EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
January 10, 2001 by and between SurgiLight, Inc., a Delaware corporation (the
"Company"), and St. Annes Investments Ltd. (the "Purchaser").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to Purchaser from
time to time as provided herein, and Purchaser shall purchase, up to the
$30,000,000 of Common Stock (as defined below) and Warrants (as defined below);
and
WHEREAS, such investments will be made by the Purchaser as statutory
underwriter of a registered indirect primary offering of such Common Stock by
the Company.
NOW, THEREFORE, in consideration of the foregoing premises, and the
promises and covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Definitions.
(a) "Draw Down" shall have the meaning assigned to such term
in Section 6.1(a) hereof.
(b) "Draw Down Pricing Period" shall mean a period of
twenty-two (22) consecutive Trading Days beginning on the date
specified in the Draw Down Notice (as defined in Section 6.1(e)
hereof); provided, however, the Draw Down Pricing Period shall not
begin before the day on which receipt of such notice is delivered
pursuant to Section 9.4 herein.
(c) "Effective Date" shall mean the date the Registration
Statement of the Company covering the Shares being subscribed for
hereby is declared effective by the Securities and Exchange Commission
(the "SEC").
(d) "GAAP" shall mean the United States Generally Accepted
Accounting Principles as those conventions, rules and procedures are
determined by the Financial Accounting Standards Board and its
predecessor agencies.
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(e) "Investment Amount" shall have the meaning assigned to
such term in Section 6.1(e) hereof.
(f) "Material Adverse Effect" shall mean any adverse effect on
the business, operations, properties, prospects or financial condition
of the Company that is material and adverse to the Company and its
subsidiaries and affiliates, taken as a whole and/or any condition,
circumstance, or situation that would prohibit or otherwise materially
interfere with the ability of the Company to perform any of its
material obligations under this Agreement or the Registration Rights
Agreement or to perform its obligations under any other Material
Agreement (as defined in Section 3.1(u)).
(h) "Principal Market" shall mean initially the OTC Bulletin
Board and shall include the American Stock Exchange, Nasdaq Small-Cap
Market, Nasdaq National Market or the New York Stock Exchange if the
Company becomes listed and trades on such market or exchange after the
date hereof.
(i) "Purchase Price" shall mean 94% of the VWAP on the date in
question.
(j) "Registration Statement" shall mean the registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), to be filed with the Securities and Exchange Commission for the
registration of the Shares pursuant to the Registration Rights
Agreement attached hereto as Exhibit A (the "Registration Rights
Agreement).
(k) "SEC Documents" shall mean the Company's latest Form 10-K
or Form 10-KSB as of the time in question, all Forms 10-Q or 10-QSB and
8-K filed thereafter, and the Proxy Statement for its latest fiscal
year as of the time in question until such time as the Company no
longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights
Agreement.
(l) "Settlement Period" shall have the meaning assigned to
such term in Section 6.1(b).
(m) "Shares" shall mean, collectively, the shares of Common
Stock of the Company being subscribed for hereunder (the "Draw Down
Shares") and those shares of Common Stock issuable to the Purchaser
upon exercise of the Warrant (the "Warrant Shares").
(n) "Threshold Price" shall mean the price per Share
designated by the Company as the lowest VWAP during any Draw Down
Pricing Period at which the Company will sell its Common Stock in
accordance with this Agreement.
(o) "Trading Day" shall mean any day on which the Principal
Market is open for business.
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(p) "VWAP" shall mean the daily volume weighted average price
of the Company's Common Stock on the Principal Market as reported by
Bloomberg Financial L.P. (based on a trading day from 9:30 am EST to
4:02 pm EST) using the VAP function on the date in question.
(q) "Warrant" shall mean the meaning assigned to such term in
Section 5.2(f) hereof.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.1. Purchase and Sale of Stock. Subject to the terms and
conditions of this Agreement, the Company may sell and issue to the Purchaser
and the Purchaser shall be obligated to purchase from the Company up to an
aggregate purchase price of thirty million dollars ($30,000,000) of the
Company's Common Stock (the "Commitment Amount"), $0.001 par value per share
(the "Common Stock"), and the Warrant, based on Draw Downs of up to two million
dollars ($2,000,000) per Draw Down.
Section 2.2. The Shares. The Company has authorized and has reserved
and covenants to continue to reserve, free of preemptive rights and other
similar contractual rights of stockholders, a sufficient number of its
authorized but unissued shares of Common Stock to cover the Shares to be issued
in connection with all Draw Downs requested under this Agreement. Anything in
this Agreement to the contrary notwithstanding, the Company may not make a Draw
Down to the extent that such Draw Down equals or exceeds a number of shares
equal to or greater than 8% of the then outstanding shares of Common Stock.
Section 2.3. Purchase Price and Initial Closing. The Company agrees to
issue and sell to the Purchaser and, in consideration of and in express reliance
upon the representations, warranties, covenants, terms and conditions of this
Agreement, the Purchaser agrees to purchase that number of the Shares to be
issued in connection with each Draw Down. The delivery of executed documents
under this Agreement and the other agreements referred to herein and the payment
of the fees set forth in Article II of the Escrow Agreement, attached as Exhibit
B hereto, (the "Initial Closing") shall take place at the offices of Xxxxxxx
Xxxxxx & Green, P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (i) within
fifteen (15) days from the date hereof, or (ii) such other time and place or on
such date as the Purchaser and the Company may agree upon (the "Initial Closing
Date"). Each party shall deliver all documents, instruments and writings
required to be delivered by such party pursuant to this Agreement at or prior to
the Initial Closing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representation and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate
authority to own, lease and operate its properties and assets and to
carry on its business as now being conducted. The Company does not have
any subsidiaries and does not own more than fifty percent (50%) of or
control any other business entity except as set forth in the SEC
Documents. The Company is duly qualified to do business and is in good
standing as a foreign corporation in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to
qualify would not have a Material Adverse Effect.
(b) Authorization, Enforcement. (i) The Company has the
requisite corporate power and corporate authority to enter into and
perform its obligations under this Agreement, the Registration Rights
Agreement, the Escrow Agreement (collectively, the "Transaction
Documents") and to issue the Draw Down Shares pursuant to their
respective terms, (ii) the execution and delivery of the Transaction
Documents 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 no further consent or authorization of
the Company or its Board of Directors or stockholders is required, and
(iii) the Transaction Documents have been duly executed and delivered
by the Company and at the Initial Closing shall constitute valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws
relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general
application. The Company has duly and validly authorized and reserved
for issuance shares of Common Stock sufficient in number for the
issuance of the Draw Down Shares.
(c) Capitalization. Except as set forth on Schedule 3.1(c),
the authorized capital stock of the Company consists of 30,000,000
shares of Common Stock of which 21,490,000 shares are issued and
outstanding and no shares of preferred stock are issued and
outstanding. All of the outstanding shares of the Company's Common
Stock have been duly and validly authorized and are fully paid and
non-assessable, except as set forth in the SEC Documents. Except as set
forth in this Agreement and the Registration Rights Agreement and as
set forth in the SEC Documents, or on Schedule 3.1(c) hereto, no shares
of Common Stock are entitled to preemptive rights or registration
rights and there are no outstanding options, warrant, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible
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into, any shares of capital stock of the Company. Furthermore, except
as set forth in this Agreement and as set forth in the SEC Documents or
on Schedule 3.1(c), there are no contracts, commitments,
understandings, or arrangements by which the Company is or may become
bound to issue additional shares of the capital stock of the Company or
options, securities or rights convertible into shares of capital stock
of the Company. Except as set forth on Schedule 3.1(c), the Company is
not a party to any agreement granting registration rights to any person
with respect to any of its equity or debt securities. Except as set
forth on Schedule 3.1(c), the Company is not a party to, and it has no
knowledge of, any agreement restricting the voting or transfer of any
shares of the capital stock of the Company. Except as set forth in the
SEC Documents or on Schedule 3.1(c) hereto, the offer and sale of all
capital stock, convertible securities, rights, warrants, or options of
the Company issued prior to the Initial Closing complied with all
applicable federal and state securities laws, and to the Company's
knowledge, no stockholder has a right of rescission or damages with
respect thereto which would have a Material Adverse Effect on the
Company's financial condition or operating results. The Company has
made available to the Purchaser true and correct copies of the
Company's articles or certificate of incorporation as in effect on the
date hereof (the "Charter"), and the Company's bylaws as in effect on
the date hereof (the "Bylaws"). The Company has not received any notice
from the Principal Market questioning or threatening the continued
inclusion of the Common Stock on such market.
(d) Issuance of Shares. The Shares to be issued under this
Agreement have been duly authorized by all necessary corporate action
and, when paid for and issued in accordance with the terms hereof and
the Warrant, the Shares shall be validly issued and outstanding, fully
paid and non-assessable, and the Purchaser shall be entitled to all
rights accorded to a holder of Common Stock.
(e) No Conflicts. Except as set forth on Schedule 3.1(e), the
execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated
herein do not and will not (i) violate any provision of the Company's
Charter or Bylaws, (ii) conflict with, 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 agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company is a party, (iii) create or impose a
lien, charge or encumbrance on any property of the Company under any
agreement or any commitment to which the Company is a party or by which
the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal, state,
local or other foreign statute, rule, regulation, order, judgment or
decree (including any federal or 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 are bound
or affected, except, in all cases, for such conflicts, defaults,
termination, amendments, accelerations, cancellations and violations as
would not, individually or in the aggregate, have a Material Adverse
Effect. The business of the Company and its subsidiaries is not being
conducted in violation of any laws, ordinances or regulations of any
governmental entity, except for possible violations
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which singularly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under any federal,
state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement, or issue and sell
the Shares in accordance with the terms hereof (other than any filings
which may be required to be made by the Company with the SEC or state
securities administrators subsequent to the Initial Closing and any
registration statement which may be filed pursuant hereto); provided
that, for purpose of the representation made in this sentence, the
Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Purchaser herein.
(f) SEC Documents, Financial Statements. The Common Stock of
the Company is registered pursuant to Section 12(g) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and, except
as disclosed in the SEC Documents or on Schedule 3.1(f) hereto, 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 Exchange Act, including material filed
pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the
foregoing including filings incorporated by reference therein being
referred to herein as the "SEC Documents"). The Company has delivered
or made available to the Purchaser, through the XXXXX system or
otherwise, true and complete copies of the SEC Documents filed with the
SEC since December 31, 1998. Except as set forth on Schedule 3.1(f),
the Company has not provided to the Purchaser any information which,
according to applicable law, rule or regulation, should have been
disclosed publicly by the Company but which has not been so disclosed,
other than with respect to the transactions contemplated by this
Agreement. As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Exchange
Act or the Securities Act, as applicable, and the rules and regulations
of the SEC promulgated thereunder applicable to such documents, and, as
of their respective filing dates, none of the SEC Documents 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. The financial statements of the Company included
in the SEC Documents comply as to form in all material respects with
applicable accounting requirements under GAAP and the published rules
and regulations of the SEC or other applicable rules and regulations
with respect thereto. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis 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 not include footnotes or may
be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its subsidiaries as
of the dates thereof and the results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(g) Subsidiaries. The SEC Documents or Schedule 3.1(g) hereto
sets forth each subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of the
Company's ownership of the outstanding
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stock or other interests of such subsidiary. For the purposes of this
Agreement, "subsidiary" shall mean any corporation or other entity of
which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for
the election of directors or other persons performing similar functions
are at the time owned directly or indirectly by the Company and/or any
of its other subsidiaries. All of the issued and outstanding shares of
capital stock of each subsidiary have been duly authorized and validly
issued, and are fully paid and non-assessable. There are no outstanding
preemptive, conversion or other rights, options, warrants or agreements
granted or issued by or binding upon any subsidiary for the purchase or
acquisition of any shares of capital stock of any subsidiary or any
other securities convertible into, exchangeable for or evidencing the
rights to subscribe for any shares of such capital stock. Neither the
Company nor any subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of
the capital stock of any subsidiary or any convertible securities,
rights, warrants or options of the type described in the preceding
sentence. Neither the Company nor any subsidiary is a party to, nor has
any knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of any subsidiary.
