EXHIBIT 10.54
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
February 18, 2000, by and among LaserSight Incorporated, a Delaware corporation
(the "Company"), with its headquarters located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and the purchasers (collectively, the
"Purchasers" and each individually a "Purchaser") named on the execution page
hereto, with regard to the following:
RECITALS
A. The Company and the Purchasers 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 Purchasers desire to purchase, upon the terms and conditions
stated in this Agreement, a total of 76,189 shares (the "Placement Shares") of
the Company's common stock, $.001 par value per share ("Common Stock"). The
Placement Shares are referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
of even date herewith in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and applicable
state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals (which are
incorporated into and deemed a part of this Agreement), their respective
promises contained herein and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF COMMON STOCK
1.1 Purchase of Common Stock. Subject to the terms and conditions
of this Agreement, on February 22, 2000 (the "Closing Date"), the Company agrees
to issue and sell to each Purchaser, and each Purchaser severally agrees to
purchase from the Company (the "Closing"), the number of shares of Common Stock
indicated below at a price which shall be in the aggregate $750,000 (the
"Purchase Price"):
Purchaser No. of Shares of Purchase Price
Common Stock
▇▇▇▇▇▇▇ Options, Inc. 50,793 $500,000
MDNH Partners, L.P. 25,396 250,000
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Total 76,189 $750,000
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Each Purchaser's obligation to purchase Common Stock hereunder
is distinct and separate from each other Purchaser's obligation to purchase, and
no Purchaser shall be required to purchase hereunder more than the number of
shares of Common Stock set forth opposite its name immediately above. The
obligations of the Company with respect to each Purchaser shall be separate from
the obligations of each other Purchaser and, except as provided in Section
6.1(c) hereof, shall not be conditioned as to any Purchaser upon the performance
of obligations of any other Purchaser. The Closing shall take place on the
Closing Date at 10:00 A.M., Eastern Time, at the offices of the Company, or at
such other time and place as shall be agreed upon by the parties.
At the Closing, the Company shall direct its transfer agent to deliver
to each Purchaser a certificate representing the Placement Shares. Delivery of
such certificate to the Purchaser shall be made against receipt at the Closing
by the Company from the Purchaser of the Purchase Price, which shall be paid by
wire transfer to an account designated at least one business day prior to the
Closing by the Company.
1.2 Form of Payment. Upon satisfaction of the conditions contained
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in Section 7.1, the Purchaser shall pay the Purchase Price by wire transfer to
the account designated by the Company.
1.3 Transfer of Securities. The Securities shall, when issued,
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be unregistered and therefore subject to the restrictions on sale, distribution
and transfer imposed under the Securities Act and under applicable securities
laws or blue sky laws of any state or foreign jurisdiction.
1.4 Registration of the Securities. The Securities shall have
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those registration rights as are set forth in the Registration Rights Agreement.
ARTICLE 2
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser represents and warrants, solely with respect to itself
and its purchase hereunder and not with respect to any other Purchaser or the
purchase hereunder by any other Purchaser (and no Purchaser shall be deemed to
make or have any liability for any representation or warranty made by any other
Purchaser), to the Company as set forth in this Article 2. No Purchaser makes
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 a 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. Such Purchaser is purchasing the Securities
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for Purchaser's own account for investment only and not with a view toward or in
connection with the public sale or distribution thereof. Such 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. Such Purchaser understands that it must
bear the economic risk of this investment indefinitely, unless the Securities
are registered pursuant to the Securities Act and any applicable securities laws
or blue sky laws of any state or foreign jurisdiction or an exemption from such
registration is available, and that the Company has no intention or obligation
to register any of the Securities other than as contemplated by Section 1.4
hereof and the Registration Rights Agreement.
2.2 Accredited Investor Status. Such Purchaser represents and
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warrants that it is an Accredited Investor (as that term is defined in Rule 501
promulgated by the SEC under the Securities Act), that it has such knowledge and
experience in business and financial matters as to be capable of evaluating the
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. Such Purchaser acknowledges that the
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Securities being sold to it hereunder are being sold pursuant to a private
offering exemption under the Securities Act and are not being registered under
the Securities Act or under the securities laws or blue sky laws of any state or
foreign jurisdiction and understands that the Company is relying upon the truth
and accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.
2.4 Information. Such Purchaser has been furnished all materials
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relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which it has specifically
requested, including, without limitation, the Company's Annual Report on Form
10-K and 10-K/A for the year ended December 31, 1998, its Quarterly Report on
Form 10-Q and 10-Q/A, as applicable, for the periods ended March 31, 1999, June
30, 1999, September 30, 1999, its Current Reports on Form 8-K filed with the SEC
on December 20, 1999; November 17, 1999; October 27, 1999; the description of
the Common Stock contained in the Company's Form 8-A/A (Amendment No. 4) filed
with the SEC on June 25, 1998; the description of the Company's Series E
Preferred Stock contained in the Company's Form 8-A filed with the SEC on July
7, 1998 and on Form 8-A/A (Amendment No. 1) filed with the SEC on March 29,
1999; Proxy Statement dated May 26, 1999 (such documents, including any
financial statements and related notes included in such documents, collectively
the "Furnished SEC Documents"). In addition, such Purchaser has received and
considered certain non-public information disclosed pursuant to the terms of the
Confidentiality Agreement between Purchaser and the Company (the "Confidential
Disclosure"). Such 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 such Purchaser's full satisfaction, and all
information and agreements, documents, records and books pertaining to this
investment which such Purchaser has requested have been made available to such
Purchaser or its advisors. Such Purchaser understands that its investment in the
Securities involves a high degree of risk. In making its investment decision,
such Purchaser has not relied on any oral or written representation, other than
those contained in the Furnished SEC Documents, the Confidential Disclosure,
this Agreement (including the schedules hereto) and the Registration Rights
Agreement, with respect to the Securities, the Company, its business or
prospects, or other matters. In making its decision to invest in the Company,
such Purchaser has relied solely upon independent investigations made by such
Purchaser and its advisors.
2.5 Governmental Review. Such Purchaser understands that no
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United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities.
2.6 Transfer or Resale. Such Purchaser understands that (i) the
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Securities have not been and (except as contemplated by the Registration Rights
Agreement) are not being registered under the Securities Act or under the
securities laws or blue sky laws of any state or foreign jurisdiction, and may
not be offered, sold, pledged or otherwise transferred unless subsequently
registered thereunder or an exemption from such registration is available, and
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or under the securities laws or blue sky
laws of any state or foreign jurisdiction or to comply with the terms and
conditions of any exemption thereunder (in each case, other than pursuant to
this Agreement or the Registration Rights Agreement), and (ii) any sale of the
Securities made in reliance on Rule 144 under the Securities Act, or a successor
rule ("Rule 144"), may be made only in accordance with the terms of Rule 144 and
Article 5 hereof and further, if Rule 144 is not applicable, any resale of the
Securities without registration under the Securities Act under circumstances in
which the seller may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder.
