AGREEMENT AND PLAN OF MERGER
AMONG
PREMIER LASER SYSTEMS, INC.
PREMIER ACQUISITION, INC.
AND
EYESYS TECHNOLOGIES, INC.
APRIL 24, 1997
TABLE OF CONTENTS
-----------------
Page
----
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 General Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2 PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Board of Directors' and Stockholders' Approval . . . . . . . . . 9
2.2 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . 15
2.7 Restrictions on Securities . . . . . . . . . . . . . . . . . . . 15
2.8 Surrender and Exchange of Outstanding Certificates, Premier
Warrants for EyeSys Warrants and Premier Options for EyeSys
Options; Status of Outstanding Certificates. . . . . . . . . . . 15
2.9 Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . 16
2.10 Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.11 Articles and Certificate of Incorporation; Bylaws; Directors and
Officers of Premier and the Surviving Corporation. . . . . . . . 16
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EYESYS . . . . . . . . . . . . 17
3.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . 17
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Authority, Approval and Enforceability . . . . . . . . . . . . . 18
3.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 19
3.6 Material Changes . . . . . . . . . . . . . . . . . . . . . . . . 20
3.7 Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.8 Properties and Inventories . . . . . . . . . . . . . . . . . . . 21
3.9 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.10 Purchase, Sale and Other Agreements. . . . . . . . . . . . . . . 22
3.11 Intellectual Property Rights . . . . . . . . . . . . . . . . . . 24
3.12 Employees and Employee Benefit Plans . . . . . . . . . . . . . . 25
3.13 Environmental and Safety Laws. . . . . . . . . . . . . . . . . . 27
3.14 Proprietary Information and Inventions and Confidentiality
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.15 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . 28
3.16 Compliance with Laws and Permits; Regulatory Matters . . . . . . 28
3.17 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . 28
3.18 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.19 The Registration Statement and Proxy Statement/Prospectus. . . . 29
3.20 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-i-
Page
----
3.21 Other Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.22 Compliance with Instruments. . . . . . . . . . . . . . . . . . . 33
3.23 Foreign Status . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.24 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 33
3.25 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . 33
3.26 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.27 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . 34
3.28 Related Party Transactions . . . . . . . . . . . . . . . . . . . 34
3.29 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PREMIER AND PAI. . . . . . . . 34
4.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . 34
4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.3 Authority, Approval and Enforceability . . . . . . . . . . . . . 35
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 35
4.5 Material Changes . . . . . . . . . . . . . . . . . . . . . . . . 36
4.6 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . 36
4.7 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.8 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.9 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.10 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 37
4.11 The Registration Statement and Proxy Statement/Prospectus. . . . 38
4.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.13 Shares Fully Paid and Non-Assessable . . . . . . . . . . . . . . 39
4.14 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 5 COVENANTS OF PREMIER, PAI AND EYESYS . . . . . . . . . . . . . . 40
5.1 Maintenance of Business. . . . . . . . . . . . . . . . . . . . . 40
5.2 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . 40
5.3 Actions Contrary to Stated Intent. . . . . . . . . . . . . . . . 41
5.4 Access to Information. . . . . . . . . . . . . . . . . . . . . . 41
5.5 Other Discussions. . . . . . . . . . . . . . . . . . . . . . . . 41
5.6 EyeSys Lock-Up Agreements. . . . . . . . . . . . . . . . . . . . 41
5.7 Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . 41
5.8 Registration Statement and Proxy Statement/Prospectus. . . . . . 42
5.9 EyeSys Payables. . . . . . . . . . . . . . . . . . . . . . . . . 42
5.10 Tax Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.11 Notification of Certain Matters. . . . . . . . . . . . . . . . . 42
5.12 Merger Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 42
5.13 Assumption of Bank Loan Agreement. . . . . . . . . . . . . . . . 42
5.14 Premier Covenant Regarding SEC Filings . . . . . . . . . . . . . 43
5.15 Premier Board Seat . . . . . . . . . . . . . . . . . . . . . . . 43
5.16 Funding For EyeSys . . . . . . . . . . . . . . . . . . . . . . . 43
5.17 Nonincluded Costs. . . . . . . . . . . . . . . . . . . . . . . . 44
5.18 Options and Warrants . . . . . . . . . . . . . . . . . . . . . . 44
-ii-
Page
----
5.19 March 31, 1997 Financial Statements. . . . . . . . . . . . . . . 44
5.20 "Stay Bonuses," RSS Payable. . . . . . . . . . . . . . . . . . . 44
5.21 Transactional Costs. . . . . . . . . . . . . . . . . . . . . . . 44
5.22 Reimbursement of Amounts Paid to Dissenting Shareholders . . . . 45
ARTICLE 6 CONDITIONS TO OBLIGATIONS OF PREMIER, PAI AND EYESYS . . . . . . 45
6.1 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 45
6.2 Representations, Warranties and Agreements . . . . . . . . . . . 45
6.3 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.4 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . 45
6.5 No Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.6 Proceeding and Documents . . . . . . . . . . . . . . . . . . . . 46
6.7 Accuracy of Documents and Information. . . . . . . . . . . . . . 46
6.8 Lock-Up Agreements . . . . . . . . . . . . . . . . . . . . . . . 46
6.9 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.10 Securities Approval. . . . . . . . . . . . . . . . . . . . . . . 46
6.11 Delaware Filings . . . . . . . . . . . . . . . . . . . . . . . . 46
6.12 Termination of EyeSys Stock Option Plan. . . . . . . . . . . . . 46
6.13 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . 46
6.14 Options, Warrants and EyeSys Notes . . . . . . . . . . . . . . . 46
6.15 Foreign Status Representation Letter . . . . . . . . . . . . . . 47
6.16 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . 47
6.17 Bank Loan Agreement. . . . . . . . . . . . . . . . . . . . . . . 47
6.18 No EyeSys Material Adverse Effect. . . . . . . . . . . . . . . . 47
6.19 No Premier Material Adverse Effect . . . . . . . . . . . . . . . 47
6.20 Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . 47
6.21 Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . 47
6.22 Amount of Shares Issuable. . . . . . . . . . . . . . . . . . . . 48
6.23 Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . 48
6.24 Compliance With Rule 145 . . . . . . . . . . . . . . . . . . . . 48
6.25 EyeSys Financial Information . . . . . . . . . . . . . . . . . . 48
6.26 EyeSys Personnel . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 7 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 48
7.2 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . 49
7.3 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.4 Indemnification of EyeSys Agents . . . . . . . . . . . . . . . . 49
7.5 Indemnification regarding Securities Act Issues. . . . . . . . . 49
ARTICLE 8 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.1 Termination by Mutual Consent. . . . . . . . . . . . . . . . . . 50
8.2 Termination by Premier or PAI or EyeSys. . . . . . . . . . . . . 50
8.3 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 51
-iii-
Page
----
ARTICLE 9 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.2 Entire Agreement; Modifications; Waiver. . . . . . . . . . . . . 52
9.3 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.5 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 52
9.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 53
9.9 Each Party to Bear Own Costs . . . . . . . . . . . . . . . . . . 53
9.10 Confidentiality and Nondisclosure Agreements . . . . . . . . . . 53
9.11 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . 53
9.12 Transfer of EyeSys Books and Assets. . . . . . . . . . . . . . . 53
9.13 Appointment and Indemnity of Escrow Committee. . . . . . . . . . 53
9.14 Survival of Representations and Warranties . . . . . . . . . . . 54
EXHIBITS
B Escrow Agreement and Instructions
C-1 Lock-Up Agreement
C-2 Lock-Up Agreement
D Certificate of Merger
F Terms of Securities
G EyeSys Operating Plan
H Loans included in Nonincluded Costs
SCHEDULES
2.1 Noteholders
2.7 Stockholders Executing Lock-Up Agreements
5.16 EyeSys Personnel
5.21 Transactional Costs
-iv-
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made as of April 24, 1997 by
and among Premier Laser Systems, Inc., a California corporation ("PREMIER"),
Premier Acquisition of Delaware, Inc., a Delaware corporation ("PAI"), EyeSys
Technologies, Inc., a Delaware corporation ("EYESYS"), and Frontenac Company
(the "PRINCIPAL SHAREHOLDER").
RECITALS
A. The parties hereto intend that, subject to the terms and
conditions hereinafter set forth, PAI, a wholly owned subsidiary of Premier,
will be merged with and into EyeSys (the "MERGER") in accordance with this
Agreement and the applicable provisions of the laws of the State of Delaware,
with EyeSys surviving as a wholly owned subsidiary of Premier. All
outstanding shares of EyeSys Common Stock, EyeSys Series A Preferred Stock
and EyeSys Series B Preferred Stock and the EyeSys Notes will be converted
into the right to receive shares of Premier Common Stock.
B. All outstanding EyeSys Common Stock Warrants, Preferred
Warrants and EyeSys Options shall be either exercised or terminated prior to
the Closing, or exchanged for Premier Options. EyeSys Common Stock,
Preferred Stock, EyeSys Notes, EyeSys Options and EyeSys Warrants shall be
collectively referred to herein as "INTERESTS IN EYESYS."
C. By executing this Agreement, the parties hereto intend to
adopt a plan of reorganization within the meaning of Section 368(a) the
Internal Revenue Code of 1986.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
do hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms shall have the following
meanings for purposes of this Agreement:
"AGREEMENT" means this Agreement and Plan of Merger among Premier, PAI
and EyeSys, dated as of April 24, 1997.
"APPRAISAL RIGHTS" shall have the meaning set forth in Section 5.22.
"BANK" means the Silicon Valley Bank.
"CERTIFICATE OF MERGER" shall mean that certificate, substantially in
the form attached hereto as EXHIBIT D, that shall be filed in the office of the
Delaware Secretary of State at the Effective Time.
"CLAIM" or "CLAIMS" shall mean any and all claims, demands, causes of
action, suits, proceedings, administrative proceedings, losses, judgments,
decrees, debts, damages, liabilities, court costs, attorneys' fees, and any
other expenses incurred, assessed or sustained by or against EyeSys.
"CLOSING" shall have the meaning stated in Section 2.4.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985.
"CODE" means the Internal Revenue Code of 1986.
"CONTINGENCY PAYMENT" means, with respect to each EyeSys Note, the
Principal of such Note multiplied by a factor of two (2).
"COWEN" shall mean Cowen & Company, a limited partnership.
"COWEN SHARES" shall mean that amount of shares of Premier Common
Stock, valued at the Per Share Value, equal to the lesser of (i) $75,000, or
(ii) one-fourth of the amount of fees payable by EyeSys to Cowen and which are
included in the Transactional Costs.
"DISSENTING SHAREHOLDERS" means those EyeSys shareholders that
exercise their dissenter's appraisal rights under the Delaware General
Corporation Law, in connection with the Merger.
"DIVIDENDS" with respect to a share of Series B Preferred Stock shall
mean the accumulated and unpaid dividends thereon immediately prior to the
Effective Time.
"EA" shall mean, with respect to an EyeSys Note held by an EyeSys
Affiliate Noteholder, the number of Merger Shares equal to the quotient of the
Principal thereon divided by the Per Share Value.
"EFFECTIVE TIME" shall have the meaning stated in Section 2.5.
"ENA" shall mean with respect to an Eyesys Note held by an EyeSys Non-
Affiliate Noteholder, the number of Merger Shares equal to the quotient of (x)
the product of two multiplied by the Principal, divided by (y) the Per Share
Value.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ESCROW AGREEMENT" shall mean that agreement pursuant to which certain
Merger Shares shall be held in escrow for a period of one (1) year after the
Effective Time as the source
-2-
of payment for the indemnification obligations of EyeSys pursuant to Article
7 of this Agreement, substantially in the form of EXHIBIT B attached hereto.
"ESCROW SHARES" shall have the meaning given in Section 2.3.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EYESYS" shall mean EyeSys Technologies, Inc., a Delaware corporation.
"EYESYS AFFILIATE NOTEHOLDERS" shall mean all holders of EyeSys Notes
as so identified on Schedule 2.1.
