EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
between
LASERSIGHT INCORPORATED
and
TLC THE LASER CENTER INC.
June 5, 1998
TABLE OF CONTENTS
ARTICLE 1 PURCHASE AND SALE OF PREFERRED STOCK
1.1 Purchase of Preferred Stock
1.2 Form of Payment
1.3 Transfer of Preferred Stock
1.4 Registration of the Securities
ARTICLE 2 PURCHASER'S REPRESENTATIONS AND WARRANTIES
2.1 Investment Purpose
2.2 Accredited Investor Status
2.3 Reliance on Exemptions
2.4 Information
2.5 Governmental Review
2.6 Transfer or Resale
2.7 Authorization
2.8 Binding Effect
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization and Qualification
3.2 Authorization; Enforcement
3.3 Capitalization
3.4 Issuance of Shares
3.5 No Conflicts
3.6 SEC Documents
3.7 Absence of Certain Changes
3.8 Absence of Litigation
3.9 Disclosure
3.10 S-3 Registration
3.11 No General Solicitation
3.12 No Integrated Offering
3.13 No Brokers
3.14 Intellectual Property
3.15 Employee Benefit Plans
3.16 Subsidiaries
3.17 Tax Matters
3.18 Environmental Matters
3.19 Compliance with Laws; Permits
3.20 Insurance
3.21 Property
ARTICLE 4 COVENANTS
4.1 Best Efforts
TABLE OF CONTENTS
(continued)
4.2 Securities Laws
4.3 Reporting Status
4.4 Use of Proceeds.
4.5 Expenses
4.6 Board Representation
4.7 Listing
4.8 Prospectus Delivery Requirement
4.9 Rights of First Offer
4.10 Standstill
4.11 Stockholder Rights Plan
4.12 Financial Statement Disclosure
ARTICLE 5 TRANSFER OF SECURITIES
5.1 Restrictive Legend
5.2 Notice of Proposed Transfer
5.3 Termination of Restrictions
5.4 Compliance with Rule 144 and Rule 144A
5.5 Non-Applicability of Restrictions on Transfer
ARTICLE 6 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell
ARTICLE 7 CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
7.1 Conditions to Purchaser's Obligation to Purchase
ARTICLE 8 GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction
8.2 Counterparts
8.3 Headings
8.4 Severability
8.5 Entire Agreement; Amendments
8.6 Notice
8.7 Successors and Assigns
8.8 Third Party Beneficiaries
8.9 Survival
8.10 Indemnification
8.11 Stamp Tax and Delivery Costs
8.12 Public Filings; Publicity
8.13 Further Assurances
8.14 Remedies
TABLE OF CONTENTS
(continued)
8.15 Termination
SECURITIES PURCHASE AGREEMENT
-----------------------------
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
June 5, 1998, by and between LaserSight Incorporated, a Delaware corporation
(the "Company"), with its headquarters located at 00000 Xxxxxxx Xxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxx 00000 and TLC The Laser Center Inc., an Ontario
corporation, with its headquarters located at 0000 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxx, Xxxxxx L4W 442 ("Purchaser"), with regard to the
following:
RECITALS
--------
A. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Section 4(2) of the Securities Act of 1933 (the "Securities
Act") and Regulation D ("Regulation D") of the Securities and Exchange
Commission (the "SEC") promulgated under the Securities Act.
B. The Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, 2,000,000 shares of Series C Convertible Participating
Preferred Stock (the "Preferred Stock") of the Company set forth in the
Certificate of Designation, Preferences and Rights of Series C Convertible
Participating Preferred Stock (the "Certificate of Designation") attached hereto
as Exhibit A, which shall be convertible into shares of the Company's common
stock, $.001 par value per share ("Common Stock"). The shares of Common Stock
issuable upon the conversion of or otherwise pursuant to the Preferred Stock are
referred to herein as the "Conversion Shares". The Preferred Stock and the
Conversion Shares are collectively referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit B (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and applicable state securities laws and a Standstill
Agreement in the form attached hereto as Exhibit C (the "Standstill Agreement"),
pursuant to which Purchaser agrees to restrict its purchase of the Company's
voting securities. The Registration Rights Agreement, the Certificate of
Designation, and the Standstill Agreement are collectively referred to herein as
the "Ancillary Documents".
AGREEMENTS
----------
NOW, THEREFORE, in consideration of the foregoing recitals (which are
incorporated into and deemed a part of this Agreement), their respective
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and Purchaser
hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF PREFERRED STOCK
1.1 Purchase of Preferred Stock. Subject to the terms and conditions of
this Agreement, on June 5, 1998 or, if later, the date on which all conditions
set forth in Articles 6 and 7 hereof have been either satisfied or waived, or
such other date as may be determined by mutual agreement of Purchaser and the
Company, but in no event later than June 30, 1998 (the "Closing Date"), the
Company agrees to issue and sell to Purchaser, and Purchaser agrees to purchase
from the Company (the "Closing"), 2,000,000 shares of Preferred Stock at a price
of U.S.$4.00 per share resulting in an aggregate purchase price of
U.S.$8,000,000 (the "Purchase Price").
The Closing shall take place on the Closing Date at 10:00 A.M. Eastern
Time at the offices of Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC, 1050 Connecticut
Avenue, N.W., Washington, D.C., or at such other time and place as shall be
agreed upon by the parties.
1.2 Form of Payment. Purchaser shall pay the Purchase Price by wire
transfer of United States Dollars to the account designated by the Company.
1.3 Transfer of Preferred Stock. The Securities shall, when issued, be
unregistered and therefore subject to the restrictions on sale, distribution and
transfer imposed under the Securities Act and under applicable securities laws
or blue sky laws of any state or foreign jurisdiction.
1.4 Registration of the Securities. Pursuant to the terms of the
Registration Rights Agreement, the Company shall, at its own expense, prepare,
and within 45 days after the Closing Date, file with the SEC a registration
statement on such form as is then available in order to effect the registration
of the Conversion Shares (the "Registration Statement"). The Company shall use
all reasonable best efforts to have the Registration Statement declared
effective as soon as possible after the filing thereof and to remain effective
for the Registration Period (as defined in the Registration Rights Agreement).
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants to the Company as set forth in this
Article 2. Purchaser does not make any other representations or warranties,
express or implied, to the Company in connection with the transactions
contemplated hereby and any and all prior representations and warranties, if
any, which may have been made by Purchaser to the Company in connection with the
transactions contemplated hereby shall be deemed to have been merged in this
Agreement and any such prior representations and warranties, if any, shall not
survive the execution and delivery of this Agreement.
2.1 Investment Purpose. Purchaser is purchasing the Securities for
Purchaser's own account for investment only and not with a view toward or in
connection with the public sale or distribution thereof. Purchaser will not,
directly or indirectly, offer, sell, pledge or otherwise transfer the Securities
or any interest therein except pursuant to transactions that are exempt from the
registration requirements of the Securities Act and/or sales registered under
the Securities Act. Purchaser understands that Purchaser must bear the economic
risk of this investment indefinitely, unless the Securities are registered
pursuant to the Securities Act and any applicable securities laws or blue sky
laws of any state or foreign jurisdiction an exemption from such registration is
available, and that the Company has no intention or obligation to register any
of the Securities other than as contemplated by Section 1.4 hereof and the
Registration Rights Agreement.
