the
foregoing. For purposes of this Agreement, "Permitted Encumbrance" shall mean
(i) Encumbrances for unpaid taxes that either (A) are not yet due and payable,
or (B) for which a reserve with respect to such obligation is established on the
books of the Company, (ii) the interests of lessors under operating leases and
purchase money liens of lessors under capital leases, (iii) Encumbrances arising
by operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or other similar encumbrances in the ordinary course of
business of the Company, (iv) Encumbrances arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(v) with respect to any real property, easements, rights of way, zoning and
similar covenants and restrictions, and similar Encumbrances and that do not
individually or in the aggregate materially impair the property of the Company,
(vi) Encumbrances resulting from any judgment or award that would not result in
a Material Adverse Change, and (vii) other Encumbrances which arise in the
<PAGE>
ordinary course of business and which individually and in the aggregate do not
materially impair the Company's use of such property or its ability to obtain
financing by using such asset as collateral.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8 or
---------------------
as disclosed in the Furnished SEC Documents, there is no civil, criminal or
administrative action, suit, proceeding, inquiry, claim, notice, hearing or
investigation at law or in equity (a "Litigation") before or by any court,
arbitrator or similar panel, public board, government agency, or self-regulatory
organization or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company, any of its
subsidiaries, or any of their respective assets (including Intangibles (as
defined herein)) or directors or officers in their capacities as such. There are
no facts known to the Company which, if known by a potential claimant or
governmental authority, could give rise to a claim or proceeding which, if
asserted or conducted with results unfavorable to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect.
Except as set forth in Schedule 3.8, neither the Company nor its subsidiaries is
subject to any order, writ, injunction or decree of any court of any federal,
state, municipal or other domestic or foreign governmental department,
commission, board, bureau, agency or instrumentality which could have a Material
Adverse Effect.
3.9 Disclosure. Neither this Agreement, the SEC Documents nor
----------
any certificate, instrument or written statement furnished or made to the
Purchaser by or on behalf of the Company in connection with this Agreement or
the Registration Rights Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading as of the date such statements were
made. There is no fact which is not disclosed in the Furnished SEC Documents or
fact which the Company has not disclosed to the Purchaser or its counsel and of
which the Company is aware which materially and adversely affects, or which
could materially and adversely affect, the Company or its subsidiaries or the
business, financial condition, operations, property, affairs or prospects of the
Company or its subsidiaries or the ability of the Company or its subsidiaries to
perform its obligations under the Agreement or any of the Registration Rights
Agreement.
3.10 S-3 Registration. The Company is currently eligible to
-----------------
register the resale of the Securities by the Purchaser pursuant to a
registration statement on Form S-3 under the Securities Act.
3.11 No General Solicitation. Neither the Company nor any person
-----------------------
acting for the Company has conducted any "general solicitation," as described
in Rule 502(c) under Regulation D, with respect to any of the Securities being
offered hereby.
3.12 No Integrated Offering. Neither the Company, nor any of
-----------------------
its Affiliates (as defined herein), nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would prevent
the parties hereto from consummating the transactions contemplated hereby
pursuant to an exemption from registration under the Securities Act pursuant to
the provisions of Regulation D. The transactions contemplated hereby are exempt
from the registration requirements of the Securities Act, assuming the accuracy
of the representations and warranties herein contained of the Purchaser. For
<PAGE>
purposes hereof, "Affiliate" shall mean any entity controlling, controlled by or
under common control with a designated person or entity; for the purposes of
this definition, "control" shall have the meaning presently specified for that
word in Rule 405 promulgated by the SEC under the Securities Act. With respect
to any entity which is a limited partnership, Affiliate shall also mean any
general or limited partner of such limited partnership, or any person or entity
which is a general partner in a general or limited partnership which is a
general partner of such limited partnership.
3.13 No Brokers. The Company has taken no action that would give
----------
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Purchaser relating to this Agreement or the transactions
contemplated hereby.
3.14 Intellectual Property. Each of the Company and its
----------------------
subsidiariesowns or possesses adequate and enforceable rights to use all
material patents, patent applications, trademarks, trademark applications, trade
names, service marks, copyrights, copyright applications, licenses, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other similar rights and
proprietary knowledge (collectively, "Intangibles") used or necessary for the
conduct of its business as now being conducted and as described in the Company's
Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 1998.
Except as set forth on Exhibit 3.14, to the Company's knowledge, neither the
Company nor any subsidiary of the Company infringes on or is in conflict with
any right of any other person with respect to any Intangibles nor is there any
claim of infringement made by a third party against or involving the Company or
any of its subsidiaries, which infringement, conflict or claim, individually or
in the aggregate, could reasonably be expected to result in an unfavorable
decision, ruling or finding which would have a Material Adverse Effect.
3.15 Employee Benefit Plans.
----------------------
(a) Identification. Schedule 3.15(a) contains a complete and
--------------
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
sponsored by the Company or to which the Company contributes on behalf of its
employees (the "Employee Benefit Plans") and each employment, severance or
change in control agreement to which the Company is a party. The Company has
provided or made available to the Purchaser copies of all plan documents,
determination letters, pending determination letter applications, VCR Submission
(as defined below), trust instruments, insurance contracts, administrative
services contracts, annual reports, actuarial valuations, summary plan
descriptions, summaries of material modifications, administrative forms and
other documents that constitute a part of or are incident to the administration
of the Employee Benefit Plans. In addition, the Company has provided or made
available to the Purchaser a written description of all existing practices
engaged in by the Company that constitute Employee Benefit Plans. Except as set
forth on Schedule 3.15(a) and subject to the requirements of the Internal
Revenue Code of 1986, as amended (the "Code") and ERISA, each of the Employee
Benefit Plans can be terminated or amended (without material cost to the
Company) at will by the Company. Except as set forth on Schedule 3.15(a), no
<PAGE>
unwritten amendment exists with respect to any Employee Benefit Plan. The
Company has no plan or commitment, whether legally binding or not, to establish
any new Employee Benefit Plan, to enter into any employment severance or change
in control agreement or to modify or to terminate any Employee Benefit Plan or
agreement.
(b) Administration. Each Employee Benefit Plan has been
---------------
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. To the
best of the knowledge of the Company, the Company has (i) made all necessary
filings with respect to such Employee Benefit Plans, including the timely filing
of Form 5500 if applicable, and (ii) made all necessary filings, reports and
disclosures pursuant to and have complied with all requirements of the Internal
Revenue Service ("IRS") Voluntary Compliance Resolution Program ("VCR
Submission"), if applicable, with respect to all profit sharing retirement plans
and pension plans in which employees of the Company participate.
(c) Examinations. Except as set forth on Schedule 3.15(c), the
------------
Company has not received any notice that any Employee Benefit Plan is currently
the subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency.
(d) Prohibited Transactions. To the best of the knowledge of
------------------------
the Company, no prohibited transactions (within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA) have occurred with respect to any
Employee Benefit Plans.
(e) Claims and Litigation. No pending or, to the actual
-----------------------
knowledge of the Company, threatened claims, suits, or other proceedings exist
with respect to any Employee Benefit Plan other than normal benefit claims filed
by participants or beneficiaries.
(f) Qualification. As set forth in more detail on Schedule
3.15(f), the Company has applied for a favorable determination letter or ruling
from the IRS for each of the Employee Benefit Plans intended to be qualified
within the meaning of Section 401(a) of the Code and/or tax-exempt within the
meaning of Section 501(a) of the Code. Except as set forth on Schedule 3.15(f),
no proceedings exist or, to the actual knowledge of the Company has been
threatened that could result in the revocation of any such favorable
determination letter or ruling.
(g) Funding Status. Neither the Company nor any member of a
---------------
"Controlled Group" (within the meaning of Section 412(n)(6)(B) of the Code) with
the Company sponsors any plans which (i) are subject to the minimum funding
requirements of Code Section 412 or ERISA Section 302, or (ii) are subject to
Title IV of ERISA assumptions.
(h) Excise Taxes. To the best of the knowledge of the Company,
------------
neither the Company nor any member of a Controlled Group has any liability to
pay excise taxes with respect to any Employee Benefit Plan under applicable
provisions of the Code or ERISA.
<PAGE>
(i) Multi-Employer Plans. Neither the Company nor any member
---------------------
of a Controlled Group is or ever has been obligated to contribute to a
multi-employer plan within the meaning of Section 3(37) of ERISA and neither the
Company nor the Controlled Group has ever contributed to any plan subject to
Title IV of ERISA.
(j) Pension Benefit Guaranty Corporation. None of the
------------------------------------
Employee Benefit Plans are subject to the requirements of Title IV of ERISA.
(k) Retirees. The Company has no obligation or commitment to
--------
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and Sections 601 through 608 of ERISA.
(l) Change in Control. The execution of, and performance of
-----------------
the transactions contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute an event under
an Employee Benefit Plan or employment, severance or change in control agreement
that will or may result in any, payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee of the
Company. No payment or benefit which will or may be made by the Company, any of
its subsidiaries, the Purchaser or any of its affiliates by reason of such
execution or performance may be characterized as an "excess parachute payment,"
within the meaning of Section 28OG(b)(1) of the Code or which will not be
deductible for federal tax purposes by virtue of Section 162(m) of the Code.