"EYESYS CERTIFICATE OF INCORPORATION" shall have the meaning given in
Section 3.2(g) of this Agreement.
"EYESYS COMMON STOCK" shall mean all of the issued and outstanding
shares of EyeSys Common Stock.
"EYESYS COMMON STOCK AND COMMON STOCK EQUIVALENTS" shall mean the sum
of (i) the number of shares of Eyesys Common Stock outstanding immediately prior
to the Effective Time (after giving effect to any exercise of Eyesys Warrants or
Eyesys Options prior to the Closing) and (ii) the product of (a) the number of
shares of Eyesys Common Stock issuable upon exercise of EyeSys Options
outstanding immediately prior to the Effective Time and (b) the fraction, the
numerator of which is the difference between the EyeSys Common Stock
Consideration Per Share and the exercise price of each such EyeSys Option and
the denominator of which is the Common Stock Consideration Per Share; and (iii)
the product of (a) the number of shares of Eyesys Common Stock issuable upon
exercise of EyeSys Common Warrants outstanding immediately prior to the
Effective Time and (b) the fraction, the numerator of which is the difference
between the EyeSys Common Stock Consideration Per Share and the exercise price
of each such EyeSys Common Warrant and the denominator of which is the Common
Stock Consideration Per Share.
"EYESYS COMMON STOCK AND COMMON STOCK EQUIVALENTS CONSIDERATION" shall
mean the difference between the Shareholder Consideration and the sum of the
Series A Preference and the Series B Preference.
"EYESYS COMMON STOCK CONSIDERATION PER SHARE" shall mean the quotient
of Eyesys Common Stock and Common Stock Equivalents Consideration divided by
EyeSys Common Stock and Common Stock Equivalents.
"EYESYS COMMON WARRANTS" means all warrants to purchase EyeSys Common
Stock outstanding immediately prior to the Effective Time.
"EYESYS FINANCIALS" shall have the meaning given in Section 3.5 of
this Agreement.
-3-
"EYESYS LETTER" means that certain disclosure letter, certified by the
President and Secretary of EyeSys and delivered by EyeSys to Premier prior to
the Closing, that describes certain matters regarding EyeSys and sets forth
exceptions to certain representations and warranties made by EyeSys for the
benefit of Premier and PAI in this Agreement.
"EYESYS LOCK-UP AGREEMENTS" has the meaning given in Section 2.7.
"EYESYS MATERIAL ADVERSE EFFECT" means any fact, event or condition,
or the absence of any fact, event or condition, as the context requires, that,
individually or in the aggregate, would have a material adverse effect on the
business, properties, condition (financial or otherwise) or results of
operations of EyeSys, or that would constitute a liability of EyeSys,
individually in excess of $10,000, or in the aggregate in excess of $25,000.
"EYESYS NON-AFFILIATE NOTEHOLDERS" shall mean all holders of EyeSys
Notes as so identified on Schedule 2.1.
"EYESYS NOTES" means those certain convertible subordinated notes
issued by EyeSys prior to the date of this Agreement and outstanding immediately
prior to the Closing.
"EYESYS OPTIONS" shall mean all options outstanding immediately prior
to the Effective Time to purchase EyeSys Common Stock.
"EYESYS PENSION PLAN" shall have the meaning given in Section 3.12.
"EYESYS STOCKHOLDERS" has the meaning given in Section 2.7.
"EYESYS WARRANTS" means all outstanding EyeSys Common Warrants and all
outstanding Preferred Warrants.
"FIRST AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF
EYESYS" means the Certificate of Amendment of the Restated Certificate of
Incorporation of EyeSys to be filed prior to the Closing, as provided in
Section 2.1(a), in form reasonably acceptable to Premier.
"FORM 10-K" shall have the meaning given in Section 4.14 of this
Agreement.
"FRONTENAC PAYABLE" shall mean the obligation of EyeSys to reimburse
Frontenac Company the amount of $72,500 for expenses paid by Frontenac Company
on behalf of EyeSys.
"GAAP" means generally accepted accounting principles.
"HAZARDOUS SUBSTANCES" shall mean any asbestos, petroleum or any
substance or material defined or designated as hazardous or toxic waste,
hazardous or toxic material, hazardous or toxic substance, or other similar
term, by any federal, state or local environmental statute, regulation or
ordinance presently in effect, including, without limitation, any material or
substance that is designated or defined as a "hazardous substance," "hazardous
waste" or "toxic substance" in (a) the Federal Water Pollution Control Act, 33
U.S.C. Sections 1251 et seq.,
-4-
and any amendments thereto, (b) the Federal Resource Conservation and
Recovery Act 42 U.S.C. Sections 6901 et seq., and any amendments thereto, (c)
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Sections 9601 et seq., and any amendments thereto, or (d) the
Hazardous Material Transportation Act, 49 U.S.C. Sections 1801 et seq., and
any amendments thereto.
"INTEREST" with respect to an EyeSys Note shall mean the accrued
and unpaid interest thereon immediately prior to the Closing.
"INTERESTS IN EYESYS" shall have the meaning given in Recital B.
"INTELLECTUAL PROPERTY" shall have the meaning given in Section
3.11 of this Agreement.
"LOAN AGREEMENT" has the meaning given in Section 5.13 of this
Agreement.
"LOSSES" shall have the meaning given in Section 2 of this Agreement.
"MERGER" shall mean the merger of PAI, a wholly owned subsidiary of
Premier, into EyeSys on the terms and conditions set forth in this Agreement.
"MERGER CONSIDERATION" shall mean the aggregate dollar amount of
the Merger Securities issued in the Merger based upon the value(s)
attributable to such Merger Securities under Article 2, plus $495,000.
"MERGER SECURITIES" shall mean the Merger Shares and the securities
issuable under Section 2.2(c) below.
"MERGER SHARES" shall mean the sum of (a) that number of shares of
Premier Common Stock determined by dividing $10,600,000 by the Per Share Value
of the Premier Common Stock, plus (b) any additional shares required as a result
of the elimination of fractional shares pursuant to Section 2.2(f).
"NONINCLUDED COSTS" shall mean all obligations for money borrowed as
shown on Exhibit H existing at the Closing of EyeSys to one or more shareholders
to EyeSys (excluding the Frontenac Payable); all legal and accounting fees
payable by EyeSys other than those which are payable by Premier under Section
5.21 hereof; all amounts due to Cowen that are in excess of the amounts required
to be paid by Premier hereunder; all amounts payable by EyeSys to settle claims
as required by Section 5.20; and all interest accrued on the EyeSys Notes as of
the Closing Date.
"PAI" shall mean Premier Acquisition of Delaware, Inc., a Delaware
corporation.
"PER SHARE VALUE" shall mean, at the election of Premier, either (i)
the average of the closing sales prices of Premier's Class A Common Stock for
the fifteen (15) trading days immediately preceding the Closing; or (ii) the
average of the closing sale prices of the Common
-5-
Stock for the thirty (30) days ending fifteen (15) days prior to such
Closing. The Per Share Value, as so defined, shall be used in the
calculation of both the base amount of Merger Securities issuable under
Section 2.2(b) hereof, as well as the additional Merger Securities
potentially issuable under Section 2.2(c) hereof, except that with respect to
the calculation of the additional securities issuable under Section 2.2(c),
the Per Share Value shall also be determined in accordance with the terms of
Section 2.2(c)(iii).
"PREFERRED STOCK" shall collectively refer to the Series A
Preferred Stock and the Series B Preferred Stock.
"PREFERRED WARRANTS" means all of the warrants to purchase Series B
Preferred Stock that are outstanding immediately prior to the Effective Time.
"PREMIER" shall mean Premier Laser Systems, Inc., a California
corporation.
"PREMIER CLASS AA OPTIONS" shall mean options to purchase Premier
Common Stock, and having the terms set forth in EXHIBIT F hereto.
"PREMIER CLASS BB OPTIONS" shall mean options to purchase Premier
Common Stock, and having the terms set forth in EXHIBIT F hereto.
"PREMIER COMMON STOCK" means the Class A Common Stock of Premier.
"PREMIER LETTER" means that certain disclosure letter certified by the
President and Secretary of Premier and delivered by Premier to EyeSys prior to
the Closing, which describes certain matters regarding Premier and PAI and sets
forth exceptions to certain representations and warranties made by Premier and
PAI for the benefit of EyeSys in this Agreement.
"PREMIER MATERIAL ADVERSE EFFECT" means any fact, event or condition,
or the absence of any fact, event or condition, as the context requires, that,
individually or in the aggregate, could or would have a material adverse effect
on the business, properties, condition (financial or otherwise) or results of
operations of Premier.
"PREMIER OPTIONS" shall mean options to purchase 165,000 shares of
Premier Common Stock, and having the terms set forth in EXHIBIT F hereto.
"PRINCIPAL" with respect to an EyeSys Note shall mean the outstanding
principal amount of such EyeSys Note immediately prior to the Effective Time.
"PRINCIPAL SHAREHOLDER" means Frontenac Company.
"PROXY STATEMENT/PROSPECTUS" means the Proxy Statement/Prospectus
furnished to the EyeSys shareholders for a special meeting of shareholders to be
held on or about June 25, 1997.
-6-
"REGISTRATION STATEMENT" means that certain registration statement on
Form S-4 to be filed with the Securities and Exchange Commission by Premier in
connection with the registration of the issuance of the Merger Shares.
"RETURNS" shall have the meaning given in Section 3.20 of this
Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SEC DOCUMENTS" shall have the meaning given in Section 4.14 of this
Agreement.
"SERIES A PREFERENCE" with respect to all of the outstanding shares of
Series A Preferred Stock, in the aggregate, means that amount determined by
multiplying the total amount of the Shareholder Consideration times "D,"
calculated under the following formula:
D = 0.12293255 - (0.084469 * 10(8) * (Shareholder Consideration minus the
Series B Preference)); provided, however, in no event shall D be more than
.1215426 or less than .1204357.
"SERIES B PREFERENCE" with respect to all of the outstanding shares of
Series B Preferred Stock, in the aggregate, shall mean that amount of the
Shareholder Consideration equal to "A" in the following formula:
A = (1-P)*(Shareholder Consideration), where
P equals (9.732853 * 10(8) * Shareholder Consideration) minus 0.31470577;
provided, however, in no event shall P be less than .2726550 or more than
.4016254.
"SERIES B PREFERRED STOCK" means all of the outstanding shares of
EyeSys Series B Preferred Stock immediately prior to the Effective Time.
"SHAREHOLDER CONSIDERATION" shall mean the difference between (a) the
Merger Consideration and (b) the sum of (i) the Nonincluded Costs and (ii) the
value of the Merger Shares issued to the holders of the EyeSys Notes pursuant to
Section 2.2(b)(i), based upon the Per Share Value.
"SHAREHOLDER GUARANTEES" has the meaning given in Section 5.13 of this
Agreement.
"SHAREHOLDER GUARANTORS" has the meaning given in Section 5.14 of this
Agreement.
"STAY BONUS" shall have the meaning set forth in Section 5.20 of this
Agreement.
"TAXES" shall have the meaning given in Section 3.20 of this
Agreement.
-7-
"TRANSACTIONAL COSTS" means such standard and customary fees and costs
as may be reasonably claimed in connection with rendering services related to
the Merger on behalf of EyeSys by Cowen, the accounting firm of Coopers &
Lybrand and the following law firms: Epstein Becker & Green P.C., Hopkins &
Sutter, and Gardere, Wynn, Sewell & Riggs, L.L.P.
1.2 GENERAL TERMS. As used in this Agreement, the terms "herein,"
"herewith," and "hereof" are references to this Agreement, taken as a whole; the
term "includes" or "including" shall mean "including, without limitations," and
references to a "Section," "subsection," "clause," "Article," "Exhibit,"
"Appendix," or "Schedule" shall mean a Section, subsection, clause, Article,
Exhibit, Appendix or Schedule of this Agreement, as the case may be, unless in
any such case the context requires otherwise. All references to a given
agreement, instrument or other document shall be a reference to that agreement,
instrument or other document as modified, amended, supplemented and restated
through the date as of which such reference is made, and reference to a Law
includes any amendment or modification thereof. The singular shall include the
plural, and the masculine shall include the feminine and neuter, and vice versa.