2.2 Accredited Investor Status. Purchaser represents and warrants, that
it is an Accredited Investor (as that term is defined in Rule 501 promulgated by
the SEC under the Securities Act), that it has such knowledge and experience in
business and financial matters as to be capable of evaluating the merits and
risks of the investment contemplated to be made hereunder, and that it (i) was
not formed or organized for the specific purpose of investing in the Company;
(ii) understands that such investment bears a high degree of risk and could
result in a total loss of its investment; and (iii) has sufficient financial
strength to hold the same as an investment and to bear the economic risks of
such investment (including possible loss of such investment) for an indefinite
period of time.
2.3 Reliance on Exemptions. Purchaser acknowledges that the Securities
being sold to it hereunder are being sold pursuant to a private offering
exemption under the Securities Act and are not being registered under the
Securities Act or under the securities laws or blue sky laws of any state or
foreign jurisdiction and understands that the Company is relying upon the truth
and accuracy of, and Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of Purchaser to acquire the Securities.
2.4 Information. Purchaser has been furnished all materials relating to
the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities which it has specifically requested,
including without limitation the Company's Annual Report on Form 10-K and 10-K/A
for the year ended December 31, 1997, its Quarterly Report on Form 10-Q for the
period ended March 31, 1998, its Current Reports on Form 8-K filed with the SEC
on March 13, 1998, March 16, 1998 and March 18, 1998, the description of the
Common Stock contained in the Company's Form 8-A/A (Amendment No. 3) filed with
the SEC on September 29, 1997 and Proxy Statement dated May 28, 1998 (such
documents, including any financial statements and related notes included in such
documents collectively the "Furnished SEC Documents"). Purchaser and its
advisors have been given the opportunity to obtain information and to examine
all documents referred to herein and to ask questions of, and to receive answers
from, the Company or any person acting on its behalf concerning the Company and
the terms and conditions of this investment, and to obtain any additional
information, to the extent the Company possesses such information or could
acquire it without unreasonable effort or expense, to verify the accuracy of any
information previously furnished. All such questions have been answered to
Purchaser's full satisfaction, and all information and agreements, documents,
records and books pertaining to this investment which Purchaser has requested
have been made available to Purchaser or Purchaser's advisors. Purchaser
understands that its investment in the Securities involves a high degree of
risk, including without limitation the risks and uncertainties disclosed under
the caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Risk Factors and Uncertainties" in the Furnished SEC
Documents. In making its investment decision, Purchaser has not relied on any
oral or written representation, other than those contained in the Furnished SEC
Documents or this Agreement (including the schedules hereto) and the Ancillary
Documents, with respect to the Securities, the Company, its business or
prospects, or other matters, provided that, the Company provided Purchaser with
certain financial projections. Such projections were prepared by the Company in
good faith based on information available to the party who prepared such
projections at the time such projections were prepared. However, Purchaser
acknowledges that such projections (i) were not updated from the date on which
such projections were prepared and such projections do not reflect the effects
of the transactions contemplated by this Agreement, and (ii) contain
forward-looking statements and assumptions regarding future events and future
performance of the Company which involve risks and uncertainties that could
materially effect actual results of the Company's operations. In making its
decision to invest in the Company, Purchaser has relied solely upon independent
investigations made by Purchaser and Purchaser's advisors.
2.5 Governmental Review. Purchaser understands that no federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.
2.6 Transfer or Resale. Purchaser understands that (i) the Securities
have not been and are not being registered under the Securities Act or under the
securities laws or blue sky laws of any state or foreign jurisdiction, and may
not be offered, sold, pledged or otherwise transferred unless subsequently
registered thereunder or an exemption from such registration is available, and
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or under the securities laws or blue sky
laws of any state or foreign jurisdiction or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to
this Agreement or the Registration Rights Agreement), and (ii) any sale of the
Securities made in reliance on Rule 144 under the Securities Act, or a successor
rule ("Rule 144"), may be made only in accordance with the terms of Rule 144 and
Article 5 hereof and further, if Rule 144 is not applicable, any resale of the
Securities without registration under the Securities Act under circumstances in
which the seller may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder.
2.7 Authorization. Purchaser represents and warrants that as of the
Closing Date the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein have been duly authorized
by it. The fulfillment of and compliance with the terms of this Agreement will
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, or (iii) result in a violation
of, breach of or default under (A) its charter or constituent document, (B) any
law, statute, rule or regulation to which it is subject, or (C) any agreement,
instrument, order, judgment or decree to which it is subject or is a party to or
by which it is bound.
2.8 Binding Effect. Purchaser represents and warrants that this
Agreement constitutes its valid and binding obligation, enforceable in
accordance with its terms, except (i) as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights generally or by
equitable principles in any action (legal or equitable), (ii) that the
availability of equitable relief is subject to the discretion of the court
before which any proceeding thereof may be brought, and (iii) that the
enforceability of the indemnification provisions may be limited by applicable
securities laws or public policy.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser, except as disclosed
or reflected (including, in the case of financial statements, provided for) in
the disclosure schedules delivered herewith, as set forth in this Article 3. The
Company does not make any other representations or warranties, express or
implied, to Purchaser in connection with the transactions contemplated hereby
and any and all prior representations and warranties, if any, which may have
been made by the Company to Purchaser in connection with the transactions
contemplated hereby shall be deemed to have been merged in this Agreement and
any such prior representations and warranties, if any, shall not survive the
execution and delivery of this Agreement.
3.1 Organization and Qualification. Each of the Company and its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted or are presently expected to be conducted during the Company's current
fiscal year. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
where the failure so to qualify or be in good standing would have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means
any material adverse effect on the business, operations, assets, properties,
liabilities, condition (financial or otherwise) or operating results of the
Company and its subsidiaries, taken as a whole on a consolidated basis, or on
the transactions contemplated hereby.
3.2 Authorization; Enforcement.
(a) The Company has the requisite corporate power and
authority to enter into and perform this Agreement and the Ancillary Documents,
and to issue, sell and perform its obligations with respect to the Securities in
accordance with the terms hereof and thereof;
(b) the execution, delivery and performance of this Agreement
and the Ancillary Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Securities) have been duly authorized by all necessary corporate
action and, except as set forth on Schedule 3.2 hereof, no further consent or
authorization of the Company, its board of directors, or its stockholders or any
other person, body or agency is required with respect to any of the transactions
contemplated hereby or (whether under rules of The NASDAQ Stock Market, the
National Association of Securities Dealers or otherwise);
(c) this Agreement, the Ancillary Documents and certificates
for the Securities have been duly executed and delivered by the Company; and
(d) this Agreement, the Ancillary Documents and the Securities
constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except (i) to the
extent that such validity or enforceability may be subject to or affected by any
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement thereof, creditors' rights
or remedies of creditors generally, or by other equitable principles of general
application, (ii) that the availability of equitable relief is subject to the
discretion of the court before which any proceeding thereof may be brought, and
(iii) that the enforceability of indemnification provisions may be limited by
applicable securities law or public policy.