(m) Insurance. With respect to each Employee Benefit Plan
---------
which is an employee welfare benefit plan (within the meaning of Section 3(l) of
ERISA), all claims incurred by the Company are (i) insured pursuant to a
contract of insurance whereby the insurance company bears any risk of loss with
respect to such claims, or (ii) covered under a contract with a health
maintenance organization which bears the liability for claims.
(n) Labor Disputes. No work stoppage or labor strike against
---------------
the Company is pending or threatened. The Company is not now, nor has been in
the past (i) involved in or threatened with any labor dispute, grievance, or
litigation relating to labor matters, including, without limitation, violation
of any federal, state or local labor, safety or employment laws (domestic or
foreign), charges of unfair labor practices or discrimination complaints which
could have a Material Adverse Effect; (ii) engaged in any unfair labor practices
within the meaning of the National Labor Relations Act or the Railway Labor Act,
or (iii) a party to, or bound by, any collective bargaining agreement or union
contract and no such agreement or contract is currently being negotiated by the
Company or any of its affiliates. No employees of the Company are currently
represented by any labor union for purposes of collective bargaining and no
activities the purpose of which is to achieve such representation are threatened
or ongoing. The Company (i) is in compliance with all applicable federal, state
and local laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of employment and
wages and hours, except for such possible non-compliance as would not,
<PAGE>
individually or in the aggregate, have a Material Adverse Effect; (ii) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments; (iii) is not liable for any arrears of wages
or any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits.
3.16 Equity Investments; Subsidiaries. Set forth on Schedule
----------------------------------
3.16 is a list of all of the Company's subsidiaries. Except as set forth on
Schedule 3.16, the Company does not own, whether directly or indirectly, any
capital stock or other proprietary interest directly or indirectly, in any
corporation, association, trust, partnership, joint venture or other entity
which is currently involved in the Company's ordinary course of business.
3.17 Title to Assets and Properties; Insurance.
-----------------------------------------
(a) The Company has good and marketable title, or a valid
leasehold interest in or contractual right to use, all of its assets and
properties, free and clear of any mortgages, judgments, claims liens, security
interests, pledges, escrows, charges or other encumbrances of any kind or
character whatsoever ("Encumbrances") except in each case for Permitted
Encumbrances and such defects in title and such other liens and Encumbrances
which do not individually or in the aggregate materially detract from the value
to the Company of the properties and assets of the Company and its subsidiaries
taken as a whole.
(b) The Company and its subsidiaries maintain insurance
(including D&O insurance) in such amounts (to the extent available in the public
market), including self-insurance, retainage and deductible arrangements, and of
such a character as is reasonable for companies engaged in the same or similar
business.
3.18 Compliance with Laws; Permits. Except as provided in
--------------------------------
Schedule 3.18, the Company and its subsidiaries are in compliance, and have been
conducted in compliance with, all federal, state, local and foreign laws, rules,
ordinances, codes, consents, authorizations, registrations, regulations,
decrees, directives, judgments and orders applicable to it except where the
failure to comply would not individually or in the aggregate have a Material
Adverse Effect. The Company has all federal, state, local and foreign
governmental licenses, permits, qualifications and authorizations ("Permits")
necessary in the conduct of its business as currently conducted. All such
Permits are in full force and effect and no violations have been recorded in
respect of any such Permit; no proceeding is pending or, to the best knowledge
of the Company, threatened to revoke or limit any such Permit and no such Permit
will be suspended, cancelled or adversely modified as a result of the execution
and delivery of this Agreement or the Registration Rights Agreement and the
consummation of the transactions contemplated hereby or thereby, except where
failure to have such Permit would not individually or in the aggregate have a
Material Adverse Effect.
<PAGE>
3.19 Taxes.
-----
(a) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith) (including,
without limitation, federal, state, city, county, local, foreign, or other
income, franchise, ad valorem, value added, excise, real or personal property,
asset, franchise taxes withheld, capital, withholding, real or tangible
property, employment, unemployment compensation, transfer, sales, use, excise
and all other taxes of any kind whatsoever imposed by the United States or any
state, city, county, country or foreign government or subdivision or agency
thereof, whether disputed or not, and (ii) "Transaction" means one or more
transactions, acts, events, or omissions of whatever nature.
(b) The Company has filed on a timely basis all returns and
reports, including all estimated returns and reports of every kind and have
timely given all notices, in respect of Taxes required to be filed or given
under applicable law within the applicable statute of limitations period by any
of them, or except where proper action has been taken by the Company to extend
the relevant filing deadline. Such returns, reports and notices are complete and
accurate in all material respects. All Taxes shown on such returns or reports
have been, and all Taxes subsequently assessed with respect to the periods
and/or Transactions to which such returns or reports relate have been or will
be, timely, and fully paid, except for amounts which the Company is contesting
in good faith. The provisions in the financial statements (and the notes and
schedules related thereto) contained in the Furnished SEC Documents for Taxes
currently payable and for deferred Taxes are adequate in all material respects
to provide for such Taxes for which the Company and its Subsidiaries taken as a
whole may be liable in respect of periods or Transactions through the dates
thereof.
(c) No fact or condition relating to any past or present
Transaction, except as set forth in the Company's disclosure schedules delivered
herewith, which, if known to any tax authority having jurisdiction, would likely
result in a successful challenge by such authority of the treatment or omission
of such factor or condition on any tax return, report or notice of the Company
or its subsidiaries, and no issue has arisen in any examination of the Company
by the IRS that, in either case, if raised with respect to any other period not
so examined would result in a proposed material deficiency for any other period
not so examined, if upheld. The Company and its subsidiaries have made all
payments or estimated Taxes required to be made under Section 6655 of the Code
and any comparable provisions of state, local or foreign law. Except as set
forth on Schedule 3.19, there is no pending nor, to the Company's knowledge,
threatened or contemplated action, audit, proceeding or investigation for the
assessment or collection of Taxes from the Company. There are no requests for
rulings, outstanding subpoenas or requests for information with respect to Taxes
of the Company, proposed reassessments of any property owned or leased by the
Company, or similar matters pending with respect to any taxing authority.
3.20 Environmental Matters. Except as listed in Schedule 3.20:
---------------------
(a) There are, with respect to the Company and its
subsidiaries, or any predecessor of the foregoing, no present violations of
Environmental Law (as defined herein), any actions, activities, circumstances,
<PAGE>
conditions, events, incidents, or contractual obligations which may give rise to
any liability of the Company pursuant to any Environmental Law and neither the
Company nor its subsidiaries has received any notice with respect to any of the
foregoing nor is any Litigation pending or threatened in connection with any of
the foregoing.
(b) To the knowledge of the Company and except in the normal
course of the Company's or its subsidiaries' business, (i) no Hazardous
Materials (as defined herein) are present on or about any real property
currently owned, leased or used by the Company or its subsidiaries, and (ii) no
Hazardous Materials were present on or about any real property previously owned,
leased or used by the Company or its subsidiaries during the period the property
was owned, leased or used by the Company or its subsidiaries.
(c) To the knowledge of the Company, no Hazardous Materials
have been released on or about, or where they may pose a threat of migration to,
any real property currently owned, leased or used by the Company or its
subsidiaries and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or its subsidiaries
during the period the property was owned, leased or used by the Company or its
subsidiaries, except as may be required in the normal course of business and in
material compliance with applicable Environmental Law.
(d) To the knowledge of the Company, no asbestos-containing
materials or PCBs are present on or about any property currently owned, leased
or used by the Company or its subsidiaries.
(e) To the knowledge of the Company, there are not now, nor
have there ever been, any underground storage tanks or similar facilities of any
kind on or under any real property currently or previously owned, leased or used
by the Company or its subsidiaries.
(f) For purposes of this Section 3.20, capitalized terms used
herein shall have the following meanings:
"Environmental Laws" shall mean, at any date, all provisions
--------------------
of federal, state, local or foreign law (including applicable principles of
common and civil law), statutes, ordinances, rules, regulations, published
standards and directives that have the force and effect of laws, statutes,
regulations, permits, licenses, judgments, writs, injunctions, decrees and
orders enacted, promulgated or issued by any Public Authority, and all indemnity
agreements and other contractual obligations, as in effect at such date,
relating to (i) the protection of the environment, including the air, surface
and subsurface soils, surface waters, groundwaters and natural resources, and
(ii) occupational health and safety and exposure of persons to Hazardous
Materials. Environmental Laws shall include the Comprehensive Environmental
Response, Compensation and Liability Act 42 U.S.C. ss.ss.9601 et seq., and any
other laws imposing or creating liability with respect to Hazardous Materials.
"Environmental Liability" shall mean any liabilities,
--------------------------
obligations, costs, losses, payments or damages, including compensatory and
punitive damages, incurred (i) to contain, remove, clean up, assess, abate or
<PAGE>
otherwise remedy any actual or alleged release or threatened release of
Hazardous Materials, any actual or alleged contamination (by Hazardous
Materials) of air, surface or subsurface soil, groundwater or surface water, or
any personal injury or damage to natural resources or property resulting from
any such release or contamination, pursuant to the requirements of any
Environmental Law or in response to any claim by any Public Authority or other
third party under any Environmental Law; (ii) to modify facilities or processes
or take any other remedial action in response to any claim by any Public
Authority of non-compliance with any Environmental Law, (iii) as a result of the
imposition of any civil or criminal fine or penalty by any Public Authority for
the violation or alleged violation of any Environmental Law, or (iv) as a result
of any action, suit, proceeding or claim by any third party under any
Environmental Law. The term "Environmental Liability" shall include: (i)
reasonable fees of counsel and consultants (but not any corporate allocation for
management time or for the use of similar in-house services or facilities), and
(ii) the costs and expenses of any investigation undertaken to ascertain the
existence or extent of any potential or actual Environmental Liability.