2.7 Authorization. Such Purchaser represents and warrants that as of
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the Closing Date the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein have been duly
authorized by it. The fulfillment of and compliance with the terms of this
Agreement will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, or (iii) result in
a violation of, breach of or default under (A) its charter or constituent
document, (B) any law, statute, rule or regulation to which it is subject, or
(C) any agreement, instrument, order, judgment or decree to which it is subject
or is a party or by which it is bound.
2.8 Binding Effect. Such Purchaser represents and warrants that
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this Agreement constitutes its valid and binding obligation, enforceable in
accordance with its terms, except (i) as limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights generally or by
equitable principles in any action (legal or equitable), (ii) that the
availability of equitable relief is subject to the discretion of the court
before which any proceeding thereof may be brought, and (iii) that the
enforceability of the indemnification provisions may be limited by applicable
securities laws or public policy.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser, except as
disclosed (including, in the case of financial statements, provided for) in the
disclosure schedules delivered herewith, as set forth in this Article 3. The
Company does not make any other representations or warranties, express or
implied, to the Purchasers 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 a 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
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subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted or are presently expected to be conducted during the Company's current
fiscal year. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
where the failure so to qualify or be in good standing would have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means
any material adverse effect on the business, operations, assets, properties,
liabilities, condition (financial or otherwise), the Common Stock price or
operating results of the Company and its subsidiaries, taken as a whole on a
consolidated basis, or on the transactions contemplated hereby.
3.2 Authorization; Enforcement.
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(a) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, and to issue, sell and
perform its obligations with respect to the Securities in accordance with the
terms hereof and thereof;
(b) the execution, delivery and performance of this Agreement
and the Registration Rights Agreement by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action and, except as set forth on Schedule 3.2 hereof,
no further consent or authorization of the Company, its board of directors, or
its stockholders or any other person, body or agency is required with respect to
any of the transactions contemplated hereby (whether under rules of The NASDAQ
Stock Market (the "NASDAQ"), the National Association of Securities Dealers,
Inc. or otherwise);
(c) this Agreement, the Registration Rights Agreement, and the
certificates for the Securities have been duly executed and delivered by the
Company; and
(d) this Agreement and the Registration Rights Agreement
constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except (i) to the
extent that such validity or enforceability may be subject to or affected by any
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement thereof, creditors' rights
or remedies of creditors generally, or by other equitable principles of general
application, (ii) that the availability of equitable relief is subject to the
discretion of the court before which any proceeding thereof may be brought, and
(iii) that the enforceability of indemnification provisions may be limited by
applicable securities laws or public policy.
3.3 Capitalization. The capitalization of the Company as of the date
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hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of Common Stock is set forth on Schedule 3.3. All of such shares of
capital stock have been, or upon issuance in accordance with the terms of the
relevant security will be, validly issued, fully paid and nonassessable. Except
as disclosed in Schedule 3.3, no shares of capital stock of the Company
(including the Securities) are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or encumbrances imposed
or suffered by the Company. Except as disclosed in Schedule 3.3, as of the date
of this Agreement, there are no outstanding options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries. The Company shall provide the
Purchasers with a written update of this representation signed by the Company's
Chief Executive Officer or Chief Financial Officer on behalf of the Company as
of the Closing Date. Except as set forth in Schedule 3.3, since December 31,
1999, the Company has not declared or paid any dividend or made any other
distribution of cash, stock or other property with respect to the Common Stock.
Except as set forth in Schedule 3.3 or as contemplated by this Agreement or the
Registration Rights Agreement or except for the right to vote its shares of
Common Stock for the election of directors, no person has the right to nominate
or elect one or more directors of the Company.
3.4 Issuance of Shares. As of the Closing the Securities will be duly
authorized, validly issued, fully paid and non-assessable with no personal
liability attaching to the owners thereof, and free from all taxes, liens,
claims and encumbrances imposed or suffered by the Company and except as
disclosed in Schedule 3.3, will not be subject to preemptive rights or other
similar rights of stockholders of the Company.
3.5 No Conflicts. The execution, delivery and performance of
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this Agreement and the Registration Rights Agreement by the Company, and the
consummation by the Company of transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance, as
applicable, of the Securities) will not (i) result in a violation of the
Company's Certificate of Incorporation or By-laws, or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in any loss of benefit under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any Material Contract (as defined herein) to which the Company or any of its
subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries, or
by which any property or asset of the Company or any of its subsidiaries, is
bound or affected, or (iv) result in the creation or imposition of an
Encumbrance (as defined herein) upon the Company's properties or assets (except
with respect to items (ii), (iii) and (iv) of this Section 3.5 such possible
conflicts, defaults, terminations, amendments, accelerations, cancellations,
violations and Encumbrances as would not individually or in the aggregate, have
a Material Adverse Effect). Neither the Company nor any of its subsidiaries is
in violation of its Certificate of Incorporation or other organizational
documents, and neither the Company nor any of its subsidiaries, is in default
(and no event has occurred which has not been waived which, with notice or lapse
of time or both, would put the Company or any of its subsidiaries in default)
under, nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, except for possible violations, defaults or rights as
would not individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations the sanctions for which either singly or in the
aggregate would not have a Material Adverse Effect. Except as set forth on
Schedule 3.5, or except (i) as may be required under the Securities Act in
connection with the performance of the Company's obligations pursuant to the
Registration Rights Agreement, (ii) filing of a Form D with the SEC, and (iii)
compliance with the state securities laws or blue sky laws of applicable
jurisdictions, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to perform its
obligations in accordance with the terms hereof. The Common Stock is listed on
the NASDAQ, the Company is not in violation of the listing requirements of the
NASDAQ and the Company is not aware of any fact (including any proceedings
pending or, to the best of the Company's knowledge, contemplated) that could
result in the Common Stock being delisted from the NASDAQ. The Company is not
aware of any fact that could result in a refusal by the NASDAQ to approve the
Securities for listing.
