EXHIBIT 99.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT ("Agreement"), dated as of
September 8, 2000, by and among LaserSight Incorporated, a Delaware corporation,
with headquarters located at 3300 University Boulevard, Winter Park, Florida
32792 (the "Company") and the investors listed on the Schedule of Buyers
attached hereto (individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act");
B. The Company shall authorize as of the Closing Date (as
defined in Section 1b.) the issuance of Common Stock Purchase Warrants to the
Buyers (the "Warrants") in the form attached hereto as Exhibit A, to acquire
shares of Common Stock (such shares of Common Stock issued upon exercise of the
Warrants are hereinafter referred to as the "Warrant Shares", and together with
the Common Shares (as defined in Section 1a.), the Warrants and the Additional
Shares (as defined in Section 4m.), the "Securities");
C. The Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of $6 million of the Company's Common
Stock, $.001 par value per share (the "Common Stock") in the respective amounts
set forth opposite each Buyer's name on the Schedule of Buyers; and to receive
in consideration for such purchase, the Warrants to purchase shares of Common
Stock in the respective amounts set forth opposite each Buyer's name in the
Schedule of Buyers, subject to adjustment as provided in the Warrants; and
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as Exhibit B (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW, THEREFORE, the Company and the Buyers hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON STOCK AND WARRANTS.
a. Purchase of Common Stock. Subject to the
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satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below,
the Company shall issue and sell to the Buyers and the Buyers shall purchase
from the Company an aggregate of 1,714,286 shares of Common Stock (the
"Common Shares"), in the respective amounts set forth opposite each Buyer's
name on the Schedule of Buyers (the "Closing"). The per share purchase price
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(the "Purchase Price") of the Common Shares shall be $3.50 or an aggregate
purchase price of up to $6,000,000.00. On the Closing Date (as defined below)
the Company shall direct its transfer agent to issue and deliver to each Buyer
a stock certificate(s) representing such number of Common Shares which such
Buyer is then purchasing (as indicated opposite such Buyer's name on the
Schedule of Buyers), duly executed on behalf of the Company and registered in
the name of such Buyer or its designee (the "Stock Certificates").
b. Closing Date. The date and time of the Closing
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(the "Closing Date") shall be 10:00 a.m. Eastern Time on September 8, 2000,
subject to notification of satisfaction (or waiver) of the conditions to
the Closing set forth in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyers). The Closing shall occur on
the Closing Date at the offices of Schulte Roth & Zabel LLP, 900
Third Avenue, New York, New York 10022.
c. Form of Payment. On the Closing Date, each Buyer
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shall pay the Company the Purchase Price for the Common Shares to be issued
and sold to such Buyer at the Closing, by wire transfer of immediately
available funds in accordance with the Company's written wire instructions
provided in writing to the Buyers at least two days prior to the Closing Date.
d. Warrants. In consideration of the purchase of the
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Common Shares, the Company shall on the Closing Date issue and deliver to each
Buyer, Warrants to purchase in the aggregate 600,000 additional shares of
Common Stock in the respective amounts set forth opposite each Buyer's name on
the Schedule of Buyers.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer (i) is purchasing the
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Common Shares and acquiring the Warrants and (ii) upon exercise of the
Warrants, will acquire the Warrant Shares then issuable for its own account,
for investment only and not with a present view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant
to sales registered or exempted under the 1933 Act; provided, however, that
by making the representations herein, such Buyer does not agree to hold any
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act evidenced by a
legal opinion in a form reasonably satisfactory to the Company. Such Buyer
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 1933 Act. Such Buyer understands that it must bear the
economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the 1933 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 the Registration
Rights Agreement.
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b. Accredited Investor Status. Such Buyer is an
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"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. Such Buyer understands that
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the Common Shares and Warrants are being offered and sold to it in reliance
on specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the Common Shares and
the Warrants.
d. Information. Such Buyer and its advisors, if any,
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have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Common Shares and the Warrants which have been specifically requested by
such Buyer, including, without limitation, the Company's Annual Report on
Form 10-K and 10-K/A for the year ended December 31, 1999, its Quarterly Report
on Form 10-Q for the periods ended March 31, 2000 and June 30, 2000; its Current
Reports on Form 8-K filed with the SEC on February 8, 2000 and June 1, 2000;
the description of the Common Stock contained in the Company's Form 8-A/A
(Amendment No. 5) filed with the SEC on August 1, 2000; the description of the
Company's Series E Preferred Stock contained in the Company's Form 8-A/A
(Amendment No. 2) filed with the SEC on February 8, 2000; Proxy Statement
dated May 10, 2000 (such forms and reports are collectively referred to herein
as the "Company Filings"). Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below.
e. No Governmental Review. Such Buyer understands that
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no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement
of the Common Shares and the Warrants or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Common Shares and the Warrants.
f. Transfer or Resale. Such Buyer understands that
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except as provided in the Registration Rights Agreement: (i) Securities have
not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a form and in substance
reasonably acceptable to the Company, to the effect that such Securities to
be sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (C) such securities can
be sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933
Act (or a successor rule thereto) ("Rule 144"); (ii) any sale of such
securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
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such securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
g. Legends. Such Buyer understands that the
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certificates or other instruments representing the Common Shares and the
Warrants, and, until such time as the Common Shares and the Warrant Shares have
been registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the stock certificates representing the Common Shares and
the Warrant Shares, except as set forth below, shall bear a restrictive
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS EVIDENCED BY A LEGAL OPINION IN A FORM AND IN SUBSTANCE
REASONABLY ACCEPTABLE TO THE COMPANY.