(h) No Material Adverse Effect. Since the date of the
financial statement contained in the most recently filed Form 10-Q (or
10-QSB) or Form 10-K (or 10-KSB), whichever is most current, no
Material Adverse Effect has occurred or exists with respect to the
Company, except as disclosed in the SEC Documents or on Schedule 3.1(h)
hereto.
(i) No Undisclosed Liabilities. Except as disclosed in the SEC
Documents or on Schedule 3.1(i) hereto, neither the Company nor any of
its subsidiaries has any liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) that would be required to be
disclosed on a balance sheet of the Company or any subsidiary
(including the notes thereto) in conformity with GAAP which are not
disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company's or its subsidiaries' respective
businesses since such date and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect on the Company or
its subsidiaries.
(j) No Undisclosed Events or Circumstances. Since the date of
the financial statement contained in the most recently filed Form 10- Q
(or 10-QSB) or Form 10-K (or 10-KSB), whichever is most current, no
event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or
financial condition, that, under applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof by
the Company but which has not been so publicly announced or disclosed
in the SEC Documents.
(k) Indebtedness. The SEC Documents or Schedule 3.1(k) hereto
sets forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any subsidiary, or for which the Company
or any subsidiary has commitments. For the purposes of this Agreement,
"Indebtedness" shall mean (A) any
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liabilities for borrowed money or amounts owed in excess of $250,000
(other than trade accounts payable incurred in the ordinary course of
business), (B) all guaranties, endorsements and contingent obligations
in respect of Indebtedness of others, whether or not the same are or
should be reflected in the Company's balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary
course of business; and (C) the present value of any lease payments in
excess of $250,000 due under leases required to be capitalized in
accordance with GAAP. Neither the Company nor any subsidiary is in
default with respect to any Indebtedness.
(l) Title to Assets. Each of the Company and the subsidiaries
has good and marketable title to all of its real and personal property
reflected in the SEC Documents, free of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except for
those indicated in the SEC Documents or on Schedule 3.1(1) hereto or
such that do not cause a Material Adverse Effect. All said leases of
the Company and each of its subsidiaries are valid and subsisting and
in full force and effect.
(m) Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any subsidiary which
questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto
or thereto. Except as set forth in the SEC Documents or on Schedule
3.1(m) hereto, there is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened,
against or involving the Company, any subsidiary or any of their
respective properties or assets. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any subsidiary.
(n) Compliance with Law. The Company and each of its
subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for
the conduct of their respective businesses as now being conducted by
them unless the failure to possess such franchises, permits, licenses,
consents and other governmental or regulatory authorizations and
approvals, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(o) Taxes. The Company and each subsidiary has filed all Tax
Returns which it is required to file under applicable laws; all such
Tax Returns are true and accurate and have been prepared in compliance
with all applicable laws; the Company has paid all Taxes due and owing
by it or any subsidiary (whether or not such Taxes are required to be
shown on a Tax Return) and has withheld and paid over to the
appropriate taxing authorities all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder,
creditor or other third parties; and since December 31, 1999, the
charges, accruals and reserves for Taxes with respect to the Company
(including any provisions for deferred income taxes) reflected on the
books of the
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Company are adequate to cover any Tax liabilities of the Company if its
current tax year were treated as ending on the date hereof.
No claim has been made by a taxing authority in a jurisdiction
where the Company does not file tax returns that the Company or any
subsidiary is or may be subject to taxation by that jurisdiction. There
are no foreign, federal, state or local tax audits or administrative or
judicial proceedings pending or being conducted with respect to the
Company or any subsidiary; no information related to Tax matters has
been requested by any foreign, federal, state or local taxing
authority; and, except as disclosed above, no written notice indicating
an intent to open an audit or other review has been received by the
Company or any subsidiary from any foreign, federal, state or local
taxing authority. There are no material unresolved questions or claims
concerning the Company's Tax liability. The Company (A) has not
executed or entered into a closing agreement pursuant to ss. 7121 of
the Internal Revenue Code or any predecessor provision thereof or any
similar provision of state, local or foreign law; and (B) has not
agreed to or is required to make any adjustments pursuant to ss. 481
(a) of the Internal Revenue Code or any similar provision of state,
local or foreign law by reason of a change in accounting method
initiated by the Company or any of its subsidiaries or has any
knowledge that the IRS has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods
that relate to the business or operations of the Company. The Company
has not been a United States real property holding corporation within
the meaning of ss. 897(c)(2) of the Internal Revenue Code during the
applicable period specified in ss. 897(c)(1)(A)(ii) of the Internal
Revenue Code.
The Company has not made an election under ss. 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of
another person that is not a subsidiary of the Company under (A) Treas.
Reg. ss. 1.1502-6 (or comparable provisions of state, local or foreign
law), (B) as a transferee or successor, (C) by contract or indemnity or
(D) otherwise. The Company is not a party to any tax sharing agreement.
The Company has not made any payments, is not obligated to make
payments nor is it a party to an agreement that could obligate it to
make any payments that would not be deductible under ss. 280G of the
Internal Revenue Code.
For purposes of this Section 3.1(o):
"IRS" means the United States Internal Revenue Service.
"Tax" or "Taxes" means federal, state, county, local, foreign,
or other income, gross receipts, ad valorem, franchise, profits, sales
or use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license,
payroll, wage or other withholding, employment, social security,
severance, stamp, occupation, alternative or add-on minimum, estimated
and other taxes of any kind whatsoever (including, without limitation,
deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
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"Tax Return" means any return, information report or filing
with respect to Taxes, including any schedules attached thereto and
including any amendment thereof.
(p) Certain Fees. Except as set forth on Schedule 3.1(p)
hereto, no brokers, finders or financial advisory fees or commissions
will be payable by the Company or any subsidiary with respect to the
transactions contemplated by this Agreement.
(q) Disclosure. To the best of the Company's knowledge,
neither this Agreement or the Schedules hereto nor any other documents,
certificates or instruments furnished to the Purchaser by or on behalf
of the Company or any subsidiary in connection with the transactions
contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements made herein or therein, in the light of the
circumstances under which they were made herein or therein, not
misleading.
(r) Operation of Business. The Company and each of the
subsidiaries owns or possesses all patents, trademarks, service marks,
trade names, copyrights, licenses and authorizations as set forth in
the SEC Documents or on Schedule 3.1(r) hereto, and all rights with
respect to the foregoing, which are necessary for the conduct of its
business as now conducted without any conflict with the rights of
others.
(s) Insurance. Except as disclosed in the SEC Documents or on
Schedule 3.1(s) hereto, the Company carries or will have the benefit of
insurance in such amounts and covering such risks as is adequate for
the conduct of its business and the value of its properties and as is
customary for companies engaging in similar businesses and similar
industries.
(t) Books and Records. The records and documents of the
Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and
the subsidiaries, the location and collection of their assets, and the
nature of all transactions giving rise to the obligations or accounts
receivable of the Company or any subsidiary.
(u) Material Agreements. Except as set forth in the SEC
Documents, or on Schedule 3.1(u) hereto, neither the Company nor any
subsidiary is a party to any written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, a copy of which
would be required to be filed with the SEC as an exhibit to a
registration statement on Form S-1 or other applicable form
(collectively, "Material Agreements") if the Company or any subsidiary
were registering securities under the Securities Act. Except as set
forth on Schedule 3.1(u), the Company and each of its subsidiaries has
in all material respects performed all the obligations required to be
performed by them to date under the foregoing agreements, have received
no notice of default and, to the best of the Company's knowledge are
not in default under any Material Agreement now in effect, the result
of which could cause a Material Adverse Effect. Except as set forth in
the SEC Documents, no written or oral contract, instrument,
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agreement, commitment, obligation, plan or arrangement of the Company
or of any subsidiary limits or shall limit the payment of dividends on
the Company's Common Stock.
(v) Transactions with Affiliates. Except as set forth in the
SEC Documents or on Schedule 3.1(v) hereto, there are no loans, leases,
agreements, contracts, royalty agreements, management contracts or
arrangements or other continuing transactions exceeding $100,000
between (A) the Company, any subsidiary or any of their respective
customers or suppliers on the one hand, and (B) on the other hand, any
officer, employee, consultant or director of the Company, or any of its
subsidiaries, or any person owning 5% or more of the capital stock of
the Company or any subsidiary or any member of the immediate family of
such officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee,
consultant, director or stockholder, or a member of the immediate
family of such officer, employee, consultant, director or stockholder.
(w) Securities Laws. The Company has complied and will comply
with all applicable federal, Florida and New York securities laws in
connection with the offer, issuance and sale of the Shares hereunder.
Neither the Company nor anyone acting on its behalf, directly or
indirectly, has or will sell, offer to sell or solicit offers to buy
the Shares or similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person (other than the
Purchaser), so as to bring the issuance and sale of the Shares under
the registration provisions of the Securities Act and applicable state
securities laws. Neither the Company nor 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 Securities Act) in connection with the offer or
sale of the Shares.
(x) Employees. Neither the Company nor any subsidiary has any
collective bargaining arrangements or agreements covering any of its
employees. Except as set forth in the SEC Documents or on Schedule
3.1(x) hereto, neither the Company nor any subsidiary is in breach of
any employment contract, agreement regarding proprietary information,
noncompetition agreement, nonsolicitation agreement, confidentiality
agreement, or any other similar contract or restrictive covenant,
relating to the right of any officer, employee or consultant to be
employed or engaged by the Company or such subsidiary. Since the date
of the December 31, 1999 Form 10-K (or 10-KSB), no officer, consultant
or key employee of the Company or any subsidiary whose termination,
either individually or in the aggregate, could have a Material Adverse
Effect, has terminated or, to the knowledge of the Company, has any
present intention of terminating his or her employment or engagement
with the Company or any subsidiary.
(y) Absence of Certain Developments. Except as disclosed in
SEC Documents or on Schedule 3.1(y) hereto, since the date of the
financial statement contained in the most recently filed Form 10-Q (or
10-QSB) or Form 10-K (or 10KSB), whichever is most current, neither the
Company nor any subsidiary has:
11
(i) issued any stock, bonds or other corporate
securities or any rights, options or warrants with respect
thereto;
(ii) borrowed any amount or incurred or become
subject to any liabilities (absolute or contingent) except
current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of
business during the comparable portion of its prior fiscal
year, as adjusted to reflect the current nature and volume of
the Company's or such subsidiary's business;
(iii) discharged or satisfied any lien or encumbrance
or paid any obligation or liability (absolute or contingent),
other than current liabilities paid in the ordinary course of
business;
(iv) declared or made any payment or distribution of
cash or other property to stockholders with respect to its
stock, or purchased or redeemed, or made any agreements so to
purchase or redeem, any shares of its capital stock;
(v) sold, assigned or transferred any other tangible
assets, or canceled any debts or claims, except in the
ordinary course of business;
(vi) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other
intangible assets or intellectual property rights, or
disclosed any proprietary confidential information to any
person except to customers in the ordinary course of business
or to the Purchaser or its representatives;
(vii) suffered any material losses (except for
anticipated losses consistent with prior quarters) or waived
any rights of material value, whether or not in the ordinary
course of business, or suffered the loss of any material
amount of prospective business;
(viii) made any changes in employee compensation
except in the ordinary course of business and consistent with
past practices;
(ix) made capital expenditures or commitments
therefor that aggregate in excess of $500,000;
(x) entered into any other material transaction,
whether or not in the ordinary course of business;
(xi) suffered any material damage, destruction or
casualty loss, whether or not covered by insurance;
(xii) experienced any material problems with labor or
management in connection with the terms and conditions of
their employment; or
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(xiii) effected any two or more events of the
foregoing kind which in the aggregate would be material to the
Company or its subsidiaries.