[remainder of page intentionally left blank]
-8-
ARTICLE 2
PLAN OF MERGER
2.1 BOARD OF DIRECTORS' AND STOCKHOLDERS' APPROVAL.
(a) The board of directors of EyeSys has duly adopted this
Agreement and, prior to the Closing, this Agreement shall be submitted for
approval by (1) at least 67% of the outstanding shares of Series B Preferred
Stock voting as a separate class, (2) a majority of the outstanding shares of
the following voting as one class: EyeSys Common Stock, Series A Preferred
Stock on an as-converted basis and Series B Preferred Stock on an
as-converted basis, and (3) the holders of a majority of the outstanding
principal under the EyeSys Notes. In addition, as conditions to the
consummation of the Merger:
(i) the First Amendment to the Restated Certificate of
Incorporation of EyeSys, which amends the EyeSys Certificate of Incorporation
to provide that if the Merger is consummated the Series A Preference and the
Series B Preference shall be as set forth in Article 1, and to eliminate any
right of the Series B Preferred Stock to participate with EyeSys Common Stock
in liquidation of the net assets of EyeSys after payment of debts and
preferences, shall be approved by (1) a majority of the outstanding shares of
the following, voting as one class: EyeSys Common Stock, Series A Preferred
Stock on an as-converted basis, and Series B Preferred Stock on an
as-converted basis, (2) with respect to the amendments of Sections 4.3.4(b)
and (c) of the Restated Certificate of Incorporation of EyeSys, at least 67%
of the outstanding shares of Series B Preferred Stock voting as a separate
class, (3) with respect to the amendment of Section 4.2.4(b)(ii), a majority
of the holders of Series A Preferred Stock voting as a separate class and at
least 67% of the outstanding shares of Series B Preferred Stock voting as a
separate class, and (4) the holders of a majority of the outstanding
principal under the EyeSys Notes;
(ii) on or before the Closing, the holders of EyeSys
Notes who are listed on Schedule 2.1 shall have elected to accept in payment
of their EyeSys Notes (excluding interest thereon), in whole or in part, EA
or ENA, as the case may be.
(b) The board of directors and sole shareholder of PAI have
duly adopted and approved this Agreement in accordance with the applicable
provisions of the Delaware General Corporation Law.
2.2 THE MERGER.
(a) At the Effective Time, subject to the terms and
conditions of this Agreement, PAI shall be merged with and into EyeSys
pursuant to the Certificate of Merger, with EyeSys as the surviving
corporation; and the separate existence of PAI shall thereupon cease, and
EyeSys, as the surviving corporation in the Merger and a wholly owned
subsidiary of Premier, shall continue its corporate existence under the laws
of the State of Delaware.
-9-
(b) Subject to Section 2.2(f) and Section 2.3, at the
Effective Time the Interests in EyeSys identified below shall be converted
into the right to receive the securities set forth in this Section 2.2(b) as
well as in Section 2.2(c), and the settlement of such issuance of securities
shall be effected pursuant to Section 2.2(d):
(i) each EyeSys Note outstanding immediately prior to
the Effective Time held by an EyeSys Affiliate Noteholder shall be converted
into the right to receive such number of the Merger Shares equal to EA, and
each EyeSys Note outstanding immediately prior to the Effective Time held by
an EyeSys Non-Affiliate Holder shall be converted into the right to receive
such number of Merger Shares equal to ENA;
(ii) each share of Series B Preferred Stock shall be
converted into the right to receive such number of the Merger Securities
equal to the Series B Preference divided by the Per Share Value, divided by
the number of shares of Series B Preferred Stock outstanding immediately
prior to the Effective Time.
(iii) each Preferred Warrant that has not been exercised
shall be cancelled.
(iv) each share of Series A Preferred Stock shall be
converted into the right to receive such number of Merger Securities equal to
the Series A Preference, divided by the Per Share Value divided by the number of
shares of Series A Preferred Stock outstanding immediately prior to the
Effective Time.
(v) each share of EyeSys Common Stock, excluding shares
held by Dissenting Shareholders, shall be converted into the right to receive
such number of Merger Securities as is equal to the EyeSys Common Stock
Consideration Per Share divided by the Per Share Value.
(vi) all of the EyeSys Options and EyeSys Common Warrants
that are not exchanged for Premier Options pursuant to Section 2.2(e) below or
exercised by the holders thereof shall be terminated.
If the Merger Securities include Premier Class AA Options or Premier Class BB
Options, the holders of each of the classes of EyeSys securities identified
in Section 2.2(b)(ii) through 2.2(b)(vi) above shall, in their capacities as
holders of such class of EyeSys securities, receive a pro rata share of each
of the types of Premier securities included in the Merger Securities. The
references in Sections 2.2(b)(ii), 2.2(b)(iv) and 2.2(b)(v) to the "number of
Merger Securities" to be issued and to the "Per Share Value" shall be deemed
to refer to the respective numbers of each type of Premier securities
allocated, on such pro rata basis, under such sections, and to the Per Share
Value of the Premier Common Stock, or the values attributed to the Premier
Class AA Options and Premier Class BB Options determined under Section
2.2(c)(iii) below, as appropriate.
(c) The Merger Securities shall also include Premier Common
Stock, Premier Class AA Options and/or Premier Class BB Options, as set forth
below.
-10-
(i) Except as set forth in Section 2.2(c)(iv) below,
EyeSys may, at its election, determine whether the securities so issuable
shall be Premier Common Stock, Premier Class AA Options or Premier Class BB
Options; provided, however, that unless waived by Premier in its sole
discretion the maximum aggregate amount of Premier Class AA Options and
Premier Class BB Options shall not exceed options to purchase 335,000 shares
of Premier Common Stock.
(ii) Such securities shall be issuable under this Section
2.2(c) only if EyeSys shall, prior to or within 90 days of the Closing Date (the
"CONTINGENCY TERMINATION DATE"), execute a definitive license agreement with
Nidek Company, Ltd. and/or Marco Ophthalmic, Inc., on terms reasonably
acceptable to Premier (the "FUTURE LICENSE AGREEMENTS"), and which provides for
the payment of at least 10% of the Future License Fees (as defined below) on or
prior to the Contingency Termination Date. The aggregate amount of securities
issuable under this Section 2.2(c) (the "CONTINGENT CONSIDERATION") shall be
calculated by reference to the noncontingent license fees (the "FUTURE LICENSE
FEES") paid or payable to EyeSys under the Future License Agreements, which
amounts shall have been actually received by EyeSys before the Contingency
Termination Date or which are contractually required to be paid within one year
from the date hereof. The value of the securities issuable under this Section
2.2(c) shall be equal to the sum of: (i) .78 times the amount of the Future
License Fees, for the first $1,500,000 of such Future License Fees; plus (iii)
.5 times the amount of the Future License Fees in excess of $1,500,000.
(iii) For purposes of this Section 2.2(c), with respect to
that amount of the Future License Fees which is received prior to the Closing
Date, Premier Common Stock shall be valued at the Per Share Value used in
connection with the Merger, and Premier Class AA Options and Premier Class BB
Options shall be deemed to have the same value as Premier's outstanding
publicly traded Class A Warrants and Class B Warrants computed in the same
manner as the Per Share Value and over the same measuring periods,
respectively, used in the calculation of the Per Share Value (but without
adjustment for the differences in terms between such securities). With
respect to that amount of the Future License Fees which is received after the
Closing Date, the Premier Common Stock, Premier Class AA Options and Premier
Class BB Options shall be valued using the same measuring period selected by
Premier in computing the Per Share Value, but substituting the date of
receipt of such additional Future License Fees for the date of the "Closing"
in such definition.
(iv) In no event shall Premier be obligated to issue
Premier Common Stock under this Section 2.2(c) if the total number of shares
so issuable, when taken together with all other Premier Common Stock issued
in connection with the Merger, shall exceed the maximum number of shares
issuable in the Merger without the approval of the Merger by Premier
shareholders in accordance with the California Corporations Code (the
"MAXIMUM AMOUNT"); provided, however, that in the event the number of shares
of Premier Common Stock issuable hereunder exceeds the Maximum Amount,
Premier shall have the option of delivering, in lieu of the shares that would
be in excess of the Maximum Amount, either cash, Premier Class AA Options or
Premier Class BB Options, such that the total amount of consideration paid by
Premier hereunder is equal to the amount required to be paid under Section
2.2(c)(ii) above.
-11-
(v) If any part of the Future License Fees with respect
to which the Contingent Consideration has been calculated is not paid when
due by the party obligated to pay such amounts, then the Contingent
Consideration shall be recalculated using the amount of Future License Fees
actually received within the one-year period after the Closing Date and the
Per Share Value and/or warrant prices specified in Section 2.2(c)(iii) used
to calculate the number of shares or options issued in the Contingent
Consideration (the "ORIGINAL VALUES"), and the excess of the amount of
Contingent Consideration actually paid or delivered over the amount of
Contingent Consideration as recalculated shall be reimbursed to Premier out
of the Escrow Shares (using the Original Values). Section 2.3 shall govern
the reallocation of the Merger Securities among the holders of Interests in
EyeSys, in the event that Merger Securities shall be returned to Premier out
of the Escrow pursuant to this Section 2.2(c)(v).
(d) The conversion of the EyeSys Notes and exchange of Merger
Securities for Nonincluded Costs (other than Stay Bonuses) shall be effected
at the Closing. The amount and type of securities into which the Interests
in EyeSys (other than the EyeSys Notes) shall be converted hereunder shall be
calculated immediately after the Contingency Termination Date, when the total
amount of the Contingent Consideration is known. Accordingly, within 3
business days after the Contingency Termination Date, the EyeSys
Representative selected pursuant to Section 9.13 shall notify Premier of the
type of securities EyeSys has elected to issue under Section 2.2(c)(i), and
shall calculate the total amount and type of the securities issuable
hereunder and shall notify Premier in writing of such calculation. Premier
shall have 3 business days from the receipt of such notice to review the
calculations contained therein, and unless Premier gives the EyeSys
Representative notice in writing within such 3 day period of Premier's
disapproval of such calculation, it shall be deemed final, absent manifest
error. If Premier disapproves such calculation, it shall provide the EyeSys
Representative with written notice of the reasons for such disapproval. The
parties shall thereafter confer in a good faith effort to resolve such
dispute. If such dispute cannot be resolved within two weeks after the date
of Premier's notice of disapproval, the matter shall be submitted to binding
arbitration in accordance with the procedures set forth in the Escrow
Agreement. After the allocation of the Merger Securities has been agreed
upon, or determined according to such arbitration procedures, Premier shall
promptly forward certificates representing the Merger Securities, in
accordance with such allocation.
(e) For purposes of this Section 2.2(e) only, the Premier
Options included in the Shareholder Consideration shall be deemed to have a
value of $3.00 per option. Premier shall issue to the holders of all
then-outstanding EyeSys Options and EyeSys Common Warrants, and to the
persons entitled to the Stay Bonuses, an aggregate of 165,000 Premier
Options, as follows:
(i) The value of outstanding and unexercised EyeSys
Options shall be equal to the value of the EyeSys Common Stock issuable upon
exercise thereof (using the Per Share Value of the Premier Common Stock into
which such EyeSys Common Stock would be converted in this Merger), less the
exercise price of such options. Each EyeSys Option shall be exchanged for
that number of Premier Options as is equal to the value determined under the
foregoing sentence, divided by $3.00. In the event that the Contingent
Consideration is payable hereunder and there are no further Premier Options
issuable in exchange for the full value of an Eyesys Option, determined in
accordance with the second
-12-
preceding sentence, then the holder thereof shall be entitled to receive the
balance of such value in Merger Securities.