3.3 Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Securities) exercisable for, or
convertible into or exchangeable for any shares of Common Stock is set forth on
Schedule 3.3. All of such shares of capital stock have been, or upon issuance in
accordance with the terms of the relevant security will be, validly issued,
fully paid and nonassessable. No shares of capital stock of the Company
(including the Securities) are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances imposed
or suffered by the Company. Except as disclosed in Schedule 3.3, as of the date
of this Agreement, there are no outstanding options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries. The Company shall provide Purchaser
with a written update of this representation signed by the Company's Chief
Executive Officer or Chief Financial Officer on behalf of the Company as of the
Closing Date.
3.4 Issuance of Shares. As of the Closing the Securities will be duly
authorized, validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances imposed or suffered by the Company and
will not be subject to preemptive rights or other similar rights of stockholders
of the Company.
3.5 No Conflicts. The execution, delivery and performance of this
Agreement and the Ancillary Documents by the Company, and the consummation by
the Company of transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance, as applicable, of the
Securities) will not (i) result in a violation of the Certificate of
Incorporation or By-laws, or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries, or
by which any property or asset of the Company or any of its subsidiaries, is
bound or affected (only with respect to this Agreement, except for such possible
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or other organizational documents, and
neither the Company nor any of its subsidiaries, is in default (and no event has
occurred which has not been waived which, with notice or lapse of time or both,
would put the Company or any of its subsidiaries in default) under, nor has
there occurred any event giving others (with notice or lapse of time or both)
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, except for possible violations, defaults or rights as
would not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations the sanctions for which either singly or in the
aggregate would not have a Material Adverse Effect. Except as set forth on
Schedule 3.5, or except (i) such as may be required under the Securities Act in
connection with the performance of the Company's obligations pursuant to the
Registration Rights Agreement, (ii) filing of a Form D with the SEC, and (iii)
compliance with the state securities laws or blue sky laws of applicable
jurisdictions, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to perform its
obligations in accordance with the terms hereof. The Common Stock is listed on
The NASDAQ Stock Market, the Company is not in violation of the listing
requirements of The NASDAQ Stock Market and the Company is not aware of any
proceedings pending or contemplated to seek to have the Common Stock delisted
from The NASDAQ Stock Market.
3.6 SEC Documents. Except as disclosed in Schedule 3.6, since December
31, 1996, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") (all of the foregoing filed after December 31, 1995 and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being referred to herein as the "SEC
Documents"). The Company has delivered to Purchaser true and complete copies of
the Furnished SEC Documents, except for exhibits, schedules and incorporated
documents. Each of the SEC Documents as originally filed or as amended complied
in all material respects with the requirements of its respective report or form
and did not on the date of filing contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein were
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and as of the date hereof, there is no
fact or facts not disclosed in the SEC Documents which relates specifically to
the Company which individually or the aggregate, may have a Material Adverse
Effect. The consolidated financial statements of the Company (including any
related schedules or notes thereto) included in the SEC Documents were prepared
in accordance with generally accepted accounting principles, consistently
applied, and the applicable rules and regulations of the SEC during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they do not include footnotes or are condensed or summary statements)
and present accurately and completely, in all material respects, the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal, year-end audit adjustments). To the extent required by
the rules of the SEC applicable thereto, the SEC Documents contain a complete
and accurate list of all material undischarged written or oral contracts,
agreements, leases or other instruments to which the Company or any subsidiary
is a party or by which the Company or any subsidiary is bound or to which any of
the properties or assets of the Company or any subsidiary is subject (each a
"Contract"). Except as set forth in Schedule 3.6, none of the Company, its
subsidiaries or, to the best knowledge of the Company, any of the other parties
thereto, is in breach or violation of any Contract, which breach or violation
would have a Material Adverse Effect. No event, occurrence or condition exists
which, with the lapse of time, the giving of notice, or both, would become a
default by the Company or its subsidiaries thereunder which would have a
Material Adverse Effect.
3.7 Absence of Certain Changes. Except as disclosed in Schedule 3.7 or
disclosed or reflected in the Furnished SEC Documents, since March 31, 1998,
there has been no change or development in the business, properties, operations,
financial condition or results of operations of the Company which individually
or in the aggregate would have a Material Adverse Effect.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8 or as
disclosed or reflected in the Furnished SEC Documents, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, or self-regulatory organization or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company, any of its subsidiaries, or any of their respective
directors or officers in their capacities as such, which could reasonably be
expected to result in an unfavorable decision, ruling or finding which would
have a Material Adverse Effect or would adversely affect the transactions
contemplated by this Agreement or any of the documents contemplated hereby or
which would adversely affect the validity or enforceability of, or the authority
or ability of the Company to perform its obligations under, this Agreement or
any of such other documents. There are no facts known to the Company which, if
known by a potential claimant or governmental authority, could reasonably be
expected to give rise to a claim or proceeding which, if asserted or conducted
with results unfavorable to the Company or any of its subsidiaries, could
reasonably be expected to have a Material Adverse Effect.
3.9 Disclosure. No information relating to or concerning the Company
set forth in this Agreement contains an untrue statement of a material fact. The
Company has not omitted to state a material fact necessary in order to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading.
3.10 S-3 Registration. The Company is currently eligible to register
the resale by Purchaser of the Securities on a registration statement on Form
S-3 under the Securities Act.
3.11 No General Solicitation. Neither the Company nor any person acting
for the Company has conducted any "general solicitation," as described in Rule
502(c) under Regulation D, with respect to any of the Securities being offered
hereby.
3.12 No Integrated Offering. Neither the Company, nor any of its
Affiliates (as defined herein), nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would prevent the
parties hereto from consummating the transactions contemplated hereby pursuant
to an exemption from registration under the Securities Act pursuant to the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the Securities Act, assuming the accuracy of
the representations and warranties herein contained of Purchaser. For purposes
hereof, "Affiliate" shall mean any entity controlling, controlled by or under
common control with a designated person or entity; for the purposes of this
definition, "control" shall have the meaning presently specified for that word
in Rule 405 promulgated by the SEC under the Securities Act. With respect to any
entity which is a limited partnership, Affiliate shall also mean any general or
limited partner of such limited partnership, or any person or entity which is a
general partner in a general or limited partnership which is a general partner
of such limited partnership.
3.13 No Brokers. The Company has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by Purchaser relating to this Agreement or the transactions
contemplated hereby.
3.14 Intellectual Property.
(a) "Intellectual Property" means any and all right, title and interest
of the Company or any of its subsidiaries in and to: all patents, registered
tradenames, trademarks and servicemarks and registered copyrights and
applications therefor owned by the Company or any of its subsidiaries
(collectively, "Company Rights"); unregistered tradenames, trademarks,
servicemarks, and copyrights, trade secrets, customer lists, methodologies,
proprietary development and marketing information and know-how, inventions,
inventors' notes, drawings, and designs associated with any of the foregoing,
relating to the business of the Company. Set forth in Schedule 3.14(a) is a true
and correct list of the Company Rights.
(b) The Company or its subsidiaries are the owners of all right, title
and interest in and to the Company Rights, free and clear of all claims, liens,
encumbrances, licenses and other interests, except for those specifically
disclosed or reflected in the Furnished SEC Documents, on Schedule 3.8, or on
Schedule 3.14(b), and neither the Company nor any subsidiary of the Company
infringes on or is in conflict with any right of any other person with respect
to any Company Rights nor is there any claim of infringement made by a third
party against or involving the Company or any of its subsidiaries, which
infringement, conflict or claim, individually or in the aggregate, could
reasonably be expected to result in an unfavorable decision, ruling or finding
which would have a Material Adverse Effect. Except as provided in the agreements
disclosed in Schedule 3.14(b), the Company has the right to bring actions for
infringement of the Intellectual Property.