(z) Governmental Approvals. Except as set forth in the SEC
Documents or on Schedule 3.1(z) hereto, and except for the filing of
any notice prior or subsequent to any Settlement Date that may be
required under applicable federal or state securities laws (which if
required, shall be filed on a timely basis), including the filing of a
registration statement or post-effective amendment pursuant to this
Agreement, no authorization, consent, approval, license, exemption of,
filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the
delivery of the Shares, or for the performance by the Company of its
obligations under this Agreement.
(aa) Use of Proceeds. The proceeds from the sale of the Shares
will be used by the Company and its subsidiaries for general corporate
purposes.
(bb) Acknowledgment Regarding Purchaser's Purchase of Shares.
Company acknowledges and agrees that Purchaser is acting solely in the
capacity of arm's length purchaser with respect to this Agreement and
the transactions contemplated hereunder. The Company further
acknowledges that the Purchaser 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 hereunder. The Company
further represents to the Purchaser that the Company's decision to
enter into this Agreement has been based solely on (a) the Purchaser's
representations and warranties in Section 3.2, and (b) the independent
evaluation by the Company and its own representatives and counsel.
(cc) Brokers and Finders Fees. Except as set forth on Schedule
3.1(cc), the Company does not owe any broker or finder any fees in
connection with the transaction contemplated under this Agreement.
Section 3.2. Representations and Warranties of the Purchaser. The
Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser. The Purchaser
is a corporation duly incorporated, validly existing and in good
standing under the laws of the British Virgin Islands.
(b) Authorization and Power. The Purchaser has the requisite
power and authority to enter into and perform the Transaction Documents
and to purchase the Shares being sold to it hereunder. The execution,
delivery and performance of the Transaction Documents by Purchaser and
the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and at the
Initial Closing shall constitute valid and binding obligations of the
Purchaser enforceable against the Purchaser in accordance with their
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization,
13
moratorium, liquidation, conservatorship, receivership or similar laws
relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general
application
(c) No Conflicts. The execution, delivery and performance of
this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby or relating hereto do not and will not
(i) result in a violation of the Purchaser's charter documents or
bylaws 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, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument
to which the Purchaser is a party, or result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Purchaser or its properties
(except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a Material Adverse Effect on
Purchaser). The Purchaser is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or to purchase the
Shares in accordance with the terms hereof.
(d) Financial Risks. The Purchaser acknowledges that it is
able to bear the financial risks associated with an investment in the
Shares and that it has been given full access to such records of the
Company and the subsidiaries and to the officers of the Company and the
subsidiaries as it has deemed necessary or appropriate to conduct its
due diligence investigation. The Purchaser is capable of evaluating the
risks and merits of an investment in the Shares by virtue of its
experience as an investor and its knowledge, experience, and
sophistication in financial and business matters and the Purchaser is
capable of bearing the entire loss of its investment in the Shares.
(e) Accredited Investor. The Purchaser is an "accredited
investor" as defined in Regulation D promulgated under the Securities
Act.
(f) General. The Purchaser understands that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the suitability of the Purchaser to
acquire the Shares.
ARTICLE IV
COVENANTS
The Company covenants with the Purchaser as follows:
Section 4.1. Securities Compliance. If applicable, the Company shall
notify the Principal Market, in accordance with its rules and regulations, of
the transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required
14
and permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Shares and the Warrant to the Purchaser or subsequent holders.
Section 4.2. Registration and Listing. The Company will cause its
Common Stock to continue to be registered under Sections 12(b) or 12(g) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements related to
any registration statement filed pursuant to this Agreement, and will not take
any action or file any document (whether or not permitted by the Securities Act
or the Exchange Act or the rules promulgated thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act, except as permitted
herein. The Company will take all action necessary to continue the listing or
trading of its Common Stock on the Principal Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market and shall provide the Purchaser with
copies of any correspondence to or from such Principal Market which questions or
threatens delisting of the Common Stock, within three (3) Trading Days of the
Company's receipt thereof, until the Purchaser has disposed of all of the
Shares.
Section 4.3. Escrow Arrangement. The Company and the Purchaser shall
enter into an escrow arrangement with Xxxxxxx Xxxxxx & Green, P.C. (the "Escrow
Agent") in the Form of Exhibit B hereto respecting payment against delivery of
the Shares.
Section 4.4. Registration Rights Agreement. The Company and the
Purchaser shall enter into the Registration Rights Agreement in the Form of
Exhibit A hereto. Before the Purchaser shall be obligated to accept a Draw Down
request from the Company, the Company shall have caused a sufficient number of
shares of Common Stock to be registered to cover the Shares to be issued in
connection with such Draw Down.
Section 4.5. Accuracy of Registration Statement.On each Settlement
Date, the Registration Statement and the prospectus therein shall not contain
any untrue statement of a material fact or omit to state any material fact to be
required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which they were made;
and on such Settlement Date or date of filing of the Registration Statement and
the prospectus therein will not include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, the Company makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement and the prospectus therein in reliance upon and in conformity with the
information furnished in writing to the Company by the Purchaser specifically
for inclusion in the Registration Statement and the prospectus therein.
Section 4.6. Compliance with Laws. The Company shall comply, and cause
each subsidiary to comply, with all applicable laws, rules, regulations and
orders, noncompliance with which could have a Material Adverse Effect.
15
Section 4.7. Keeping of Records and Books of Account. The Company shall
keep and cause each subsidiary to keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
Section 4.8. Other Agreements. The Company shall not enter into any
agreement the terms of which such agreement would restrict or impair the ability
of the Company to perform its obligations under this Agreement.
Section 4.9. Notice of Certain Events Affecting Registration;
Suspension of Right to Request a Draw Down. The Company will immediately notify
the Purchaser in writing pursuant to Section 9.4 herein, upon the occurrence of
any of the following events in respect of the Registration Statement or related
prospectus in respect of the Shares: (i) receipt of any request for additional
information from the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement the response to
which would require any amendments or supplements to the Registration Statement
or related prospectus; (ii) the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate. The Company shall
not deliver to the Purchaser any Draw Down Notice during the continuation of any
of the foregoing events. The Company shall promptly make available to the
Purchaser any such supplements or amendments to the related prospectus, at which
time, provided that the registration statement and any supplements and
amendments thereto are then effective, the Company may recommence the delivery
of Draw Down Notices.
Section 4.10. Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument or by
operation of law the obligation to deliver to the Purchaser such shares of stock
and/or securities as the Purchaser is entitled to receive pursuant to this
Agreement.
16
Section 4.11. Limitation on Future Financing. The Company agrees that,
except as set forth below, it will not enter into any sale of its Common Stock
or securities convertible into cash at a discount to the current market price
until the earlier of (i) 18 months from the Effective Date, or (ii) sixty (60)
days after the entire Commitment Amount has been purchased by the Purchaser. The
foregoing shall not prevent or limit the Company from engaging in any sale of
securities (i) in a registered public offering by the Company which is
underwritten by one or more established investment banks (not including an
equity line type of financing), (ii) in one or more private placements where the
purchasers do not have registration rights, (iii) pursuant to any presently
existing or future employee benefit plan which plan has been or is approved by
the Company's stockholders, (iv) pursuant to any compensatory plan for
directors, officers, full-time employee or key consultant, (v) in connection
with a strategic partnership or other business transaction, the principal
purpose of which is not simply to raise money, or (vi) to which Purchaser gives
its prior written consent, which it shall not unreasonably withhold. Further,
the Purchaser shall have a right of first refusal, to elect to participate, in
such subsequent transaction in the case of (i), (ii) and (vi) above. Such right
of first refusal must be exercised in writing and delivered pursuant to Section
9.4 hereof within seven (7) Trading Days of the Purchaser's receipt of notice of
the proposed terms of such financing.
The Purchaser covenants with the Company as follows:
Section 4.12. Compliance with Law. The Purchaser agrees that its
trading activities with respect to shares of the Company's Common Stock will be
in compliance with all applicable state and federal securities laws, rules and
regulations and rules and regulations of the Principal Market on which the
Company's Common Stock is listed. Without limiting the generality of the
foregoing, the Purchaser agrees that it will, whenever required by federal
securities laws, deliver the prospectus included in the Registration Statement
to any purchaser of Shares from the Purchaser.
ARTICLE V
CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS
Section 5.1. Conditions Precedent to the Obligation of the Company to
Sell the Shares. The obligation hereunder of the Company to proceed to close
this Agreement and to issue and sell the Shares to the Purchaser is subject to
the satisfaction or waiver, at or before the Initial Closing, and as of each
Settlement Date of each of the conditions set forth below. These conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
(a) Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser shall
be true and correct in all material respects as of the date when made
and as of the Initial Closing and as of each Settlement Date as though
made at that time, except for representations and warranties that speak
as of a particular date.
17
(b) Performance by the Purchaser. The Purchaser shall have
performed, satisfied and complied in all material respects with all
material covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Purchaser
at or prior to the Initial Closing and as of each Settlement Date.
(c) No Injunction. 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 which prohibits the consummation of any of the
transactions contemplated by this Agreement.
Section 5.2. Conditions Precedent to the Obligation of the Purchaser to
Close. The obligation hereunder of the Purchaser to perform its obligations
under this Agreement and to purchase the Shares is subject to the satisfaction
or waiver, at or before the Initial Closing, of each of the conditions set forth
below. These conditions are for the Purchaser's sole benefit and may be waived
by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties.
Each of the representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of
the Initial Closing as though made at that time (except for
representations and warranties that speak as of a particular date).
(b) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Initial
Closing.
(c) No Injunction. 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 which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(d) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall
have been commenced, and no investigation by any governmental authority
shall have been threatened, against the Purchaser or the Company or any
subsidiary, or any of the officers, directors or affiliates of the
Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in
connection with such transactions.
(e) Opinion of Counsel, Etc. At the Initial Closing, the
Purchaser shall have received an opinion of counsel to the Company,
dated as of the Initial Closing Date, in the form of Exhibit C hereto.
(f) Warrant. On the Initial Closing Date, the Company shall
issue to the Purchaser a warrant certificate to purchase up to 100,000
shares of Common Stock.
18
The Warrant shall have a term from its initial date of exercise of
three (3) years. The exercise price of the Warrant shall be 120% of the
average of the closing bid prices of the Common Stock on the Principal
Market during the five (5) Trading Days immediately prior to the
Initial Closing Date. The Common Stock underlying the Warrant will be
registered in the Registration Statement referred to in Section 4.3
hereof. The Warrant shall be in the form of Exhibit E hereto.
Section 5.3. Conditions Precedent to the Obligation of the Purchaser to
Accept a Draw Down and Purchase the Shares. The obligation hereunder of the
Purchaser to accept a Draw Down request and to acquire and pay for the Shares is
subject to the satisfaction at or before each Settlement Date, of each of the
conditions set forth below.