The legend set forth above shall be removed and the
Company shall issue a certificate without such legend to the holder of any
Securities upon which it is stamped, if (i) any such Securities are
registered for sale under the 1933 Act and such Securities are sold in a
public sale pursuant to such registration, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of counsel, in a
form and in substance reasonably acceptable to the Company, to the effect
that a public sale, assignment or transfer of such Securities may be made
without registration under the 1933 Act ,and as a result of such sale the
Securities are no longer "restricted securities" as defined under Rule 144, or
(iii) any of the Securities can be sold pursuant to Rule 144 without any
restriction as to the number of securities sold or the manner of such sale. Each
Buyer acknowledges, covenants and agrees to sell any of the Securities
represented by a certificate(s) from which the legend has been removed, only
pursuant to (i) a registration statement effective under the 1933 Act, or (ii) a
written opinion of counsel in a form and in substance reasonably acceptable to
the Company that such sale is exempt from registration required by Section 5 of
the 1933 Act. In the event the above legend is removed from any of the
Securities, the Company may, upon reasonable advance notice to the holder,
require that the above legend be placed on any of the Securities that cannot
then be sold pursuant to an effective registration statement or Rule 144(k)
under the 1933 Act (or any successor rule thereto).
h. Authorization; Enforcement. This Agreement has been
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duly and validly authorized, executed and delivered on behalf of such Buyer and
is a valid and binding agreement of such Buyer enforceable in accordance with
its terms, subject as to enforceability to general principles of equity and
<PAGE>
to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies. 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) such Buyer's charter or constituent document, (B) any law,
statute, rule or regulation to which such Buyer is subject, or (C) any
agreement, instrument, order, judgment or decree to which such Buyer is
subject or is a party or by which it is bound.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that as of
the date hereof, that:
a. Organization and Qualification. The Company and its
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subsidiaries (a complete list of which is set forth in Schedule 3(a)) are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. 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 in which the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect and
all of which jurisdictions in which either the Company or its subsidiaries
is or believes it should be duly qualified is set forth on Schedule 3(a) hereto.
"Material Adverse Effect" means any material adverse effect on (i) the business,
properties, operations, condition (financial or otherwise), prospects or results
of operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the
Registration Rights Agreement, the Warrants or under the agreements or
instruments to be entered into or filed in connection herewith or therewith, or
(iii) the Securities.
b. Authorization; Enforcement; Compliance with Other
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Instruments. (i) The Company has the requisite corporate power and authority
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to enter into and perform its obligations under this Agreement and the
Registration Rights Agreement, to issue, sell and perform its obligations with
respect to the Common Shares, the Additional Shares, if applicable, and the
Warrants in accordance with the terms hereof and thereof, and to issue the
Warrant Shares upon the exercise of the Warrants, in accordance with the
Warrants, (ii) the execution and delivery of this Agreement, the Common Shares,
the Additional Shares, if applicable, the Warrants and the Registration Rights
Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby, including, without limitation, the issuance of
the Common Shares, the Additional Shares, if applicable, and the Warrants and
the reservation for issuance and the issuance of each of the Additional Shares,
if applicable, and the Warrant Shares upon exercise of the Warrants have been
duly authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement, the Registration Rights Agreement, the
certificates for the Common Shares, the Additional Shares, if applicable, and
<PAGE>
the Warrants have been duly executed and delivered by the Company, and (iv) this
Agreement, the Registration Rights Agreement, the certificates for the Common
Shares, the Additional Shares, if applicable, and the Warrants constitute the
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by (A)
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies, and (B)
applicable securities laws or public policy.
c. Capitalization and Indebtedness. As of the date
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hereof and immediately prior to the issuance of the Common Shares and Warrants
hereunder, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, of which as of the date hereof, 21,260,792 shares are
issued and outstanding, and 10,000,000 shares of Preferred Stock, of which as
of the date hereof 2,000,000 shares are issued or outstanding. All of the
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as set forth on Schedule 3(c), no shares of Common Stock
or Preferred Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company.
Except as set forth on Schedule 3(c), as of the date hereof, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, 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,
(ii) there are no outstanding debt securities, notes, credit agreements, or
other agreements, documents or instruments evidencing indebtedness of the
Company or any of its subsidiaries or by which the Company or any of its
subsidiaries is or may become bound and (iii) except for the Company's
securities which are the subject of registration statements which have been
filed with the SEC as of the Closing Date, there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement). Except as disclosed on Schedule 3(c), there are
no securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of any of the Securities as described in this
Agreement. The Company has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation, as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), and the Company's By-laws, as in
effect on the date hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. Issuance of Securities. The Securities are duly
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authorized and, upon issuance in accordance with the terms hereof, the Common
Shares, the Additional Shares, if applicable, and the Warrants shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, liens
and charges with respect to the issue thereof, and shall not be subject to
preemptive rights or other similar rights of stockholders of the Company
and (iii) entitled to the rights set forth in the Certificate of Incorporation
and the Warrants, respectively. Not less than 125% of the number of shares of
Common Stock necessary to provide for the issuance in the aggregate of the
Additional Shares, if applicable, and the Warrant Shares upon exercise of
the Warrants have been duly authorized and reserved for issuance. Upon
exercise of the Warrants, the Warrant Shares will be validly issued, fully
<PAGE>
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, with the holders being entitled to all rights accorded to
a holder of Common Stock.