3.6 SEC Documents. Except as disclosed in Schedule 3.6, since
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December 31, 1997, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934 (the
"Exchange Act") (all of the foregoing filed after December 31, 1995 and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being referred to herein as the
"SEC Documents"). The Company has delivered to the Purchasers true and complete
copies of the Furnished SEC Documents, except for exhibits, schedules and
incorporated documents. Each of the SEC Documents as originally filed or as
amended complied in all material respects with the requirements of its
respective report or form and did not on the date of filing contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and as of the date
hereof, there is no fact or facts not disclosed in the SEC Documents or
disclosed in writing to the Purchasers which relate specifically to the Company
which individually or in the aggregate, may have a Material Adverse Effect. The
consolidated financial statements of the Company (including any related
schedules or notes thereto) included in the SEC Documents were prepared in
accordance with generally accepted accounting principles, consistently applied,
and the applicable rules and regulations of the SEC during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they do not include footnotes or are condensed or summary statements) and
present accurately and completely, in all material respects, the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal, year-end audit adjustments). To the extent required by the rules of the
SEC applicable thereto, the SEC Documents contain a complete and accurate list
of all material undischarged written or oral contracts, agreements, leases or
other instruments to which the Company or any subsidiary is a party or by which
the Company or any subsidiary is bound or to which any of the properties or
assets of the Company or any subsidiary is subject (each a "Material Contract").
Except as set forth in Schedule 3.6, none of the Company, its subsidiaries or,
to the best knowledge of the Company, any of the other parties thereto, is in
breach or violation of any Material Contract, which breach or violation would
have a Material Adverse Effect. To the best knowledge of the Company, no event,
occurrence or condition exists which, with the lapse of time, the giving of
notice, or both, would become a default by the Company or its subsidiaries
thereunder which would have a Material Adverse Effect. Except as set forth in
Schedule 3.6 or disclosed in writing to the Purchasers, there are no liabilities
or obligations (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due and regardless of when asserted), except
(i) liabilities and obligations in the respective amounts reserved for in the
Company's balance sheet or the footnotes thereto as of September 30, 1999
included in the Furnished SEC Documents, (ii) liabilities and obligations
incurred after December 31, 1999 in the ordinary course of business consistent
(in amount and kind) with past practice (none of which is a liability resulting
from breach of contract, breach of warranty, tort, infringement, claim or
lawsuit), (iii) liabilities and obligations disclosed in the Furnished SEC
Documents, and (iv) liabilities and obligations which would not individually or
in the aggregate, have a Material Adverse Effect. Since December 31, 1999, the
Company has operated its business only in the ordinary course and there has not
been individually or in the aggregate, any change that would have a Material
Adverse Effect (a "Material Adverse Change") other than changes disclosed in the
SEC Documents or otherwise set forth in Schedule 3.6.
3.7 Absence of Certain Changes. Except as disclosed in Schedule 3.7
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or in the Confidential Disclosure, since December 31, 1999, the business of the
Company and its subsidiaries has been conducted in the ordinary course,
consistent with past practice and there has not been (a) any Material Adverse
Change, nor has any event or change occurred which could reasonably result in a
Material Adverse Change, in the condition (financial or otherwise), results of
operations, business, assets, liabilities or prospects of the Company or its
subsidiaries or any event or condition which could reasonably be expected to
have such a Material Adverse Change, (b) any waiver or cancellation of any
valuable right of the Company or its subsidiaries, or the cancellation of any
material debt or claim held by the Company or its subsidiaries, (c) any payment,
discharge or satisfaction of any claim, liability or obligation of the Company
or its subsidiaries other than in the ordinary course of business except where
such payment, discharge or satisfaction would not, individually or in the
aggregate, have a Material Adverse Effect, (d) the placement of any Encumbrance
upon the assets of the Company or its subsidiaries other than any Permitted
Encumbrance (as defined herein), (e) any declaration or payment of dividends on,
or other distribution with respect to, or any direct or indirect redemption or
acquisition of, any securities of the Company, (f) any issuance of any stock,
bonds or other securities of the Company or its subsidiaries which is not
disclosed in Schedule 3.3 or the Furnished SEC Documents, (g) any sale,
assignment or transfer of any tangible or intangible assets of the Company or
its subsidiaries except in the ordinary course of business, (h) any loan by the
Company or its subsidiaries to any officer, director, employee, consultant or
shareholder of the Company or its subsidiaries (other than advances to such
persons in the ordinary course of business in connection with travel and travel
related expenses), (i) any damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the assets, property, condition
(financial or otherwise), results of operations or prospects of the Company or
its subsidiaries, (j) any increase, direct or indirect, in the compensation paid
or payable to any officer or director of the Company or its subsidiaries, other
than in the ordinary course of business, to any other employee, consultant or
agent of the Company or its subsidiaries, (k) any change in the accounting
methods, practices or policies of the Company or its subsidiaries, (l) any
indebtedness incurred for borrowed money by the Company or its subsidiaries
other than in the ordinary course of business, (m) any amendment to or
termination of any material agreement to which the Company or its subsidiaries
is a party other than the expiration of any such agreement in accordance with
its terms or as disclosed in the Furnished SEC Documents, (n) to the Company's
knowledge, any change in the laws or regulations governing the Company or its
subsidiaries, (o) any Material Adverse Change in the manner of business or
operations of the Company or its subsidiaries (including, without limitation,
material accelerations or material deferrals of the payment of accounts payable
or other current liabilities or material deferrals of the collection of accounts
or notes receivable), (p) any capital expenditures or commitments therefor by
the Company or its subsidiaries other than in the ordinary course of business,
(q) any amendment of the certificate of incorporation, bylaws or other
organizational documents of the Company or its subsidiaries which is not
disclosed in the Furnished SEC Documents, (r) any material transaction entered
into by the Company or its subsidiaries other than in the ordinary course of
business or any other material transactions entered into by the Company or its
subsidiaries whether or not in the ordinary course of business which is not
disclosed in the Furnished SEC Documents, or (s) any agreement or commitment
(contingent or otherwise) by the Company or its subsidiaries to do any of the
foregoing. For purposes of this Agreement, "Permitted Encumbrance" shall mean
(i) Encumbrances for unpaid taxes that either (A) are not yet due and payable,
or (B) for which a reserve with respect to such obligation is established on the
books of the Company, (ii) the interests of lessors under operating leases and
purchase money liens of lessors under capital leases, (iii) Encumbrances arising
by operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or other similar encumbrances in the ordinary course of
business of the Company, (iv) Encumbrances arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(v) with respect to any real property, easements, rights of way, zoning and
similar covenants and restrictions, and similar Encumbrances and that do not
individually or in the aggregate materially impair the property of the Company,
(vi) Encumbrances resulting from any judgment or award that would not result in
a Material Adverse Change, and (vii) other Encumbrances which arise in the
ordinary course of business and which individually and in the aggregate do not
materially impair the Company's use of such property or its ability to obtain
financing by using such asset as collateral.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8 or
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as disclosed in the Furnished SEC Documents, there is no civil, criminal or
administrative action, suit, proceeding, inquiry, claim, notice, hearing or
investigation at law or in equity (a "Litigation") before or by any court,
arbitrator or similar panel, public board, government agency, or self-regulatory
organization or body pending or, to the knowledge of the Company or any of its
subsidiaries, threatened against or affecting the Company, any of its
subsidiaries, or any of their respective assets (including Intangibles (as
defined herein)) or directors or officers in their capacities as such. There are
no facts known to the Company which, if known by a potential claimant or
governmental authority, could give rise to a claim or proceeding which, if
asserted or conducted with results unfavorable to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect.