(a) Satisfaction of Conditions to Initial Closing. The Company
shall have satisfied, or the Purchaser shall have waived at the Initial
Closing, the conditions set forth in Section 5.2 hereof
(b) Effective Registration Statement. The Registration
Statement registering the Shares shall have been declared effective by
the SEC and shall remain effective on each Settlement Date.
(c) No Suspension. Trading in the Company's Common Stock shall
not have been suspended by the SEC or the Principal Market (except for
any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to the delivery of each Draw
Down Notice), and, at any time prior to such Draw Down Notice, trading
in securities generally as reported on the Principal Market shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported on the Principal
Market unless the general suspension or limitation shall have been
terminated prior to the delivery of such Draw Down Notice.
(d) Material Adverse Effect. No Material Adverse Effect and no
Consolidation Event where the successor entity has not agreed to
perform the Company's obligations shall have occurred.
(e) Opinion of Counsel. The Purchaser shall have received (i)
a "down-to-date" letter from the Company's counsel, confirming that
there is no change from the counsel's previously delivered opinion, or
else specifying with particularity the reason for any change and an
opinion as to the additional items specified in Exhibit C hereto, and
(ii) any other items set forth in the Escrow Agreement.
ARTICLE VI
DRAW DOWN TERMS
Section 6.1. Draw Down Terms. Subject to the satisfaction of the
conditions set forth in this Agreement, the parties agree as follows:
19
(a) The Company, may, in its sole discretion, issue and
exercise a draw down (a "Draw Down") during each Draw Down Pricing
Period, which Draw Down the Purchaser shall be obligated to accept for
a period of 18 months commencing immediately after the Effective Date
(the "Commitment Period").
(b) Only one Draw Down shall be allowed in each Draw Down
Pricing Period. There shall be at least five (5) Trading Days between
Draw Down Pricing Periods. The number of shares of Common Stock
purchased by the Purchaser with respect to each Draw Down shall be
determined as set forth in Section 6.1(d) herein and settled on:
(i) as to the 1st through the 11th Trading Days after
a Draw Down Pricing Period commences (the "First Settlement
Period"), on the 13th Trading Day after a Draw Down Pricing
Period commences; and
(ii) (ii) as to the 12th through the 22nd Trading
Days after a Draw Down Pricing Period commences (the "Second
Settlement Period"), the 24th Trading Day after a Draw Down
Pricing Period. (each, a "Settlement Date" and the First and
Second Settlement Periods collectively referred to as
"Settlement Periods").
In connection with each Draw Down Pricing Period, the Company
may set the Threshold Price in the Draw Down Notice.
(c) The minimum Investment Amount for any Draw Down shall be
$100,000 and the maximum Investment Amount as to each Draw Down shall
be the lesser of (i) $2,000,000, and (ii) 4.5% of the average of the
VWAPs for the Common Stock for the sixty (60) calendar day period
immediately prior to the applicable Commencement Date (defined below)
multiplied by the total trading volume in respect of the Common Stock
for the sixty (60) calendar day period immediately prior to such
Commencement Date.
(d) The number of Shares of Common Stock to be issued on each
Settlement Date shall be a number of shares equal to the sum of the
quotients (for each trading day within the Settlement Period) of (x)
1/22nd of the Investment Amount, and (y) the Purchase Price on each
Trading Day within the Settlement Period, subject to the following
adjustments:
(i) if the VWAP on a given Trading Day is less than
the Threshold Price, then the Investment Amount will be
reduced by 1/22nd and that day shall be withdrawn from the
Settlement Period; and
(ii) trading of the Common Stock on the Principal
Market is suspended for more than three (3) hours, in the
aggregate, on any Trading Day during the Settlement Period,
the Investment Amount shall be reduced by 1/22nd and that day
shall be withdrawn from the applicable Settlement Period.
20
(e) The Company must inform the Purchaser by delivering a draw
down notice, in the form of Exhibit D hereto (the "Draw Down Notice"),
via facsimile transmission in accordance with Section 9.4 as to the
amount of the Draw Down (the "Investment Amount") the Company wishes to
exercise, before the first day of the Draw Down Pricing Period (the
"Commencement Date"). If the Commencement Date is to be the date of the
Draw Down Notice, the Draw Down Notice must be delivered to and receipt
confirmed by the Purchaser at least one hour before trading commences
on such date. At no time shall the Purchaser be required to purchase
more than the maximum Investment Amount for a given Draw Down Pricing
Period so that if the Company chooses not to exercise the maximum
Investment Amount in a given Draw Down Pricing Period the Purchaser is
not obligated to and shall not purchase more than the scheduled maximum
Investment Amount in a subsequent Draw Down Pricing Period.
(f) On or before each Settlement Date, the Shares purchased by
the Purchaser shall be delivered to The Depository Trust Company
("DTC") account of the Purchaser or its designees via the Deposit
Withdrawal Agent Commission ("DWAC") system upon receipt by the Escrow
Agent of payment for the Draw Down Shares into the Escrow Agent's
master escrow account, as provided in the Escrow Agreement. The Escrow
Agent shall be directed to pay the purchase price to the Company, net
of Seven Hundred Fifty Dollars ($750) as escrow expenses to the Escrow
Agent and any additional fees as set forth in the Escrow Agreement. The
delivery of the Shares into the Purchaser's DTC account in exchange for
payment therefor shall be referred to herein as "Settlement".
ARTICLE VII
TERMINATION
Section 7.1. Term. The term of this Agreement shall begin on the date
hereof and shall end eighteen (18) months from the Effective Date or as
otherwise set forth in Section 7.2.
Section 7.2. Other Termination.
(a) This Agreement shall terminate upon one (1) Trading Day's
notice if (i) an event resulting in a Material Adverse Effect has
occurred and has not been cured for a period of 60 days, (ii) the
Common Stock is de-listed from the Principal Market unless such
de-listing is in connection with the listing of the Common Stock on the
Nasdaq National Market, Nasdaq SmallCap Market, the American Stock
Exchange or the New York Stock Exchange, or (iii) the Company files for
protection from creditors under any applicable law.
21
(b) The Company may terminate this Agreement upon one (1)
Trading Day's notice if the Purchaser shall fail to fund more than one
properly noticed Draw Down within three (3) Trading Days of a
Settlement Date.
Section 7.3. Effect of Termination. In the event of
termination by the Company or the Purchaser, written notice thereof
shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated without further
action by either party. If this Agreement is terminated as provided in
Section 7.1 or 7.2 herein, this Agreement shall become void and of no
further force and effect, except for Sections 9.1 and 9.2, and Article
VIII herein. Nothing in this Section 7.3 shall be deemed to release the
Company or the Purchaser from any liability for any breach under this
Agreement, or to impair the rights of the Company or the Purchaser to
compel specific performance by the other party of its obligations under
this Agreement.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. General Indemnity.
(a) The Company agrees to indemnify and hold harmless the
Purchaser (and its directors, officers, affiliates, agents, successors
and assigns) from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements)
incurred by the Purchaser as a result of any inaccuracy in or breach of
the representations, warranties or covenants made by the Company
herein.
(b) The Purchaser agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and
assigns from and against any and all losses, liabilities, deficiencies,
costs, damages and expenses (including, without limitation, reasonable
attorneys' fees, charges and disbursements) incurred by the Company as
result of any material inaccuracy in or breach of the representations,
warranties or covenants made by the Purchaser herein. Notwithstanding
anything to the contrary herein, the Purchaser shall be liable under
this Section 8.1 for only that amount as does not exceed the net
proceeds to the Purchaser as a result of the sale of the Shares.
Section 8.2. Indemnification Procedure. Any party entitled to
indemnification under this Article VIII (an "Indemnified Party") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
Indemnified Party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of counsel to the Indemnified Party a conflict of interest
between it and the
22
indemnifying party may exist with respect of such action, proceeding or claim,
to assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. In the event that the indemnifying party advises an
Indemnified Party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
Indemnified Party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the Indemnified Party's costs (including reasonable
attorneys' fees, charges and disbursements) and expenses arising out of the
defense, settlement or compromise of any such action, claim or proceeding shall
be losses subject to indemnification hereunder. The Indemnified Party shall
cooperate fully with the indemnifying party in connection with any settlement
negotiations or defense of any such action or claim by the indemnifying party
and shall furnish to the indemnifying party all information reasonably available
to the Indemnified Party, which relates to such action or claim. The
indemnifying party shall keep the Indemnified Party fully apprised at all times
as to the status of the defense or any settlement negotiations with respect
thereto. If the indemnifying party elects to defend any such action or claim,
then the Indemnified Party shall be entitled to participate in such defense with
counsel of its choice at its sole cost and expense. The indemnifying party shall
not be liable for any settlement of any action, claim or proceeding effected
without its prior written consent. Notwithstanding anything in this Article VIII
to the contrary, the indemnifying party shall not, without the Indemnified
Party's prior written consent, settle or compromise any claim or consent to
entry of any judgment in respect thereof which imposes any future obligation on
the Indemnified Party or which does not include, as an unconditional term
thereof, the giving by the claimant or the plaintiff to the Indemnified Party of
a release from all liability in respect of such claim. The indemnification
required by this Article VIII shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, within ten (10)
Trading Days of written notice thereof to the indemnifying party so long as the
Indemnified Party irrevocably agrees to refund such moneys, with interest, if it
is ultimately determined by a court of competent jurisdiction that such party
was not entitled to indemnification. The indemnity agreements contained herein
shall be in addition to (a) any cause of action or similar rights of the
Indemnified Party against the indemnifying party or others, and (b) any
liabilities to which the indemnifying party may be subject.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Fees and Expenses. Each of the parties to this Agreement
shall pay its own fees and expenses related to the transactions contemplated by
this Agreement; except that, the Company shall pay, at the Initial Closing, the
fees and expenses incurred by the Purchaser in connection with the preparation,
negotiation, execution and delivery of this Agreement and the transactions
contemplated hereunder, as further set forth in the Escrow Agreement. In
addition, the Company shall pay all reasonable fees and expenses incurred by the
23
Purchaser in connection with any subsequent amendments, modifications or waivers
of this Agreement, the Escrow Agreement or the Registration Rights Agreement or
incurred in connection with the enforcement of this Agreement, the Escrow
Agreement and the Registration Rights Agreement, including, without limitation,
all reasonable attorneys' fees and expenses if such subsequent amendment,
modification or waiver is at the request of the Company. The Company shall pay
all stamp or other similar taxes and duties levied in connection with issuance
of the Shares pursuant hereto.
Section 9.2. Specific Enforcement. The Company and the Purchaser
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.
Section 9.3. Entire Agreement; Amendment. The Transaction Documents
contain the entire understanding of the parties with respect to the matters
covered in the Transaction Documents, neither the Company nor the Purchaser
makes any representations, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought and no condition to closing any Draw Down in favor
of the Purchaser may be waived by the Purchaser.
Section 9.4. Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company: 00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: X. Xxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to: The Business Law Group
(which shall not constitute 000 X. Xxxxxxx Xxxx., Xxxxx 000
xxxxxx) Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000 0000
24
If to Purchaser: c/o Ultra Finance Ltd.
Xxxxxxxxxxxxx 0, X.X. Xxx 0000
Xxxxxx Xx-0000 Xxxxxxxxxxx
Attn: X.X. Xxxxxxxx
Fax: 000-000 000 0000
with copies to: Xxxxxxx Xxxxxx & Green P.C.