e. No Conflicts. The execution, delivery and
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performance of this Agreement, the Registration Rights Agreement and the
Warrants by the Company, and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) result in a violation
of the Certificate of Incorporation and the Certificate of Designations,
Preferences and Rights of any outstanding series of Preferred Stock of the
Company or By-laws, or (ii) except as disclosed in Schedule 3(e), violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which the Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment or decree (including
U.S. federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common Stock is
traded or listed) 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, except for possible violations, conflict or defaults the sanctions
for which either singly or in the aggregate would not have a Material Adverse
Effect. Except as described on Schedule 3(e), neither the Company nor its
subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of Preferred Stock of the Company or By-laws or their
organizational charter or by-laws, respectively, or in violation of any term of
or in default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is 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 specifically contemplated by this
Agreement and as required under the 1933 Act or under applicable state
securities law or blue sky laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental or regulatory or self-regulatory agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement the Registration Rights Agreement or the Warrants in accordance with
the terms hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof or will
be obtained or effected within the applicable time requirements for such
actions. The Company is not in violation of the listing requirements of the
NASDAQ National Market and does not reasonably anticipate that the Common Stock
will be delisted by the NASDAQ National Market in the foreseeable future. The
Company and its subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.
f. SEC Documents; Financial Statements. Since December
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31, 1998 the Company has filed all reports, schedules, forms, statements and
<PAGE>
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"1934 Act") (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to
as the "SEC Documents"). The Company (i) has delivered or made available,
including via EDGAR, to each Buyer or its representative true and complete
copies of the SEC Documents as each Buyer or its representative has requested
from the Company and (ii) agrees to deliver or make available to each Buyer or
its representative true and complete copies of any additional SEC
Documents, upon request. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied 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 may exclude footnotes or may
be condensed or summary statements) and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).
g. Absence of Certain Changes. Except as expressly set
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forth in Schedule 3(g) since December 31, 1999, there has been no material
adverse change and no material adverse development in the business,
properties, operations, condition (financial or otherwise), prospects or
results of operations of the Company and its subsidiaries taken as a
whole. The Company has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any bankruptcy law nor
does the Company or its subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings.
h. Absence of Litigation. Except as disclosed on
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Schedule 3(h), there is no action, suit, proceeding, inquiry or investigatio
n before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company or its subsidiaries
or their respective directors or officers, or the Common Stock, wherein an
unfavorable decision, ruling or finding could individually or in the aggregate
have a Material Adverse Effect. Schedule 3(h) contains a complete list and
summary description of any pending, or to the knowledge of the Company,
threatened litigation against or affecting the Company or any of its
subsidiaries, without regard to whether it could have a Material Adverse Effect.
<PAGE>
i. Acknowledgment Regarding Buyers' Purchase of the
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Securities. The Company acknowledges and agrees that each of the Buyers
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is acting solely in the capacity of arm's length purchaser with respect
to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that each Buyer is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any advice given by
any of the Buyers or any of their respective representatives or agents in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Buyer's purchase of the Securities. The Company
further represents to each Buyer that the Company's decision to enter into
this Agreement has been based solely on the independent evaluation by the
Company and its representatives. The Company has not provided to any Buyer any
nonpublic information that, in the opinion of the Company, is material to a
decision to purchase or sell Common Stock.
j. No General Solicitation. Neither the Company, nor
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any of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D under the 1933 Act) in connection with the
offer or sale of any of the Securities offered hereby.
k. No Integrated Offering. Neither the Company, nor any
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of its affiliates, 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 require registration of
any of the Securities under the 1933 Act or cause the offering of any of the
Securities to be integrated with prior offerings by the Company for purposes
of the 1933 Act or any applicable shareholder approval provisions, including,
without limitation, under the rules and regulations of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
l. Employment Matters; ERISA Matters. The Company and
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its subsidiaries are in compliance with all federal, state, local and foreign
laws and regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours except where failure to be in
compliance would not have a Material Adverse Effect. There are no pending
investigations involving the Company or any of its subsidiaries by the U.S.
Department of Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and regulations.
There is no unfair labor practice charge or complaint against the Company or
any of its subsidiaries pending before the National Labor Relations Board
or any strike, picketing, boycott, dispute, slowdown or stoppage pending or to
the Company's knowledge threatened against or involving the Company or any
of its subsidiaries. Except as set forth in Schedule 3(l), no representation
question exists respecting the employees of the Company or any of its
subsidiaries, and no collective bargaining agreement or modification thereof
is currently being negotiated by the Company or any of its subsidiaries. No
grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company or any of its subsidiaries. No
material labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is imminent. Except as
set forth on Schedule 3(l), the Company has no employee benefit plans subject to
the Employee Retirement Income Security Act of 1974, as amended.
<PAGE>
m. Intellectual Property Rights. The Company and its
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subsidiaries own or possess the requisite rights or licenses to use all
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights (collectively
"Intellectual Property Rights") necessary to conduct their respective
businesses as now conducted and as presently contemplated to be operated in
the future, except to the extent the Company's failure to acquire such rights
or licenses would not have a Material Adverse Effect. None of the
Intellectual Property Rights or other intellectual property rights have expired
or terminated, or are expected to expire or terminate in the near future. Except
as disclosed on Schedule 3(h) and except as disclosed by the Company to the
Buyers in writing, the Company and its subsidiaries do not have any knowledge of
any event, fact or circumstance relating to (i) any infringement by the Company
or its subsidiaries of any trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets or other similar
rights of others, or of any such development of similar or identical trade
secrets or technical information by others or (ii) any person or entity now
infringing any Intellectual Property Rights or other similar rights or any such
development of similar or identical trade secrets or technical information owned
or used by the Company or any of its subsidiaries and, there is no claim, action
or proceeding being made or brought against, or to the Company's knowledge,
being threatened against, the Company or its subsidiaries regarding any
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets or other similar rights of others, or
of any such development of similar or identical trade secrets or technical
information by others or (iii) any person or entity now infringing any
Intellectual Property Rights or other similar rights or any such development of
similar or identical trade secrets or other infringement. Except as disclosed on
Schedule 3(h) and except as disclosed by the Company to the Buyers in writing,
the Company and its subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company and its subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of their Intellectual Property Rights.