Except as set forth in Schedule 3.8, neither the Company nor its subsidiaries is
subject to any order, writ, injunction or decree of any court of any federal,
state, municipal or other domestic or foreign governmental department,
commission, board, bureau, agency or instrumentality which could have a Material
Adverse Effect.
3.9 Disclosure. Neither this Agreement, the SEC Documents nor any
----------
certificate, instrument or written statement furnished or made to the Purchasers
by or on behalf of the Company in connection with this Agreement or the
Registration Rights Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading as of the date such statements were
made. There is no fact which is not disclosed in the Furnished SEC Documents or
fact which the Company has not disclosed to the Purchasers or its counsel and of
which the Company is aware which materially and adversely affects, or which
could materially and adversely affect, the Company or its subsidiaries or the
business, financial condition, operations, property, affairs or prospects of the
Company or its subsidiaries or the ability of the Company or its subsidiaries to
perform its obligations under the Agreement or any of the Registration Rights
Agreement.
3.10 S-3 Registration. The Company is currently eligible to register
-----------------
the resale of the Securities by the Purchasers pursuant to a registration
statement on Form S-3 under the Securities Act.
3.11 No General Solicitation. Neither the Company nor any person
-----------------------
acting for the Company has conducted any "general solicitation," as described in
Rule 502(c) under Regulation D, with respect to any of the Securities being
offered hereby.
3.12 No Integrated Offering. Neither the Company, nor any of its
------------------------
Affiliates (as defined herein), nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would prevent the
parties hereto from consummating the transactions contemplated hereby pursuant
to an exemption from registration under the Securities Act pursuant to the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the Securities Act, assuming the accuracy of
the representations and warranties herein contained of the Purchasers. 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 that would give rise
-----------
to any claim by any person for brokerage commissions, finder's fees or similar
payments by the Purchasers relating to this Agreement or the transactions
contemplated hereby.
3.14 Intellectual Property. Each of the Company and its subsidiaries
----------------------
owns or possesses adequate and enforceable rights to use all material patents,
patent applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") used or necessary for the conduct of its
business as now being conducted and as described in the Company's Annual Report
on Form 10-K and Form 10-K/A for the year ended December 31, 1998. Except as set
forth on Exhibit 3.14, to the Company's knowledge, neither the Company nor any
subsidiary of the Company infringes on or is in conflict with any right of any
other person with respect to any Intangibles nor is there any claim of
infringement made by a third party against or involving the Company or any of
its subsidiaries, which infringement, conflict or claim, individually or in the
aggregate, could reasonably be expected to result in an unfavorable decision,
ruling or finding which would have a Material Adverse Effect.
3.15 Employee Benefit Plans.
----------------------
(a) Identification. Schedule 3.15(a) contains a complete and
--------------
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
sponsored by the Company or to which the Company contributes on behalf of its
employees (the "Employee Benefit Plans") and each employment, severance or
change in control agreement to which the Company is a party. The Company has
provided or made available to the Purchasers copies of all plan documents,
determination letters, pending determination letter applications, VCR Submission
(as defined below), trust instruments, insurance contracts, administrative
services contracts, annual reports, actuarial valuations, summary plan
descriptions, summaries of material modifications, administrative forms and
other documents that constitute a part of or are incident to the administration
of the Employee Benefit Plans. In addition, the Company has provided or made
available to the Purchasers a written description of all existing practices
engaged in by the Company that constitute Employee Benefit Plans. Except as set
forth on Schedule 3.15(a) and subject to the requirements of the Internal
Revenue Code of 1986, as amended (the "Code") and ERISA, each of the Employee
Benefit Plans can be terminated or amended (without material cost to the
Company) at will by the Company. Except as set forth on Schedule 3.15(a), no
unwritten amendment exists with respect to any Employee Benefit Plan. The
Company has no plan or commitment, whether legally binding or not, to establish
any new Employee Benefit Plan, to enter into any employment severance or change
in control agreement or to modify or to terminate any Employee Benefit Plan or
agreement.
(b) Administration. Each Employee Benefit Plan has been
--------------
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect. To the
best of the knowledge of the Company, the Company has (i) made all necessary
filings with respect to such Employee Benefit Plans, including the timely filing
of Form 5500 if applicable, and (ii) made all necessary filings, reports and
disclosures pursuant to and have complied with all requirements of the Internal
Revenue Service ("IRS") Voluntary Compliance Resolution Program ("VCR
Submission"), if applicable, with respect to all profit sharing retirement plans
and pension plans in which employees of the Company participate.
(c) Examinations. Except as set forth on Schedule 3.15(c), the
------------
Company has not received any notice that any Employee Benefit Plan is currently
the subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency.
(d) Prohibited Transactions. To the best of the knowledge of
------------------------
the Company, no prohibited transactions (within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA) have occurred with respect to any
Employee Benefit Plans.
(e) Claims and Litigation. No pending or, to the actual
-----------------------
knowledge of the Company, threatened claims, suits, or other proceedings exist
with respect to any Employee Benefit Plan other than normal benefit claims filed
by participants or beneficiaries.
(f) Qualification. As set forth in more detail on Schedule
-------------
3.15(f), the Company has applied for a favorable determination letter or ruling
from the IRS for each of the Employee Benefit Plans intended to be qualified
within the meaning of Section 401(a) of the Code and/or tax-exempt within the
meaning of Section 501(a) of the Code. Except as set forth on Schedule 3.15(f),
no proceedings exist or, to the actual knowledge of the Company has been
threatened that could result in the revocation of any such favorable
determination letter or ruling.
(g) Funding Status. Neither the Company nor any member of a
---------------
"Controlled Group" (within the meaning of Section 412(n)(6)(B) of the Code) with
the Company sponsors any plans which (i) are subject to the minimum funding
requirements of Code Section 412 or ERISA Section 302, or (ii) are subject to
Title IV of ERISA assumptions.