(ii) If any Premier Options remain after EyeSys Options
are exchanged under Section 2.2(e)(i) above, the remaining Premier Options
shall then be issued in exchange for outstanding EyeSys Common Warrants.
Each outstanding and unexercised EyeSys Common Warrant shall be exchanged for
that number of Premier Options as is equal to the value of the EyeSys Common
Stock issuable upon the "net exercise" thereof (using the Per Share Value of
the Premier Common Stock into which such EyeSys Common Stock would be
converted in this Merger), divided by $3.00. In the event that the
Contingent Consideration is payable hereunder and there are no further
Premier Options issuable in exchange for the full value of an EyeSys Common
Warrant, determined in accordance with the second preceding sentence, then
the holder thereof shall be entitled to receive the balance of such value in
Merger Securities.
(iii) If any Premier Options remain after the application
of sections 2.2(e)(i) and 2.2(e)(ii) above, the remaining Premier Options
shall be issued to the persons entitled to the holders of the Stay Bonuses,
in satisfaction of such Stay Bonuses, at the rate of $3.00 of Stay Bonus
forgiven for each Premier Option so issued. EyeSys shall determine which
persons shall receive Premier Options under this Section 2.2(e)(iii).
(iv) EyeSys shall make arrangements for agreements with
the holders of the EyeSys Options and EyeSys Common Warrants and the persons
entitled to the Stay Bonuses to exchange such securities or claims for the
Premier Options in accordance with this Section 2.2(e), and for the
termination of any EyeSys Option or EyeSys Common Warrant, or payment of any
Stay Bonus, that is not exchanged or paid as set forth above. Premier will
issue the Premier Options within three (3) business days after the
determination of the allocation of the Merger Securities as set forth in
Section 2.2(d).
(f) Notwithstanding anything herein, with respect to each
holder of Interests in EyeSys, if the aggregate number of shares of Premier
Common Stock collectively issuable to such a holder for conversion of all of
such holder's EyeSys Common Stock, Preferred Stock and EyeSys Notes pursuant
to Section 2.2(b) includes a fractional share, such fractional share shall be
rounded to the nearest whole number. The aggregate number of shares of
Premier Common Stock purchasable under Premier Options issued in exchange for
EyeSys Options and EysSys Common Warrants shall be rounded to the nearest
whole number and the aggregate exercise price (but not the exercise price per
share thereof) shall be adjusted accordingly. To the extent that any of the
holders of Interests in EyeSys have presently outstanding rights to purchase
shares of EyeSys capital stock that expire in whole or in part unexercised,
the exchange ratios set forth above with respect to the exchange of Interests
in EyeSys into shares of Premier Common Stock or Premier Options shall not be
adjusted after the Effective Time of the Merger. All shares of EyeSys Common
Stock or EyeSys Preferred Stock that are owned by EyeSys shall be canceled,
and no securities of Premier or other consideration shall be delivered in
exchange therefor.
(g) At the Effective Time, by virtue of the Merger and
without any action on the part of any shareholder of PAI, each issued and
outstanding share of capital stock
-13-
of PAI shall continue to be issued and shall be converted into one share of
Common Stock of EyeSys, as the surviving corporation in the Merger. Each
stock certificate of PAI evidencing ownership of any such shares shall
continue to evidence ownership of such shares of capital stock of EyeSys, as
the surviving corporation in the Merger.
2.3 ESCROW.
(a) Twenty percent of all securities otherwise issuable in
respect of EyeSys Common Stock, Preferred Stock and the EyeSys Notes pursuant
to Sections 2.2(b) (collectively, the "ESCROW SHARES") shall be deducted from
the Merger Shares on a pro rata basis among the holders of EyeSys Common
Stock, Preferred Stock and the EyeSys Notes and placed in an escrow for a one
(1)-year period as the source of payment for the indemnification obligations
of EyeSys, pursuant to Article 7 of this Agreement and the Escrow Agreement.
(b) In addition to the shares described in Section 2.3(a)
above, there shall be deposited into the Escrow that number of shares of
Premier Common Stock (the "ESCROWED DISSENTING SHARES") equal to the number
of shares that would be issuable to any EyeSys stockholders who have
perfected their Appraisal Rights at the Closing Date in accordance with
Delaware law. To the extent that the Principal Shareholder sells shares of
Premier Common Stock under Section 5.22, the Escrowed Dissenting Shares so
deposited in the Escrow shall be immediately released to the Principal
Shareholder, in an amount equal to the amounts of Premier Common Stock sold
by it, and shall be subject to the Lock-Up Agreement executed by the
Principal Shareholder. At such time as the claims of dissenting shareholders
have been paid, all of the Escrowed Dissenting Shares that have not been
released to the Principal Shareholder shall be returned to Premier. The
Interests in Eyesys held by the Principal Shareholder shall be deemed
converted, upon consummation of the Merger, into the right to receive that
number of the Escrowed Dissenting Shares required to be delivered under this
Section 2.3(b).
(c) Upon the distribution out of the Escrow of any remaining
securities to the holders of Interests in EyeSys, such securities shall be
distributed to such holders in such amounts as would provide such holders
with that amount of the Merger Securities that they would have received under
Section 2.2(b) had the aggregate amount of Merger Securities originally
issued been only the total amount of Merger Securities outstanding after any
reimbursement to Premier of Merger Securities required to be made under this
Agreement.
2.4 THE CLOSING. Subject to termination of this Agreement as
provided in Article 8 below, the closing of the Merger shall take place at
the offices of Rutan & Tucker, 611 Anton Boulevard, Suite 1400, Costa Mesa,
California 92626, at 10:00 a.m. on the business day that is three (3)
business days after the Merger has been approved by the EyeSys shareholders,
or such other place, time and date as Premier, PAI and EyeSys may mutually
select (the "CLOSING").
2.5 EFFECTIVE TIME. Upon the complete satisfaction or satisfactory
waiver of all conditions set forth in Article 6 of this Agreement, the
Certificate of Merger shall be executed and filed as set forth herein.
Simultaneously with the Closing, the Certificate of Merger shall be submitted
for filing in the office of the Secretary of State for the State of
-14-
Delaware. The Merger shall become effective immediately upon the filing of
the Certificate of Merger in the office of the Secretary of State for the
State of Delaware (the "EFFECTIVE TIME").
2.6 REGISTRATION RIGHTS.
(a) The Merger Shares, the Premier Options, the Premier Class
AA Options, the Premier Class BB Options, the securities issuable upon
exercise of any of such options and the Cowen Shares shall be registered,
pursuant to the Registration Statement to be filed with the Securities and
Exchange Commission. EyeSys shall furnish its shareholders with a Proxy
Statement/Prospectus for a special meeting of the shareholders of such
company, to be held on or about June 15, 1997, or as soon thereafter as is
practicable.
(b) EyeSys shall provide Premier with such audited financial
statements and other information concerning EyeSys (including updated
financial information, if required by applicable securities laws) as may be
required in order to accurately prepare the Registration Statement, and
Premier shall have no obligation to file the Registration Statement until
such information has been provided.
2.7 RESTRICTIONS ON SECURITIES. The Premier Common Stock, Premier
Class AA Options, Premier Class BB Options, and Premier Options issued to
certain holders of Interests in EyeSys shall be subject to the following
agreements:
(a) the Lock-Up Agreement, executed by the EyeSys
stockholders listed on Schedule 2.7 (the "EYESYS STOCKHOLDERS") in the forms
attached hereto as EXHIBIT C-1 (for holders of 5% or more of the EyeSys
Shares, on an as-converted basis) or EXHIBIT C-2 (for holders of less than 5%
of the EyeSys Shares, on an as-converted basis) (collectively, the "EYESYS
LOCK-UP AGREEMENTS"); and
(b) the Escrow Agreement.
2.8 SURRENDER AND EXCHANGE OF OUTSTANDING CERTIFICATES, PREMIER
WARRANTS FOR EYESYS WARRANTS AND PREMIER OPTIONS FOR EYESYS OPTIONS; STATUS OF
OUTSTANDING CERTIFICATES. The conversion of the EyeSys Notes, the EyeSys Common
Stock and Preferred Stock into the right to receive Merger Shares and additional
securities under Section 2.2(d), as provided for by this Agreement, shall occur
automatically at the Effective Time without further action by the holders
thereof. Until surrendered, each certificate that prior to the Effective Time
represented shares of EyeSys Common Stock and Preferred Stock, as well as each
EyeSys Note, will be deemed to evidence the right to receive the number of
shares of Premier Common Stock or additional securities into which such EyeSys
Common Stock, Preferred Stock or EyeSys Note have been converted. Premier
shall, within ten (10) business days after the Effective Time, use reasonable
efforts to notify each holder of a certificate or certificates theretofore
representing a share or shares of EyeSys Common Stock, Preferred Stock and
EyeSys Notes to surrender all of such holder's certificates or EyeSys Notes, as
the case may be, to Premier; and upon such surrender such holder shall be
entitled to receive in exchange a certificate or certificates representing the
Premier Common Stock into which such shares or EyeSys Notes have been converted.
-15-
2.9 APPRAISAL RIGHTS. Holders of EyeSys Common Stock or Preferred
Stock who have complied with all requirements for perfecting the appraisal
rights as set forth in the Delaware General Corporation Law shall be entitled to
their rights under such laws. EyeSys shall give Premier prompt written notice
of any written demands for appraisal, withdrawals of demands for appraisal and
any other instrument in respect thereof received by EyeSys.
2.10 REORGANIZATION. The parties intend to adopt the Agreement as a
plan of reorganization and to consummate the Merger in accordance with
Section 368(a) of the Code. To the best of its knowledge, EyeSys believes that
(a) the fair market value of the Merger Shares and other consideration received
by each EyeSys shareholder from Premier in respect of the Merger is
approximately equal to the fair market value of the Interests in EyeSys
surrendered in the exchange, and (b) that the fair market value of the assets of
EyeSys after the Effective Time will equal or exceed the sum of the liabilities
to which the transferred assets are subject.
2.11 ARTICLES AND CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS AND
OFFICERS OF PREMIER AND THE SURVIVING CORPORATION.
(a) The Articles of Incorporation of Premier as in effect as
of the date of this Agreement shall be the Articles of Incorporation of
Premier after the Merger, unless and until thereafter amended. The
Certificate of Incorporation of EyeSys, modified as indicated in the
Certificate of Merger, shall be the Certificate of Incorporation of EyeSys as
the surviving corporation after the Merger, unless and until thereafter
amended.
(b) The Bylaws of Premier as in effect immediately prior to
the Effective Time shall be the Bylaws of Premier after the Merger, unless
and until thereafter amended. The Bylaws of PAI in effect immediately prior
to the Merger shall be the Bylaws of EyeSys as the surviving corporation
after the Merger, unless and until thereafter amended.
(c) The directors and officers of Premier immediately
following the Effective Time of the Merger shall be the same as the directors
and officers of Premier immediately prior to the Merger, until their
successors are elected or appointed and qualified, except as set forth in
Section 5.15.
(d) The officers of EyeSys as the surviving corporation
immediately following the Effective Time of the Merger shall be as follows
until their successors are elected or appointed and qualified:
Rom Rao President and Director
Michael Hiebert Secretary and Chief Financial Officer
The directors of EyeSys as the surviving corporation immediately following the
Effective Time shall be those persons specified by Premier at the Closing.
-16-
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EYESYS
Except as set forth in the EyeSys Letter, which disclosures shall be
deemed representations and warranties hereunder, EyeSys represents and warrants
to Premier and PAI as follows:
3.1 ORGANIZATION AND STANDING.
(a) EyeSys is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has all
requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted, and is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect.