3.15 Employee Benefit Plans.
(A) Identification. Schedule 3.15(a) contains a complete and
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
sponsored by the Company or to which the Company contributes on behalf of its
employees (the "Employee Benefit Plans"). The Company has provided or made
available to Purchaser copies of all plan documents, determination letters,
pending determination letter applications, trust instruments, insurance
contracts, administrative services contracts, annual reports, actuarial
valuations, summary plan descriptions, summaries of material modifications,
administrative forms and other documents that constitute a part of or are
incident to the administration of the Employee Benefit Plans. In addition, the
Company has provided or made available to Purchaser a written description of all
existing practices engaged in by the Company that constitute Employee Benefit
Plans. Except as set forth on Schedule 3.15(a) and subject to the requirements
of the Internal Revenue Code of 1986, as amended (the "Code") and ERISA, each of
the Employee Benefit Plans can be terminated or amended at will by the Company.
Except as set forth on Schedule 3.15(a), no unwritten amendment exists with
respect to any Employee Benefit Plan.
(B) Administration. To the best knowledge of the Company, each
Employee Benefit Plan has been administered and maintained in compliance with
all applicable laws, rules and regulations, except where the failure to be in
compliance would not, individually or in the aggregate, result in a Material
Adverse Effect. To the best of the knowledge of the Company, the Company has (i)
made all necessary filings with respect to such Employee Benefit Plans,
including the timely filing of Form 5500 if applicable, and (ii) made all
necessary filings, reports and disclosures pursuant to and have complied with
all requirements of the Internal Revenue Service ("IRS") Voluntary Compliance
Resolution Program, if applicable, with respect to all profit sharing retirement
plans and pension plans in which employees of the Company participate.
(C) Examinations. Except as set forth on Schedule 3.15(c), the
Company has not received any notice that any Employee Benefit Plan is currently
the subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency.
(D) Prohibited Transactions. To the best of the knowledge of
the Company, no prohibited transactions (within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA) have occurred with respect to any
Employee Benefit Plans.
(E) Claims and Litigation. No pending or, to the actual
knowledge of the Company, threatened claims, suits, or other proceedings exist
with respect to any Employee Benefit Plan other than normal benefit claims filed
by participants or beneficiaries.
(F) Qualification. The Company has applied for a favorable
determination letter or ruling from the IRS for each of the Employee Benefit
Plans intended to be qualified within the meaning of Section 401(a) of the Code
and/or tax-exempt within the meaning of Section 501(a) of the Code. Except as
set forth on Schedule 3.15(f), no proceedings exist or, to the actual knowledge
of the Company has been threatened that could result in the revocation of any
such favorable determination letter or ruling.
(G) Funding Status. Neither the Company nor any member of a
"Controlled Group" (within the meaning of Section 412(n)(6)(B)) of the Code with
the Company sponsors any plans which (i) are subject to the minimum funding
requirements of Code Section 412 or ERISA Section 302, or (ii) are subject to
Title IV of ERISA assumptions.
(H) Excise Taxes. To the best of the knowledge of the Company,
neither the Company nor any member of a Controlled Group has any liability to
pay excise taxes with respect to any Employee Benefit Plan under applicable
provisions of the Code or ERISA.
(I) Multi-employer Plans. Neither the Company nor any member
of a Controlled Group is or ever has been obligated to contribute to a
multi-employer plan within the meaning of Section 3(37) of ERISA.
(J) Pension Benefit Guaranty Corporation. None of the Employee
Benefit Plans are subject to the requirements of Title IV of ERISA.
(K) Retirees. The Company has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and Sections 601 through 608 of ERISA.
3.16 Subsidiaries. Except as set forth on Schedule 3.16, the Company
does not own, whether directly or indirectly, any capital stock or other
proprietary interest directly or indirectly, in any corporation, association,
trust, partnership, joint venture or other entity which is currently involved in
the Company's ordinary course of business. Except as set forth on Schedule 3.16,
with respect to each of the Company's subsidiaries (i) the Company owns directly
or indirectly all of such subsidiary's outstanding capital stock, and (ii) there
are no outstanding options, warrants, rights, contracts, commitments,
understandings or arrangements by which such subsidiary is bound to issue any
additional shares of capital stock or any security convertible thereunto or
exercisable or exchangeable therefor.
3.17 Tax Matters.
(a) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith) (including,
without limitation, federal, state, city, county, local, foreign, or other
income, franchise, capital, withholding, real or tangible property, employment,
unemployment compensation, transfer, sales, use, excise and all other taxes of
any kind) imposed by the United States or any state, city, country, country or
foreign government or subdivision or agency thereof, whether disputed or not,
and (ii) "Transaction" means one or more transactions, acts, events, or
omissions of whatever nature.
(b) The Company has filed on a timely basis all returns and
reports, including all estimated returns and reports of every kind and have
timely given all notices, in respect of Taxes required to be filed or given
under applicable law within the applicable statute of limitations period by any
of them, except where the failure to so file or to give such notice and would
not have a Material Adverse Effect, or except where proper action has been taken
by the Company to extend the relevant filing deadline. Such returns, reports and
notices are complete and accurate in all material respects. All Taxes shown on
such returns or reports have been, and all Taxes subsequently assessed with
respect to the periods and or Transactions to which such returns or reports
relate have been or will be, timely, and fully paid, except for amounts which
the Company is contesting in good faith, or which the failure to pay would not
have had a Material Adverse Effect. The provisions in the financial statements
(and the notes and schedules related thereto) contained in the Furnished SEC
Documents for Taxes currently payable and for deferred Taxes are adequate in all
material respects to provide for such Taxes for which the Company and its
Subsidiaries taken as a whole may be liable in respect of periods or
Transactions through the dates thereof.
(c) No fact or condition relating to any past or present
Transaction, except as set forth on Schedule 3.17, which, if known to any tax
authority having jurisdiction, would likely result in a successful challenge by
such authority of the treatment or omission of such factor or condition on any
tax return, report or notice of the Company or its Subsidiaries, and no issue
has arisen in any examination of the Company by the IRS that, in either case, if
raised with respect to any other period no so examined would result in a
proposed material deficiency for any other period not so examined, if upheld.
The Company and its Subsidiaries have made all payments or estimated Taxes
required to be made under Section 6655 of the Internal Revenue Code of 1986, as
amended (the "Code") and any comparable provisions of state, local or foreign
law. Except as set forth on Schedule 3.17, to the Company's knowledge there is
no pending nor threatened or contemplated action, audit, proceeding or
investigation for the assessment or collection of Taxes from the Company. There
are no requests for rulings, outstanding subpoenas or requests for information
with respect to Taxes of the Company, proposed reassessments of any property
owned or leased by the Company, or similar matters pending with respect to any
taxing authority.