(which shall not constitute 000 Xxxx Xxxxxx
xxxxxx) Xxx Xxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
Any party hereto may from time to time change its address for notices
by giving written notice of such changed address to the other party hereto in
accordance herewith. Section 9.5. Waivers. No waiver by either party of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provisions, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
Section 9.6. Headings. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 9.7. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
The parties hereto may not amend this Agreement or any rights or obligations
hereunder without the prior written consent of the Company and each Purchaser to
be affected by the amendment. After Initial Closing, the assignment by a party
to this Agreement of any rights hereunder shall not affect the obligations of
such party under this Agreement.
Section 9.8. No 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.
Section 9.9. Governing Law/Arbitration. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to the choice of law provisions. The Company and
the Purchaser agree to submit itself to the in personam jurisdiction of the
state and federal courts situated within the Southern District of the State of
New York with regard to any controversy arising out of or relating to this
Agreement. Any dispute under this Agreement or any Exhibit attached hereto shall
be submitted to arbitration under the American Arbitration Association (the
"AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter referred to as the "Board of Arbitration") selected as
according to
25
the rules governing the AAA. The Board of Arbitration shall meet on consecutive
business days in New York City, New York, and shall reach and render a decision
in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York. To the extent practical, decisions of the
Board of Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. The Board of Arbitration shall be authorized and is
directed to enter a default judgment against any party refusing to participate
in the arbitration proceeding within thirty days of any deadline for such
participation. Any decision made by the Board of Arbitration (either prior to or
after the expiration of such thirty (30) calendar day period) shall be final,
binding and conclusive on the parties to the dispute, and entitled to be
enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The prevailing party shall be awarded its costs,
including attorneys' fees, from the non-prevailing party as part of the
arbitration award. Any party shall have the right to seek injunctive relief from
any court of competent jurisdiction in any case where such relief is available.
The prevailing party in such injunctive action shall be awarded its costs,
including attorney's fees, from the non-prevailing party.
Section 9.10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. Execution may be made by
delivery by facsimile.
Section 9.11. Publicity. Neither the Company nor the Purchaser shall
issue any press release or otherwise make any public statement or announcement
with respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement. After the Initial Closing, the Company may issue a
press release or otherwise make a public statement or announcement with respect
to this Agreement or the transactions contemplated hereby or the existence of
this Agreement; provided, however, that prior to issuing any such press release,
making any such public statement or announcement, the Company obtains the prior
consent of the Purchaser, which consent shall not be unreasonably withheld or
delayed.
Section 9.12. Severability. The provisions of this Agreement are
severable and, in the event that The Board of Arbitration or any court or
officials of any regulatory agency of competent jurisdiction shall determine
that any one or more of the provisions or part of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
and this Agreement shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of such provision, had never been contained
herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible, so long as such construction does not materially
adversely effect the economic rights of either party hereto.
26
Section 9.13. Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instruments, documents and
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.
Section 9.14. Effectiveness of Agreement. This Agreement shall become
effective only upon satisfaction of the conditions precedent to the Initial
Closing set forth in Article I of the Escrow Agreement.
[SIGNATURE PAGE FOLLOWS]
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorize officer as of this 12th day of
January, 2001.
SURGILIGHT, INC.
By: /s/ X. Xxx
--------------------------------
X. Xxx, President & CEO
ST. ANNES INVESTMENTS LTD.
By: /s/ X.X. Xxxxxxxx
--------------------------------
X.X. Xxxxxxxx, Director
28
EXHIBIT A TO EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of January 10, 2001
between St. Annes Investments Ltd. ("Purchaser") and SurgiLight, Inc. (the
"Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, pursuant to a Common Stock Purchase Agreement dated as of the date
hereof (the "Purchase Agreement") by and between the Purchaser and the Company,
the Purchaser has committed to purchase up to $30,000,000 of the Company's
Common Stock (terms not defined herein shall have the meanings ascribed to them
in the Purchase Agreement) and a warrant to purchase Common Stock; and
WHEREAS, the Company desires to grant to the Purchaser the registration
rights set forth herein with respect to the Shares.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term "Registrable
Security" means all Shares that have not been (i) sold under the Registration
Statement, (ii) sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act ("Rule 144") are met, (iii) otherwise transferred to persons who
may trade such Shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
Shares not bearing a restrictive legend or (iv) sold without any time, volume or
manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act. The term "Registrable Securities" means any
and/or all of the Shares falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be deemed to be made in the definition
of "Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement.
Section 2. Restrictions on Transfer. The Purchaser acknowledges and
understands that in the absence of an effective Registration Statement
authorizing the resale of the Shares as provided herein, the Shares are
"restricted securities" as defined in Rule 144. The Purchaser understands that
no disposition or transfer of the Shares may be made by Purchaser in the absence
of (i) an opinion of counsel to the Purchaser, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without registration
under the Securities Act or (ii) such registration.
With a view to making available to the Purchaser the benefits of Rule
144, the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of Rule
144; and
(b) file with the Commission in a timely manner all reports
and other documents required to be filed by the Company pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is
not required to file such reports but in the past had been required to
or did file such reports, it will, upon the request of the Purchaser,
make available other information as required by, and so long as
necessary to permit sales of, its Registrable Securities pursuant to
Rule 144.
Section 3. Registration Rights With Respect to the Shares.
(a) The Company agrees that it will prepare and file with the
Securities and Exchange Commission ("Commission"), within forty-five
(45) days after the date hereof, a registration statement (on Form S-3
and/or S-1, or other appropriate form of registration statement) under
the Securities Act (the "Registration Statement"), at the sole expense
of the Company (except as provided in Section 3(c) hereof), in respect
of Purchaser, so as to permit a public offering and resale of the
Shares under the Securities Act by Purchaser.
(b) The Company shall use its best efforts to cause the
Registration Statement to become effective within the earlier of (i)
ninety (90) days of the date hereof, or (ii) five (5) days after
receiving written notice of SEC clearance and will within said five (5)
days request acceleration of effectiveness. The Company will notify
Purchaser of the effectiveness of the Registration Statement within one
Trading Day of such event.
(c) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 hereof effective
under the Securities Act until the earliest of (i) the date that all
the Shares have been disposed of pursuant to the Registration
Statement, (ii) the date that all of the Shares have been sold pursuant
to the Registration Statement, (iii) the date the holders thereof
receive an opinion of counsel to the Company, which opinion shall be
reasonably acceptable to the Purchaser, that the Shares may be sold
under the provisions of Rule 144 without limitation as to volume, (iv)
all Shares have been otherwise transferred to persons who may trade
such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership
for such Shares not bearing a restrictive legend, or (v) all Shares may
be sold without any time, volume or manner limitations pursuant to Rule
144(k) or any similar provision then in effect under the Securities Act
in the opinion of counsel to the Company, which counsel shall be
reasonably acceptable to the Purchaser (the "Effectiveness Period").
(d) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and
filing of the Registration Statement under subparagraph 3(a) and in
complying with applicable securities and Blue Sky laws (including,
without limitation, all attorneys' fees of the Company) shall be borne
by the Company. The Purchaser shall bear the cost of underwriting
and/or brokerage discounts, fees and commissions, if any, applicable to
the Shares being registered and the fees and expenses of its counsel.
(e) The Purchaser and its counsel shall have a reasonable
period, not to exceed five (5) Trading Days, to review the proposed
Registration Statement or any amendment
2
thereto, prior to filing with the Commission, and the Company shall
provide the Purchaser with copies of any comment letters received from
the Commission with respect thereto within two (2) Trading Days of
receipt thereof.
(f) The Company shall make reasonably available for inspection
by Purchaser upon its reasonable request, any underwriter participating
in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by the Purchaser or any
such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by the Purchaser or any such
underwriter, attorney, accountant or agent in connection with the
Registration Statement, in each case, as is customary for similar due
diligence examinations; provided, however, all records, information and
documents that are designated in writing by the Company, in good faith,
as confidential, proprietary or containing any material non-public
information shall be kept confidential by the Purchaser and any such
underwriter, attorney, accountant or agent, unless such disclosure is
made pursuant to judicial process in a court proceeding (after first
giving the Company an opportunity promptly to seek a protective order
or otherwise limit the scope of the information sought to be disclosed)
or is required by law, or such records, information or documents become
available to the public generally or through a third party not in
violation of an accompanying obligation of confidentiality. If the
foregoing inspection and information gathering would otherwise disrupt
the Company's conduct of its business, such inspection and information
gathering shall, to the maximum extent possible, be coordinated on
behalf of the Purchaser and the other parties entitled thereto by one
firm of counsel designed by and on behalf of the majority in interest
of Purchaser and other parties.
(g) The Company shall qualify any of the Shares for sale in
New York and Florida, if the Purchaser reasonably designates, and shall
furnish indemnification in the manner provided in Section 6 hereof.
However, the Company shall not be required to qualify in any state
which will require an escrow or other restriction relating to the
Company and/or the sellers, or which will require the Company to
qualify to do business in such state or require the Company to file
therein any general consent to service of process.
(h) The Company at its expense will supply the Purchaser with
copies of the Registration Statement and the prospectus included
therein and other related documents in such quantities as may be
reasonably requested by the Purchaser.
(i) The Company shall not be required by this Section 3 to
include a Purchaser's Shares in any Registration Statement which is to
be filed if, in the opinion of counsel for both the Purchaser and the
Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for the
Purchaser and the Company) the proposed offering or other transfer as
to which such registration is requested is exempt from applicable
federal and state securities laws and would result in all purchasers or
transferees obtaining securities which are not "restricted securities",
as defined in Rule 144 under the Securities Act.
3
(j) If at any time or from time to time after the effective
date of the Registration Statement, the Company notifies the Purchaser
in writing of the existence of a Potential Material Event (as defined
in Section 3(k) below), the Purchaser shall not offer or sell any
Shares or engage in any other transaction involving or relating to
Shares, from the time of the giving of notice with respect to a
Potential Material Event until the Purchaser receives written notice
from the Company that such Potential Material Event either has been
disclosed to the public or no longer constitutes a Potential Material
Event (the "Suspension Period"). Notwithstanding anything herein to the
contrary, if a Suspension Period occurs during any periods commencing
on a Trading Day a Draw Down Notice is deemed delivered and ending ten
(10) Trading Days following the end of the corresponding Draw Down
Pricing Period, then the Company must compensate the Purchaser for any
net decline in the market value of any Shares committed to be purchased
by the Purchaser through the end of such Suspension Period. Net decline
shall be calculated as the difference between the highest VWAP during
the applicable Suspension Period and the VWAP on the Trading Day
immediately following a properly delivered notice to the Purchaser that
such Suspension Period has ended. If a Potential Material Event shall
occur prior to the date the Registration Statement is filed, then the
Company's obligation to file the Registration Statement shall be
delayed without penalty for not more than thirty (30) calendar days.
The Company must give Purchaser notice of the existence of a Potential
Material Event in writing at least two (2) Trading Days prior to the
first day of any Suspension Period, if lawful to do so.
(k) "Potential Material Event" means any of the following: (i)
the possession by the Company of material information that is not ripe
for disclosure in a registration statement, as determined in good faith
by the Chief Executive Officer or the Board of Directors of the Company
or that disclosure of such information in the Registration Statement
would be detrimental to the business and affairs of the Company; or
(ii) any material engagement or activity by the Company which would, in
the good faith determination of the Chief Executive Officer or the
Board of Directors of the Company, be adversely affected by disclosure
in a registration statement at such time, which determination shall be
accompanied by a good faith determination by the Chief Executive
Officer or the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information.