"Hazardous Material" shall mean any substance regulated by any
------------------
Environmental Law or which may now or in the future form the basis for any
Environmental Liability.
"Public Authority" shall mean any supranational, national,
-----------------
regional, state or local government court, governmental agency, authority,
board, bureau, instrumentality or regulatory body.
3.21 Suppliers and Customers. Except as set forth on Schedule 3.21,
-----------------------
the Company does not have any knowledge of any termination, cancellation
or threatened termination or cancellation or limitation of, or any material
modification or change in, or expressed material dissatisfaction with the
business relationship between the Company or its subsidiaries and any supplier
or vendor of the Company or its subsidiaries, in each case, of materials or
services in an amount in excess of $50,000 per year.
3.22 Holding Company Act and Investment Company Act. Neither
---------------------------------------------------
the Company nor its subsidiaries is: (i) a "public utility company" or a
"holding company," or an "affiliate" or a "subsidiary company" of a "holding
company," or an "affiliate" of such a "subsidiary company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility," as defined in the Federal Power Act, as amended, or (iii) an
"investment company" or an "affiliated person" thereof or an "affiliated person"
of any such "affiliated person," as such terms are defined in the Investment
Company Act of 1940, as amended.
3.23 Foreign Corrupt Practices. To the Company's best knowledge,
--------------------------
the Company has no notice and neither the Company, nor any of its subsidiaries,
nor any director, officer, agent, employee or other person acting on behalf of
the Company or any subsidiary has violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended. To the Company's
best knowledge, the Company has no notice and neither the Company, nor any of
its subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any subsidiary has, in the course of his
actions or, on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
<PAGE>
political activity, made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
ARTICLE 4
COVENANTS
4.1 Best Efforts. The parties shall use their best efforts timely
------------
to satisfy each of the conditions described in Articles 6 and 7 of this
Agreement.
4.2 Securities Laws. The Company shall file a Form D with
----------------
respect tothe Securities with the SEC as required under Regulation D and shall
provide a copy thereof to the Purchaser within 15 days after the Closing Date.
The Company shall file a Form 8-K disclosing this Agreement and the transactions
contemplated hereby with the SEC within five business days following the Closing
Date. The Company shall, on or prior to the Closing Date, take such action as is
necessary to sell the Securities to the Purchaser under applicable securities
laws of the states of the United States, and shall provide evidence of any such
action so taken to the Purchaser on or prior to the Closing Date.
4.3 Reporting Status. So long as the Purchaser beneficially owns
----------------
any of the Securities, the Company shall use its best efforts to timely file all
reports required to be filed by it with the SEC pursuant to the Exchange Act,
and make and keep public information available as those terms are defined in
Rule 144 and the Company shall not terminate its status as an issuer required to
file reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.
4.4 Use of Proceeds. The Company shall use the Purchase Price for
---------------
general corporate purposes.
4.5 Expenses. Except as may otherwise agreed to, the Company
--------
and the Purchaser shall pay all the costs and expenses incurred by it or on
its behalf in connection with this Agreement and the consummation of the
transactions contemplated hereby.
4.6 Listing. The Company shall use its best efforts to continue
-------
the listing and trading of its Common Stock on the NASDAQ, the New York Stock
Exchange or American Stock Exchange; and comply in all respects with the
Company's reporting, filing and other obligations under the by-laws or rules of
the NASDAQ or such exchange, as applicable.
4.7 Prospectus Delivery Requirement. The Purchaser understands
-------------------------------
that the Securities Act requires delivery of a prospectus relating to the
Securities in connection with any sale or other disposition thereof pursuant to
a registration statement, and the Purchaser shall comply with the
applicable prospectus delivery requirements of the Securities Act in
connection with any such sale or other disposition.
<PAGE>
4.8 Transactions with Affiliates. The Company will not, and
------------------------------
will not permit any subsidiaries to, engage in any transaction or group of
related transactions (including, without limitation, the purchase, lease, sale
or exchange of properties of any kind or the rendering of any service) with any
affiliate (other than the Company), except in the ordinary course and pursuant
to the reasonable requirements of the Company's or the subsidiaries' business
and upon fair and reasonable terms no less favorable to the Company or such
subsidiaries than would be obtainable in a comparable arm's-length transaction
with a person not an affiliate. The Company will not be deemed in default of
this Section 4.8 in connection with carrying out its obligations pursuant to
those agreements or transactions described in the Furnished SEC Documents.
ARTICLE 5
TRANSFER OF SECURITIES
The Securities shall not be transferable except upon the conditions
specified in this Article 5, which conditions are intended to insure compliance
with the provisions of the Securities Act and state securities laws in respect
of the transfer of any such Securities.
<PAGE>
5.1 Restrictive Legend.
------------------
(a) Unless and until otherwise permitted by this Article 5,
each certificate for the Securities issued to the Purchaser or to any subsequent
transferee of the Securities shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"These shares have not been registered under the Securities
Act of 1933 and may not be offered for sale, sold, transferred
or otherwise disposed of unless registered under such Act or
unless an exemption from such registration is available.
Further, such transfer is subject to the conditions specified
in a Securities Purchase Agreement dated as of January 31,
2000 pursuant to which such shares were issued and sold by
LaserSight Incorporated (the "Company"), a copy of which
Agreement will be furnished by the Company to the holder
hereof upon request and without charge."
(b) The Company may order its transfer agent for the Common
Stock to stop the transfer of any of the Securities bearing the legend set forth
in Subsection (a) of this Section 5.1 until the conditions of this Article 5
with respect to the transfer of such securities have been satisfied.
5.2 Notice of Proposed Transfer. If, prior to any transfer or
----------------------------
sale of any the Securities, the Purchaser shall deliver a written notice to the
Company describing briefly the manner of such transfer or sale and a written
opinion of counsel for the Purchaser (provided that such counsel, and the form
and substance of such opinion, are reasonably satisfactory to the Company) to
the effect that such transfer or sale may be effected without the registration
of such Securities under the Securities Act, the Company shall thereupon permit
or cause its transfer agent to permit such transfer or sale to be effected;
provided, however, that if in such written notice the Purchaser represents and
warrants to the Company that the transfer or sale is to a purchaser or
transferee whom the Purchaser knows or reasonably believes to be a "qualified
institutional buyer," as that term is defined in Rule 144A promulgated by the
SEC under the Securities Act ("Rule 144A"), no opinion shall be required unless
reasonably requested in writing by the Company within five days after receipt of
such written notice, in which case the Purchaser shall deliver to Company such a
written opinion of counsel.
5.3 Termination of Restrictions.
---------------------------
(a) Notwithstanding the foregoing provisions of this Article
5, the restrictions imposed by this Article 5 upon the transferability of the
Securities shall terminate as to any particular share of such securities when
(i) such security shall have been effectively registered under the Securities
Act and sold by the Purchaser thereof in accordance with such registration, or
(ii) a written opinion to the effect that such restrictions are no longer
required or necessary under any federal or state securities law or regulation
has been received from counsel for the Purchaser thereof (provided that such
counsel, and the form and substance of such opinion, are reasonably satisfactory
<PAGE>
to the Company) or counsel for the Company, or (iii) such security shall have
been sold without registration under the Securities Act in compliance with Rule
144, or (iv) the Company is reasonably satisfied that the Purchaser of such
security shall, in accordance with the terms of Subsection (k) of Rule 144, be
entitled to sell such security pursuant to such Subsection, or (v) a letter or
an order shall have been issued to the Purchaser thereof by the staff of the SEC
or the SEC stating that no enforcement action shall be recommended by such staff
or taken by the SEC, as the case may be, if such security is transferred without
registration under the Securities Act in accordance with the conditions set
forth in such letter or order and such letter or order specifies that no
subsequent restrictions on transfer are required.
(b) Whenever the restrictions imposed by this Article 5 shall
terminate, as hereinabove provided, the Purchaser who then holds any particular
Securities then outstanding as to which such restrictions shall have terminated
shall be entitled to receive from the Company, without expense to the Purchaser,
one or more new certificates for such securities not bearing the restrictive
legend set forth in Section 5.1(a) hereof.
5.4 Compliance with Rule 144 and Rule 144A. At the written
---------------------------------------
request of the Purchaser who proposes to sell any of the Securities in
compliance with Rule 144, the Company shall furnish to the Purchaser, within 10
days after receipt of such request, a written statement as to whether or
not the Company is in compliance with the filing requirements of the SEC as
set forth in such Rule. For purposes of effecting compliance with Rule 144A,
in connection with any resales of any Securities that hereafter may be
effected pursuant to the provisions of Rule 144A, the Purchaser desiring to
effect such resale and each prospective institutional purchaser of such shares
designated by the Purchaser shall have the right, at any time the Company is
not subject to Section 13 or 15(d) of the Securities and Exchange Act, to
obtain from the Company, upon the written request of the Purchaser and at
the Company's expense the documents specified in Section (d)(4)(i) of Rule
144A, as such rule may be amended from time to time.