n. Environmental Laws. (i) The Company and its
------------------
subsidiaries (A) are in material compliance with any and all Environmental
Laws, (B) have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses, and (C) are in material compliance with all terms and conditions
of any such permit, license or approval. With respect to the Company and/or
its subsidiaries (A) there are no past or present releases of any material
into the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law
environmental liability or any liability under any Environmental Law and (B)
neither the Company nor any of its subsidiaries has received any notice with
respect to the foregoing, nor is any action pending or to the Company's
knowledge, threatened in connection with the foregoing. The term "Environmental
Laws" means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into the
<PAGE>
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
(ii) Other than those that are or were stored, used or
disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the
Company or any of its Subsidiaries, and to the Company's knowledge no Hazardous
Materials were released on or about any real property previously owned, leased
or used by the Company or any of its subsidiaries during the period the property
was owned, leased or used by the Company or any of its subsidiaries.
(iii) To the Company's knowledge, there are no underground
storage tanks on or under any real property owned, leased or used by the Company
or any of its subsidiaries that are not in compliance with applicable law.
o. Title. The Company and its subsidiaries do not own
-----
any real property and have a valid leasehold interest to all real property and
good and marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as are described
in Schedule 3(o) or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries. Any real property and
facilities held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries.
p. Insurance. The Company and each of its subsidiaries
---------
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as is prudent and customary in the
businesses in which the Company and its subsidiaries are engaged.
Neither the Company nor any such subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not individually
or in the aggregate have a Material Adverse Effect.
q. Regulatory Permits; Compliance. The Company and its
------------------------------
subsidiaries possess all franchises, grants, authorizations, licenses permits,
easements, consents, certificates, approvals and orders necessary to own,
lease and operate its properties and to conduct their respective businesses
as currently being conducted (collectively, the "Company Permits"). There is
no action pending, or to the knowledge of the Company, threatened
regarding the suspension or cancellation of any of the Company Permits.
Neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of, any of the Company Permits, except where such
conflicts, default or violations would not individually or in the aggregate
have a Material Adverse Effect. Neither the Company nor any of its subsidiaries
<PAGE>
has received any notification with respect to possible conflicts, defaults, or
violations of applicable laws.
r. Internal Accounting Controls. The Company and each
----------------------------
of its subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
s. No Materially Adverse Contracts, Etc. Neither the
------------------------------------
Company nor any of its subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
which has or is expected in the future individually or in the aggregate to have
a Material Adverse Effect. Except for the agreement which is the subject of
the litigation described in item 8 on Schedule 3(h), neither the Company nor
any of its subsidiaries is a party to any contract or agreement which has or
is expected to have a Material Adverse Effect.
t. Tax Status. The Company and each of its subsidiaries
----------
has made or filed all federal, state and foreign income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of its
subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax. The Company has not been notified that any of its tax
returns is currently being audited by any taxing authority.
u. Certain Transactions. Except as set forth on
--------------------
Schedule 3(u) and except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms no less
favorable than the Company could obtain from third parties and other than the
grant of stock options or warrants disclosed on Schedule 3(c), none of the
officers, directors or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the
<PAGE>
Company, any corporation, partnership, trust or other entity in which any
officer, director or any such employee has a substantial interest or is an
officer, director, trustee or partner.
v. S-3 Registration. The Company is currently eligible
----------------
to register securities, including the resale of the Common Shares, the
Additional Shares, if applicable, and the Warrant Shares on a registration
statement on Form S-3 under the 1933 Act.
w. Disclosure. All information relating to or
----------
concerning the Company or any of its subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in
connection with the transactions contemplated hereby is true and correct in
all material respects and the Company has not omitted to state any material
fact necessary in order to make the statements made herein or therein, in light
of the circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company
or any of its subsidiaries or its or their business, properties, operations
or financial conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not
been so publicly announced or disclosed (assuming for this purpose that the
Company's reports filed under the 1934 Act are being incorporated into an
effective registration statement filed by the Company under the 1933 Act).
x. Investment Company Status. The Company is not and
-------------------------
upon consummation of the sale of the Securities will not be an "investment
company," a company controlled by an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
y. Foreign Corrupt Practices. To the Company's
-------------------------
knowledge, 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 for, 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; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
4. COVENANTS AND AGREEMENTS.
a. Best Efforts. Each party shall use its best efforts
-------------
timely to satisfy each of the conditions to be satisfied by it as provided
in Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with
------
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for, or obtain exemption
for the Securities for, sale to the Buyers at the Closing pursuant to this
<PAGE>
Agreement under applicable securities or "Blue Sky" laws of the states of the
United States, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date.