3.18 Environmental Matters. Except as listed in Schedule 3.18:
(a) There are, with respect to the Company and its
subsidiaries, or any predecessor of the foregoing, no present violations of
Environmental Law (as defined herein), nor to the knowledge of the Company, any
actions, activities, circumstances, conditions, events, incidents, or
contractual obligations which may give rise to any Environmental Liability and
neither the Company nor its subsidiaries has received any notice with respect to
any of the foregoing nor is any litigation pending or threatened in connection
with any of the foregoing.
(b) To the knowledge of the Company and except in the normal
course of the Company's or its subsidiaries' business (i) no Hazardous Materials
are present on or about any real property currently owned, leased or used by the
Company or its subsidiaries, and (ii) no Hazardous Materials were present on or
about any real property previously owned, leased or used by the Company or its
subsidiaries during the period the property was owned, leased or used by the
Company or its subsidiaries.
(c) To the knowledge of the Company, no Hazardous Materials
have been released on or about, or where they may pose a threat of migration to,
any real property currently owned, leased or used by the Company or its
subsidiaries and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or its subsidiaries
during the period the property was owned, leased or used by the Company or its
subsidiaries, except as may be required in the normal course of business and in
material compliance with applicable Environmental Law.
(d) To the knowledge of the Company, no asbestos-containing
materials or PCBs are present on or about any property currently owned, leased
or used by the Company or its subsidiaries.
(e) To the knowledge of the Company, there are not now, nor
have there ever been, any underground storage tanks or similar facilities of any
kind on or under any real property currently or previously owned, leased or used
by the Company or its subsidiaries.
(f) For purposes of this Section 3.18, capitalized terms used
herein shall have The following meanings:
"Environmental Laws" shall mean, at any date, all provisions
of federal, state, local or foreign law (including applicable principles of
common and civil law), statutes, ordinances, rules, regulations, published
standards and directives that have the force and effect of laws, statutes,
regulations, permits, licenses, judgments, writs, injunctions, decrees and
orders enacted, promulgated or issued by an), Public Authority, and all
indemnity agreements and other contractual obligations, as in effect at such
date, relating to (i) the protection of the environment, including the air,
surface and subsurface soils, surface waters, groundwaters and natural
resources, and (ii) occupational health and safety and exposure of persons to
Hazardous Materials. Environmental Laws shall include the Comprehensive
Environmental Response, Compensation and Liability Act 42 U.S.C. ss.ss.9601 et
seq., and any other laws imposing or creating liability with respect to
Hazardous Materials.
"Environmental Liability" shall mean any liabilities,
obligations, costs, losses, payments or damages, including compensatory and
punitive damages, incurred (i) to contain, remove, clean up, assess, xxxxx or
otherwise remedy any actual or alleged release or threatened release of
Hazardous Materials, any actual or alleged contamination (by Hazardous
Materials) of air, surface or subsurface soil, groundwater or surface water, or
any personal injury or damage to natural resources or property resulting from
any such release or contamination, pursuant to the requirements of any
Environmental Law or in response to any claim by any Public Authority or other
third party under any Environmental Law; (ii) to modify facilities or processes
or take any other remedial action in response to any claim by any Public
Authority of non-compliance with any Environmental Law, (iii) as a result of the
imposition of any civil or criminal fine or penalty by any Public Authority for
the violation or alleged violation of any Environmental Law, or (iv) as a result
of any action, suit, proceeding or claim by any third party under any
Environmental Law. The term "Environmental Liability" shall include: (i)
reasonable fees of counsel and consultants (but not any corporate allocation for
management time or for the use of similar in-house services or facilities) and
(ii) the costs and expenses of any investigation undertaken to ascertain the
existence or extent of any potential or actual Environmental Liability.
"Hazardous Material" shall mean any substance regulated by any
Environmental Law or which may now or in the future form the basis for any
Environmental Liability.
"Public Authority" shall mean any supranational, national,
regional, state or local government court, governmental agency, authority,
board, bureau, instrumentality or regulatory body.
3.19 Compliance with Laws; Permits. Except as provided in Schedule
3.19, the Company and its subsidiaries are in compliance, and have been
conducted in compliance with, all federal, state, local and foreign laws, rules,
ordinances, codes, consents, authorizations, registrations, regulations,
decrees, directives, judgments and orders applicable to it except where the
failure to comply would not individually or in the aggregate have a Material
Adverse Effect. The Company has all federal, state, local and foreign
governmental licenses, permits, qualifications and authorizations ("Permits")
necessary in the conduct of its business as currently conducted. All such
Permits are in full force and effect and no violations have been recorded in
respect of any such Permit; no proceeding is pending or, to the best knowledge
of the Company, threatened to revoke or limit any such Permit and no such Permit
will be suspended, cancelled or adversely modified as a result of the execution
and delivery of this Agreement or the Ancillary Documents and the consummation
of the transactions contemplated hereby or thereby, except where failure to have
such Permit would not individually or in the aggregate have a Material Adverse
Effect.
3.20 Insurance. The Company and its Subsidiaries maintains fire, flood,
windstorm, hurricane and casualty insurance policies, with extended coverage
(subject to reasonable deductibles), with licensed carriers sufficient to allow
them to replace any of their property that might be damaged or destroyed and to
the best knowledge of the Company have liability insurance reasonably adequate
to protect them and their financial condition against the risks involved in the
business conducted by them. Neither the Company nor any of its Subsidiaries has
done anything by way of action or inaction which might invalidate any of such
policies in whole or in part.
3.21 Property. The Company and its subsidiaries have good and
marketable title, or a valid leasehold interest in or contractual right to use,
all of their assets and properties, free and clear of any mortgages, judgments,
claims liens, security interests, pledges, escrows, charges or other
encumbrances of any kind or character whatsoever ("Encumbrances") except in each
case for permitted encumbrances and such defects in title and such other liens
and Encumbrances which do not individually or in the aggregate have a Material
Adverse Effect on the value to the Company of the properties and assets of the
Company and its subsidiaries taken as a whole.
ARTICLE 4
COVENANTS
4.1 Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Articles 6 and 7 of this Agreement.
4.2 Securities Laws. The Company shall file a Form D with respect to
the Securities with the SEC as required under Regulation D and shall provide a
copy thereof to Purchaser within 15 days after the Closing Date. The Company
shall file a Form 8-K disclosing this Agreement and the transactions
contemplated hereby with the SEC within five business days following the Closing
Date. The Company shall, on or prior to the Closing Date, take such action as is
necessary to sell the Securities to Purchaser under applicable securities laws
of the states of the United States, and shall provide evidence of any such
action so taken to Purchaser on or prior to the Closing Date.
4.3 Reporting Status. So long as Purchaser beneficially owns any of the
Securities, the Company shall use its best efforts to timely file all reports
required to be filed by it with the SEC pursuant to the Exchange Act, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
4.4 Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities to (i) redeem its Series B Convertible Participating Preferred
Stock (the "Series B Preferred Stock"), 525 shares of which are currently issued
and outstanding, if the Series B Preferred Stock is outstanding as of the date
of the Closing Date, and (ii) implement its strategic business plan, including,
without limitation, the acquisition of related technology through asset and
business acquisitions, mergers and joint ventures.
4.5 Expenses. Each of the Company and Purchaser shall pay all the costs
and expenses incurred by it or on its behalf in connection with this Agreement
and the consummation of the transactions contemplated hereby.