5.5 Non-Applicability of Restrictions on Transfer.
---------------------------------------------
Notwithstanding the provisions of Section 5.2 hereof, any record owner of
Securities may from time to time transfer all or part of such record owner's
Securities (i) to a nominee identified in writing to the Company as being the
nominee of or for such record owner, and any nominee of or for a beneficial
owner of Securities identified in writing to the Company as being the nominee of
or for such beneficial owner may from time to time transfer all or part of the
Securities registered in the name of such nominee but held as nominee on behalf
of such beneficial owner, to such beneficial owner, (ii) to an Affiliate of such
record owner, or (iii) if such record owner is a partnership or limited
liability company or the nominee of a partnership or limited liability company,
to a partner, member, retired partner or member, or estate of a partner, member
or retired partner or member, of such partnership or limited liability company,
so long as such transfer is in accordance with the transferee's interest in such
partnership or limited liability company and is without consideration; provided,
however, that (A) such record owner shall deliver a written notice to the
Company describing in reasonable detail the manner of such transfer or sale
prior to the consummation of such transfer or sale, (B) each such transferee
shall remain subject to all restrictions on the transfer of Securities herein
contained, and (C) if reasonably requested in writing by the Company within five
days after receipt of such written notice, such record owner shall deliver to
<PAGE>
the Company such additional information requested by the Company or its counsel
(in form and substance satisfactory to the Company and such counsel) that the
proposed transfer is within the scope of this Section 5.5 or a written opinion
of counsel for such record owner (provided that such counsel, and the form and
substance of such opinion, are reasonably satisfactory to the Company) to the
effect that such transfer or sale may be effected without the registration of
such securities under the Securities Act.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation
----------------------------------------------
of the Company hereunder to issue and sell the Securities to the Purchaser at
the Closing is subject to the satisfaction, as of the Closing Date and with
respect to the Purchaser, of each of the following conditions thereto, provided
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion:
(a) The Purchaser shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(b) The Purchaser shall have wired same-day funds to the
account designated by the Company equal to the Purchase Price.
(c) The representations and warranties of the Purchaser shall
be true and correct as of the date when made and as of the Closing as
though made at that time (except for representations and warranties
that speak as of a specific date), and the Purchaser shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Purchaser at or prior to
the Closing.
(d) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE
7.1 The obligation of the Purchaser hereunder to purchase
the Securities to be purchased by it on the Closing Date is subject to the
satisfaction of each of the following conditions, provided that these conditions
are for the Purchaser's sole benefit and may be waived by the Purchaser at any
time in the Purchaser's sole discretion:
(a) The Company shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Purchaser.
<PAGE>
(b) The Company shall have directed its transfer agent to
deliver to the Purchaser duly executed certificates for the Securities
being so purchased by the Purchaser.
(c) The Trading in the Common Stock shall not have been
suspended by the NASDAQ or the SEC or other regulatory authority.
(d) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing as
though made at that time and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
The Purchaser shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as
of the Closing Date to the foregoing effect.
(e) The Purchaser shall have completed to its satisfaction all
business, legal, accounting and financial due diligence with respect to
the Company.
(f) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
(g) The Purchaser shall have received the Officer's
Certificate described in Section 3.3 dated as of the Closing Date.
(h) The Purchaser shall have received an opinion of
Sonnenschein Nath & Rosenthal, dated as of the Closing Date, in the
form attached hereto as Exhibit B.
(i) The Company shall have delivered to the Purchaser
certificates of good standing of the Company and the subsidiaries which
are organized pursuant to the corporate laws of a State within the
United States as of a date no earlier than ten days prior to the
Closing.
(j) The Company shall have delivered to the Purchaser a
certificate executed by a duly authorized officer certifying (i) a copy
of the Company's certificate of incorporation and the by-laws, (ii)
resolutions authorizing the execution of this Agreement and the
Registration Rights Agreement, and (iii) incumbency matters.
(k) Without limiting the generality of Section 7.1(d), no
Material Adverse Effect shall have occurred, nor shall any event or
events have occurred which would reasonably likely to have a Material
Adverse Effect.
<PAGE>
ARTICLE 8
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction. This Agreement shall be
----------------------------
governed by and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in the State of Delaware,
without giving effect to the principles of conflicts of law. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts and
state courts located in the County of New Castle in the State of Delaware in any
suit or proceeding based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in respect of such
suit or proceeding may be determined in such courts. The Company and the
Purchaser irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Service of process upon the Company or
the Purchaser mailed by certified mail, return receipt requested, shall be
deemed in every respect effective service of process upon the Company in any
suit or proceeding arising hereunder. Nothing herein shall affect the
Purchaser's right to serve process in any other manner permitted by law. A final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
8.2 Counterparts. This Agreement may be executed in two or
------------
more counterparts, including, without limitation, by facsimile transmission, all
of which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
8.3 Headings. The headings of this Agreement are for convenience
--------
of reference and shall not form part of, or affect the interpretation of,
this Agreement.
8.4 Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
8.5 Entire Agreement; Amendments. This Agreement, the Schedules
-----------------------------
hereto and the instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor the
Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived other than
by an instrument in writing signed by the party to be charged with enforcement
and no provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Purchaser.
8.6 Notice. Any notice herein required or permitted to be given
------
shall be in writing and may be personally served or delivered by
nationally-recognized overnight courier or by facsimile-machine confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission). Each party shall provide
notice to the other party of any change in address. The addresses for such
communications shall be:
<PAGE>
If to the Company:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Winter Park, Florida 32792
Telecopy: (407) 678-9982
Attention: Chief Executive Officer
with a copy to:
The Lowenbaum Partnership, L.L.C.
222 South Central Avenue
Suite 901
St. Louis, Missouri 63105
Telecopy: (314) 746-4848
Attention: Timothy L. Elliott, Esq.
and
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Telecopy: (312) 876-7934
Attention: Paul Miller, Esq.
If to the Purchaser:
BayStar Capital, L.P.
BayStar International, Ltd.
1500 West Market Street
Mequon, Wisconsin 53092
Telecopy: (262) 240-3215
Attention: Brian Davidson
8.7 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Purchaser shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other. The
provisions of this Agreement which are for each of the Purchaser's benefit as a
purchaser of holder of Securities are also for the benefit of, and enforceable
by, any subsequent holder of such Securities.
<PAGE>
8.8 Third Party Beneficiaries. This Agreement is intended for the
-------------------------
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 Survival. All representations and warranties in this
--------
Agreement shall survive the execution and delivery of this Agreement and the
Closing. All agreements contained herein shall survive the Closing until, by
their respective terms, they are no longer operative.
8.10 Indemnification.
---------------
(a) The Company shall indemnify and hold harmless the Purchaser,
its respective officers, directors, employees, attorneys, agents,
representatives, successors and assigns (each a "Purchaser Entity") from any
(a) Losses (as defined herein) insofar as such Losses (or actions in respect
thereof) incurred or suffered by the Purchaser Entity (whether incurred or
suffered directly or indirectly through ownership of capital stock of the
Company) arise out of or are based upon or are incurred as a result of (i) the
breach or falsity or incorrectness as of the Closing Date of any representation
or warranty, covenants or agreements of the Company contained in or made
pursuant to this Agreement, or (ii) the existence of any condition, event or
fact constituting, or which with notice or passage of time, or both, would
constitute a default in the observance of any of the Company's undertakings or
covenants hereunder, under the Registration Rights Agreement or the Company's
Certificate of Incorporation and By-laws. The Company shall also pay all
reasonable attorney's and accountant's fees and costs and court costs incurred
by the Purchaser in enforcing the indemnification provided for in this Section
8.10. Notwithstanding the foregoing, the Company expressly agrees and
acknowledges that the right of indemnification granted herein to the Purchaser
shall not be deemed to be the exclusive remedy available to the Purchaser for
any of the matters described in this Section 8.10.
(b) For purposes of this Section 8.10, "Losses" shall mean each and
------------
all of the following items: claims, losses, (including, without limitation,
losses of earnings) liabilities, obligations, payments, damages (actual,
punitive or consequential), charges, judgments, fines, penalties, amounts paid
in settlement; costs and expenses (including, without limitation, interest which
may be imposed in connection therewith, costs and expenses of investigation,
actions, suits, proceedings, demands, assessments and fees, expenses and
disbursements of counsel, consultants and other experts). Any payment (or deemed
payment) by the Company to the Purchaser pursuant to this Section 8.10 shall be
treated for federal income tax purposes as an adjustment to the Purchase Price.
(c) Within five days after a party seeking indemnification under
this Section 8.10 shall become aware of the facts indicating that a claim
-------------
for indemnification may be warranted, such party shall give to the party from
whom indemnification is being sought a claim notice relating to such Losses (a
"Claim Notice"). Each Claim Notice shall specify the nature of the claim, the
applicable provision(s) of this Agreement or other instrument under which the
claim for indemnity arises and, if possible, the amount or the estimated amount
thereof.
<PAGE>
8.11 Stamp Tax and Delivery Costs. The Company will pay all stamp
-----------------------------
and other taxes, if any, which may be payable in respect of the sale or other
transfer of the Securities to the Purchaser and the issuance thereof to the
Purchaser or its nominee, and will save the Purchaser harmless against any loss
or liability resulting from nonpayment or delay in payment of any such tax. The
Company will also pay all reasonable costs of delivery to the Purchaser, or the
Purchaser's nominee, of the Securities to be purchased by the Purchaser or
otherwise transferred to the Purchaser.