c. Reporting Status. Until the earlier of (i) the date
----------------
as of which the Investors (as that term is defined in the Registration Rights
Agreement) may sell all of the Common Shares, the Additional Shares, if
applicable, and the Warrant Shares without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) or (ii) the date on which
(A) the Investors shall have sold all the Common Shares and the Warrant
Shares and (B) none of the Common Shares and the Warrants are outstanding (the
"Registration Period"), the Company (x) shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under
the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination and (y) will use its best efforts and
take all necessary action to maintain its ability and eligibility to register
securities on Form S-3.
d. Use of Proceeds. The Company will use the proceeds
---------------
from the sale of the Common Shares and Warrants for working capital and
general corporate purposes and shall not otherwise, directly or indirectly,
use such proceeds for any loan to or investment on any other corporation,
partnership, enterprise or other person (except in connection with its
direct or indirect subsidiaries) or for the repurchase, redemption, or
retirement of any capital stock of the Company.
e. Reservation of Shares. The Company shall take all
---------------------
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 125% of the number of shares of Common Stock
necessary to provide for the issuance of the Common Shares and the Warrant
Shares in accordance with the terms of this Agreement and the Warrants.
f. Expenses. Each of the Company and the Buyers shall
--------
each pay its respective costs and expenses incurred by such party in
connection with the negotiation, investigation, preparation, execution,
delivery and performance of this Agreement, the Warrants and the Registration
Rights Agreement; provided, that at the Closing as the Buyers may request,
the Company shall reimburse the Buyers for the Buyers' and its attorneys' fees
and expenses incurred in connection with the preparation of this Agreement,
the Warrants and the Registration Rights Agreement (including their review of
the initial Registration Statement under the Registration Rights Agreement) up
to an aggregate of $25,000. In addition to the foregoing, the prevailing party
in any dispute or litigation concerning the enforcement of the prevailing
party's rights and/or collection of any amounts due under this Agreement,
the non-prevailing party agrees to pay on demand all reasonable costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel to the prevailing party) incurred by the prevailing party in connection
with the enforcement of the prevailing party's rights and/or the collection of
all amounts due under this Agreement.
g. Additional Issuances of Securities.
----------------------------------
<PAGE>
(a) Right of First Refusal. If at any time on or
----------------------
before the one year anniversary of the Closing Date, the Company shall desire
to issue any Common Stock or other equity security or any other security
convertible, exchangeable or exercisable for Common Stock (including any
debt financing with an equity component) or any other right to acquire any
Common Stock (the "Convertible Securities") pursuant to Section 4(2) of the
1933 Act or an offering under Regulation D or Regulation S of the 1933 Act or
in any other private placement, other than pursuant to or in connection with
(A) Company authorized stock option plans, (B) the exercise or conversion of
the Company's preferred stock, options or warrants outstanding as of the
Closing Date, (C) the Company's shareholder rights plan, (D) the settlement
of litigation or any dispute to which the Company or any of its Subsidiaries
is a party and which is approved by the Company's Board of Directors,
(E) a merger, acquisition, joint venture or similar arrangement which is
approved by the Board of Directors of the Company, (F) future equity
financing whereby Common Stock or Convertible Securities are issued to any
person or entity which has or is proposed to have a material technology or
ongoing commercial relationship with the Company in addition to any equity
financing provided by such person or entity and it is determined by the Board of
Directors of the Company that such equity financing will result in a material
technology or ongoing commercial relationship with the Company, (G) a firm
commitment underwritten secondary public offering of Common Stock of the Company
by a nationally recognized investment banking firm which (i) is registered under
the Securities Act and (ii) yields gross proceeds to the Company of at least
$25,000,000 or (H) the next single private placement of Common Stock of the
Company funding within 6 months of the Closing Date and yielding gross proceeds
to the Company of no more than $10,000,000 (each of (A), (B), (C), (D), (E),
(F), (G) and (H) hereafter, collectively an "Offering"), then the Company shall
first comply with the terms of this Section 4(g).
(b) Notice Requirements. The Company shall notify,
-------------------
or cause to be notified, the Buyers, by certified mail return receipt
requested, not less than five (5) business days prior to the time the Company
intends to consummate such issuance (the "Issuance Notice"). The Issuance
Notice shall set forth all of the terms of such proposed issuance.
(c) Exercise of Right of First Refusal. The right
----------------------------------
of first refusal provided for in this Section 4(g) may be exercised by the
Buyers by delivery of a written notice to the Company (the "Exercise Notice"),
within 48 hours following receipt of the Issuance Notice (the "Refusal
Period"). The Exercise Notice shall state that the Buyers agree to purchase all
or any specified part of the proposed issuance of such Common Stock or
Convertible Securities on terms substantially equal to the terms set forth in
the Issuance Notice.
(d) Right to Issue Securities. After expiration of
-------------------------
the Refusal Period, if the provisions of this Section 4(g) have been complied
with in all respects by the Company and no Exercise Notice has been given, or
if given, the Buyers have not agreed to purchase all of the securities set
forth in the Issuance Notice, the Company shall have the right for forty-five
(45) calendar days following the termination of the Refusal Period to issue such
securities, or any portion thereof not being purchased by the Buyers, as the
case may be, specified in the Issuance Notice on the terms described in the
Issuance Notice without further notice to the Buyers, but after such forty-five
(45) calendar days, no such issuance may be made without again giving
<PAGE>
notice to the Buyers and complying with all of the requirements of this
Section 4(g).
h. Disclosure. From and after the date hereof, the
----------
Company shall not disclose nonpublic information to any Buyer, advisors to or
representatives of such Buyer unless prior to disclosure of such information
the Company identifies such information as being nonpublic information and
provides the Buyer, such advisors and representatives with the opportunity to
accept or refuse to accept such nonpublic information for review.