4.6 Board Representation. On or at any time within 90 days after the
Closing Date, Purchaser may provide the Company with (i) the name of an
individual (the "TLC Initial Nominee") Purchaser recommends be appointed to the
Company's Board of Directors (the "Board"), and (ii) all information related to
the TLC Initial Nominee as would be required by Regulation 14A promulgated by
the SEC under the Exchange Act to be included in a proxy statement related to a
meeting of the Company's stockholders at which directors would be elected (the
"Proxy Information"). Within 30 days after the Company's receipt of all Proxy
Information relating to such individual, the Board shall consider the
qualifications of the TLC Initial Nominee and, subject to its fiduciary duties,
either appoint the TLC Initial Nominee to serve on the Board until the next
election of directors by the Company's stockholders or notify Purchaser that the
Board has determined that such appointment would not be consistent with the
Board's fiduciary duties. At any time within 90 days after the Company's
notifies Purchaser of the Board's determination not to appoint the TLC Initial
Nominee, Purchaser may provide the Company with the name of, together with Proxy
Information relating to, one or more individuals (the "TLC Alternative Nominee")
that Purchaser recommends be appointed to the Board. Within 30 days after the
Company's receipt of all Proxy Information relating to the TLC Alternative
Nominee, the Board shall consider the qualifications of such TLC Alternative
Nominee and, subject to its fiduciary duties, either appoint the TLC Alternative
Nominee to serve on the Board until the next election of directors by the
Company's stockholders or notify Purchaser that the Board has determined that
such appointment would not be consistent with the Board's fiduciary duties. This
process shall continue until the Board and Purchaser have agreed upon an
individual nominated by Purchaser to serve on the Board (the "TLC Nominee"). The
Company shall increase the size of the Company's Board of Directors to the
extent necessary to accommodate the appointment of the TLC Nominee. Thereafter,
for as long as Purchaser holds of record (such amount to be determined by
considering the total of the following (i) the number of full shares of Common
Stock into which shares of Preferred Stock then held by Purchaser could be
converted pursuant to terms of the Certificate of Designation, and (ii) that
number of full shares of Common Stock then held by the Purchaser) at least 7.5%
of the Common Stock outstanding on any date the Board fixes the record date for
the meeting of the Company's stockholders at which directors will be elected,
Purchaser shall have the right to designate a nominee to stand for election as a
director at the next meeting at which directors are to be elected. If such
nominee of the Purchasers is not the TLC Nominee, then similar to the process
described in the first four sentences of this Section 4.6, Purchaser shall
submit recommendations for an individual to stand for election as a director and
the Proxy Information related thereto to the committee of the Board responsible
for director nominations. Such committee shall consider the qualifications of
such individual and, subject to its fiduciary duties, either nominate such
individual for election at such meeting of stockholders or notify Purchaser that
such committee has determined that such appointment would not be consistent with
its fiduciary duties (in which case the process shall continue until the
committee and Purchaser have agreed upon an individual to stand for election as
a director at the next meeting at which directors are to be elected).
4.7 Listing. The Company shall use its best efforts to continue the
listing and trading of its Common Stock on Nasdaq, the New York Stock Exchange
or American Stock Exchange; and comply in all respects with the Company's
reporting, filing and other obligations under the by-laws or rules of the Nasdaq
or such exchange, as applicable. In connection with the first issuance of the
Conversion Shares, the Company shall take the necessary actions to have the
Conversion Shares approved for quotation on The NASDAQ Stock Market.
4.8 Prospectus Delivery Requirement. Purchaser understands that the
Securities Act requires delivery of a prospectus relating to the Conversion
Shares in connection with any sale or other disposition thereof pursuant to the
Registration Statement, and Purchaser shall comply with the applicable
prospectus delivery requirements of the Securities Act in connection with any
such sale or other disposition.
4.9 Rights of First Offer.
(a) During the period commencing on the Closing Date and
continuing until the date on which the sum of (i) the number of full shares of
Common Stock into which shares of Preferred Stock for which Purchaser was the
record holder could be converted pursuant to terms of the Certificate of
Designation, and (ii) that number of full shares of Common Stock then held by
the Purchaser, is less than five percent (5%) of the then total outstanding
Common Stock, prior to the Company finalizing a financing (the "Proposed
Offering") with an investor which includes the issuance of equity securities, or
any security convertible into or exercisable, directly or indirectly, for equity
securities of the Company (collectively, the "Equity Securities") at a price
which is less than the closing bid price (the "Market Price") for a share of
Common Stock (on the date of the Proposed Offering Notice (as defined herein))
as reported by The NASDAQ Stock Market, or such other securities exchange or
national market system on which Common Stock is then listed, the Company shall
provide written notice to Purchaser (the "Proposed Offering Notice") which
includes a description in reasonable detail of the Proposed Offering, including
the type and amount of Equity Securities proposed to be issued and the
consideration the Company desires to receive therefore. The Proposed Offering
Notice shall constitute an offer to Purchaser to purchase a portion (a
"Maintenance Amount") of the securities being offered (the "Offered Securities")
in connection with the Proposed Offering on a pari passu basis in order to
maintain Purchaser's percentage level of ownership of the Company's Common Stock
outstanding as such ownership exists on the date of the Proposed Offering
Notice. For purposes of determining whether a Proposed Offering includes the
issuance of Equity Securities at a price which is less than the Market Price,
the total consideration to be received by the Company in connection with such
Proposed Offering will be divided by the total of (i) shares of Common Stock to
be issued in connection with the Proposed Offering, (ii) options and warrants to
purchase Common Stock to be issued in connection with the Proposed Offering
(assuming such options and warrants have been fully exercised), and (iii)
preferred stock (and options and warrants to purchase such preferred stock) to
be issued in connection with the Proposed Offering which are convertible into
Common Stock (assuming such preferred stock, options and warrants shall be
deemed to have been converted to Common Stock pursuant to the terms thereof
utilizing the Market Price).
(b) Purchaser shall have five business days after receipt of
the Proposed Offering Notice (unless Purchaser earlier indicates that it has no
interest in purchasing the Offered Securities), to decide whether or not to
acquire the Maintenance Amount, after which (if Purchaser has not agreed to
purchase the above-mentioned Maintenance Amount on the terms set forth in the
Proposed Offering Notice or such other terms as are mutually acceptable to the
Company and Purchaser) the Company shall be permitted to seek and obtain a
third-party purchaser to acquire the entire amount of the Offered Securities,
provided that the closing of such acquisition by such third party purchaser
occurs within 120 days from the date of the Proposed Offering Notice and
provided that the acquisition of the Offered Securities by such third-party
purchaser is on terms not materially different than those terms set forth in the
Proposed Offering Notice.
(c) The parties acknowledge and agree that the requirements of
this Section 4.9 shall not apply to a public offering of the Company's equity
securities. For purposes of this Section 4.9, the following will not be deemed a
"Proposed Offering": (i) the grant of options or warrants, or the issuance of
securities, under any employee or director stock option, stock, purchase or
restricted stock plan of the Company, (ii) the issuance of Common Stock pursuant
to any contingent obligation of the Company existing as of the Closing and
described on Schedule 3.3, (iii) the issuance of securities upon the exercise or
conversion of the Company's options, warrants or other convertible securities
outstanding as of the date hereof, (iv) declaration of a rights dividend to
holders of Common Stock in connection with the adoption of a stockholder rights
plan by the Company, and (v) the issuance of securities in connection with a
merger, acquisition, joint venture or similar arrangement. The consummation of
the Company's financing transaction (the "Dawson Samberg Financing") with Dawson
Samberg Capital Management, Inc. and its affiliates ("Dawson Samberg") shall not
trigger any rights of Purchaser under this Section 4.9.