(b) EyeSys has delivered to Premier and PAI complete and
accurate copies of its current Certificate of Incorporation and Bylaws, and
minutes of all of its directors' and shareholders' meetings. EyeSys' stock
books provided to Premier and PAI are complete and accurate as of the date
hereof
3.2 CAPITALIZATION.
(a) EyeSys' current outstanding capitalization (common stock,
preferred stock, warrants and options and any other issued or granted
security) is as set forth in the EyeSys Letter. The EyeSys Letter accurately
describes the vesting schedules associated with EyeSys Options and states the
number of shares of EyeSys Common Stock which may be acquired pursuant to
unvested EyeSys Options. EyeSys has advised Premier in writing of the
residence of any holder of an Interest in EyeSys if such residence is outside
of the United States. EyeSys does not have in effect any stock appreciation
rights plan and no stock appreciation rights are currently outstanding.
(b) Other than as set forth in the EyeSys Letter, EyeSys does
not have outstanding any preemptive or subscription rights, options,
warrants, rights to convert, capital stock equivalents or other rights to
purchase or otherwise acquire any of EyeSys' capital stock or other
securities.
(c) All of the issued and outstanding shares of EyeSys Common
Stock and EyeSys Preferred Stock have been duly authorized and validly issued
and are fully paid and non-assessable, and such common and preferred stock
has been issued in full compliance with all applicable federal and state
securities laws. All of EyeSys' incentive stock options have been issued in
compliance with all laws, rules and regulations necessary to preserve such
incentive stock option treatment. All EyeSys Options have been issued in
accordance with EyeSys' current stock option plan.
(d) Except for any restrictions imposed by applicable state
and federal securities laws, and except as set forth in the EyeSys Letter,
there is no right of first refusal,
-17-
co-sale right, right of participation, right of first offer, option or other
restriction on transfer applicable to any shares of EyeSys Common or
Preferred Stock.
(e) Except as set forth in the EyeSys Letter, (i) none of the
holders of EyeSys Option or EyeSys Warrants has registration rights, and (ii)
EyeSys is not and will not be under any obligation to register under the
Securities Act any shares of EyeSys Common or Preferred Stock or any other of
its securities that might be issued in the future if the Merger were not
consummated.
(f) Except as set forth in the EyeSys Letter, EyeSys is
neither a party nor subject to any agreement or understanding, and, to
EyeSys' knowledge, there is no agreement or understanding between or among
any persons that affects or relates to the voting or giving of written
consent with respect to any security.
(g) Except as set forth in the EyeSys Letter, there have
not been and nor are there outstanding any adjustments made or required to be
made to the conversion prices of the Preferred Stock from those set forth in
EyeSys' Restated Certificate of Incorporation (the "EYESYS CERTIFICATE OF
INCORPORATION"). The number of Merger Securities into which each share of
EyeSys Common Stock, Preferred Stock and the EyeSys Notes convert pursuant to
Section 2.2 of this Agreement is consistent with that which the holders of the
respective Interests in EyeSys are entitled to under the amendments to the
EyeSys Notes and the First Amendment to the Restated Certificate of
Incorporation of EyeSys. Upon obtaining the approvals and consents described in
Section 2. 1 (a) of this Agreement, (i) the EyeSys Notes shall have been duly
amended and such amended EyeSys Notes shall be the legal, valid and binding
obligation of EyeSys and the holders of the EyeSys Notes, and (ii) the First
Amendment to the Restated Certificate of Incorporation of EyeSys shall have been
duly adopted in accordance with Delaware Law upon the filing with the Secretary
of State for the State of Delaware.
3.3 SUBSIDIARIES. EyeSys neither owns nor controls, directly or
indirectly, any corporation, partnership, business, trust or other entity.
3.4 AUTHORITY, APPROVAL AND ENFORCEABILITY.
(a) Subject to obtaining the approval of the holders of
EyeSys Common Stock, Preferred Stock and the holders of the EyeSys Notes
required pursuant to Section 2.1(a), EyeSys has full corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and all corporate action on its part necessary for such execution,
delivery and performance has been duly taken.
(b) Subject to obtaining all necessary consents, the
execution and delivery by it of this Agreement do not, and the performance
and consummation of the transactions contemplated by this Agreement shall
not, result in any conflict with, breach or violation of or default,
termination or forfeiture under (or upon the failure to give notice or the
lapse of time, or both, result in any conflict with, breach or violation of
or default, termination or forfeiture under) any terms or provisions of the
EyeSys Certificate of Incorporation, the First Amendment to the Restated
Certificate of Incorporation of EyeSys or its Bylaws, or any statute, rule,
regulation, judicial, governmental, regulatory or administrative decree,
order or judgment, or
-18-
any agreement, lease, license, permit or other instrument to which it is a
party or to which any of its assets is subject, the breach, violation,
default, termination or forfeiture of which could or would result in a
Material Adverse Effect.
(c) No consent, approval, authorization, order, registration,
qualification or filing of or with any court or any regulatory authority or
any other governmental or administrative body is required on its part for the
consummation by it of the transactions contemplated by this Agreement, except
the filing of the First Amendment to the Restated Certificate of
Incorporation of EyeSys and the Certificate of Merger in the office of the
Secretary of State of the State of Delaware.
(d) Subject to Premier, PAI and EyeSys obtaining the
approvals identified in Section 2.1, this Agreement is the legal, valid and
binding obligation of EyeSys, enforceable against EyeSys in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and subject to the availability of equitable remedies.
3.5 FINANCIAL STATEMENTS.
(a) Except as set forth in the EyeSys Letter, EyeSys has
delivered to Premier and PAI complete copies of its consolidated balance
sheets as at December 31 for calendar years 1991 through 1995 and the related
statements of operations, shareholders' equity and cash flows for the
calendar years 1990 through 1995 and the notes thereto, accompanied by the
auditors' report containing the unqualified opinion of its independent
certified public accountants. Prior to the Closing, EyeSys shall deliver to
Premier and PAI a complete copy of its consolidated balance sheets as at
December 31, 1996, and the related statements of operations, shareholders
equity and cash flows for the calendar year 1996 and the notes thereto,
accompanied by the auditor's report containing the opinion of its independent
certified public accountants, containing a "going concern" qualification (the
"1996 FINANCIALS"). The financial statements described above are referred to
herein, collectively as the "AUDITED FINANCIALS." EyeSys' Audited Financials
are (or, with respect to the 1996 Financials, will be) complete and correct
in all material respects and present fairly its consolidated financial
position as of those dates and the results of its operations and cash flows
for the years then ended, in conformity with GAAP applied on a consistent
basis.
(b) EyeSys has delivered to Premier and PAI an unaudited
consolidated balance sheet as of December 31, 1996 and the related unaudited
statements of operations, shareholders' equity and cash flows for the twelve
(12) months then ended (the "INTERIM FINANCIALS"). EyeSys' Interim
Financials are complete and correct in all material respects (notwithstanding
any annotations in the EyeSys Letter schedule of accounts receivable) and
present fairly its financial condition as of December 31, 1996 and the
results of its operations and cash flows for the twelve (12) months then
ended, in conformity with GAAP applied on a basis consistent with its Audited
Financials (except for the absence of notes thereto and subject to normal
year-end audit adjustments, which are not material). The Audited Financials
and the Interim Financials are hereinafter collectively referred to as the
"EYESYS FINANCIALS."
-19-
(c) There are no debts, liabilities or claims against EyeSys
as of the dates of the EyeSys Financials that are not currently reflected in
such EyeSys Financials, contingent or otherwise, which are or would be of a
nature required to be reflected in a balance sheet prepared in accordance
with GAAP. All deferred taxes of EyeSys are properly accounted for in the
EyeSys Financials, in accordance with GAAP. EyeSys' revenue recognition
policies with respect to the EyeSys Financials have been made in accordance
with GAAP. All of EyeSys' general ledgers, books and records are located at
EyeSys' principal place of business. EyeSys does not have any of its
records, systems, controls, data or information recorded, stored, maintained,
operated or otherwise wholly or partly dependent upon or held by any means
(including any electronic, mechanical or photographic process, whether
computerized or not) that (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of EyeSys.
(d) Subject to any reserves set forth in the EyeSys
Financials, all of the accounts receivable and notes receivable owing to
EyeSys, as of the date hereof, constitute and as of the Effective Time will
constitute, valid and enforceable claims arising from bona fide transactions
in the ordinary course of business, and there are no known or asserted
claims, refusals to pay, or other rights of set-off against any thereof.
Except as set forth in the EyeSys Letter, there is (i) no account debtor nor
note debtor delinquent in its payment by more than 60 days, (ii) no account
debtor nor note debtor that has refused (or, to the best knowledge of EyeSys,
threatened to refuse) to pay its currently outstanding obligations to EyeSys
for any reason, (iii) to the best knowledge of EyeSys, no account debtor nor
note debtor that is insolvent or bankrupt, and (iv) no account receivable nor
note receivable pledged to any third party by EyeSys.
(e) Except for any Transaction Costs, all accounts payable
and notes payable by EyeSys to third parties as of the date hereof arose, and
as of the Closing will have arisen, in the ordinary course of business, and,
there is no such account payable nor note payable delinquent in its payment,
except as set forth in the EyeSys Letter, or any update thereto prior to the
Closing.
3.6 MATERIAL CHANGES. Since December 31, 1996, except as set forth
in the EyeSys Letter, there has not been:
(a) any material change in its assets, liabilities, financial
condition, or operating results from that reflected in the Financials, except
changes in the ordinary course of business that have not been, in the
aggregate, material; nor any damage, destruction or loss, whether or not
covered by insurance, materially adversely affecting its business,
properties, prospects, or financial condition (as such business is presently
conducted and as it is proposed to be conducted);
(b) any waiver or compromise by it of a valuable right or of
a debt owed to it; nor any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by it, except in the ordinary course
of business and that is not material to its business, properties, prospects,
or financial condition (as such business is presently conducted and as it is
proposed to be conducted);
-20-
(c) any material change to a material contract or material
arrangement by which it or any of its material assets is bound or subject;
any material change in any compensation arrangement or agreement with any
employee, consultant, officer, director or shareholder; any sale, assignment,
or transfer of any patents, trademarks, copyrights, trade secrets, or other
intangible assets; nor notification that there has been a loss of or material
order or contract cancellation by any of its customers;
(d) any resignation or termination of employment of any of
its key officers or employees; and EyeSys, to the best of its knowledge, does
not know of the impending resignation or termination of employment of any
such officer or employee;
(e) any mortgage, pledge, transfer of a security interest in,
or lien created by it, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable; any loans or
guarantees made by it to or for the benefit of its employees, officers, or
directors, or any members of their immediate families, other than travel
advances and other advances made in the ordinary course of its business; nor
any declaration, setting aside or payment or other distribution in respect of
any of its capital stock, nor any direct or indirect redemption, purchase, or
other acquisition of any of such stock by it;
(f) any other event or condition of any character that would
result in a Material Adverse Effect; nor (other than in the ordinary course
of business) any agreement or commitment by it to do any of the things
described in this Section 3.6.
3.7 RETURNS. EyeSys has not had any of its products returned by a
purchaser or user thereof other than for minor, nonrecurring warranty
problems. Except as set forth in the EyeSys Letter, EyeSys is not aware of
any pending warranty claims. The reserves reflected on the EyeSys Financials
for future warranty claims are adequate to provide for future warranty claims
on products sold by EyeSys through the date of the EyeSys Financials.
3.8 PROPERTIES AND INVENTORIES.
(a) EyeSys has good and marketable title to and the right to
use all of the assets used in its operations or necessary for the conduct of
its business, as reflected in the EyeSys Financials, free and clear of any
mortgages, pledges, security interests, licenses, encumbrances, restrictions
or adverse claims, except as disclosed in the notes to its Financials, except
for the lien of taxes not yet due and payable, and except as set forth in the
EyeSys Letter. All of the physical assets reflected on its balance sheets
included in the EyeSys Financials are valued therein at the lower of fair
market value or the amount computed under other EyeSys financial reporting
policies (and, for such purposes, taking into account any obsolescence of
such assets), are in the possession of EyeSys, and will be in the possession
of EyeSys at the Closing (except for inventory sold in the ordinary course of
business). All of such physical assets are in good operating condition,
normal wear and tear excepted.