(h) Excise Taxes. To the best of the knowledge of the Company,
------------
neither the Company nor any member of a Controlled Group has any liability to
pay excise taxes with respect to any Employee Benefit Plan under applicable
provisions of the Code or ERISA.
(i) Multi-Employer Plans. Neither the Company nor any member
of a Controlled Group is or ever has been obligated to contribute to a
multi-employer plan within the meaning of Section 3(37) of ERISA and neither the
Company nor the Controlled Group has ever contributed to any plan subject to
Title IV of ERISA.
(j) Pension Benefit Guaranty Corporation. None of the Employee
------------------------------------
Benefit Plans are subject to the requirements of Title IV of ERISA.
(k) Retirees. The Company has no obligation or commitment to
--------
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and Sections 601 through 608 of ERISA.
(l) Change in Control. The execution of, and performance of
-----------------
the transactions contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute an event under
an Employee Benefit Plan or employment, severance or change in control agreement
that will or may result in any, payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee of the
Company. No payment or benefit which will or may be made by the Company, any of
its subsidiaries, the Purchasers or any of its affiliates by reason of such
execution or performance may be characterized as an "excess parachute payment,"
within the meaning of Section 28OG(b)(1) of the Code or which will not be
deductible for federal tax purposes by virtue of Section 162(m) of the Code.
(m) Insurance. With respect to each Employee Benefit Plan
---------
which is an employee welfare benefit plan (within the meaning of Section 3(l) of
ERISA), all claims incurred by the Company are (i) insured pursuant to a
contract of insurance whereby the insurance company bears any risk of loss with
respect to such claims, or (ii) covered under a contract with a health
maintenance organization which bears the liability for claims.
(n) Labor Disputes. No work stoppage or labor strike against
---------------
the Company is pending or threatened. The Company is not now, nor has been in
the past (i) involved in or threatened with any labor dispute, grievance, or
litigation relating to labor matters, including, without limitation, violation
of any federal, state or local labor, safety or employment laws (domestic or
foreign), charges of unfair labor practices or discrimination complaints which
could have a Material Adverse Effect; (ii) engaged in any unfair labor practices
within the meaning of the National Labor Relations Act or the Railway Labor Act,
or (iii) a party to, or bound by, any collective bargaining agreement or union
contract and no such agreement or contract is currently being negotiated by the
Company or any of its affiliates. No employees of the Company are currently
represented by any labor union for purposes of collective bargaining and no
activities the purpose of which is to achieve such representation are threatened
or ongoing. The Company (i) is in compliance with all applicable federal, state
and local laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of employment and
wages and hours, except for such possible non-compliance as would not,
individually or in the aggregate, have a Material Adverse Effect; (ii) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments; (iii) is not liable for any arrears of wages
or any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits.
3.16 Equity Investments; Subsidiaries. Set forth on Schedule 3.16 is a
------------------
list of all of the Company's subsidiaries. Except as set forth on Schedule 3.16,
the Company does not own, whether directly or indirectly, any capital stock or
other proprietary interest directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity which is
currently involved in the Company's ordinary course of business.
3.17 Title to Assets and Properties; Insurance.
-----------------------------------------
(a) The Company has good and marketable title, or a valid
leasehold interest in or contractual right to use, all of its assets and
properties, free and clear of any mortgages, judgments, claims liens, security
interests, pledges, escrows, charges or other encumbrances of any kind or
character whatsoever ("Encumbrances") except in each case for Permitted
Encumbrances and such defects in title and such other liens and Encumbrances
which do not individually or in the aggregate materially detract from the value
to the Company of the properties and assets of the Company and its subsidiaries
taken as a whole.
(b) The Company and its subsidiaries maintain insurance
(including D&O insurance) in such amounts (to the extent available in the public
market), including self-insurance, retainage and deductible arrangements, and of
such a character as is reasonable for companies engaged in the same or similar
business.
3.18 Compliance with Laws; Permits. Except as provided in Schedule
-------------------------------
3.18, the Company and its subsidiaries are in compliance, and have been
conducted in compliance with, all federal, state, local and foreign laws, rules,
ordinances, codes, consents, authorizations, registrations, regulations,
decrees, directives, judgments and orders applicable to it except where the
failure to comply would not individually or in the aggregate have a Material
Adverse Effect. The Company has all federal, state, local and foreign
governmental licenses, permits, qualifications and authorizations ("Permits")
necessary in the conduct of its business as currently conducted. All such
Permits are in full force and effect and no violations have been recorded in
respect of any such Permit; no proceeding is pending or, to the best knowledge
of the Company, threatened to revoke or limit any such Permit and no such Permit
will be suspended, cancelled or adversely modified as a result of the execution
and delivery of this Agreement or the Registration Rights Agreement and the
consummation of the transactions contemplated hereby or thereby, except where
failure to have such Permit would not individually or in the aggregate have a
Material Adverse Effect.
3.19 Taxes.
-----
(a) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith) (including,
without limitation, federal, state, city, county, local, foreign, or other
income, franchise, ad valorem, value added, excise, real or personal property,
asset, franchise taxes withheld, capital, withholding, real or tangible
property, employment, unemployment compensation, transfer, sales, use, excise
and all other taxes of any kind whatsoever imposed by the United States or any
state, city, county, country or foreign government or subdivision or agency
thereof, whether disputed or not, and (ii) "Transaction" means one or more
transactions, acts, events, or omissions of whatever nature.
(b) The Company has filed on a timely basis all returns and
reports, including all estimated returns and reports of every kind and have
timely given all notices, in respect of Taxes required to be filed or given
under applicable law within the applicable statute of limitations period by any
of them, or except where proper action has been taken by the Company to extend
the relevant filing deadline. Such returns, reports and notices are complete and
accurate in all material respects. All Taxes shown on such returns or reports
have been, and all Taxes subsequently assessed with respect to the periods
and/or Transactions to which such returns or reports relate have been or will
be, timely, and fully paid, except for amounts which the Company is contesting
in good faith. The provisions in the financial statements (and the notes and
schedules related thereto) contained in the Furnished SEC Documents for Taxes
currently payable and for deferred Taxes are adequate in all material respects
to provide for such Taxes for which the Company and its Subsidiaries taken as a
whole may be liable in respect of periods or Transactions through the dates
thereof.