i. Corporate Existence. So long as any Buyer
--------------------
beneficially owns any Securities, the Company shall maintain its corporate
existence in good standing under the laws of the jurisdiction in which it
is incorporated and shall not sell all or substantially all of the Company's
assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company's assets for cash, or, if for securities,
where the surviving or successor entity in such transaction (i)assumes the
Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose common stock is listed for trading on the American Stock
Exchange, NASDAQ or the New York Stock Exchange.
j. Solvency; Compliance with Law. The Company
-----------------------------
individually and together with its subsidiaries on a consolidated basis (both
before and after giving effect to the transactions contemplated by this
Agreement) is solvent (i.e., its assets have a fair market value in excess of
the amount required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no
information that would lead it to reasonably conclude that the Company would
not have, nor does it intend to take any action that would impair, its
ability to pay its debts from time to time incurred in connection therewith as
such debts mature. The Company will conduct its business in compliance with all
applicable laws, rules, ordinances and regulations of the jurisdictions in which
it is conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations the failure to comply with
which would have a Material Adverse Effect.
k. Insurance. The Company shall maintain liability,
---------
casualty and other insurance (subject to customary deductions and retentions)
with responsible insurance companies against such risk of the types and in
the amounts customarily maintained by companies of comparable size to the
Company.
l. No Integration. The Company will not conduct any
--------------
future offering that will be integrated with the issuance of the Securities for
purposes of the rules promulgated by the SEC or NASDAQ.
m. Price Protection.
----------------
(a) Adjustment to Purchase Price. In addition to the
----------------------------
rights afforded the Buyers under Section 4(g), if at any time or from time to
time on or before the two year anniversary of the Closing Date (the "Protection
Period") the Company issues any Common Stock or other equity security or
<PAGE>
Convertible Securities, other than in connection with a transaction which would
qualify as an Offering under subsections (A), (B), (C), (D), (E) or (F) of
Section 4(g), without consideration or for a consideration per share less
than the Adjusted Purchase Price (as defined below) in effect immediately
prior to such issuance (each, a "New Issuance"), the Company, concurrently
with each such New Issuance (whether or not such Buyer has exercised its
right of first refusal pursuant to Section 4(g)), shall issue to each Buyer a
number of additional shares of Common Stock (the "Additional Shares")
(provided, that nothing in this Section 4(m)(a) shall require the Company
to violate NASDAQ Rule 4460(i) and, without receiving the Buyer's prior written
consent, the Company will not issue shares pursuant to any New Issuance if the
number of Additional Shares would be limited by NASDAQ Rule 4460(i)),
without payment of any additional consideration by the Buyer or its assignee
therefor or any other action required of the Buyer or its assignee, equal to the
difference between (A) a fraction, the numerator of which is the aggregate
purchase price paid by such Buyer for the Common Shares originally purchased by
such Buyer hereunder and the denominator of which is the Adjusted Purchase Price
and (B) the number of Common Shares originally purchased by such Buyer hereunder
plus any Additional Shares previously issued to such Buyer pursuant to this
Section 4(m).
(b) Adjusted Purchase Price. The initial Adjusted
-----------------------
Purchase Price shall be $3.11 per share and shall be reduced from time to time
to reflect the Effective Purchase Price (as defined below) at which the Company
issues securities in each New Issuance. For purposes hereof the "Effective
Purchase Price" means:
(i) the per share price at which Common Stock or Convertible
Securities (other than New Issuance Warrants (as defined below)) is
issued in the New Issuance (for purposes of calculating the per share
price at which such Convertible Securities had been issued such
Convertible Securities will be deemed to have been converted on the
closing date of such New Issuance into the applicable maximum number of
Common Shares issuable thereunder, regardless of any restrictions on
conversion or exercise); or
(ii) if the New Issuance includes the issuance of both (A)
Common Stock or Convertible Securities (other than New Issuance
Warrants) and (B) securities exercisable for Common Stock ("New
Issuance Warrants") then the Effective Purchase Price shall be the
number resulting from dividing the Adjusted Proceeds (as defined below)
by the number of shares of Common Stock issued in the New Issuance or,
if applicable, the maximum number of shares of Common Stock issuable on
the closing date of such New Issuance pursuant to such Convertible
Securities (other than New Issuance Warrants), regardless of any
restrictions on conversion or exercise; or
(iii) if the New Issuance only includes New Issuance Warrants
then the Effective Purchase Price shall be the exercise price of such
New Issuance Warrants.
For purposes hereof "Adjusted Proceeds" means the proceeds received by the
Company from the issuance of the Common Stock and/or Convertible Securities
(other than New Issuance Warrants) in the New Issuance reduced by the number
resulting from multiplying the number of shares of Common Stock into which the
<PAGE>
New Issuance Warrants may be exercised by 80% of the difference between the
closing price for the Common Stock for the date prior to the date of the New
Issuance and the exercise price at which the New Issuance Warrants are issued.
If the Effective Purchase Price is greater than the Adjusted Purchase Price then
the Adjusted Purchase Price shall not change.