(b) Since September 30, 1996, there has not occurred any
transfer of title other than in the ordinary course of business, any
abandonment, any pilferage or any other material loss with respect to, any of
its property, plant or equipment.
-21-
(c) Included in the EyeSys Letter is a true and correct list
of all of the physical assets (including fixed assets) owned by EyeSys having
a net book value in excess of $5,000. EyeSys does not own any real property.
All improvements on leased property used in the business of EyeSys and the
present use thereof are in accordance with all applicable laws. The net book
value of any fixed assets owned by EyeSys has not been written up nor down,
other than pursuant to depreciation or amortization expense in accordance
with its historical practice.
(d) The EyeSys Letter lists all real property leases to which
EyeSys is a party. Assuming due authorization, execution and delivery by the
other parties thereto, such leases are legal, valid, binding and enforceable
in accordance with their respective terms (except as limited by bankruptcy,
insolvency, reorganization or other laws of general application affecting
creditors' rights generally). EyeSys has a valid and subsisting leasehold
interest in its leased real property, free and clear of all material
encumbrances. Neither EyeSys nor, to the knowledge of EyeSys, any other
party to any of such leases, is in material default under any of such leases,
or has performed any act or omitted to perform any act which act or omission,
with notice or lapse of time or both, will become a material default
thereunder.
3.9 INSURANCE. EyeSys maintains policies of insurance covering
its assets, properties, business and liabilities in types and amounts
customary for similarly sized companies engaged in similar businesses.
EyeSys is in compliance with each of such policies, such that none of the
coverage provided under such policies has been invalidated. EyeSys has fully
paid all premiums and other payments which have become due to its insurers.
The EyeSys Letter contains a complete and accurate list of all insurance
policies, bonds and surety instruments. To the knowledge of EyeSys, there is
no threat by any of the insurers to terminate or materially increase the
premiums payable under any of such insurance policies due to the activities
or loss experience of EyeSys.
3.10 PURCHASE, SALE AND OTHER AGREEMENTS.
(a) Except as described in the EyeSys Letter, EyeSys is not
a party to nor subject to any:
(i) agreement for the purchase of inventory, supplies,
or equipment, other real or personal property, or the procurement of
services, except individual purchase orders or aggregate purchase orders to a
single vendor involving payments of less than $10,000 or as have been entered
into in the ordinary course of the business of EyeSys;
(ii) lease or ownership of equipment, machinery or other
personal property;
(iii) agreement for the sale or lease of products or
furnishing of its services, except individual purchase orders or aggregate
purchase orders from a single customer involving payments of less than
$10,000, or as have been entered into in the ordinary course of the business
of EyeSys;
-22-
(iv) joint venture, partnership or other contract or
arrangement involving the sharing of profits;
(v) agreement relating to the purchase or acquisition,
by merger or otherwise, of a significant portion of its business, assets or
securities by any other person or of any other person by it other than as
contemplated herein;
(vi) agreement containing a covenant or covenants which
purport. to limit its ability or right to engage in any lawful business
activity or compete with any person or entity;
(vii) agreement presently in effect pursuant to which it
has appointed any organization or person to act as its distributor or sales
agent or pursuant to which it has been appointed a distributor or sales agent
by any third party;
(viii) agreement with any of its officers, directors or
affiliates, other than stock option or stock purchase plans or agreements or
proprietary information or consulting or independent contractor agreements;
(ix) agreement for the license of any patent, copyright,
trade secret or other proprietary right or indemnification by it with respect to
infringements of proprietary rights, except employee or consultant proprietary
information agreements and except for those end-user licenses sold in the
ordinary course of business by EyeSys in connection with the sale of its
products;
(x) agreements involving payments to or obligations of
it, not otherwise described in this Section 3.10, in excess of $10,000 (other
than agreements for the sale of inventory in the ordinary course of business);
or
(xi) agreements of indebtedness, capital equipment leases
or guarantees of the obligations of others.
(b) To the best of EyeSys' knowledge, except as set forth in
the EyeSys Letter, no party to any such contract, agreement or arrangement
intends to cancel, withdraw, modify or amend such agreement or arrangement or
return a product for reimbursement or discontinue any provision of
agreed-upon services.
(c) Except as described in the EyeSys Letter, EyeSys has
performed all material obligations required to be performed by it on or prior
to the date hereof under each contract, obligation, commitment, agreement,
undertaking, arrangement or lease referred to in this Agreement (including,
without limitation, the Loan Agreement) or the EyeSys Letter, and it is not
in default, breach nor violation thereunder, or under any other agreements to
which it is a party, except for such defaults, breaches, or violations under
such instruments or obligations that would not have a Material Adverse Effect.
-23-
3.11 INTELLECTUAL PROPERTY RIGHTS.
(a) EyeSys has complete and undisputed title and ownership
and the right to utilize all patents, trademarks, license rights, service
marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes (collectively, "INTELLECTUAL PROPERTY") necessary for or
used in its business as now conducted and as proposed to be conducted without
any conflict with or infringement of the rights of others. All of EyeSys'
patents, trademarks, license rights, service marks, trade names and
copyrights, whether or not registered, are identified in the EyeSys Letter.
Except as disclosed in the EyeSys Letter, there are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is it
bound by or a party to any options, licenses or agreements of any kind with
respect to the Intellectual Property of any other person or entity. It has
not received any communications nor is it aware of any entity alleging that
it has violated or, by conducting its business as proposed, would violate any
Intellectual Property of any other person or entity. It is not aware that
any of its employees or consultants is obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of EyeSys or that would conflict with its
business as proposed to be conducted. EyeSys does not believe it is or will
be necessary to utilize any inventions of any of its employees or consultants
(or persons it currently intends to hire as service providers) made prior to
their employment by it. The EyeSys Letter sets forth all patents, patent
applications, trademarks (registered or unregistered), license agreements,
independent contractor or consulting agreements and any other Intellectual
Property that requires a consent or waiver to consummate the transactions
contemplated in this Agreement. All of EyeSys' license agreements with
respect to its Intellectual Property are in writing and evidence legitimate
ownership of such rights in EyeSys. All royalty obligations of EyeSys are
listed in the EyeSys Letter. No claims for royalties have been, are or will
be asserted against EyeSys. No invention that is shown as being owned by any
individual service provider of EyeSys is necessary for the conduct of EyeSys'
business.
(b) EyeSys is not making use of any confidential information
of third parties nor any confidential information in which any of its present
or, to its actual knowledge, past employees or other service providers, has
claimed a proprietary interest; and EyeSys is not actually aware of any facts
that would give rise to such a claim.
(c) Without limiting the generality of the foregoing
representations, except as described in the EyeSys Letter, EyeSys expressly
represents and warrants that:
(i) EyeSys has satisfied all obligations pursuant to any
and all consulting agreements;
(ii) EyeSys has no present or future liability under any
agreement to (x) provide indemnification for infringement of any third-party
rights or otherwise; or (y) provide updates, enhancements, modifications, bug
fixes, support, maintenance or the like of any products, or technology;
-24-
(iii) Except as disclosed in the EyeSys Letter, as of the
date of this Agreement, EyeSys has not entered into nor negotiated with others
to enter into any consulting agreements, software development agreements,
license agreements or similar agreements;
(iv) EyeSys has retained all rights, title and interest
(including, without limitation, rights to derivatives, modifications, updates
and enhancements) to the components necessary for its business as now conducted
and as proposed to be conducted in the future;
(v) EyeSys knows of no facts or circumstances which would
materially and adversely affect the validity or enforceability of any of its
patents, trademarks, or copyrights;
(vi) All fees and filings necessary to keep the patents,
copyrights and trademarks of EyeSys in full force and effect, including without
limitation, patent maintenance fees and annuity fees, have been duly and
properly paid or executed;
(vii) All applications of EyeSys for patents, trademark
registrations and copyright registrations were properly filed in compliance with
the applicable laws of the countries in which they were filed;
(viii) All information known to EyeSys to be material to the
patentability of the claims of EyeSys' U.S. patents and U.S. patent applicable
was submitted to the United States Patent and Trademark Office in accordance
with the duty of candor and good faith set forth in 37 C.F.R. Section 1.56;
(ix) EyeSys has taken reasonable precautions to safeguard
the confidentiality of its trade secrets;
(x) All copyrightable material used in EyeSys products
were either authored solely by employees of EyeSys within the scope or their
employment or authored by nonemployees with the copyright rights assigned in
writing to EyeSys; and
(xi) The manufacturing, distribution, promotion and/or
activities of EyeSys as its business is presently conducted or proposed to be
conducted, does not violate any intellectual property rights, including without
limitation patent rights, of any other person or entity.
3.12 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) Other than as set forth in the EyeSys Letter regarding
employee benefit plans, programs or arrangements maintained or sponsored by
EyeSys (such plans, the "EMPLOYEE PLANS"), neither EyeSys nor any entity or
trade or business which together with EyeSys is treated as a single employer
under Sections 414(b), (c), (m) or (o) of the Code (its "ERISA AFFILIATES")
is a party to any pension, profit sharing, savings, retirement or other
deferred compensation plan, any bonus (whether payable in cash or stock),
stock option, stock
-25-
purchase or incentive program, or any group health plan (whether insured or
self-funded), or any disability or group life insurance plan, severance or
other employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), or to any
collective bargaining agreement or other agreement, written or oral, with any
trade or labor union, employees' association or similar organization. EyeSys
is not a party to, nor has made any contribution to or otherwise incurred any
obligation under, any "multiemployer plan" as defined in Section 3(37) of
ERISA.
With respect to each such Employee Plan, EyeSys has furnished to
Premier and PAI or their counsel complete and accurate copies of the plan
documents (including plan amendments currently under consideration, trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents, and any material employee
communications), and all IRS Forms 5500 filed with respect to any Employee
Plans.
(b) With respect to each of the Employee Plans subject to
ERISA as either an employee pension benefit plan within the meaning of
Section 3(2) of ERISA or an employee welfare benefit plan within the meaning
of Section 3(l) of ERISA, EyeSys has prepared in good faith and timely filed
all requisite governmental reports, and has properly and timely posted or
distributed all notices and reports to employees required to be filed, posted
or distributed with respect to each such Employee Plan.
(c) Each such Employee Plan has at all times been operated
and administered in all material respects in accordance with its terms and
all applicable laws, including but not limited to, ERISA and the Code.
(d) Each Employee Plan that is intended to be qualified under
Code Section 401(a) ("EYESYS PENSION PLAN") has received a favorable
determination letter from the Internal Revenue Service that such Employee
Plan is qualified under Code Section 401(a) and that the trust under such
Employee Plan is exempt from tax under Code Section 501(a). EyeSys knows of
no reasonable basis for the disqualification of any EyeSys Pension Plan from
exemption under Section 401(a) of the Code.
(e) Neither EyeSys nor any EyeSys Pension Plan, nor any
fiduciary, trustee thereof nor, to the best knowledge of EyeSys, the
administrator thereof or any party in interest (as defined in Section 3(14)
of ERISA) or disqualified person (as defined in Section, 4975(e)(2) of the
Code) with respect to such plan has engaged in any transaction which would
subject EyeSys, the EyeSys Pension Plan, any trust created under such plan,
or any trustee or administrator thereof, or any party dealing with such
EyeSys Pension Plan or any such trust, to either civil liability or a civil
penalty assessed pursuant to Section 409 or 502 of ERISA, or a tax imposed
pursuant to Section 4975, 4976 or 4979 of the Code. EyeSys has no knowledge
of any breach of fiduciary duties owed to EyeSys Pension Plan participants
pursuant to the provisions of Part 4 of Title I of ERISA.
(f) There are no pending claims by or on behalf of any of the
EyeSys Employee Plans, by any employee or beneficiary covered under any such
EyeSys Employee
-26-
Plan, or otherwise involving any such EyeSys Employee Plan (other than claims
for benefits in the ordinary course).
(g) No EyeSys Pension Plan is subject to Section 412 of the
Code nor Title IV of ERISA.