(c) No fact or condition relating to any past or present
Transaction, except as set forth in the Company's disclosure schedules delivered
herewith, which, if known to any tax authority having jurisdiction, would likely
result in a successful challenge by such authority of the treatment or omission
of such factor or condition on any tax return, report or notice of the Company
or its subsidiaries, and no issue has arisen in any examination of the Company
by the IRS that, in either case, if raised with respect to any other period not
so examined would result in a proposed material deficiency for any other period
not so examined, if upheld. The Company and its subsidiaries have made all
payments or estimated Taxes required to be made under Section 6655 of the Code
and any comparable provisions of state, local or foreign law. Except as set
forth on Schedule 3.19, there is no pending nor, to the Company's knowledge,
threatened or contemplated action, audit, proceeding or investigation for the
assessment or collection of Taxes from the Company. There are no requests for
rulings, outstanding subpoenas or requests for information with respect to Taxes
of the Company, proposed reassessments of any property owned or leased by the
Company, or similar matters pending with respect to any taxing authority.
3.20 Environmental Matters. Except as listed in Schedule 3.20:
---------------------
(a) There are, with respect to the Company and its
subsidiaries, or any predecessor of the foregoing, no present violations of
Environmental Law (as defined herein), any actions, activities, circumstances,
conditions, events, incidents, or contractual obligations which may give rise to
any liability of the Company pursuant to any Environmental Law and neither the
Company nor its subsidiaries has received any notice with respect to any of the
foregoing nor is any Litigation pending or threatened in connection with any of
the foregoing.
(b To the knowledge of the Company and except in the normal
course of the Company's or its subsidiaries' business, (i) no Hazardous
Materials (as defined herein) are present on or about any real property
currently owned, leased or used by the Company or its subsidiaries, and (ii) no
Hazardous Materials were present on or about any real property previously owned,
leased or used by the Company or its subsidiaries during the period the property
was owned, leased or used by the Company or its subsidiaries.
(c) To the knowledge of the Company, no Hazardous Materials
have been released on or about, or where they may pose a threat of migration to,
any real property currently owned, leased or used by the Company or its
subsidiaries and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or its subsidiaries
during the period the property was owned, leased or used by the Company or its
subsidiaries, except as may be required in the normal course of business and in
material compliance with applicable Environmental Law.
(d) To the knowledge of the Company, no asbestos-containing
materials or PCBs are present on or about any property currently owned, leased
or used by the Company or its subsidiaries.
(e) To the knowledge of the Company, there are not now, nor
have there ever been, any underground storage tanks or similar facilities of any
kind on or under any real property currently or previously owned, leased or used
by the Company or its subsidiaries.
(f) For purposes of this Section 3.20, capitalized terms used
herein shall have the following meanings:
"Environmental Laws" shall mean, at any date, all provisions
-------------------
of federal, state, local or foreign law (including applicable principles of
common and civil law), statutes, ordinances, rules, regulations, published
standards and directives that have the force and effect of laws, statutes,
regulations, permits, licenses, judgments, writs, injunctions, decrees and
orders enacted, promulgated or issued by any Public Authority, and all indemnity
agreements and other contractual obligations, as in effect at such date,
relating to (i) the protection of the environment, including the air, surface
and subsurface soils, surface waters, groundwaters and natural resources, and
(ii) occupational health and safety and exposure of persons to Hazardous
Materials. Environmental Laws shall include the Comprehensive Environmental
Response, Compensation and Liability Act 42 U.S.C. ss.ss.9601 et seq., and any
other laws imposing or creating liability with respect to Hazardous Materials.
"Environmental Liability" shall mean any liabilities,
-------------------------
obligations, costs, losses, payments or damages, including compensatory and
punitive damages, incurred (i) to contain, remove, clean up, assess, ▇▇▇▇▇ 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.
3.21 Suppliers and Customers. Except as set forth on Schedule 3.21, the
-----------------------
Company does not have any knowledge of any termination, cancellation or
threatened termination or cancellation or limitation of, or any material
modification or change in, or expressed material dissatisfaction with the
business relationship between the Company or its subsidiaries and any supplier
or vendor of the Company or its subsidiaries, in each case, of materials or
services in an amount in excess of $50,000 per year.
3.22 Holding Company Act and Investment Company Act. Neither the
---------------------------------------------------
Company nor its subsidiaries is: (i) a "public utility company" or a "holding
company," or an "affiliate" or a "subsidiary company" of a "holding company," or
an "affiliate" of such a "subsidiary company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, or (ii) a "public
utility," as defined in the Federal Power Act, as amended, or (iii) an
"investment company" or an "affiliated person" thereof or an "affiliated person"
of any such "affiliated person," as such terms are defined in the Investment
Company Act of 1940, as amended.
3.23 Foreign Corrupt Practices. To the Company's best knowledge, the
--------------------------
Company has no notice and neither the Company, nor any of its subsidiaries, nor
any director, officer, agent, employee or other person acting on behalf of the
Company or any subsidiary has violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended. To the Company's
best knowledge, the Company has no notice and neither the Company, nor any of
its subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any subsidiary has, in the course of his
actions or, on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity, made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
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 the Purchasers within 15 days after the Closing Date. The
Company shall file a Form 8-K disclosing this Agreement and the transactions
contemplated hereby with the SEC within five business days following the Closing
Date. The Company shall, on or prior to the Closing Date, take such action as is
necessary to sell the Securities to the Purchasers under applicable securities
laws of the states of the United States, and shall provide evidence of any such
action so taken to the Purchasers on or prior to the Closing Date.
4.3 Reporting Status. So long as any Purchaser beneficially owns any
----------------
of the Securities, the Company shall use its best efforts to timely file all
reports required to be filed by it with the SEC pursuant to the Exchange Act,
and make and keep public information available as those terms are defined in
Rule 144 and the Company shall not terminate its status as an issuer required to
file reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.
4.4 Use of Proceeds. The Company shall use the Purchase Price for
---------------
general corporate purposes.
4.5 Expenses. Except as may otherwise agreed to, the Company and
--------
the Purchasers shall pay all the costs and expenses incurred by it or them or on
its or their behalf in connection with this Agreement and the consummation of
the transactions contemplated hereby.
4.6 Listing. The Company shall use its best efforts to continue the
-------
listing and trading of its Common Stock on the NASDAQ, the New York Stock
Exchange or American Stock Exchange; and comply in all respects with the
Company's reporting, filing and other obligations under the by-laws or rules of
the NASDAQ or such exchange, as applicable.
4.7 Prospectus Delivery Requirement. The Purchasers understand that
-------------------------------
the Securities Act requires delivery of a prospectus relating to the Securities
in connection with any sale or other disposition thereof pursuant to a
registration statement, and each Purchaser shall comply with the applicable
prospectus delivery requirements of the Securities Act in connection with any
such sale or other disposition.