Section 4. Cooperation with Company. The Purchaser will cooperate with
the Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company (which shall
include all information regarding the Purchaser and proposed manner of sale of
the Registrable Securities required to be disclosed in the Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and performing its obligations under any underwriting agreement,
if the offering is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering. The
Purchaser shall consent to be named as an underwriter in the Registration
Statement. Purchaser acknowledges that in accordance with current Commission
policy, the Purchaser will be named as the underwriter of the Shares in the
Registration Statement.
4
Section 5. Registration Procedures. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration
of any of the Registrable Securities under the Securities Act, the Company shall
(except as otherwise provided in this Agreement), as expeditiously as possible,
subject to the Purchaser's assistance and cooperation as reasonably required:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities
covered by such registration statement whenever the Purchaser of such
Registrable Securities shall desire to sell or otherwise dispose of the
same (including prospectus supplements with respect to the sales of
securities from time to time in connection with a registration
statement pursuant to Rule 415 promulgated under the Securities Act)
and (ii) take all lawful action such that each of (A) the Registration
Statement and any amendment thereto does not, when it becomes
effective, 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 not misleading and (B) the prospectus
forming part of the Registration Statement, and any amendment or
supplement thereto, does not at any time during the Effectiveness
Period include 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;
(b) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the
distribution or delivery of any prospectus (including any supplements
thereto), provide draft copies thereof to the Purchaser and reflect in
such documents all such comments as the Purchaser (and its counsel)
reasonably may propose and (ii) furnish to the Purchaser such numbers
of copies of a prospectus including a preliminary prospectus or any
amendment or supplement to any prospectus, as applicable, in conformity
with the requirements of the Securities Act, and such other documents,
as the Purchaser may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the
Purchaser;
(c) register and qualify the Registrable Securities covered by
the Registration Statement under New York and Florida blue sky laws
(subject to the limitations set forth in Section 3(g) above), and do
any and all other acts and things which may be reasonably necessary or
advisable to enable the Purchaser to consummate the public sale or
other disposition in such jurisdiction of the securities owned by the
Purchaser, except that the Company shall not for any such purpose be
required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any
general consent to service of process;
(d) list such Registrable Securities on the Principal Market,
and any other exchange on which the Common Stock of the Company is then
listed, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or the Nasdaq Stock Market;
5
(e) notify the Purchaser at any time when a prospectus
relating thereto covered by the Registration Statement is required to
be delivered under the Securities Act, of the happening of any event of
which it has knowledge as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and the
Company shall prepare and file a curative amendment under Section 5(a)
as quickly as commercially possible;
(f) as promptly as practicable after becoming aware of such
event, notify the Purchaser who holds Registrable Securities being sold
(or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the Commission or any state authority
of any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time and take all
lawful action to effect the withdrawal, recission or removal of such
stop order or other suspension;
(g) cooperate with the Purchaser to facilitate the timely
preparation and delivery of certificates for the Registrable Securities
to be offered pursuant to the Registration Statement and enable such
certificates for the Registrable Securities to be in such denominations
or amounts, as the case may be, as the Purchaser reasonably may request
and registered in such names as the Purchaser may request, pursuant to
the Purchase Agreement.
(h) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Purchaser of its
Registrable Securities in accordance with the intended methods therefor
provided in the prospectus which are customary for issuers to perform
under the circumstances;
(i) in the event of an underwritten offering, promptly include
or incorporate in a prospectus supplement or post-effective amendment
to the Registration Statement such information as the managing
underwriters reasonably agree should be included therein and to which
the Company does not reasonably object and make all required filings of
such prospectus supplement or post-effective amendment as soon as
practicable after it is notified of the matters to be included or
incorporated in such prospectus supplement or post-effective amendment;
and
(j) maintain a transfer agent for its Common Stock.
Section 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Purchaser and each person, if any, who controls the Purchaser within
the meaning of the Securities Act ("Distributing Purchaser") against
any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited
to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees), to which the Distributing Purchaser may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
6
Statement, or any related preliminary prospectus, final prospectus or
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the
Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by the Distributing
Purchaser specifically for use in the preparation thereof. This Section
6(a) shall not inure to the benefit of any Distributing Purchaser with
respect to any person asserting such loss, claim, damage or liability
who purchased the Registrable Securities which are the subject thereof
if the Distributing Purchaser failed to send or give (in violation of
the Securities Act or the rules and regulations promulgated thereunder)
a copy of the prospectus contained in such Registration Statement to
such person at or prior to the written confirmation to such person of
the sale of such Registrable Securities, where the Distributing
Purchaser was obligated to do so under the Securities Act or the rules
and regulations promulgated thereunder. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Each Distributing Purchaser agrees that it will indemnify
and hold harmless the Company, and each officer, director of the
Company or person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include,
but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees) to which the Company
or any such officer, director or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, or any related
preliminary prospectus, final prospectus or amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each
case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, preliminary prospectus, final prospectus or amendment or
supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by such Distributing Purchaser
specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the Distributing
Purchaser may otherwise have. Notwithstanding anything to the contrary
herein, the Distributing Purchaser shall not be liable under this
Section 6(b) for any amount in excess of the net proceeds to such
Distributing Purchaser as a result of the sale of Registrable
Securities pursuant to the Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party
of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any
liability which it may have to any indemnified party except to the
extent of actual prejudice demonstrated by the indemnifying party. In
case any such
7
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified,
assume the defense thereof, subject to the provisions herein stated and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 6 for
any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation, unless the indemnifying party shall not pursue
the action to its final conclusion. The indemnified party shall have
the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel
reasonably satisfactory to the indemnified party; provided that if the
indemnified party is the Distributing Purchaser, the fees and expenses
of such counsel shall be at the expense of the indemnifying party if
(i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party, or (ii) the named parties to any
such action (including any impleaded parties) include both the
Distributing Purchaser and the indemnifying party and the Distributing
Purchaser shall have been advised by such counsel that there may be one
or more legal defenses available to the indemnifying party different
from or in conflict with any legal defenses which may be available to
the Distributing Purchaser (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of
the Distributing Purchaser, it being understood, however, that the
indemnifying party shall, in connection with any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of
one separate firm of attorneys for the Distributing Purchaser, which
firm shall be designated in writing by the Distributing Purchaser and
be approved by the indemnifying party). No settlement of any action
against an indemnified party shall be made without the prior written
consent of the indemnified party, which consent shall not be
unreasonably withheld.
All fees and expenses of the indemnified party (including
reasonable costs of defense and investigation in a manner not
inconsistent with this Section and all reasonable attorneys' fees and
expenses) shall be paid to the indemnified party, as incurred, within
ten (10) Trading Days of written notice thereof to the indemnifying
party; provided, that the indemnifying party may require such
indemnified party to undertake to reimburse all such fees and expenses
to the extent it is finally judicially determined that such indemnified
party is not entitled to indemnification hereunder.
Section 7. Contribution. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 6 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that the express provisions of Section 6 hereof provide
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any indemnified party, then the Company and the
applicable Distributing Purchaser shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject
8
(which shall, for all purposes of this Agreement, include, but not be limited
to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault 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 Company on the one hand or the applicable Distributing Purchaser
on the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Distributing Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. 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.
Notwithstanding any other provision of this Section 7, in no event
shall any (i) Purchaser be required to undertake liability to any person under
this Section 7 for any amounts in excess of the dollar amount of the net
proceeds to be received by the Purchaser from the sale of the Purchaser's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act and (ii)
underwriter be required to undertake liability to any person hereunder for any
amounts in excess of the aggregate discount, commission or other compensation
payable to such underwriter with respect to the Registrable Securities
underwritten by it and distributed pursuant to the Registration Statement.
Section 8. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be delivered as set forth
in the Purchase Agreement.
Section 9. Assignment. Neither this Agreement nor any rights of the
Purchaser or the Company hereunder may be assigned by either party to any other
person. Notwithstanding the foregoing, (a) the provisions of this Agreement
shall inure to the benefit of, and be enforceable by, any transferee of any of
the Common Stock purchased by the Purchaser pursuant to the Purchase Agreement
other than through open-market sales, and (b) upon the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed in the
case of an assignment to an affiliate of the Purchaser, the Purchaser's interest
in this Agreement may be assigned at any time, in whole or in part, to any other
person or entity (including any affiliate of the Purchaser) who agrees to be
bound hereby.
Section 10. Counterparts/Facsimile. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when together shall constitute but one and the same instrument, and shall
become effective when one or more
9
counterparts have been signed by each party hereto and delivered to the other
party. In lieu of the original, a facsimile transmission or copy of the original
shall be as effective and enforceable as the original.
Section 11. Remedies and Severability. The remedies provided in this
Agreement are cumulative and not exclusive of any remedies provided by law. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of those that may be hereafter declared
invalid, illegal, void or unenforceable.
Section 12. Conflicting Agreements. The Company shall not enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the purchasers of Registrable Securities in this Agreement or
otherwise prevents the Company from complying with all of its obligations
hereunder.
Section 13. Headings. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any action may be brought as set
forth in the Purchase Agreement. Any party shall have the right to seek
injunctive relief from any court of competent jurisdiction in any case where
such relief is available. Any dispute under this Agreement shall be submitted to
arbitration under the American Arbitration Association (the "AAA") in New York
City, New York, and shall be finally and conclusively determined by the decision
of a board of arbitration consisting of three (3) members (hereinafter referred
to as the "Board of Arbitration") selected as according to the rules governing
the AAA. The Board of Arbitration shall meet on consecutive business days in New
York City, New York, and shall reach and render a decision in writing (concurred
in by a majority of the members of the Board of Arbitration) with respect to the
amount, if any, which the losing party is required to pay to the other party in
respect of a claim filed. In connection with rendering its decisions, the Board
of Arbitration shall adopt and follow the laws of the State of New York. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. The Board of Arbitration shall
be authorized and is directed to enter a default judgment against any party
refusing to participate in the arbitration proceeding within thirty days of any
deadline for such participation. Any decision made by the Board of Arbitration
(either prior to or after the expiration of such thirty (30) calendar day
period) shall be final, binding and conclusive on the parties to the dispute,
and entitled to be enforced to the fullest extent permitted by law and entered
in any court of
10
competent jurisdiction. The prevailing party shall be awarded its costs,
including attorneys' fees, from the non-prevailing party as part of the
arbitration award. Any party shall have the right to seek injunctive relief from
any court of competent jurisdiction in any case where such relief is available.
The prevailing party in such injunctive action shall be awarded its costs,
including attorney's fees, from the non-prevailing party.
11
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed, on this 12th day of January, 2001
SURGILIGHT, INC.
By: /s/ X. Xxx
--------------------------------
X. Xxx, President & CEO
ST. ANNES INVESTMENTS LTD
By: /s/ X.X. Xxxxxxxx
--------------------------------
X.X. Xxxxxxxx, Director
12
EXHIBIT B TO EXHIBIT 10.1
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of January 10,
2001, by and among SurgiLight, Inc., a corporation incorporated under the laws
of Delaware (the "Company"), St. Annes Investments Ltd. ("Purchaser"), and
Xxxxxxx Xxxxxx & Green, P.C., having an address at 000 Xxxx Xxxxxx, Xxx Xxxx, XX
00000 (the "Escrow Agent"). Capitalized terms used but not defined herein shall
have the meanings set forth in the Common Stock Purchase Agreement referred to
in the first recital.