(h) There are no strikes or labor disputes pending or
threatened by nor any attempts at union organization of any EyeSys employees.
(i) The EyeSys Letter includes a full and complete list of
all directors, officers and employees of EyeSys as of the date of this
Agreement, specifying their names and job titles. The EyeSys Letter provides
accurate information to Premier and PAI regarding the total amount of base
salary, whether it is fixed or commission or a combination thereof with
respect to each of the foregoing. Except as set forth in the EyeSys Letter,
the employment of each of EyeSys' employees is "at will" employment, except
as may be required to the contrary under applicable law. Except as set forth
in the EyeSys Letter, EyeSys does not have any obligation (i) to provide any
particular form or period of notice prior to termination, or (ii) to pay any
of such employees any severance benefits in connection with their termination
of employment or service. In addition, except as set forth in the EyeSys
Letter, no severance pay will become due to any EyeSys employees under any
EyeSys agreement, plan or program as a result of the Merger. EyeSys does not
owe and has not accrued any bonuses or vacation pay or retirement benefits to
employees or former employees, other than as set forth on the payroll records
delivered by EyeSys to Premier and PAI prior to the Closing.
(j) EyeSys has not violated any of the health care
continuation coverage requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") applicable to its employees prior to the
Effective Time of the Merger.
3.13 ENVIRONMENTAL AND SAFETY LAWS. Except as described in the
EyeSys Letter, there are no Hazardous Substances (as hereinafter defined) at any
of the facilities owned or used by EyeSys. The EyeSys Letter describes the way
in which EyeSys disposes of any Hazardous Substances used by it, including the
names and locations of any offsite storage or disposal facilities used by
EyeSys. EyeSys has not released, discharged nor disposed of Hazardous
Substances on or under any of such facilities or on or under any premises
previously occupied by EyeSys during the period in which such facilities have
been owned or used by EyeSys. The facilities owned or used by EyeSys do not now
contain, nor did such facilities or any premises previously occupied by EyeSys
contain, any underground storage tanks for any Hazardous Substances. EyeSys has
complied and is in compliance with all applicable local, state and federal
environmental laws, regulations, ordinances and administrative and judicial
orders relating to the generation, recycling, use, sale, storage, handling,
transfer and disposal of any Hazardous Substances. EyeSys has not been alleged
to be in violation of, nor been subject to any administrative, judicial or
regulatory proceeding pursuant to, such laws or regulations either now or any
time during the past twenty-four months. No Claims have been or are currently
asserted against EyeSys nor, to EyeSys' knowledge, will be asserted against
EyeSys after the Effective Time, based on EyeSys' acts or failures to act prior
to the Effective Time with respect to Hazardous Substances.
-27-
3.14 PROPRIETARY INFORMATION AND INVENTIONS AND CONFIDENTIALITY
AGREEMENTS. Each employee, officer and director of EyeSys has executed a
confidentiality agreement and all of the employees, officers and directors
(not including non-employee directors) of EyeSys have executed a proprietary
information and inventions agreement. Copies of such agreements have been
provided to counsel to Premier and PAI. EyeSys is not aware that any of such
persons is in violation thereof.
3.15 POWERS OF ATTORNEY. Except as set forth in the EyeSys Letter,
no person holds a power of attorney from EyeSys.
3.16 COMPLIANCE WITH LAWS AND PERMITS; REGULATORY MATTERS. Except
where the failure to so comply would not have a Material Adverse Effect,
EyeSys has all valid and current permits, licenses, orders, authorizations,
registrations, approvals and other analogous instruments (and each is in full
force and effect) and EyeSys has made all filings and registrations and the
like necessary or required by law to conduct its business as presently
conducted. EyeSys has not received any governmental notice within two years
of the date hereof of any violation by EyeSys of any such laws, rules,
regulations or orders. Except where the failure to comply would not have a
Material Adverse Effect, (a) EyeSys is not in default or noncompliance under
any such permits, consents, or similar instruments, and (b) the business and
operations of EyeSys are in compliance with all foreign, federal, state,
local and county laws, ordinances, regulations, judgments, orders, decrees or
rules of any court, arbitrator or governmental, regulatory or administrative
agency or entity. Without limiting the generality of the foregoing, all of
the products presently marketed by EyeSys have been approved or cleared to
market pursuant to valid and subsisting Premarket Approval or Section 510(k)
Clearances issued by the United States Food and Drug Administration ("FDA").
EyeSys has never conducted any clinical trials which have required
Investigational Device Exemptions ("IDE's"). EyeSys is unaware of any medical
complications arising in connection with or resulting from clinical trials
conducted by EyeSys either directly or under its direction, or from the use
of its products following FDA approval or clearance, except as set forth in
the EyeSys Letter. No complaints have been received by EyeSys with respect
to such procedures, and no Medical Device Reports have been filed by EyeSys
or have been required to be filed. The design, manufacture and distribution
of all of EyeSys' products has been conducted, and shall continue through the
Closing Date to be conducted, in accordance with "good manufacturing
practices" as required by the FDA.
3.17 ABSENCE OF LITIGATION. Except as disclosed in the EyeSys
Letter, neither EyeSys nor, to the best of its knowledge, any of its officers or
directors is engaged in, or has been threatened with, any litigation,
arbitration, investigation or other proceeding relating to it, its employee
benefit plans, property, business, assets, licenses, permits or goodwill, or
against or affecting the Merger or the actions taken or contemplated in
connection therewith, nor, to the best of its knowledge, is there any reasonable
basis therefor. There is no action, suit, proceeding or investigation pending
or threatened against EyeSys that questions the validity of this Agreement or
the Agreement of Merger or the right of EyeSys to enter into this Agreement or
the Agreement of Merger or to consummate the transactions contemplated hereby or
thereby or which might result in any Material Adverse Effect. The foregoing
includes actions pending or threatened (or any reasonable basis therefor known
to it) involving any dispute with its consultants or the prior employment of any
of its employees, their use in connection with its
-28-
business of any information or techniques allegedly proprietary to any of
their former employers, or their obligations under any agreements with prior
employers. There is no action, suit, proceeding or investigation by EyeSys
currently pending, nor which it intends to initiate. Neither EyeSys nor, to
the best of its knowledge, any of its officers or directors is bound by any
judgment, decree, injunction, ruling or order of any court, governmental,
regulatory or administrative department, commission, agency or
instrumentality, arbitrator or any other person which would have a Material
Adverse Effect.
3.18 NO BROKERS. Except with respect to the fees payable to Cowen
which are included in the Transactional Costs, EyeSys is not obligated for
the payment of fees or expenses of any broker or finder in connection with
the origin, negotiation or execution of this Agreement or the Agreement of
Merger nor in connection with any transaction contemplated hereby or thereby.
3.19 THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
The information supplied by EyeSys for inclusion in the Registration
Statement shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact nor omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The information supplied by EyeSys for
inclusion in the Proxy Statement/Prospectus to be sent to the holders of
interests in EyeSys will not, on the date the Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto) is first mailed to holders of
Interests in EyeSys, at the time of the EyeSys Stockholder Meeting, or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with
respect to any material fact, or shall omit to state any material fact
necessary in order to make the statement made therein not false or
misleading. If at any time prior to the Effective Time any event relating to
EyeSys or any of its respective affiliates, officers or directors should be
discovered by EyeSys which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/ Prospectus,
EyeSys shall promptly inform Premier and PAI. The Proxy
Statement/Prospectus, including all financial statements of EyeSys required
to be included therein, shall comply in all material respects as to form with
the requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, EyeSys makes no
representation or warranty with respect to any information supplied or
required to be supplied by Premier or PAI which is contained in any of the
foregoing documents.
3.20 TAXES.
(a) DEFINITIONS. For purposes of this Agreement:
(i) the term "TAXES" means (A) all federal, state,
local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, use,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts with respect thereto,
(B) any liability for payment of amounts described in clause (A) whether as a
result of transferee liability, of being a member
-29-
of an affiliated, consolidated, combined or unitary group for any period, or
otherwise through operation of law and (C) any liability for the payment of
amounts described in clauses (A) or (B) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other expressed or implied
agreement to indemnify any other person; and the term "TAX" means any one of
the foregoing Taxes; and
(ii) the term "RETURNS" means all returns, declarations,
reports, statements and other documents required to be filed in respect of
Taxes, and the term "RETURN" means any one of the foregoing Returns.
(b) EyeSys has properly completed and filed on a timely
basis all Returns required to be filed on or prior to the date of this
Agreement. As of the time of filing, the foregoing Returns properly
reflected the applicable facts then known to EyeSys regarding its income,
business, assets, operations, activities, status or any other information
required to be shown thereon. No extension of time within which to file any
Return that has been required to be filed has failed to be requested and
granted. EyeSys will properly complete and file on a timely basis all
Returns required to be filed on or prior to the Closing.
(c) With respect to all Taxes imposed upon EyeSys, or for
which EyeSys is or was liable, whether to taxing authorities (as, for
example, under law) or to other persons or entities (as, for example, under
tax allocation agreements), with respect to all taxable periods or portions
of periods ending on or before the date of Closing, EyeSys has fully complied
with all applicable tax laws and agreements, and except as set forth in the
EyeSys Letter, all such amounts required to be paid by EyeSys to taxing
authorities, on or before the date of this Agreement, have been paid. EyeSys
does not owe any taxes on compensation paid to any of its employees.
(d) No issues have been raised (nor are currently pending)
by any taxing authority in connection with any of the Returns. No extensions
nor waivers of statutes of limitations with respect to the Returns have been
given by or requested from EyeSys. Except to the extent indicated in the
EyeSys Letter, all deficiencies asserted or assessments made as a result of
any state or federal income tax examinations have been fully paid, or are
fully reflected as a liability in the Financials of EyeSys, or are being
contested and an adequate reserve therefor has been established and is fully
reflected in the Financials of EyeSys.
(e) Except as set forth in the EyeSys Letter, there are no
liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of EyeSys. EyeSys is not a party to or bound by (nor will EyeSys
become a party to or bound by) any tax indemnity, tax sharing or tax
allocation agreement. EyeSys has never been a member of an affiliated group
of corporations, within the meaning of Section 1504 of the Code. EyeSys has
not filed a consent pursuant to the collapsible corporation provisions of
Section 341(f) of the Code (or any corresponding provision of state, local or
foreign income Tax law) nor agreed to have Section 341(f)(2) of the Code (or
any corresponding provision of state, local or foreign income Tax law) apply
to any disposition of any asset owned by it.
(f) EyeSys has not elected to be treated as an S Corporation
pursuant to Section 1362(a) of the Code. None of the assets of EyeSys is
property that EyeSys is
-30-
required to treat as being owned by any other person pursuant to the
so-called "safe harbor lease" provisions of former Section 168(f)(8) of the
Code. None of the assets of EyeSys directly or indirectly secures any debt
the interest on which is tax-exempt under Section 103 (a) of the Code. None
of the assets of EyeSys is "tax-exempt use property" within the meaning of
Section 168(h) of the Code.
(g) EyeSys has not made and has not agreed to make a deemed
dividend election under Treas. Reg. Section 1.1502-32(f)(2) nor a consent
dividend election under Section 565 of the Code. EyeSys has not agreed to
make, nor is it required to make, any adjustment under Sections 481(a) or
263A of the Code or any comparable provision of any applicable state or
foreign tax laws by reason of a change in accounting method or otherwise.
EyeSys has not participated in (and has not agreed to participate in) an
international boycott within the meaning of Section 999 of the Code.
(h) EyeSys is not a party to any agreement, contract,
arrangement or plan that has resulted or would result, whether separately or
in the aggregate, in connection with the Merger, or with any change of
control of EyeSys or any other transaction contemplated by this Agreement, in
the payment of any "excess parachute payments" within the meaning of Section
28OG of the Code. To the best knowledge of EyeSys, except as set forth in
the EyeSys Letter, no Shareholder of EyeSys is other than a United States
person within the meaning of the Code. EyeSys does not have and has not had
a permanent establishment in any foreign country, as defined in any
applicable Tax treaty or convention between the United States of America and
such foreign country, and EyeSys has not engaged in a trade or business
within any foreign country.