8.12 Public Filings; Publicity. No party hereto shall make any
-------------------------
public statement regarding the transactions contemplated hereby unless the
language and timing of such statement has been approved by both the Company and
the Purchaser or unless such party has been advised by its securities counsel to
make such statement. Notwithstanding the foregoing, each of the parties hereto
may, in documents required to be filed by it with the SEC or other regulatory
bodies, make such statements with respect to the transactions contemplated
hereby as each may be advised is legally necessary upon advice of its counsel;
provided, however, that the party making such determination shall immediately
notify the other party that it intends to make a public announcement and the
parties hereto shall, in good faith, attempt to agree on any public
announcements or publicity statements with respect thereto (which approval shall
not be unreasonably withheld or delayed).
8.13 Further Assurances. Each party shall do and perform, or
-------------------
cause tobe done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.14 Remedies. No provision of this Agreement providing for any
--------
remedy to the Purchaser shall limit any remedy that would otherwise be available
to the Purchaser at law or in equity. Nothing in this Agreement shall limit any
rights the Purchaser may have with any applicable federal or state securities
laws with respect to the investment contemplated hereby.
8.15 Termination. In the event that the Closing shall not have
-----------
occurred on or before February 15, 2000, this Agreement shall terminate at the
close of business on such date.
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be duly executed as of the date first above written.
LASERSIGHT INCORPORATED BAYSTAR CAPITAL, L.P.
By: BayStar Management, L.L.C.
By: /s/Gregory L. Wilson By: /s/Michael A. Roth
-------------------------- ----------------------------
Gregory L. Wilson Name: Michael A. Roth
Chief Financial Officer ----------------------------
Title: Investment Manager
----------------------------
BAYSTAR INTERNATIONAL, LTD.
By: BayStar International Management, L.L.C.
By: /s/Michael A. Roth
----------------------------
Name: Michael A. Roth
----------------------------
Title: Investment Manager
----------------------------
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Registration Rights Agreement
Exhibit B - SN&R Opinion
Schedule 3.2 - Consents
Schedule 3.3 - Capitalization
Schedule 3.5 - Conflicts
Schedule 3.6 - SEC Filings
Schedule 3.7 - Certain Changes
Schedule 3.8 - Litigation
Schedule 3.14 - Intellectual Property
Schedule 3.15(a) - Employee Benefit Plans - Identifications
Schedule 3.15(c) - Employee Benefit Plans - Examinations
Schedule 3.15(f) - Employee Benefit Plans - Qualification
Schedule 3.16 - Subsidiaries
Schedule 3.18 - Compliance with Laws; Permits
Schedule 3.19 - Tax Matters
Schedule 3.20 - Environmental Matters
Schedule 3.21 - Suppliers and Customers
EXHIBIT 99.5
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
January 31, 2000, by and among LaserSight Incorporated, a Delaware corporation
(the "Company"), with its headquarters located at 3300 University Boulevard,
Suite 140, Winter Park, Florida 32792, and BayStar Capital, L.P. ("BSC) and
BayStar International, Ltd. ("BSI), each with headquarters located at 1500 West
Market Street, Mequon, Wisconsin 53092 (BSC and BSI shall be referred to herein
collectively and individually as the "urchaser"), with regard to the following:
RECITALS
A. In connection with the Securities Purchase Agreement dated of even
date herewith by and among the Company and the Purchaser (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Purchaser 253,968 (the
"Placement Shares") of the Company's common stock, par value $.001 per share
(the "Common Stock").
B. To induce the Purchaser to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide to the Holders certain
rights to registration by the Company under the Securities Act of 1933 and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "Securities Act") and applicable state securities laws.
AGREEMENTS
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchaser agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified:
Advice: See Section 4 hereof.
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Agreement: See the introductory paragraphs hereto.
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Blackout Event: means a determination by the Board made in good faith,
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after consulting with outside securities counsel, that the registration of
Registrable Securities under the Securities Act or the continuation of the
disposition of Registrable Securities pursuant to an effective Registration
Statement at such time (i) would have a material adverse effect upon a proposed
material sale of all (or substantially all) of the assets of the Company or a
material merger, reorganization, recapitalization or similar current transaction
materially affecting the capital structure or equity ownership of the Company,
or (ii) would require the Company to make a public disclosure of information,
<PAGE>
which disclosure a majority of the outside directors determine in good faith
would have a material adverse effect on the Company.
Blackout Period: See Section 3(a) hereof.
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Board: The Board of Directors of the Company.
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Claim: See Section 6(a) hereof.
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Common Stock: See the introductory paragraphs hereto.
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Company: See the introductory paragraphs hereto.
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Exchange Act: The Securities Exchange Act of 1934 and the rules and
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regulations of the SEC promulgated thereunder.
Form S-3: Form S-3 of the SEC under the Securities Act or any successor
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form.
Holdback Period: See Section 3(b) hereof.
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Holder: Any registered holder of a Registrable Security or Registrable
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Securities.
Indemnified Person: See Section 6(c) hereof.
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Indemnifying Person: See Section 6(c) hereof.
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Losses: See Section 6(a) hereof.
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NASD: See Section 4(j) hereof.
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Other Holders: See Section 2.2(a) hereof.
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Other Shares: See Section 2.2(a) hereof.
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Participant: See Section 6(a) hereof.
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Person: An individual, trustee, corporation, partnership, limited
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liability company, trust, unincorporated association, business association, firm
or other legal entity.
Piggyback Registration Statement: See Section 2.2(a) hereof.
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Prospectus: The prospectus included in any Registration Statement
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(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
<PAGE>
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchaser: See the introductory paragraphs hereto.
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Registrable Securities means the Placement Shares and any other
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securities issued or issuable with respect to any of the foregoing by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable Securities held by a Holder, such securities shall
cease to be Registrable Securities when (i) a Registration Statement with
respect to the offering of such securities by the Holder thereof shall have been
declared effective under the Securities Act and such securities shall have been
disposed of by such Holder pursuant to such Registration Statement, or (ii) such
securities may at the time of determination be sold to the public pursuant to
Rule 144 without any restrictions or limitations whatsoever (including
restrictions or limitations related to affiliates) on the amount of securities
which may be sold by such Holder without the lapse of any further time or the
satisfaction of any condition.
Registration Expenses: See Section 5(b) hereof.
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Registration Period: See Section 2.1(b) hereof.
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Registration Statement: Any registration statement of the Company filed
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with the SEC under the Securities Act, including the Prospectus, all amendments
and supplements to such registration statement, post-effective amendments, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
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may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC providing for public offers and sales of securities made in
compliance therewith resulting in offers and sales by subsequent holders that
are not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
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may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission or any successor federal
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agency charged with the
enforcement of the federal securities laws.
Securities Act: See the introductory paragraphs hereto.
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Securities Purchase Agreement: See the introductory paragraphs hereto.
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Shelf Registration Statement: See Section 2.1(a) hereof.
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<PAGE>
Subsidiary: Any corporation of which the Company owns securities
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representing a majority of the outstanding voting power or any partnership of
which the Company (or a Subsidiary) holds a majority of the general partner
interest.
Underwritten Offering: A public offering of Common Stock, or other
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securities convertible into, or exercisable or exchangeable for, Common Stock
that is underwritten on a firm commitment basis.
2. SHELF REGISTRATION
2.1 Shelf Registration Statement.
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(a) The Company shall:
(i) prepare and, no more than 90 days after the date of this
Agreement, file with the sec a registration statement in respect of all
the registrable securities on an appropriate form for a secondary
offering to be made on a continuous basis by the company pursuant to
rule 415 (the "shelf registration statement"); and
(ii) subject to Section 3 hereof, use its best efforts to
cause the Shelf Registration Statement to become effective as soon as
practicable after such filing.
In addition to the Registrable Securities, the Company may include in the Shelf
Registration Statement shares of Common Stock held by any holder of equity
securities of the Company or any securities convertible into or exercisable or
exchangeable for such equity securities, which holder is entitled by written
agreement with the Company to have some or all of such securities included in
the Shelf Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective at all times until such date as is
the earlier of: (i) the date on which all of the Registrable Securities have
been sold, (ii) the date on which all of the Registrable Securities may be
immediately sold to the public without registration conditions or limitations
whatsoever (including limitations or restrictions related to affiliates),
whether pursuant to Rule 144 or otherwise, and (iii) subject to this Section and
Section 3, the date which is two years after the date hereof. (The period of
time commencing on the date the Shelf Registration Statement is declared
effective and, subject to this Section and Section 3, ending on the earliest of
the foregoing dates is referred to as the "Registration Period.") Subject to
Section 3 hereof, the Company shall use its best efforts to amend or supplement
the Prospectus contained in the Shelf Registration Statement in order to permit
such Prospectus to be lawfully delivered until the end of the Registration
Period. The Registration Period shall be extended by duration of (i) any period
during which a Holder is unable to utilize the Prospectus until the Company
amends or supplements the related Registration Statement pursuant to Section
4(h), and (ii) any Blackout Period.
(c) In addition to complying with the requirements of Section 4, in
connection with the Shelf Registration Statement, the Company shall (i) mail to
each Holder a copy of the Prospectus forming part of the Shelf Registration
<PAGE>
Statement, and (ii) otherwise comply in all respects with all applicable federal
securities laws, rules and regulations.
(d) Each Holder shall notify the Company at least five business days
prior to any sale of Registrable Securities by such Holder pursuant to the Shelf
Registration Statement. During such five-day period, the Company shall have the
right to notify Holder that the Holder may not sell Registrable Securities
pursuant to the Shelf Registration Statement due to either a Blackout Period or
Holdback Period then being in effect or then being invoked. Upon such notice
being provided, Holder shall not sell any Registrable Securities pursuant to the
Shelf Registration Statement until the Company has notified Holder that the
Blackout Period or Holdback Period, as applicable, is no longer in effect.