WHEREAS, the Purchaser will from time to time as requested by the
Company, purchase shares of the Company's Common Stock from the Company as set
forth in that certain Common Stock Purchase Agreement (the "Purchase Agreement")
dated the date hereof between the Purchaser and the Company, which shares shall
be issued pursuant to the terms and conditions contained herein and in the
Purchase Agreement; and
WHEREAS, the Company and the Purchaser have requested that the Escrow
Agent hold in escrow and then distribute the initial documents and certain funds
which are conditions precedent to the effectiveness of the Purchase Agreement,
and have further requested that upon each exercise of a Draw Down, the Escrow
Agent hold the relevant documents and the applicable purchase price pending
receipt by Purchaser of certificates representing the securities issuable upon
such Draw Down;
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
TERMS OF THE ESCROW FOR THE INITIAL CLOSING
1.1. The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds and documents which
are referenced in Section 5.2 of the Purchase Agreement.
1.2. At the Initial Closing, the Company shall deliver to the Escrow
Agent:
(i) the original executed Registration Rights
Agreement in the form of Exhibit A to the Purchase Agreement;
(ii) the original executed opinion of The Business
Law Group in the form of Exhibit C to the Purchase Agreement;
(iii) the sum of $20,000 for the fees and expenses of
the Purchaser's counsel;
(iv) the original executed Company counterpart of
this Escrow Agreement;
(v) the original executed Company counterpart of the
Purchase Agreement; and
(vi) the original executed Warrant.
1.3. Upon receipt of the foregoing, and receipt of executed
counterparts from Purchaser of the Purchase Agreement, the Registration Rights
Agreement and this Escrow Agreement, the Escrow Agent shall calculate and enter
the exercise price, issuance date and termination date on the face of the
Warrant and immediately transfer the sum of $20,000 to Xxxxxxx Xxxxxx & Green,
P.C. ("EB&G"), 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 for the Purchaser's
legal and escrow costs and shall then arrange to have the Purchase Agreement,
this Escrow Agreement, the Registration Rights Agreement, the Warrant and the
opinion of counsel delivered to the appropriate parties.
1.4 Wire transfers to the Escrow Agent (not address for notice or
delivery of documents) shall be made as follows:
Xxxxxxx Xxxxxx & Green, P.C.
Master Escrow Account
Chase Manhattan Bank
0000 Xxxxxxxx - Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA No. 000000000
Account No. 035 1 346036
Attention: L. Borneo
ARTICLE II
TERMS OF THE ESCROW FOR EACH DRAW DOWN
2.1. Each time the Company shall send a Draw Down Notice to the
Purchaser as provided in the Purchase Agreement, it shall send a copy, by
facsimile, to the Escrow Agent.
2.2. Each time the Purchaser shall purchase Shares pursuant to a Draw
Down, the Purchaser shall send the applicable Purchase Price of the Draw Down
Shares to the Escrow Agent. Upon receipt of such funds, the Escrow Agent shall
advise the Company in writing that it has received the funds for such Draw Down
Shares. The Company shall promptly, but no later than two (2) Trading Days after
receipt of such funding notice from the Escrow Agent:
(i) cause its transfer agent to issue the Draw Down
Shares to the Purchaser via DTC's DWAC system to the account
specified by the Purchaser from time to time;
2
(ii) deliver the original executed attorney's opinion
in the form of Exhibit C to the Purchase Agreement to the
Purchaser; and
(iii) deliver a Form 424(b) supplemental prospectus
to the Purchaser.
2.3. Upon receipt of written confirmation from the transfer agent or
from the Purchaser that such Draw Down Shares have been so deposited and the
opinion and the supplemental prospectus have been so delivered, the Escrow Agent
shall, within one (1) Trading Day, wire 95% of the Purchase Price of the Draw
Down Shares per the written instructions of the Company, net of $750 as escrow
expenses to the Escrow Agent, and wire the remaining 5% of the Purchase Price
per the written instructions of GKN Securities Corp.
2.4. In the event that the Draw Down Shares are not in the Purchaser's
DTC account and the opinion and supplemental prospectus are not delivered to the
Escrow Agent within two (2) Trading Days of the date of the Escrow Agent's
notice, then Purchaser shall have the right to demand, by notice, the return of
the Purchase Price, and the Draw Down Notice shall be deemed cancelled.
ARTICLE III
MISCELLANEOUS
3.1. No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
3.2. All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as set forth in the Purchase
Agreement.
3.3. This Escrow Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties hereto.
3.4. This Escrow Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by their respective agents duly authorized in writing
or as otherwise expressly permitted herein.
3.5. Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had
3
prepared the same. Unless otherwise indicated, all references to Articles are to
this Escrow Agreement.
3.6. The parties hereto expressly agree that this Escrow Agreement
shall be governed by, interpreted under and construed and enforced in accordance
with the laws of the State of New York. Except as expressly set forth herein,
any action to enforce, arising out of, or relating in any way to, any provisions
of this Escrow Agreement shall be brought in the Federal or state courts of New
York, New York as is more fully set forth in the Purchase Agreement.
3.7. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, Purchaser and the
Escrow Agent.
3.8. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, excepting only its own gross negligence or willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent's attorneys-at-law (other than Escrow Agent itself)
shall be conclusive evidence of such good faith.
3.9. The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
3.10. The Escrow Agent shall not be liable in any respect on account of
the identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder or hereunder.
3.11. The Escrow Agent shall be entitled to employ such legal counsel
and other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Purchaser, and may continue to act as legal counsel for the Purchaser, from time
to time, notwithstanding its duties as the Escrow Agent hereunder. The Company
consents to the Escrow Agent in such capacity as legal counsel for the Purchaser
and waives any claim that such representation represents a conflict of interest
on the part of the Escrow Agent. The Company understands that the Purchaser and
the Escrow Agent are relying explicitly on the foregoing provision in entering
into this Escrow Agreement.
4
3.12. The Escrow Agent's responsibilities as escrow agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Purchaser. In the event of any such resignation, the Purchaser
and the Company shall appoint a successor Escrow Agent.
3.13. If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
3.14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment of a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or (2)
to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the State and City of New York in accordance
with the applicable procedure therefor.
3.15. The Company and the Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Purchase
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.
5
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of this 12th day of January, 2001.
SURGILIGHT, INC.
By: /s/ X. Xxx
--------------------------------------------
X. Xxx, President & CEO
ST. ANNES INVESTMENTS LTD.
By: /s/ X.X. Xxxxxxxx
--------------------------------------------
X.X. Xxxxxxxx, Director
ESCROW AGENT:
XXXXXXX XXXXXX & GREEN, P.C.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx, Authorized Signatory
6
EXHIBIT C TO EXHIBIT 10.1
Executed opinion of The Business Law Group attached hereto and, as to
the opinion to be delivered pursuant to Section 5.3(e) of the Purchase Agreement
at Settlement, the following additional items:
1. The Registration Statement has been declared
effective by the SEC and no stop order is in effect with respect to the
Registration Statement. Assuming compliance by the Purchaser with the "Plan of
Distribution" caption of the Registration Statement and timely compliance by the
Purchaser with all prospectus delivery requirements, the Shares shall be freely
transferable by the Purchaser.
2. We have no knowledge that the Registration Statement
and the Prospectus at the time the Registration Statement became effective and
as of the date of this opinion contained or contain an untrue statement of a
material fact or omitted or omits 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; however, we express no
opinion with respect to the financial statements and the notes thereto and the
schedules and other financial and statistical data derived therefrom included in
the Registration Statement or the Prospectus.
January 12, 2001
St. Annes Investments, Ltd.
C/o Ultra Finance Ltd.
Xxxxxxxxxxxxx 0, X.X. Xxx 0000
Xxxxxx Xx-0000 Xxxxxxxxxxx
Attn: X. X. Xxxxxxxx
Fax: 000-000-000-0000
Re: Common Stock Purchase Agreement Between St. Annes Investments,
Ltd. and SurgiLight, Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to the Common Stock Purchase
Agreement by and between St. Annes Investments, Ltd. (the "Purchaser") and
SurgiLight, Inc. (the "Company"), dated as of January 12, 2001 (the "Purchase
Agreement"), which provides for the issuance and sale by the Company of up to
$30,000,000 of Common Stock (the "Shares") of the Company and Warrants. All
terms used herein have the meanings defined for them in the Purchase Agreement
unless otherwise defined herein.
We have acted as counsel for the Company in connection with the
negotiation of the Purchase Agreement, the Warrants issued by the Company at the
Closing, the Registration Rights Agreement between the Purchaser and the
Company, dated as of January 12, 2001 (the "Registration Rights Agreement"), and
the Escrow Agreement between the Purchaser, the Company and Xxxxxxx Xxxxxx &
Green, P.C., dated as of January 12, 2001 (the "Escrow Agreement", and together
with the Purchase Agreement, the Warrant and the Registration Rights Agreement,
the "Agreements"). As counsel, we have made such legal and factual examinations
and inquiries as we have deemed advisable or necessary for the purpose of
rendering this opinion. In addition, we have examined, among other things,
originals or copies of such corporate records of the Company, certificates of
public officials and such other documents and questions of law that we consider
necessary or advisable for the purpose of rendering this opinion. In such
examination we have assumed the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us as
originals, the conformity to original documents of all copies submitted to us as
copies thereof, the legal capacity of natural persons, and the due execution and
delivery of all documents (except as to
due execution and delivery by the Company) where due execution and delivery are
a prerequisite to the effectiveness thereof.
As used in this opinion, the expression "to our knowledge" refers to
the current actual knowledge of the attorneys of this firm who have worked on
matters for the Company solely in connection with the Agreements and the
transactions contemplated thereby without independent investigation or inquiry.
For purposes of this opinion, we have assumed that the Purchaser has
all requisite power and authority, and has taken any and all necessary corporate
action, to execute and deliver the Agreements, and we are assuming that the
representations and warranties made by the Purchaser in the Agreements and
pursuant thereto are true and correct.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
power and authority (corporate and other) to carry on its business and to own,
lease and operate its properties and assets as described in the Company's SEC
Documents. The Company and each subsidiary is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the Company owns or leases property, other than those in which the failure
so to qualify would not have a Material Adverse Effect.
2. The Company has the requisite corporate power and authority to enter
into and perform its obligations under the Agreements and to issue the Shares.
The execution and delivery of the Agreements by the Company and the consummation
by it of the transactions contemplated thereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required. Each of the
Agreements has been duly executed and delivered by the Company and each of the
Agreements constitutes valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws relating to, or affecting generally the enforcement of creditors' rights
and remedies or by other equitable principles of general application.
3. The execution, delivery and performance of the Agreements by the
Company and the consummation by the Company of the transactions contemplated
thereby, including, without limitation, the issuance of the Shares, the Warrant
and the shares issuable upon exercise of the Warrant (the "Warrant Shares"), do
not and will not (i) result in a violation of the Company's Charter (the
"Charter") or By-Laws; (ii) to our knowledge, except as set forth on Schedule 3
hereto, conflict with, or constitute a material default (or an event that 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, instrument or any "lock-up" or similar provision
of any underwriting or similar agreement to which the Company is a party; or
(iii) result in a violation of any federal or state law, rule or regulation
applicable to the Company or by which any property or asset of the Company is
bound or affected, except for such
2
violations as would not, individually or in the aggregate, have a Material
Adverse Effect. To our knowledge, the Company is not in violation of any terms
of its Charter or Bylaws.
4. When issued and duly paid for, the Shares and Warrant Shares will be
duly and validly issued, fully paid and nonassessable, and free of any liens,
encumbrances and preemptive or similar rights contained in the Company's Charter
or Bylaws or, to our knowledge, in any agreement to which the Company is party,
except as set forth in Schedule 4 hereto.
5. To our knowledge, except as disclosed in the SEC Documents and in
Schedule 5 hereto, there are no claims, actions, suits, proceedings or
investigations that are pending against the Company or its properties, or
against any officer or director of the Company in his or her capacity as such,
nor has the Company received any written threat of any such claims, actions,
suits, proceedings, or investigations.