(d) Nothing contained in this Section 4.9 will require the
Company to issue Equity Securities or take any action which is inconsistent with
the listing rules of The NASDAQ Stock Market.
4.10 Standstill. Pursuant to the terms of the Standstill Agreement for
the period specified therein, Purchaser shall not acquire any voting securities
or instruments which are convertible into the voting securities of the Company.
4.11 Stockholder Rights Plan. Prior to or in connection with the Dawson
Samberg Financing, the Company shall either (i) enter into an agreement with
Dawson Samberg providing that neither Dawson Samberg nor any entity Affiliate
will purchase any voting securities of the Company after the consummation of the
Dawson Samberg Financing without the approval of a majority of the members of
the Company's Board of Directors (the "Board"), or (ii) subject to the Board's
fiduciary duties, the Company will adopt a stockholder rights plan which would
be triggered should any investor acquire more than 15% of the Common Stock
outstanding without the approval of the Board.
4.12 Financial Statement Disclosure. The Company shall deliver to
Purchaser (a) as soon as available, but in any event within 45 days after the
end of each month during each of the Company's fiscal years, a Company prepared
consolidated balance sheet, consolidated income statement, and consolidated
statement of cash flow covering the Company's consolidated operations during
such period; and (b) as soon as available, but in any event within 90 days after
the end of each of the Company's fiscal years, consolidated financial statements
of the Company for each such fiscal year, audited by independent certified
public accountants. Such audited financial statements shall include a
consolidated balance sheet, consolidated profit and loss statement, and
consolidated statement of cash flow and such accountants' letter to management
when available.
ARTICLE 5
TRANSFER OF SECURITIES
The Securities shall not be transferable except upon the conditions
specified in this Article 5, which conditions are intended to insure compliance
with the provisions of the Securities Act and state securities laws in respect
of the transfer of any such Securities.
5.1 Restrictive Legend.
(A) Unless and until otherwise permitted by this Article 5,
each certificate for the Preferred Stock and the Conversion Shares issued to
Purchaser or to any subsequent transferee of such Securities shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"These Shares have not been registered under the Securities
Act of 1933 and may not be offered for sale, sold, transferred
or otherwise disposed of unless registered under such Act or
unless an exemption from such registration is available.
Further, such transfer is subject to the conditions specified
in a Securities Purchase Agreement dated as of June 5, 1998
pursuant to which such shares were issued and sold by
LaserSight Incorporated (the "Company"), a copy of which
Agreement will be furnished by the Company to the holder
hereof upon request and without charge."
(B) The Company may order its transfer agents for Common Stock
to stop the transfer of any of the Securities bearing the legend set forth in
Subsection (a) of this Section 5.1 until the conditions of this Article 5 with
respect to the transfer of such Securities have been satisfied.
5.2 Notice of Proposed Transfer. If, prior to any transfer or sale of
any Securities not registered under the Securities Act, Purchaser desiring to
effect such transfer or sale shall deliver a written notice to the Company
describing briefly the manner of such transfer or sale and a written opinion of
counsel for Purchaser (provided that such counsel, and the form and substance of
such opinion, are reasonably satisfactory to the Company) to the effect that
such transfer or sale may be effected without the registration of such
Securities under the Securities Act, the Company shall thereupon permit or cause
its transfer agent to permit such transfer or sale to be effected; provided,
however, that if in such written notice the transferring Purchaser represents
and warrants to the Company that the transfer or sale is to a purchaser or
transferee whom the transferring Purchaser knows or reasonably believes to be a
"qualified institutional buyer," as that term is defined in Rule 144A
promulgated by the SEC under the Securities Act ("Rule 144A"), no opinion shall
be required unless reasonably requested in writing by the Company within five
days after receipt of such written notice, in which case Purchaser shall deliver
to Company such a written opinion of counsel.
5.3 Termination of Restrictions.
(A) Notwithstanding the foregoing provisions of this Article
5, the restrictions imposed by this Article 5 upon the transferability of
Securities shall terminate as to any particular share of such Securities when
(i) such Security shall have been effectively registered under the Securities
Act and sold by Purchaser thereof in accordance with such registration, or (ii)
a written opinion to the effect that such restrictions are no longer required or
necessary under any federal or state securities law or regulation have been
received from counsel for Purchaser thereof (provided that such counsel, and the
form and substance of such opinion, are reasonably satisfactory to the Company)
or counsel for the Company, or (iii) such Security shall have been sold without
registration under the Securities Act in compliance with Rule 144, or (iv) the
Company is reasonably satisfied that Purchaser of such Security shall, in
accordance with the terms of Subsection (k) of Rule 144, be entitled to sell
such Security pursuant to such Subsection, or (v) a letter or an order shall
have been issued to Purchaser thereof by the staff of the SEC or the SEC stating
that no enforcement action shall be recommended by such staff or taken by the
SEC, as the case may be, if such Security is transferred without registration
under the Securities Act in accordance with the conditions set forth in such
letter or order and such letter or order specifies that no subsequent
restrictions on transfer are required.
(B) Whenever the restrictions imposed by this Article 5 shall
terminate, as hereinabove provided, a Purchaser who then holds any particular
Securities then outstanding as to which such restrictions shall have terminated
shall be entitled to receive from the Company, without expense to Purchaser, one
or more new certificates for such Securities not bearing the restrictive legend
set forth in Section 5.1(a) hereof.
5.4 Compliance with Rule 144 and Rule 144A. At the written request of
Purchaser who proposes to sell any of Securities in compliance with Rule 144,
the Company shall furnish to Purchaser, within 10 days after receipt of such
request, a written statement as to whether or not the Company is in compliance
with the filing requirements of the SEC as set forth in such Rule. For purposes
of effecting compliance with Rule 144A, in connection with any resales of any
Securities that hereafter may be effected pursuant to the provisions of Rule
144A, Purchaser desiring to effect such resale and each prospective
institutional purchaser of such shares designated by Purchaser shall have the
right, at any time the Company is not subject to Section 13 or 15(d) of the
Securities and Exchange Act, to obtain from the Company, upon the written
request of Purchaser and at the Company's expense the documents specified in
Section (d)(4)(i) of Rule 144A, as such rule may be amended from time to time.