(e) Subject to Sections 3 and 4 hereof, the Company shall promptly
supplement or amend the Shelf Registration Statement if required by the
Securities Act to keep such Registration Statement effective during the
Registration Period, or if reasonably requested by the Holders of at least 30%
of the Registrable Securities then transferable pursuant to such Shelf
Registration Statement.
(f) Each Holder shall notify the Company promptly, but in any event
within three business days, after the date on which all Registrable Securities
owned by such Holder have been sold by such Holder so that the Company may
comply with its obligation to terminate the Shelf Registration Statement in
accordance with Item 512 of Regulation S-K.
2.2 Piggyback Registration Rights.
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(a) So long as the Holders hold Registrable Securities, if the Company
proposes or is required to file with the SEC a registration statement (the
"Piggyback Registration Statement") under the Securities Act in connection with
an Underwritten Offering of Common Stock (other than a registration statement on
a form that does not permit the inclusion therein of the Registrable
Securities), the Company will each such time give prompt written notice of its
intention to do so to each Holder. Upon the written request of any Holder given
within 10 days after the delivery or mailing of such notice by the Company, the
Company will use reasonable best efforts to include in such Piggyback
Registration Statement that number of the Registrable Securities specified by
Holder in such written request (subject to the limitations set forth in this
Section 2.2(a) and in Section 2.2(b) below) (the "Requested Shares") so as to
permit the public sale of such Requested Shares; provided that if the managing
underwriter or underwriters of such Underwritten Offering advise the Company
that marketing factors require a limit on the number of shares to be
underwritten, the Company may (subject to the limitations set forth in the
following sentence and based on the written recommendation of the underwriter)
exclude or limit the number of Requested Shares to be sold pursuant to such
Piggyback Registration Statement. In such event, the Company shall so advise
each requesting Holder, and the number of Requested Shares and other shares
("Other Shares") requested to be included in such Piggyback Registration
Statement and underwriting by other persons or entities that are then
stockholders of the Company ("Other Holders"), after providing for all shares
that the Company proposes to offer and sell for its own account, shall be
allocated among the Requesting Holders and Other Holders pro rata on the basis
<PAGE>
of (i) the number of Requested Shares then held by the requesting Holders, and
(ii) the aggregate number of Other Shares then held by Other Holders.
(b) The right of any Holder to registration shall be conditioned upon
(i) such Holder's execution of the underwriting agreement agreed to among the
Company and the managing underwriters for such Underwritten Offering, (ii) such
Holder's completion and execution of all customary questionnaires and other
documents which must be executed in connection with such underwriting agreement,
and (iii) such Holder supplying the Company and the underwriter such additional
information as may be necessary to register such Holder's Registrable
Securities.
3. BLACKOUT AND HOLDBACK EVENTS
(a) During any period of up to 90 days' duration following the
occurrence of a Blackout Event (a "Blackout Period"), the Company shall not be
required to file, or cause to be declared effective, under the Securities Act
any Registration Statement hereunder and, if applicable, the Holders will
discontinue the offer and sale of Registrable Securities pursuant to any
effective Shelf Registration Statement or a Piggyback Registration Statement.
(b) The Holders shall not, if requested by the managing underwriter or
underwriters of an Underwritten Offering, effect any public or private sale of
any Common Stock, including a sale pursuant to Rule 144, during the period
("Holdback Period") beginning 14 days prior to, and ending 90 days after, the
effective date of the registration statement relating to such Underwritten
Offering.
(c) The aggregate number of days during which one or more Blackout
Periods or Holdback Periods are in effect shall not exceed 225 days during the
Registration Period, provided that the aggregate number of days during which one
or more Blackout Periods or Holdback Periods are in effect shall not exceed 90
days during any 12-month period.
(d) The Company shall promptly notify the Holders in writing of any
decision not to file a Registration Statement or not to cause a Registration
Statement to be declared effective or to discontinue sales of Registrable
Securities pursuant to this Section 3, which notice shall set forth the reason
for such decision (but not disclosing any nonpublic material information) and
shall include an undertaking by the Company promptly to notify the Holders as
soon as sales may resume. If the Company shall give any notice of postponement
of the filing or effectiveness of any registration statement or shall request
the Holders not to sell Registrable Securities pursuant to an effective
Registration Statement, the Company shall not, during the period of postponement
or withdrawal, sell any Common Stock for its own account pursuant to a
Registration Statement or permit any stockholder of the Company to sell Common
Stock pursuant to an effective Registration Statement, in either case other than
pursuant to a registration statement on Form S-8 (or an equivalent registration
form then in effect).
<PAGE>
4. REGISTRATION PROCEDURES
In connection with the filing of the Shelf Registration Statement or a
Piggyback Registration Statement by the Company, the Company shall effect such
registrations to permit the sale of the Registrable Securities covered thereby
in accordance with the intended method or methods of disposition thereof, and in
connection with such Registration Statement the Company shall:
(a) At least 3 business days before the filing of the Shelf
Registration Statement or Piggyback Registration Statement, and a reasonable
time before the filing of or any Prospectus or any amendments or supplements
thereto, the Company shall afford to the Purchaser an opportunity to review a
draft of the Shelf Registration Statement, Piggyback Registration Statement or
any Prospectus or any amendments or supplements thereto, as applicable, except
for such portions thereof which outside securities counsel to the Company has
advised the Company contain material non-public information. The Holders of
Registrable Securities included or intended to be included in a Registration
Statement shall have a reasonable opportunity to comment on the sections of any
such Registration Statement or related Prospectus captioned "Selling
Stockholders" or "Plan of Distribution" (or the equivalent) and the Company
shall not file any Registration Statement that includes in such sections
statements concerning any such Holder, its holdings of Registrable Securities,
or its intended method or methods of distribution as to which such Holder shall
reasonably object.
(b) Notify the selling Holders of Registrable Securities promptly (but
in any event within five business days), and confirm such notice in writing: (i)
when a Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act, and (ii)
of the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose.
(c) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest practicable time.
(d) Furnish to each selling Holder of Registrable Securities and each
managing underwriter, if any, at the sole expense of the Company one conformed
copy of the Shelf Registration Statement or Piggyback Registration Statement, as
applicable, and each post-effective amendment thereto and, if requested, all
documents incorporated or deemed to be incorporated therein by reference and all
exhibits.
(e) Deliver to each selling Holder of Registrable Securities, and the
underwriters, if any, at the sole expense of the Company as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
<PAGE>
paragraph of this Section 4, the Company consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders of
Registrable Securities and the underwriters, agents or dealers, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(f) Prior to any public offering of Registrable Securities, to use its
reasonable best efforts to register or qualify, and to cooperate with the
selling Holders of Registrable Securities, the managing underwriter or
underwriters, if any, and respective counsel, in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities laws of such jurisdictions within the United States as any selling
Holder or the managing underwriter or underwriters reasonably request; keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
applicable Registration Statement; provided, however, that the Company shall not
be required to (A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 4(f), (B) subject itself
to general taxation in any such jurisdiction, (C) file a general consent to
service of process in any such jurisdiction, (D) provide any undertakings that
cause the Company unreasonable material expense or burden, or (E) make any
change in its charter or by-laws, which in each case the Board, in good faith,
determines to be contrary to the best interests of the Company and its
stockholders.
(g) Cooperate with the selling Holders of Registrable Securities and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends and shall be
in a form in compliance with any applicable rules of a stock exchange on which
the Common Stock is then listed; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(h) Upon the occurrence of any event or any information becoming known
to the Company that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect, as promptly as practicable
prepare and (subject to Section 4(a) hereof) file with the SEC, at the sole
expense of the Company, a supplement or post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, any such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(i) Comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 90 days
after the end of any 12-month period (or 120 days after the end of any 12-month
<PAGE>
period if such period is a fiscal year) commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(j) Cooperate with each seller of Registrable Securities covered by any
Registration Statement in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(k) Use its reasonable best efforts to cause all Registrable Securities
relating to any Registration Statement to be listed on each securities exchange
or national market system, if any, on which similar securities issued by the
Company are then listed.
(l) In connection with any Underwritten Offering, enter into an
underwriting agreement as is customary in underwritten offerings of common
equity similar to the Common Stock, and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or the disposition of such Registrable
Securities and, in such connection:
(i) make such representations and warranties to, and covenants
with, the underwriters with respect to the business of the Company and
its subsidiaries, as applicable (including any acquired business,
properties or entity, if applicable), and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily
made by issuers to underwriters in firm-commitment underwritten
offerings of common equity similar to the Common Stock, and confirm the
same in writing if and when requested;
(ii) obtain the written opinions of counsel to the Company in
form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by the
managing underwriter or underwriters;
(iii) obtain "comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter
or underwriters from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary or of any business acquired by the
Company for which financial statements and financial data are, or are
required to be, included or incorporated by reference in the
Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested
by the managing underwriter or underwriters as permitted by the
Statement on Auditing Standards No. 72; and
(iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 6 hereof (or such other
provisions and procedures acceptable to Holders of a majority of the
<PAGE>
Registrable Securities covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder.