6. To our knowledge, there are no outstanding options, warrants, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any right to
subscribe for or acquire any shares of Common Stock or contracts, commitments,
understanding, or arrangements by which the Company is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock, except as described in the SEC
Documents or the Agreements or as set forth in Schedule 6 hereto. To our
knowledge, the Company is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality.
7. To our knowledge, the issuance of the Shares and the Warrant Shares
will not violate the applicable listing agreement between the Company and any
securities exchange or market on which the Company's securities are listed.
8. The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock, $0.001 par value per share, of which approximately
23,676,600 shares are issued and outstanding (including 2,186,000 held in escrow
pursuant to another transaction) and 10,000,000 of preferred stock, $0.001 par
value per share, of which none are issued and outstanding.
This opinion is furnished to the Purchaser solely for its benefit in
connection with the transactions described above and may not be relied upon by
any other person or for any other purpose without our prior written consent.
We are members of the Bar of the State of Florida. We call your
attention to the fact that the Purchase Agreement is to be governed by the laws
of the State of New York and that we are not members of the Bar of the State of
New York. We express no opinion as to the enforceability of the Purchase
Agreement under any laws other than the laws of the State of Florida. This
opinion is based solely upon the foregoing Florida laws as currently in effect.
3
The opinions expressed herein are given to you solely for your use in
connection with the transaction contemplated by the Investment Agreement and may
not be relied upon by, or delivered to, any other person or entity or for any
other purpose without our prior written consent.
THE BUSINESS LAW GROUP
By: /s/ X. Xxxxxxx Grocock
-------------------------------
X. Xxxxxxx Xxxxxxx, Esq.
4
Schedule 3
There are certain default, acceleration, and anti-dilution provisions in the
Debenture Purchase Agreement, Debenture, and Warrant between the Company and
GEM.
5
Schedule 4
There may be certain rights held by GEM pursuant to the Debenture and related
agreements.
6
Schedule 5
In November 2000 the Company was served with a private order of
investigation from the United States Securities Exchange Commission. Factual
inquiry is presently ensuing. The Company is not aware of any securities law
violations and does not anticipate that this investigation will result in any
formal charges.
7
Schedule 6
There is an outstanding warrant held by GEM.
8
EXHIBIT D TO EXHIBIT 10.1
DRAW DOWN NOTICE/COMPLIANCE CERTIFICATE
SurgiLight, Inc.
The undersigned hereby certifies, with respect to shares of Common
Stock of SurgiLight, Inc. (the "Company") issuable in connection with this Draw
Down Notice and Compliance Certificate dated _____________ (the "Notice"),
delivered pursuant to the Common Stock Purchase Agreement dated as of January
102001 (the "Agreement"), as follows:
1. The undersigned is the duly appointed Chief Executive Officer of the
Company.
2. Except as set forth on the schedules attached hereto, the
representations and warranties of the Company set forth in the Agreement are
true and correct in all material respects as though made on and as of the date
hereof and all SEC Documents are as represented in Section 3.1(f) of the
Agreement.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company under the Agreement on or prior to the
date of this Draw Down Notice and has complied in all material respects with all
of the Company's obligations and conditions contained in the Agreement.
4. The Investment Amount is $___________.
5. The Threshold Price, if any, is $__________.
6. The Draw Down Pricing Period shall commence on ____________.
The undersigned has executed this Certificate this ____ day of
________, _____.
SURGILIGHT, INC.
By:
---------------------------------
Name:
Title:
EXHIBIT E TO EXHIBIT 10.1
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT OR
ANY APPLICABLE STATE LAWS. THIS WARRANT MAY ONLY BE EXERCISED BY A NON-US PERSON
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT.
STOCK PURCHASE WARRANT
To Purchase 100,000 shares of Common Stock of
SURGILIGHT, INC.
THIS CERTIFIES that, for value received, St. Annes Investments Ltd.
(the "Holder"), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after
January 12, 2001 (the "Initial Exercise Date") and on or prior to the close of
business on January 12, 2004 (the "Termination Date") but not thereafter, to
subscribe for and purchase from SurgiLight, Inc., a corporation incorporated in
the State of Delaware (the "Company"), up to 100,000 shares (the "Warrant
Shares") of Common Stock, $0.001 par value per share, of the Company (the
"Common Stock"). The purchase price of one share of Common Stock (the "Exercise
Price") under this Warrant shall be $3.34. The Exercise Price and the number of
Warrant Shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. In the event of any conflict between the terms of
this Warrant and the Common Stock Purchase Agreement dated as of January 10,
2001 pursuant to which this Warrant has been issued (the "Purchase Agreement"),
the Purchase Agreement shall control. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth for such terms in the Purchase
Agreement.
1
1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously with such
issue).
3. Exercise of Warrant.
(a) Except as provided in Section 4 herein, exercise of the
purchase rights represented by this Warrant may be made at any time or
times on or after the Initial Exercise Date, and on or before the close
of business on the Termination Date by the surrender of this Warrant
and the Notice of Exercise Form annexed hereto duly executed, at the
office of the Company (or such other office or agency of the Company as
it may designate by notice in writing to the registered Holder at the
address of such Holder appearing on the books of the Company) and upon
payment of the Exercise Price of the shares thereby purchased by wire
transfer or cashier's check drawn on a United States bank, the Holder
shall be entitled to receive a certificate for the number of Warrant
Shares so purchased. Certificates for shares purchased hereunder shall
be delivered to the Holder within three (3) Trading Days after the date
on which this Warrant shall have been exercised as aforesaid. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any
other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the
date the Warrant has been exercised by payment to the Company of the
Exercise Price and all taxes required to be paid by the Holder, if any,
pursuant to Section 5 prior to the issuance of such shares, have been
paid.
(b) If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
(c) This Warrant shall also be exercisable by means of a
"cashless exercise" in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A) = the average of the high and low trading prices per share
of Common Stock on the Trading Day preceding the date of such
election on the
2
Nasdaq Stock Market, or if the Common Stock is not traded on
the Nasdaq Stock Market, then the Principal Market in terms of
volume, and converted into US Dollars;
(B) = the Exercise Price of the Warrants; and
(X) = the number of Warrant Shares issuable upon exercise of
the Warrants in accordance with the terms of this Warrant.
(d) Notwithstanding anything herein to the contrary, in no
event shall the Holder be permitted to exercise this Warrant for
Warrant Shares to the extent that (i) the number of Warrant Shares
owned by such Holder (other than Warrant Shares issuable upon exercise
of this Warrant) plus (ii) the number of Warrant Shares issuable upon
exercise of this Warrant, would be equal to or exceed 9.9% of the
number of Warrant Shares then issued and outstanding, including shares
issuable upon exercise of this Warrant held by such Holder after
application of this Section 3(d). As used herein, beneficial ownership
shall be determined in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this Section 3(d)
applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder) and of which a
portion of this Warrant is exercisable shall be in the sole discretion
of such Holder, and the submission of a Notice of Exercise shall be
deemed to be such Holder's determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder) and
of which portion of this Warrant is exercisable, in each case subject
to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
Nothing contained herein shall be deemed to restrict the right of a
Holder to exercise this Warrant into Warrant Shares at such time as
such exercise will not violate the provisions of this Section 3(d). The
provisions of this Section 3(d) may be waived by the Holder upon, at
the election of the Holder, with not less than 61 days' prior notice to
the Company, and the provisions of this Section 3(d) shall continue to
apply until such 61st day (or such later date as may be specified in
such notice of waiver). No exercise of this Warrant in violation of
this Section 3(d) but otherwise in accordance with this Warrant shall
affect the status of the Warrant Shares as validly issued, fully-paid
and nonassessable.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this
3
Warrant when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and the Company may require,
as a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
6. Closing of Books. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this Warrant.
7. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part,
shall be registered on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the principal office of
the Company, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder
or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. In the event that the Holder
wishes to transfer a portion of this Warrant, the Holder shall transfer
at least 50,000 shares underlying this Warrant to any such transferee.
Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
(b) This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with Section
7(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under
this Section 7.
(d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the
Warrants.
4
8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price, the Warrant Shares so purchased shall
be and be deemed to be issued to such Holder as the record owner of such shares
as of the close of business on the later of the date of such surrender or
payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares. (a)
Stock Splits, etc. The number and kind of securities purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
from time to time upon the happening of any of the following. In case the
Company shall (i) pay a dividend in Warrant Shares or make a distribution in
Warrant Shares to holders of its outstanding Common Stock, (ii) subdivide its
outstanding Warrant Shares into a greater number of Warrant Shares, (iii)
combine its outstanding Warrant Shares into a smaller number of Warrant Shares
or (iv) issue any shares of its capital stock in a reclassification of the
Common Stock, then the number of Warrant Shares purchasable upon exercise of
this Warrant immediately prior thereto shall be adjusted so that the Holder
shall be entitled to receive the kind and number of Warrant Shares or other
securities of the Company which it would have owned or have been entitled to
receive had such Warrant been exercised in advance thereof. Upon each such
adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the Holder shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
12. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to
5
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the number of Warrant Shares of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of Warrant Shares for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Warrant to be performed and observed by the Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of Warrant Shares for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this Section
12, "common stock of the successor or acquiring corporation" shall include stock
of such corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 13 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
13. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
14. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder notice of such adjustment or adjustments setting forth the number
of Warrant Shares (and other securities or property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant Shares (and
other securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in the absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
15. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other
6
distribution, or any right to subscribe for or purchase any evidences
of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any
sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Holder appearing on the books of the Company and delivered in
accordance with Section 17(d).
16. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Principal Market
upon which the Common Stock may be listed.
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions
7
as may be necessary or appropriate to protect the rights of Holder against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (b)
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant, and (c) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the
number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
17. Miscellaneous.
(a) Jurisdiction. This Warrant shall constitute a contract
under the laws of New York, without regard to its conflict of law,
principles or rules, and be subject to arbitration pursuant to the
terms set forth in the Purchase Agreement.
(b) Restrictions. The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal
securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay
or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's
rights, powers or remedies, notwithstanding all rights hereunder
terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which
results in any material damages to the Holder, the Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase
Agreement.
(e) Limitation of Liability. No provision hereof, in the
absence of affirmative action by Holder to purchase Warrant Shares, and
no enumeration herein of the rights or privileges of Holder, shall give
rise to any liability of Holder for the purchase price of any Common
Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
8
(f) Remedies. Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant.
The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be
adequate.
(g) Successors and Assigns. Subject to applicable securities
laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the
Company and the successors and permitted assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant and shall be enforceable by
any such Holder or holder of Warrant Shares.
(h) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and
the Holder.
(i) Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant shall
be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
(j) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
9
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.
Dated: January 12, 2001
SURGILIGHT, INC.
By: /s/ X. Xxx
------------------------------------
X. Xxx, President & CEO
10
To: SurgiLight, Inc.
(1) The undersigned hereby elects to purchase ________ Warrant Shares
(the "Common Stock"), of Breakaway Solutions, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
----------------------------------------
The Warrant Shares shall be delivered to the following:
----------------------------------------
----------------------------------------
----------------------------------------
[PURCHASER]
By:
-------------------------------
Name:
Title:
Dated:
----------------------------
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
whose address is
---------------------------------------------------------------
-------------------------------------------------------------------------------.
--------------------------------------------------------------------------------
Dated:
---------------, -------
Holder's Signature:
---------------------------
Holder's Address:
-----------------------------
-----------------------------
Signature Guaranteed:
--------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