5.5 Non-Applicability of Restrictions on Transfer. Notwithstanding the
provisions of Section 5.2 hereof, any record owner of Securities may from time
to time transfer all or part of such record owner's Securities (i) to a nominee
identified in writing to the Company as being the nominee of or for such record
owner, and any nominee of or for a beneficial owner of Securities identified in
writing to the Company as being the nominee of or for such beneficial owner may
from time to time transfer all or part of the Securities registered in the name
of such nominee but held as nominee on behalf of such beneficial owner, to such
beneficial owner, (ii) to an Affiliate of such record owner, or (iii) if such
record owner is a partnership or limited liability company or the nominee of a
partnership or limited liability company, to a partner, member, retired partner
or member, or estate of a partner, member or retired partner or member, of such
partnership or limited liability company, so long as such transfer is in
accordance with the transferee's interest in such partnership or limited
liability company and is without consideration; provided, however, that (1) such
record owner shall deliver a written notice to the Company describing in
reasonable detail the manner of such transfer or sale prior to the consummation
of such transfer or sale, (2) each such transferee shall remain subject to all
restrictions on the transfer of Securities herein contained, and (3) if
reasonably requested in writing by the Company within five days after receipt of
such written notice, such record owner shall deliver to the Company such
additional information requested by the Company or its counsel (in form and
substance reasonably satisfactory to the Company and such counsel) that the
proposed transfer is within the scope of this Section 5.5 or a written opinion
of counsel for such record owner (provided that such counsel, and the form and
substance of such opinion, are reasonably satisfactory to the Company) to the
effect that such transfer or sale may be effected without the registration of
such Securities under the Securities Act.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of
the Company hereunder to issue and sell the Securities to Purchaser at the
Closing is subject to the satisfaction, as of the Closing Date and with respect
to Purchaser, of each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
(A) Purchaser shall have executed the signature page to this
Agreement and the Ancillary Documents, as applicable, and delivered the
same to the Company.
(B) The Purchase Price shall have been delivered to the
Company.
(C) The Company shall have received notice from the Company's
senior lender, Foothill Capital Corporation ("Foothill"), that Foothill
has been paid all amounts owed by the Company.
(D) The representations and warranties of Purchaser shall be
true and correct as of the date when made and as of the Closing as
though made at that time (except for representations and warranties
that speak as of a specific date), and Purchaser shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the applicable Purchaser at or prior to
the Closing.
(E) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
7.1 Conditions to Purchaser's Obligation to Purchase. The obligation of
Purchaser hereunder to purchase the Securities on the Closing Date is subject to
the satisfaction of each of the following conditions, provided that these
conditions are for Purchaser's sole benefit and may be waived by Purchaser at
any time in Purchaser's sole discretion:
(A) The Company shall have executed the signature page to this
Agreement, the Registration Rights Agreement and delivered the same to
Purchaser.
(B) At the Closing, the Company shall have delivered to
Purchaser duly executed certificates for the Preferred Stock.
(C) The Common Stock shall be listed on The NASDAQ Stock
Market and trading in the Common Stock shall not have been suspended by
The NASDAQ Stock Market or the SEC or other regulatory authority.
(D) Purchaser shall have received notice from Foothill, that
Foothill has been paid all amounts owed by the Company.
(E) Concurrently with the Closing, the Company shall redeem
the Series B Preferred Stock.
(F) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing Date as
though made at that time and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
Purchaser shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as
of the Closing Date to the foregoing effect.
(G) Purchaser shall have completed to their satisfaction all
business, legal, accounting and financial due diligence with respect to
the Company.
(H) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any
of the transactions contemplated by this Agreement.
(I) Purchaser shall have received an opinion of Xxxxxxxxxxxx
Xxxx & Xxxxxxxxx, dated as of the Closing Date, in the form attached
hereto as Exhibit D.
ARTICLE 8
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in that state, without giving effect to the
principles of conflicts of law. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and state courts located in the
County of New Castle in the State of Delaware in any suit or proceeding based on
or arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The Company and Purchaser irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding.
Service of process upon the Company or Purchaser mailed by certified mail,
return receipt requested, shall be deemed in every respect effective service of
process upon the Company in any suit or proceeding arising hereunder. Nothing
herein shall affect Purchaser's right to serve process in any other manner
permitted by law. A final non-appealable judgment in any such suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
8.2 Counterparts. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
8.3 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.4 Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
8.5 Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and
Purchaser.
8.6 Notice. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile-machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). Each party shall provide notice to the other party
of any change in address. The addresses for such communications shall be:
If to the Company:
LaserSight Incorporated
00000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer
After June 30, 1998:
LaserSight Incorporated
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
Xxx Xxxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
If to Purchaser:
TLC The LaserCenter, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx
Xxxxxx L4W 442
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
with a copy to:
Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
8.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other. The
provisions of this Agreement which are for each of the Purchaser's benefit as a
purchaser of holder of Securities are also for the benefit of, and enforceable
by, any subsequent holder of such Securities.
8.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 Survival. All representations and warranties in this Agreement
shall survive the execution and delivery of this Agreement and the Closing. All
agreements contained herein shall survive the Closing until, by their respective
terms, they are no longer operative
8.10 Indemnification. The Company shall indemnify and hold harmless
Purchaser against and from any losses, claims, damages, liabilities or expenses
("Losses") insofar as such Losses (or actions in respect thereof) arise out of
or are based upon (i) the falsity or incorrectness as of the Closing Date of any
representation or warranty of the Company contained in or made pursuant to
Article 3 hereof, or (ii) the existence of any condition, event or fact
constituting, or which with notice or passage of time, or both, would constitute
a default in the observance of any of the Company's undertakings or covenants
hereunder, under the Registration Rights Agreement or the Company's Certificate
of Incorporation and By-laws. The Company shall also pay all attorney's and
accountant's fees and costs and court costs incurred by Purchaser in enforcing
the indemnification provided for in this Section 8.10. Notwithstanding the
foregoing, the Company expressly agrees and acknowledges that the right of
indemnification granted herein to Purchaser of shall not be deemed to be the
exclusive remedy available to Purchaser for any of the matters described in this
Section 8.10.
8.11 Stamp Tax and Delivery Costs. The Company will pay all stamp and
other taxes, if any, which may be payable in respect of the sale or other
transfer of the Securities to Purchaser and the issuance thereof to Purchaser or
its nominee, and will save Purchaser harmless against any loss or liability
resulting from nonpayment or delay in payment of any such tax. The Company will
also pay all reasonable costs of delivery to Purchaser, or Purchaser's nominee,
of the Securities to be purchased by Purchaser or otherwise transferred to
Purchaser.
8.12 Public Filings; Publicity. No party hereto shall make any public
statement regarding the transactions contemplated hereby unless the language and
timing of such statement has been approved by both the Company and Purchaser.
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with the SEC or other regulatory bodies, make such
statements with respect to the transactions contemplated hereby as each may be
advised is legally necessary upon advice of its counsel; provided, however, that
the party making such determination shall immediately notify the other party
that it intends to make a public announcement and the parties hereto shall, in
good faith, attempt to agree on any public announcements or publicity statements
with respect thereto (which approval shall not be unreasonably withheld or
delayed).
8.13 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
8.14 Remedies. No provision of this Agreement providing for any remedy
to a Purchaser shall limit any remedy which would otherwise be available to
Purchaser at law or in equity. Nothing in this Agreement shall limit any rights
a Purchaser may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby.
8.15 Termination. In the event that the Closing shall not have occurred
on or before June 30, 1998, unless the parties agree otherwise, this Agreement
shall terminate at the close of business on such date.
IN WITNESS WHEREOF, Purchaser and the Company have caused this
Agreement to be duly executed as of the date first above written.
LASERSIGHT INCORPORATED: TLC THE LASER CENTER INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ X. X. Xxxxx
--------------------------- ------------------------
Xxxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxx
President and CEO Title: Vice-President of Acquisitions
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