4.8 Transactions with Affiliates. The Company will not, and will
------------------------------
not permit any subsidiaries to, engage in any transaction or group of related
transactions (including, without limitation, the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
affiliate (other than the Company), except in the ordinary course and pursuant
to the reasonable requirements of the Company's or the subsidiaries' business
and upon fair and reasonable terms no less favorable to the Company or such
subsidiaries than would be obtainable in a comparable arm's-length transaction
with a person not an affiliate. The Company will not be deemed in default of
this Section 4.8 in connection with carrying out its obligations pursuant to
those agreements or transactions described in the Furnished SEC Documents.
ARTICLE 5
TRANSFER OF SECURITIES
The Securities shall not be transferable except upon the conditions
specified in this Article 5, which conditions are intended to insure compliance
with the provisions of the Securities Act and state securities laws in respect
of the transfer of any such Securities.
5.1 Restrictive Legend.
------------------
(a) Unless and until otherwise permitted by this Article 5,
each certificate for the Securities issued to the Purchasers or to any
subsequent transferee of the Securities shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"These shares have not been registered under the Securities
Act of 1933 and may not be offered for sale, sold, transferred
or otherwise disposed of unless registered under such Act or
unless an exemption from such registration is available.
Further, such transfer is subject to the conditions specified
in a Securities Purchase Agreement dated as of February 18,
2000 pursuant to which such shares were issued and sold by
LaserSight Incorporated (the "Company"), a copy of which
Agreement will be furnished by the Company to the holder
hereof upon request and without charge."
(b) The Company may order its transfer agent for the Common
Stock to stop the transfer of any of the Securities bearing the legend set forth
in Subsection (a) of this Section 5.1 until the conditions of this Article 5
with respect to the transfer of such securities have been satisfied.
5.2 Notice of Proposed Transfer. If, prior to any transfer or sale
----------------------------
of any the Securities, a Purchaser shall deliver a written notice to the Company
describing briefly the manner of such transfer or sale and a written opinion of
counsel for such 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 such
Purchaser shall deliver to Company such a written opinion of counsel.
5.3 Termination of Restrictions.
---------------------------
(a) Notwithstanding the foregoing provisions of this Article
5, the restrictions imposed by this Article 5 upon the transferability of the
Securities shall terminate as to any particular share of such securities when
(i) such security shall have been effectively registered under the Securities
Act and sold by such Purchaser thereof in accordance with such registration, or
(ii) a written opinion to the effect that such restrictions are no longer
required or necessary under any federal or state securities law or regulation
has been received from counsel for such 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 such 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 such 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 such
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 any Purchaser who proposes to sell any of the Securities in compliance with
Rule 144, the Company shall furnish to such 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, any Purchaser desiring to effect such resale and each
prospective institutional purchaser of such shares designated by such Purchaser
shall have the right, at any time the Company is not subject to Section 13 or
15(d) of the Securities and Exchange Act, to obtain from the Company, upon the
written request of the Purchaser and at the Company's expense the documents
specified in Section (d)(4)(i) of Rule 144A, as such rule may be amended from
time to time.
5.5 Non-Applicability of Restrictions on Transfer. Notwithstanding
---------------------------------------------
the provisions of Section 5.2 hereof, any record owner of Securities may from
time to time transfer all or part of such record owner's Securities (i) to a
nominee identified in writing to the Company as being the nominee of or for such
record owner, and any nominee of or for a beneficial owner of Securities
identified in writing to the Company as being the nominee of or for such
beneficial owner may from time to time transfer all or part of the Securities
registered in the name of such nominee but held as nominee on behalf of such
beneficial owner, to such beneficial owner, (ii) to an Affiliate of such record
owner, or (iii) if such record owner is a partnership or limited liability
company or the nominee of a partnership or limited liability company, to a
partner, member, retired partner or member, or estate of a partner, member or
retired partner or member, of such partnership or limited liability company, so
long as such transfer is in accordance with the transferee's interest in such
partnership or limited liability company and is without consideration; provided,
however, that (A) such record owner shall deliver a written notice to the
Company describing in reasonable detail the manner of such transfer or sale
prior to the consummation of such transfer or sale, (B) each such transferee
shall remain subject to all restrictions on the transfer of Securities herein
contained, and (C) if reasonably requested in writing by the Company within five
days after receipt of such written notice, such record owner shall deliver to
the Company such additional information requested by the Company or its counsel
(in form and substance satisfactory to the Company and such counsel) that the
proposed transfer is within the scope of this Section 5.5 or a written opinion
of counsel for such record owner (provided that such counsel, and the form and
substance of such opinion, are reasonably satisfactory to the Company) to the
effect that such transfer or sale may be effected without the registration of
such securities under the Securities Act.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of
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the Company hereunder to issue and sell the Securities to any Purchaser at the
Closing is subject to the satisfaction, as of the Closing Date and with respect
to such 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) Such Purchaser shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
(b) Such Purchaser shall have wired same-day funds to the
account designated by the Company equal to its applicable portion of
the Purchase Price.
(c) The aggregate Purchase Price delivered by all of the
Purchasers for the Placement Shares purchased at the Closing shall
equal at least $750,000.
(d) The representations and warranties of such 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 such 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 such 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 EACH PURCHASER'S OBLIGATION TO PURCHASE
7.1 The obligation of each Purchaser hereunder to purchase the
Securities to be purchased by it on the Closing Date is subject to the
satisfaction of each of the following conditions, provided that these conditions
are for each Purchaser's sole benefit and may be waived by such Purchaser at any
time in such Purchaser's sole discretion:
(a) The Company shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Purchasers.
(b) The Company shall have directed its transfer agent to
deliver to each Purchaser duly executed certificates for the Securities
being so purchased by such Purchaser.
(c) The Trading in the Common Stock shall not have been
suspended by the NASDAQ or the SEC or other regulatory authority.
(d) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing as
though made at that time and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
Each Purchaser shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as
of the Closing Date to the foregoing effect.
(e) Each Purchaser shall have completed to its satisfaction
all business, legal, accounting and financial due diligence with
respect to the Company.
(f) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the
consummation of any of the transactions contemplated by this Agreement.
(g) Each Purchaser shall have received the Officer's Certificate
described in Section 3.3 dated as of the Closing Date.
(h) Each Purchaser shall have received an opinion of
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, dated as of the Closing Date, in the
form attached hereto as Exhibit B.
(i) The Company shall have delivered to each Purchaser
certificates of good standing of the Company and the subsidiaries which
are organized pursuant to the corporate laws of a State within the
United States as of a date no earlier than 30 days prior to the
Closing.
(j) The Company shall have delivered to each Purchaser a
certificate executed by a duly authorized officer certifying (i) a copy
of the Company's certificate of incorporation and the by-laws, (ii)
resolutions authorizing the execution of this Agreement and the
Registration Rights Agreement, and (iii) incumbency matters.