(c) Covenants Regarding Additional Shares. The Company
-------------------------------------
covenants and agrees that each AdditionalCommon Share issuable pursuant to
this Section 4(m) shall be duly authorized and, when issued, shall be
validly issued, fully paid and nonassessable with no liability on the part of
the holders thereof, and shall be free from all taxes, liens, security
interests, encumbrances, preemptive rights and charges.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent (in the form attached hereto as Exhibit C) to issue certificates,
or at a Buyer's request and if an electronic issuance can properly reflect any
legends required to be contained on such certificates, to electronically issue
such shares (e.g., through DWAC or DTC), representing the Common Shares,
registered in the name of each Buyer or its respective nominee(s), for the
Common Shares, Additional Shares, if any, and the Warrant Shares as the case may
be, in such amounts as specified from time to time by each Buyer to the Company
in accordance with the terms of and upon exercise of the Warrants (the
"Irrevocable Transfer Agent Instructions"). The certificates representing the
Common Shares, the Additional Shares and the Warrant Shares shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction with respect to the Securities other than (i) the
Irrevocable Transfer Agent Instructions referred to in first sentence of this
paragraph and (ii) stop transfer instructions to give effect to Section 2(f)
hereof (in the case of the Common Shares and the Warrant Shares, prior to
registration of the Common Shares and the Warrant Shares under the 1933 Act),
will be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement, the Registration Rights Agreement and
the Warrants. Nothing in this Section 5 shall affect in any way each Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of any of the Securities. If a Buyer provides the Company with an opinion
of counsel, reasonably satisfactory in form and substance to the Company, that
registration of a resale by such Buyer of any of the Securities is not required
under the 1933 Act, the Company shall permit the transfer, and, in the case of
the Common Shares, Additional Shares, if any, or Warrant Shares, promptly
instruct its transfer agent to issue one or more certificates in such name and
in such denominations as specified by such Buyer. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the
Buyers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of
this Section 5, that the Buyers shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
<PAGE>
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Common Shares and Warrants to each Buyer at the Closing is subject to the
satisfaction, with respect to each Buyer, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:
(a) Such Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(b) Such Buyer shall have delivered to the Company the
purchase price for the Common Shares being purchased by such Buyer at the
Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
(c) The representations and warranties of such Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer 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 such Buyer at or prior to the Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the Common
Shares and Warrants at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion:
a. The Company shall have executed this Agreement and
the Registration Rights Agreement, and delivered the same to such Buyer.
b. The Common Stock shall be listed and authorized for
trading on the NASDAQ National Market, and trading in the Common Stock issuable
upon exercise of the Warrants to be traded on the NASDAQ National Market
shall not have been suspended by the SEC or NASDAQ.
c. The representations and warranties of the Company
shall be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case such representations and
warranties shall be true and correct without further qualification) as of
the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
<PAGE>
Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. Such Buyer 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 and as to such
other matters as may be reasonably requested by such Buyer including, without
limitation, an update as of the Closing Date regarding the representation
contained in Section 3(c) above.
d. Each Buyer shall have received and be an addressee on
the opinion of Sonnenschein Nath & Rosenthal dated as of the Closing Date,
in form, scope and substance reasonably satisfactory to such Buyer and in
substantially the form of Exhibit D attached hereto.
e. The Company shall have issued a letter to its
transfer agent containing irrevocable instructions directing the transfer agent
to deliver to such Buyer the Stock Certificates (in such denominations as such
Buyer shall request) for the Common Shares purchased by such Buyer at the
Closing.
f. The Company shall have executed and delivered to such
Buyer the Warrants being purchased by such Buyer at the Closing.
g. The Board of Directors of the Company shall have
adopted the resolutions in substantially the form of Exhibit E attached hereto.
h. As of the Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock solely for the purpose
of effecting the exercise of the Warrants, shares of Common Stock to provide
for the issuance of the Warrant Shares in accordance with the terms of this
Agreement and the Warrants.
i. The Irrevocable Transfer Agent Instructions, in the
form of Exhibit C attached hereto, shall have been delivered to and acknowledged
in writing by the Company's transfer agent.
j. The transactions contemplated hereby shall not
violate any law, regulation or order then in effect and applicable to Buyers or
the Company.
8. INDEMNIFICATION.
In consideration of each Buyer's execution and delivery
of this Agreement and acquiring the Securities hereunder and in addition to all
of the Company's other obligations under this Agreement, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each other holder
of Securities and all of their officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Buyer
Indemnitees") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Buyer
Indemnitee is a party to the action for which indemnification hereunder is
<PAGE>
sought), and including reasonable attorneys' fees and disbursements (the "Buyer
Indemnified Liabilities"), incurred by any Buyer Indemnitee (and shall advance
the same) as a result of, or arising out of, or relating to (a) subject to
Section 9(i), any misrepresentation or breach of any representation or warranty
made by the Company in this Agreement the Warrants, the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement the Warrants or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, or (c) the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Buyer Indemnitees. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Buyer Indemnified Liabilities which is permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by
-------------
and interpreted in accordance with the laws ofthe State of Delaware without
regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed in two
------------
or more identical counterparts, all of which 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 four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are for
--------
convenience of reference and shall not form partof, or affect the interpretation
of, this Agreement.
d. 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 in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire Agreement; Amendments. This Agreement
----------------------------
supersedes all other prior oral or written agreements between the Buyers and
the Company, their affiliates and persons acting on their behalf with respect to
the matters discussed herein, and this Agreement and the documents 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, any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
f. Notices. Any notices, consents, waivers or other
-------
communications required or permitted to be givenunder the terms of this
<PAGE>
Agreement shall be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile;
(iii) three days after being sent by U.S. certified mail, return receipt
requested, or (iv) one day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. For purposes of consent under Section 4 (g)(b), notice shall be delivered
only by U.S. certified mail, return receipt requested. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
LaserSight Incorporated
3300 University Boulevard
Winter Park, Florida 32792
Telephone: (407) 678-9900
Facsimile: (407) 678-9982
Attention: President and CEO
With a copy to:
The Lowenbaum Partnership, L.L.C.