(l) Make available for inspection by any underwriter participating in
any such disposition of Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Company and its
subsidiaries, as applicable, as shall be reasonably necessary to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act,
and cause the officers, directors and employees of the Company and its
Subsidiaries, as applicable, to supply all information reasonably requested by
any such inspector in connection with such Registration Statement.
(m) Enter into such customary agreements (including, if applicable, an
underwriting agreement) and take such other actions as the Holders of a majority
of the Registrable Securities participating in such offering shall reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities. The Holders of the Registrable Securities which are to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that the Company make to and for the benefit
of such Holders the representations, warranties and covenants of the Company
which are being made to and for the benefit of such underwriters and which are
of the type customarily provided to institutional investors in secondary
offerings.
(n) Use its reasonable best efforts to take all other steps reasonably
necessary or advisable to effect the registration of the Registrable Securities
covered by a Registration Statement.
(o) Cause to be maintained a transfer agent and registrar for all
Registrable Securities covered by a Registration Statement.
(p) Deliver promptly to each Holder participating in the offering and
each underwriter, if any, copies of all correspondence between the SEC and the
Company, its counsel or auditors with the SEC or its staff with respect to a
Registration Statement, other than those portions of any such correspondence
which contain information subject to attorney-client privilege or a request for
confidential treatment with respect to the Company, and, upon receipt of such
confidentiality agreements as the Company may reasonably request, make
reasonably available for inspection by any underwriter, if any, participating in
any disposition to be effected pursuant to a Registration Statement and by any
attorney, accountant or other agent retained by any such underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers, directors
and employees to supply all information reasonably requested by any such
underwriter, attorney, account or agent in connection with such registration
statement.
(q) Make reasonably available to its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into account
<PAGE>
the needs of the Company's businesses and the requirements of the marketing
process) in the marketing of Registrable Securities in any unwritten offering.
(r) Promptly prior to the filing of any document which (i) is to be
incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement), and (ii) contains
disclosure specifically referring to the Holders provide copies of such document
to counsel for the selling Holders of Registrable Securities and to each
managing underwriter, if any, and make the Company's representatives reasonably
available for discussion of such information and make such changes in such
information concerning the selling Holders prior to the filing thereof as
counsel for such selling holders or underwriters may reasonably request.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request. The
Company may exclude from such registration the Registrable Securities of any
seller so long as such seller fails to furnish such information within a
reasonable time after receiving such request. Each seller as to which any
registration is being effected shall furnish promptly to the Company all
information required to be disclosed in order to make the information previously
furnished to the Company by such seller not materially misleading.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon actual receipt of any notice from the Company
of the happening of any event of the kind described in Section 4(b)(ii) hereof
or any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect,
such Holder will forthwith discontinue disposition of such Registrable
Securities covered by such Registration Statement or Prospectus to be sold by
such Holder until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(e) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the Company shall give any such notice, the
Registration Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Securities covered by such Registration
Statement, as the case may be, shall have received (i) the copies of the
supplemented or amended Prospectus contemplated by Section 4(e) hereof, or (ii)
the Advice.
Each Holder of Registrable Securities understands that the Securities
Act may require delivery of a Prospectus in connection with any sale thereof
pursuant to a Registration Statement, and each such Holder shall comply with the
applicable Prospectus delivery requirements of the Securities Act in connection
with any such sale.
5. REGISTRATION EXPENSES
(a) All Registration Expenses shall be borne by the Company.
Notwithstanding the foregoing, the sellers of the Registrable Securities being
registered shall pay all (i) brokerage or underwriting fees, discounts and
commissions attributable to the sale of such Registrable Securities, (ii) the
<PAGE>
fees and disbursements of any counsel or other advisors or experts retained by
such sellers (severally or jointly), and (iii) transfer taxes on resale of any
of the Registrable Securities by such sellers.
(b) For purposes of this Agreement, "Registration Expenses" shall mean
all fees and expenses incident to the compliance with this Agreement by the
Company (other than fees and expenses referred to in the second sentence of
Section 5(a) hereof), including, without limitation, (i) all registration and
filing fees, including, without limitation, (A) any SEC or NASD filing fees and
(B) fees and expenses of compliance with state securities or blue sky laws, (ii)
printing expenses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, as the case may be, duplicating and copying
expenses, (iii) messenger, telephone and delivery expenses incurred by the
Company, (iv) all fees and disbursements of counsel for the Company, (v) fees
and expenses of all other Persons retained by the Company, including annual or
special audit and "comfort" letters, (vi) stock exchange listing fees and
expenses, if any, and (vii) the expenses relating to printing and distributing
the Shelf Registration Statement, Piggyback Registration Statement and any other
documents necessary in order to comply with this Agreement.
6. INDEMNIFICATION AND CONTRIBUTION
(a) The Company shall indemnify and hold harmless each Holder of
Registrable Securities, the officers, partners (and directors, officers,
employees and stockholders thereof), employees, stockholders and directors of
each such Person (each, a "Participant"), from and against any and all losses,
claims, damages and liabilities, joint or several, actions or proceedings
(commenced or threatened) (collectively, "Losses") (including, without
limitation, the reasonable legal fees and other expenses (including settlements
made pursuant to the terms of Section 6(c)) actually incurred in connection with
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand (a "Claim")) caused by, arising out of or based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) or Prospectus
(as amended or supplemented from time to time) or any preliminary prospectus,
(ii) or caused by, arising out of or based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading, except insofar as such
Losses are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information relating to any Participant furnished to the Company by such
Participant expressly for use therein, or (iii) any violation by the Company of
any federal, state or common law rule or regulation applicable to the Company
and relating to action required of or inaction by the Company in connection with
any such registration, and the Company will reimburse any such indemnified party
for any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending such Claim as such expenses are
incurred; provided, however, that the Company will not be liable if such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any preliminary prospectus and corrected in the Prospectus or any
amendment or supplement thereto and the Prospectus does not contain any other
untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and any such
Loss suffered or incurred by the Participants resulted from any Claim by any
Person who purchased Registrable Securities which are the subject thereof from
<PAGE>
such Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Securities sold to such Person if required by applicable law,
unless such failure to deliver or provide a copy of the Prospectus (as amended
or supplemented) was a result of noncompliance by the Company with this
Agreement. Such indemnity and reimbursement of expenses shall remain in full
force and effect regardless of any investigation made by as on behalf of such
indemnified party and shall survive the transfer of such securities by such
Holder.
(b) Each Participant shall, severally and not jointly, indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement, and each Person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each Participant, but only
with reference to information relating to such Participant furnished to the
Company, in writing by such Participant expressly for use in such Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the net proceeds received by such Participant from sales of
Registrable Securities giving rise to such obligations.
(c) If any Claim shall be brought or asserted against any Person in
respect of which indemnity may be sought pursuant to either of the two preceding
paragraphs, such Person (the "Indemnified Person") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Person") in
writing, and the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such Claim and
shall pay the reasonable fees and expenses actually incurred by such counsel
related to such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise. In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person or any affiliate and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Indemnifying Person shall not, in connection with any one such
proceeding or separate but substantially similar related proceedings in the same
jurisdiction arising out of the same general allegations, be liable for the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Indemnified Persons, and all such fees and expenses shall be reimbursed
promptly as they are incurred. If the Company shall be the Indemnifying Person,
any such separate firm for the Indemnified Persons shall be designated in
writing by Participants who sold a majority in interest of Registrable
Securities sold by all such Participants and reasonably acceptable to the
Company. If the Company shall be the Indemnified Person, any such separate firm
for the Company, its directors, its officers who sign a Registration Statement
and such control Persons of the Company shall be designated in writing by the
Company. No Indemnifying Person shall be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with such consent or if
there be a final judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
shall indemnify and hold harmless each Indemnified Person from and against any
loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Persons
<PAGE>
(which consent shall not be unreasonably withheld or delayed), effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party, or indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
involves only the payment of money damages that are actually paid by the
Indemnifying Person or includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 6 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any Losses, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Person or Persons on the one hand
and the Indemnified Person or Persons on the other in connection with the
statements or omissions or alleged statements or omissions that resulted in such
Losses (or actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Person on the one hand or
such Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. If, however, the allocation provided in the second
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative fault,
but also the relative benefits of the indemnifying party and the indemnified
party as well as any other relevant equitable considerations.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the Losses referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Person in connection with investigating or
defending any such Claim. Notwithstanding the provisions of this Section 6, in
no event shall a Participant be required to contribute any amount in excess of
the amount by which net proceeds received by such Participant from sales of
Registrable Securities exceed the amount of any damages that such Participant
has otherwise been required to pay or has paid by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
<PAGE>
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section shall be paid by the
Indemnifying Person to the Indemnified Person as such Losses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of any of Purchaser, any Holder, any person
who controls the Purchaser or any Holder, or any officers or directors of the
Purchaser or such Holder, and (ii) any termination of this Agreement.
(g) The indemnity and contribution covenants contained in this Section
6 are in addition to any liability which any Indemnifying Person may otherwise
have to any Indemnified Person.
7. RULE 144
The Company will file the reports required to be filed by it under the
Exchange Act in a timely manner in accordance with the requirements of the
Exchange Act. The Company will also take such further action as any Holder of
Registrable Securities issued by the Company may reasonably request, to the
extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144(k).