(k) Without limiting the generality of Section 7.1(d), no
Material Adverse Effect shall have occurred, nor shall any event or
events have occurred which would reasonably likely to have a Material
Adverse Effect.
ARTICLE 8
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction. This Agreement shall be governed
----------------------------
by and construed in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed in the State of Delaware, without giving
effect to the principles of conflicts of law. The parties hereto irrevocably
consent to the jurisdiction of the United States federal courts and state courts
located in the County of New Castle in the State of Delaware in any suit or
proceeding based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in respect of such
suit or proceeding may be determined in such courts. The Company and each
Purchaser irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Service of process upon the Company or
any 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 any
Purchaser's right to serve process in any other manner permitted by law. A final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
8.2 Counterparts. This Agreement may be executed in two or more
------------
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be delivered to the other parties.
8.3 Headings. The headings of this Agreement are for convenience of
--------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.4 Severability. If any provision of this Agreement shall be invalid
------------
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
8.5 Entire Agreement; Amendments. This Agreement, the Schedules
-----------------------------
hereto and the instruments referenced herein contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor any
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 each 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
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
The Lowenbaum Partnership, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
If to the Purchasers:
▇▇▇▇▇▇▇ Options, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
MDNH Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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 any 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.
---------------
(a) The Company shall indemnify and hold harmless each Purchaser,
its respective officers, directors, employees, attorneys, agents,
representatives, successors and assigns (each a "Purchaser Entity") from any (a)
Losses (as defined herein) insofar as such Losses (or actions in respect
thereof) incurred or suffered by the Purchaser Entity (whether incurred or
suffered directly or indirectly through ownership of capital stock of the
Company) arise out of or are based upon or are incurred as a result of (i) the
breach or falsity or incorrectness as of the Closing Date of any representation
or warranty, covenants or agreements of the Company contained in or made
pursuant to this Agreement, or (ii) the existence of any condition, event or
fact constituting, or which with notice or passage of time, or both, would
constitute a default in the observance of any of the Company's undertakings or
covenants hereunder, under the Registration Rights Agreement or the Company's
Certificate of Incorporation and By-laws. The Company shall also pay all
reasonable attorney's and accountant's fees and costs and court costs incurred
by any Purchaser in enforcing the indemnification provided for in this Section
8.10. Notwithstanding the foregoing, the Company expressly agrees and
acknowledges that the right of indemnification granted herein to the Purchaser
shall not be deemed to be the exclusive remedy available to the Purchaser for
any of the matters described in this Section 8.10.
(b) For purposes of this Section 8.10, "Losses" shall mean each
and all of the following items: claims, losses, (including, without limitation,
losses of earnings) liabilities, obligations, payments, damages (actual,
punitive or consequential), charges, judgments, fines, penalties, amounts paid
in settlement; costs and expenses (including, without limitation, interest which
may be imposed in connection therewith, costs and expenses of investigation,
actions, suits, proceedings, demands, assessments and fees, expenses and
disbursements of counsel, consultants and other experts). Any payment (or deemed
payment) by the Company to the Purchaser pursuant to this Section 8.10 shall be
treated for federal income tax purposes as an adjustment to the Purchase Price.
(c) Within five days after a party seeking indemnification under
this Section 8.10 shall become aware of the facts indicating that a claim for
indemnification may be warranted, such party shall give to the party from whom
indemnification is being sought a claim notice relating to such Losses (a "Claim
Notice"). Each Claim Notice shall specify the nature of the claim, the
applicable provision(s) of this Agreement or other instrument under which the
claim for indemnity arises and, if possible, the amount or the estimated amount
thereof.
8.11 Stamp Tax and Delivery Costs. The Company will pay all stamp and
-----------------------------
other taxes, if any, which may be payable in respect of the sale or other
transfer of the Securities to the Purchasers and the issuance thereof to the
Purchasers or their nominee, and will save the Purchasers harmless against any
loss or liability resulting from nonpayment or delay in payment of any such tax.
The Company will also pay all reasonable costs of delivery to the Purchasers, or
the Purchasers' nominee, of the Securities to be purchased by the Purchasers or
otherwise transferred to the Purchasers.
8.12 Public Filings; Publicity. No party hereto shall make any public
--------------------------
statement regarding the transactions contemplated hereby unless the language and
timing of such statement has been approved by both the Company and the
Purchasers or unless such party has been advised by its securities counsel to
make such statement. Notwithstanding the foregoing, each of the parties hereto
may, in documents required to be filed by it with the SEC or other regulatory
bodies, make such statements with respect to the transactions contemplated
hereby as each may be advised is legally necessary upon advice of its counsel;
provided, however, that the party making such determination shall immediately
notify the other party that it intends to make a public announcement and the
parties hereto shall, in good faith, attempt to agree on any public
announcements or publicity statements with respect thereto (which approval shall
not be unreasonably withheld or delayed).
8.13 Further Assurances. Each party shall do and perform, or cause 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 the Purchasers shall limit any remedy that would otherwise be available to
the Purchasers at law or in equity. Nothing in this Agreement shall limit any
rights the Purchasers may have with any applicable federal or state securities
laws with respect to the investment contemplated hereby.
8.15 Termination. In the event that the Closing shall not have occurred
-----------
on or before February 25, 2000, this Agreement shall terminate at the close of
business on such date.
IN WITNESS WHEREOF, the Purchasers and the Company have caused this
Agreement to be duly executed as of the date first above written.
LASERSIGHT INCORPORATED ▇▇▇▇▇▇▇ OPTIONS, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- -----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer -----------------------------
Title: Chairman
-----------------------------
MDNH PARTNERS, L.P.
By: MDNH Trading Corporation, its
General Partner
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title President
-----------------------------
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Registration Rights Agreement
Exhibit B - SN&R Opinion
Schedule 3.2 - Consents
Schedule 3.3 - Capitalization
Schedule 3.5 - Conflicts
Schedule 3.6 - SEC Filings
Schedule 3.7 - Certain Changes
Schedule 3.8 - Litigation
Schedule 3.14 - Intellectual Property
Schedule 3.15(a) - Employee Benefit Plans - Identifications
Schedule 3.15(c) - Employee Benefit Plans - Examinations
Schedule 3.15(f) - Employee Benefit Plans - Qualification
Schedule 3.16 - Subsidiaries
Schedule 3.18 - Compliance with Laws; Permits
Schedule 3.19 - Tax Matters
Schedule 3.20 - Environmental Matters
Schedule 3.21 - Suppliers and Customers