222 South Central Avenue
Suite 901
St. Louis, Missouri 63105
Telephone: (314) 746-4880
Facsimile: (314) 746-4848
Attention: Timothy L. Elliott, Esq.
and
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Telephone: (312) 876-8000
Facsimile: (312) 876-7934
Attention: Paul Miller, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Telephone: (718) 921-8293
Facsimile: (718) 921-8334
Attention: Mr. Isaac Kagan
If to a Buyer, to its address and facsimile number on the
Schedule of Buyers, with copies to such Buyer's counsel as set forth on the
Schedule of Buyers:
<PAGE>
Each party shall provide five days' prior written notice to
the other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be
----------------------
binding upon and inure to the benefit of theparties and their respective
successors and assigns, including any purchasers of the Securities. The Company
shall not assign this Agreement or any rights or obligations hereunder without
the prior written consent of the Buyers. A Buyer may assign some or all of its
rights hereunder without the consent of the Company, provided, however, that (i)
any such assignment shall not release such Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, and (ii) no Buyer may assign its
rights hereunder in a manner that would cause the offering of Securities
hereunder to be required to be registered under the 1933 Act, and (iii) Buyer or
the assignee provides notice of such assignment to the Company promptly after
the effective date of such assignment.
h. No 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.
i. Survival. The representations and warranties of the
--------
Company and the Buyers contained in Sections3 and 2, respectively, shall
survive the Closing until two years after the Closing Date. The agreements and
covenants set forth in Sections 4, 5 and 8, shall survive the Closing; provided,
however the agreements and covenants set forth in Sections 4 and 5 shall
terminate at such time none of the Buyers own any of the Securities. Each Buyer
shall be responsible only for its own representations, warranties, agreements
and covenants hereunder.
j. Publicity. The Company and each Buyer shall have
---------
the right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with respect to such
transactions as is required by applicable law and regulations (although each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof), but only to the extent required by such law or regulation.
k. Further Assurances. Each party shall do and perform,
------------------
or cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates, instruments
and documents, as the other party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
l. No Strict Construction. The language used in this
----------------------
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied
against any party.
<PAGE>
m. Equitable Relief. The Company recognizes that in the
----------------
event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Buyers. The Company therefore agrees that the Buyers shall be
entitled to seek temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
n. Consent to Jurisdiction. The parties hereto
-----------------------
expressly submit themselves to the exclusive jurisdiction of the state and
federal courts of New York in any action or proceeding relating to this
Agreement or any of the other documents contemplated hereby or any of the
transactions contemplated hereby or thereby. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in such a court and any claim that any such action, suit or proceeding
brought in such a court has been brought in an inconvenient forum. The parties
hereto irrevocably and unconditionally consent to the service of process of
any of the aforementioned courts in any such action, suit or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, at their respective addresses set forth or provided for herein,
such service to become effective 10 days after such mailing. Nothing herein
shall affect the right of any party to serve process in any manner permitted by
law or to commence legal proceedings or otherwise proceed against the other
parties in any other jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the Buyers and the Company have caused
this Securities Purchase Agreement to be duly executed as of the date first
written above.
COMPANY:
-------
LASERSIGHT INCORPORATED
By: /s/Michael R. Farris
--------------------------------
Print Name: Michael R. Farris
Title: Chief Financial Officer
BUYERS:
------
BAYSTAR CAPITAL, L.P.,
a Delaware limited partnership
BY: BayStar Capital Management LLC,
Its General Partner
By: /s/Michael A. Roth
--------------------------------
Name: Michael A. Roth
Title:
1500 West Market Street, Suite 200
Mequon, WI 53092
Fax:
BAYSTAR INTERNATIONAL LTD.,
a British Virgin Islands corporation
BY: BayStar International Management LLC,
Its Investment Manager
By: /s/Michael A. Roth
---------------------------
Name: Michael A. Roth
Title:
1500 West Market Street, Suite 200
Mequon, WI 53092
Fax:
<PAGE>
SCHEDULE OF BUYERS
Investor Address and Investor's Legal Counsel
Investor Name Facsimile Number and Counsel's Address
------------- ---------------- ---------------------
BayStar Capital, L.P c/o Stark Investments Eleazer Klein, Esq.
1500 West Market Street Schulte Roth & Zabel LLP
1,142,857 Common Shares Suite 200 900 Third Avenue
Mequon, WI 53092 New York, New York 10022
400,000 Warrant Shares Attention: Brian Davidson Fax: (212) 593-5955
BayStar International, Ltd. c/o Stark Investments Eleazer Klein, Esq.
1500 West Market Street Schulte Roth & Zabel LLP
571,429 Common Shares Suite 200 900 Third Avenue
Mequon, WI 53092 New York, New York 10022
200,000 Warrant Shares Attention: Brian Davidson Fax: (212) 593-5955
<PAGE>
List of Exhibits
----------------
Exhibit A Form of Warrant
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Transfer Agent Instructions
Exhibit D Form of Opinion of Sonnenschein Nath & Rosenthal
Exhibit E Form of Resolutions of Board
List of Schedules
-----------------
3(a) List of Subsidiaries & Jurisdictions of Due Qualification
3(c) Capitalization and Indebtedness
3(e) No Conflicts
3(g) Certain Changes
3(h) Litigation
3(l) Employment; Erisa
3(o) Title
3(t) Tax Status
3(u) Certain Transactions