8. MISCELLANEOUS
(a) The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of (i) the
Company, and (ii) the Holders of not less than a majority in aggregate amount of
the then-outstanding Registrable Securities; provided, however, that Section 4
and this Section 8(a) may not be amended, modified or supplemented without the
prior written consent of each Holder (including any person who was a Holder of
Registrable Securities disposed of pursuant to any Registration Statement)
affected by any such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority in aggregate amount of the Registrable Securities being sold by
such Holders pursuant to such Registration Statement.
(b) Any notice herein required or permitted to be given shall be in
writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
<PAGE>
If to the Company:
LaserSight Incorporated
3300 University Boulevard
Suite 140
Orlando, Florida 32792
Telecopy: (407) 678-9981
Attention: Chief Financial Officer
with a copy to:
The Lowenbaum Partnership, LLC
222 South Central Avenue
Suite 901
St. Louis, Missouri 63105
Telecopy: (314) 746-4848
Attention: Timothy L. Elliott, Esq.
and
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Telecopy: (312) 876-7934
Attention: Paul Miller, Esq.
If to the Purchaser:
BayStar Capital, L.P.
BayStar International, Ltd.
1500 West Market Street
Mequon, Wisconsin 53092
Telecopy: (262) 240-3215
Attention: Brian Davidson
(c) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto, and the Holders;
provided, however, that this Agreement shall not inure to the benefit of, or be
binding upon, a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Securities. If any Person shall acquire
Registrable Securities from any Holder, in any manner (except for any
acquisition in violation of this Agreement, the Securities Purchase Agreement or
applicable law) whether by operation of law or otherwise, such transferee shall
promptly notify the Company and such Registrable Securities acquired from such
Holder shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities such Person shall be entitled to
receive the benefits of and be conclusively deemed to have agreed to be bound by
and to perform all of the terms and provisions of this Agreement. If the Company
<PAGE>
shall so request, any such successor or assign shall agree in writing to acquire
and hold the Registrable Securities acquired from such Holder subject to all of
the terms hereof.
(d) This Agreement may be executed in two or more counterparts,
including, without limitation, by facsimile transmission, all of which
counterparts shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
(e) The headings in this Agreement are for convenience of reference and
shall not form a part of, or affect the interpretation of, this Agreement.
(f) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed in such State. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and Delaware State courts
located in the County of New Castle in the State of Delaware, in any suit or
proceeding based on or arising under this Agreement and irrevocably agree that
all claims in respect of such suit or proceeding may be determined in such
courts. The parties hereto irrevocably waive the defense of an inconvenient
forum to the maintenance of such suit or proceeding. Service of process upon any
party hereto mailed by first-class mail shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding.
Nothing herein shall affect any party's right to serve process in any other
manner permitted by law. A final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(g) Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its affiliates (as such term is defined in
Rule 405 under the Securities Act) shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
(h) Holders of Registrable Securities are intended third-party
beneficiaries of the agreements made hereunder among the Company and the
Purchaser and shall have the right to enforce this Agreement to the extent they
deem such enforcement necessary or advisable to protect their rights hereunder.
(i) This Agreement, together with the Securities Purchase Agreement and
the other agreements among the parties of even date herewith or therewith, is
intended by the parties as a final expression of their agreement and to be a
complete and exclusive statement of their agreement and understanding in respect
of the subject matter hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
among the parties with respect to such subject matter.
<PAGE>
(j) During the time period beginning on the date hereof and continuing
until the Company has satisfied its obligations hereunder or until such
obligations have expired, the Company will not enter into any agreement related
to the registration of its securities which is inconsistent with the rights
granted to the Holders pursuant to this Agreement. The rights granted to the
Purchaser pursuant to this Agreement do not conflict with any other agreements
to which the Company is a party.
(k) If Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its option, be treated as
the Holder of such Registrable Securities for purposes of any request or other
action by any Holder or Holders of Registrable Securities pursuant to this
Agreement (or any determination of any number or percentage of shares
constituting Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement), provided that the Company shall have
received assurances reasonably satisfactory to it of such beneficial ownership.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
LASERSIGHT INCORPORATED BAYSTAR CAPITAL, L.P.
By: BayStar Management, L.L.C.
By: /s/Gregory L. Wilson By: /s/ Michael A. Roth
----------------------- --------------------------
Gregory L. Wilson Name: Michael A. Roth
Chief Financial Officer --------------------------
Title: Investment Manager
--------------------------
BAYSTAR INTERNATIONAL, LTD.
By: BayStar International Management, L.L.C.
By: /s/ Michael A. Roth
: --------------------------
Name: Michael A. Roth
--------------------------
Title: Investment Manager
--------------------------
SIGNATURE PAGE
TO REGISTRATION RIGHTS AGREEMENT
EXHIBIT 99.6
SECOND AMENDMENT TO RIGHTS AGREEMENT
THIS SECOND AMENDMENT to the Rights Agreement (the "Rights Agreement")
dated as of July 2, 1998, between LaserSight Incorporated and American Stock
Transfer & Trust Company as Rights Agent ("American Stock Transfer") is dated as
of the 28th day of January, 2000.
WHEREAS, the Company proposes to enter into that certain Securities
Purchase Agreement dated as of January 31, 2000 (the "Securities Purchase
Agreement") with TLC Laser Eye Centers Inc. (the "Purchaser"), and following the
consummation of the transactions contemplated by the Securities Purchase
Agreement the Purchaser will be a significant stockholder of the Company; and
WHEREAS, the Board of Directors of the Company believes that it is in
the best interests of the Company and its stockholders that the transactions
contemplated by the Securities Purchase Agreement be consummated on the terms
set forth in the Securities Purchase Agreement;
WHEREAS, the Board of Directors of the Company desires to amend the
Rights Agreement such that the execution of the Securities Purchase Agreement
and the consummation of the transactions contemplated thereby will not cause (i)
the Purchaser or its Affiliates or Associates to become an Acquiring Person as a
result of the acquisition of securities of the Company pursuant to the
Securities Purchase Agreement or (ii) a Distribution Date, a Shares Acquisition
Date or a Triggering Event to occur, irrespective of the number of securities
acquired pursuant to the Securities Purchase Agreement;
WHEREAS, Section 27 of the Rights Agreement authorizes the Board of
Directors of the Company and the Rights Agent to adopt the proposed amendment
without the approval of the Company's stockholders; and
WHEREAS, capitalized terms used but not defined herein have the
meanings assigned to such terms in the Rights Agreement;
NOW, THEREFORE, in consideration of the recitals (which are deemed to
be a part of this Amendment) and agreements contained herein, the parties hereto
agree to amend the Rights Agreement as follows:
1. Section 1(a) of the Rights Agreement is hereby modified
and amended by adding the following sentence at the end thereof:
Notwithstanding the foregoing, no Person shall become an Acquiring
Person as the result an acquisition of securities of the Company (or
the acquisition of Common Shares upon the conversion of such
securities) pursuant to and in accordance with the Securities Purchase
Agreement; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of the Company
then outstanding by reason of the acquisition of securities (including
<PAGE>
the acquisition of Common Shares upon the conversion of such
securities) pursuant to and in accordance with the Securities Purchase
Agreement and shall, after such share acquisitions, (A) acquire, in one
or more transactions, beneficial ownership of an additional number of
Common Shares which exceeds 0.1% of the then-outstanding Common Shares
and (B) beneficially own after such acquisition 15% or more of the
aggregate number of Common Shares of the Company then outstanding, then
such Person shall be deemed to be an Acquiring Person.
2. Section 1(w) of the Rights Agreement is hereby modified
and amended by adding the following sentence at the end thereof:
Notwithstanding any provision of this Agreement to the contrary,
neither the execution and delivery of the Securities Purchase Agreement
nor consummation of the transactions contemplated thereby (including
the conversion of securities acquired pursuant thereto into Common
Shares) shall be deemed to cause a Shares Acquisition Date.
3. Section 1(y) of the Rights Agreement is hereby modified
and amended by adding the following sentence at the end thereof:
Notwithstanding any provision of this Agreement to the contrary,
neither the execution and delivery of the Securities Purchase Agreement
nor consummation of the transactions contemplated thereby (including
the conversion of securities acquired pursuant thereto into Common
Shares) shall be deemed to be a Triggering Event.
4. Section 3(a) of the Rights Agreement is hereby modified
and amended by adding the following sentence at the end thereof:
Notwithstanding any provision of this Agreement to the contrary,
neither the execution and delivery of the Securities Purchase Agreement
nor consummation of the transactions contemplated thereby (including
the conversion of securities acquired pursuant thereto into Common
Shares) shall be deemed to cause a Distribution Date.
5. Section 15 of the Rights Agreement is hereby modified and
amended to add the following sentence at the end thereof:
Nothing in this Agreement shall be construed to give any holder of
Rights or any other Person any legal or equitable rights, remedy or
claim under this Agreement in connection with any transactions
contemplated by the Securities Purchase Agreement.
6. Except as expressly amended hereby, the Rights Agreement
remains in full force and effect.
<PAGE>
7. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware, and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and performed entirely within such State.
8. This Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
Attest: LASERSIGHT INCORPORATED
By: /s/J. Richard Crowley By: /s/Gregory L. Wilson
-------------------------------- -------------------------------
Name: J. Richard Crowley Name: Gregory L. Wilson
Title: Chief Operating Officer Title: Chief Financial Officer
Attest: AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /s/Susan Silber By: /s/Herbert J. Lemmer
-------------------------------- -------------------------------
Name: Susan Silber Name: Herbert J. Lemmer
Title: Assistant Secretary Title: Vice President