(i) Except as set forth in the EyeSys Letter, EyeSys is not
party to any joint venture, partnership, or other arrangement or contract
which is treated as a partnership for federal income tax purposes.
(j) The unpaid Taxes of EyeSys do not exceed any reserve for
Tax liability (excluding any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth or included
in EyeSys' balance sheets as at December 31, 1995 and September 30, 1996, as
adjusted for the passage of time through the Effective Time in good faith in
accordance with the past custom and practice of EyeSys. No Tax liability of
EyeSys has been incurred since December 31, 1995, other than in the ordinary
course of business, and an adequate reserve on the Financials has been made
for all Taxes since that date.
(k) After the date of this Agreement, no material election
with respect to Taxes shall be made by EyeSys without the prior written
consent of Premier and PAI.
(l) The liabilities of EyeSys to which the transferred
assets of EyeSys are subject were incurred by EyeSys in the ordinary course
of its business.
(m) To the best knowledge of EyeSys, there is no plan or
intention on the part of the shareholders of EyeSys to sell, exchange, or
otherwise dispose of such number of the Merger Shares as would reduce the
EyeSys shareholders' ownership of shares of Premier
-31-
Common Stock to a number of shares having a value, determined as of the
Effective Time, of less than 50% of the value, determined as of the Effective
Time, of all of the shares of EyeSys Common and Preferred Stock outstanding
immediately prior to the Effective Time. For purposes of this representation,
shares of EyeSys Common or Preferred Stock exchanged for cash or other
property surrendered by dissenters, shall be treated as outstanding EyeSys
Common or Preferred Stock at the Effective Time of the Merger. Moreover,
shares of EyeSys Common or Preferred Stock and shares of Premier Common Stock
held by EyeSys shareholders as of the date hereof and otherwise sold,
redeemed, or disposed of prior or subsequent to the Merger will be considered
in making this representation.
(n) EyeSys is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(o) At least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by EyeSys immediately prior to the Merger will be held
by the surviving corporation immediately after the Merger. For the purpose
of determining the percentage of EyeSys' net and gross assets held by the
surviving corporation immediately following the Merger, the following assets
will be treated as property held by EyeSys immediately prior to the Merger
that is not held by the surviving corporation subsequent to the Merger: (i)
assets disposed of by EyeSys prior to the Merger and in contemplation thereof
(including, without limitation, any asset disposed of by EyeSys, other than
in the ordinary course of business, pursuant to a plan or intent existing
during the period ending on the Effective Time of the Merger and beginning
with the commencement of negotiations (whether formal or informal) with
Premier regarding the Merger); (ii) assets disposed of after the Merger
pursuant to a binding obligation entered into by EyeSys before the Merger and
in contemplation thereof, other than in the ordinary course of business;
(iii) assets used by EyeSys to pay shareholders perfecting dissenters' rights
or other expenses or liabilities incurred in connection with the Merger; and
(iv) assets used to make distribution, redemption or other payments in
respect of EyeSys capital stock or rights to acquire such stock (including
payments treated as such for tax purposes) that are made in contemplation of
the Merger or related thereto.
(p) EyeSys has not sold, exchanged or discontinued any line
or lines of business with a value representing in the aggregate more than 25%
of the current fair market value of the total assets of EyeSys as of the
Closing.
3.21 OTHER TAXES.
(a) The hours worked by and payments made to EyeSys'
employees have not been in violation of the Fair Labor Standards Act or any
other applicable federal, foreign, state or local labor laws.
(b) All payments due from EyeSys on account of employee
health and welfare insurance have been paid or accrued as a liability on its
balance sheets included in the EyeSys Financials.
-32-
(c) All severance and vacation payments which are or were due
and payable by EyeSys under the terms of any agreement have been paid or
accrued as a liability on its balance sheets included in the EyeSys
Financials.
3.22 COMPLIANCE WITH INSTRUMENTS. EyeSys is not in violation of or
conflict with, breach of or in default under (either with the giving of notice
or the passage of time or both) any term or provision of the EyeSys Certificate
of Incorporation or its Bylaws.
3.23 FOREIGN STATUS. EyeSys is not a foreign corporation, foreign
partnership, foreign trust or foreign establishment (as each such term is
defined in the Code).
3.24 CONSENTS AND APPROVALS. The EyeSys Letter lists all consents
and approvals required for the execution and delivery of this Agreement by
EyeSys and the consummation of the Merger by EyeSys, including those that are
necessary because of the transactions contemplated by this Agreement or those
which are necessary to avoid the loss of the rights to use EyeSys' Intellectual
Property or other rights.
3.25 ACCOUNTS RECEIVABLE. The EyeSys Letter lists all accounts
receivable, unbilled invoices and other debts due or recorded in the records of
EyeSys, as of April 7, 1997. Notwithstanding any annotations in the EyeSys
Letter schedule of accounts receivable, at least 95% of the amount of all
accounts receivable, unbilled invoices and other debts due or recorded in the
records and books of account of EyeSys as being due to EyeSys as at the date of
this Agreement will be good, payable and collectible in full in the ordinary
course of business within ninety (90) days after the Closing (or one hundred
twenty (120) days, with respect to receivables, invoices and debts due from
foreign (non-U.S.) payors), net of applicable reserves as recorded on EyeSys'
books on the date hereof; no contest with respect to the amount or validity of
any amount is pending; and none of such accounts receivable or other debts is or
will at the Closing be subject to any counterclaim or set-off. The values at
which accounts receivable are carried reflect the accounts receivable valuation
policy of EyeSys which is consistent with GAAP applied on a consistent basis.
3.26 INVENTORY. The inventories shown on the Financials as of
December 31, 1995 and September 30, 1996 or thereafter acquired by EyeSys,
consisted of items of a quantity and quality usable or salable in the ordinary
course of business. The inventories are valued at the lower of cost or market
value, determined in accordance with generally accepted accounting principles
consistently applied and on a basis which is consistent with the past practices
of EyeSys. Since December 31, 1996, EyeSys has continued to replenish
inventories in a normal and customary manner consistent with past practices.
EyeSys has not received written or oral notice that it will experience in the
foreseeable future any difficulty in obtaining, in the desired quantity and
quality and at a reasonable price and upon reasonable terms and conditions, the
raw materials, supplies or component products required for the manufacture,
assembly or production of its products. Except as disclosed in the EyeSys
Letter, EyeSys does not have any sole source suppliers and has been and is able
to acquire component parts from multiple sources on a timely basis. The values
at which inventories are carried reflect the inventory valuation policy of
EyeSys which is consistent with its past practice and in accordance with GAAP
applied on a consistent basis.
-33-
3.27 NO UNDISCLOSED LIABILITIES. Except as set forth in the EyeSys
Letter, there is no outstanding claim, liability or obligation of any nature,
whether absolute, accrued, contingent or otherwise, other than: (a) the
liabilities and obligations that are fully reflected, accrued or reserved
against on the Financials for which the reserves are appropriate and
reasonable; (b) liabilities incurred in the ordinary course of business since
the date of the Financials, (c) Transactional Costs, or (d) contractual
liabilities or obligations not required to be disclosed in the Financials
prepared in accordance with GAAP.
3.28 RELATED PARTY TRANSACTIONS. Except as set forth in the EyeSys
Letter, or otherwise reflected in the Capitalization Table included in the
EyeSys Letter, no employee, officer or director of EyeSys or member of his or
her immediate family is indebted to EyeSys, nor is EyeSys indebted (or committed
to make loans or extend or guarantee credit) to any of them. Except as set
forth in the EyeSys Letter, to the best of EyeSys' knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which EyeSys is affiliated or with which EyeSys has a business
relationship, or any firm or corporation that competes with EyeSys, except that
the employees, officers or directors of EyeSys and members of their immediate
families may own stock in publicly traded companies that may compete with
EyeSys. No member of the immediate family of any officer or director of EyeSys
is directly interested in any material contract with EyeSys.
3.29 DISTRIBUTION. All of EyeSys' international distributors for
its products are identified in the EyeSys Letter. EyeSys has entered into
written distribution agreements with each of such distributors, copies of
which have been delivered to Premier. All of such agreements are in full
force and effect. To EyeSys' knowledge, no such distributor intends or
expects to materially reduce the volume of purchases of EyeSys' products from
the amounts purchased during the fiscal year ended December 31, 1996.
When used in this Article 3, "KNOWLEDGE" means information actually known or
which should have been known by any one of the directors of EyeSys or any of the
following: Youssef Wakil, Kenneth Carbonari, David Harley, Michel Ulsas, David
Liu or Henry Kuehn after inquiry by such persons of EyeSys personnel who report
to them.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PREMIER AND PAI
Except as set forth in Premier Letter, which disclosures shall be
deemed representations and warranties hereunder, each of Premier and PAI
represents and warrants to EyeSys as follows:
4.1 ORGANIZATION AND STANDING.
(a) Each of Premier and PAI is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, has all requisite corporate power and authority to own,
operate and lease its properties and carry on its business as now conducted,
and is duly qualified to do business and is in good standing as a foreign
-34-
corporation in each jurisdiction in which the failure to so qualify could or
would have a Material Adverse Effect.
(b) Prior to Closing, each of Premier and PAI shall have
delivered or made available to EyeSys complete and accurate copies of its
current Certificates of Incorporation and Bylaws, as the case may be.
4.2 SUBSIDIARIES. Premier does not own or control, directly or
indirectly, any corporation, partnership, business, trust or other entity,
except Data.Site, LLC and PAI.
4.3 AUTHORITY, APPROVAL AND ENFORCEABILITY.
(a) Subject to obtaining any required approvals of their
respective stockholders, each of Premier and PAI has full corporate power and
authority to execute, deliver and perform its obligations under this
Agreement, and all corporate action on their respective parts necessary for
such execution, delivery and performance has been duly taken.
(b) Subject to obtaining all necessary consents, the
execution and delivery by each of Premier and PAI, as the case may be, of
this Agreement do not, and the performance and consummation of the
transactions contemplated by this Agreement shall not, result in any conflict
with, breach or violation of or default, termination or forfeiture under (or
upon the failure to give notice or the lapse of time, or both, result in any
conflict with, breach or violation of or default, termination or forfeiture
under) any terms or provisions of its current Articles of Incorporation or
Bylaws, as the case may be, or any statute, rule, regulation, judicial,
governmental, regulatory or administrative decree, order or judgment, or any
agreement, lease or other instrument to which either is a party or to which
any of its assets is subject, the breach, violation, default, termination or
forfeiture of which could or would result in a Material Adverse Effect.
(c) No consent, approval, authorization, order, registration,
qualification or filing of or with any court or any regulatory authority or
any other governmental or administrative body is required on its part for the
consummation by each of Premier and PAI, as the case may be, of the
transactions contemplated by this Agreement, except the filing of the First
Amendment to the Restated Certificate of Incorporation of EyeSys, and the
Certificate of Merger in the offices of the Secretaries of State of the
States of Delaware and California.
(d) Subject to Premier, PAI and EyeSys obtaining the
approvals identified in Section 2.1 of this Agreement, this Agreement is the
legal, valid and binding obligation of Premier and PAI, respectively, and
enforceable against Premier and PAI in accordance with the respective terms
hereof and thereof, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and subject to the availability of equitable remedies.
4.4 FINANCIAL STATEMENTS.
(a) Premier has delivered or made available to EyeSys
complete copies of its consolidated balance sheets as at March 31 for the
fiscal years 1994 through 1996 and the
-35-
related statements of operations, shareholders' equity and cash flows for the
years ended on each March 31 for the years 1994 through 1996 and the notes
thereto (collectively, the "PREMIER AUDITED FINANCIALS") accompanied by the
auditors' report and the opinion of its independent certified public
accountants. Premier's Audited Financials present fairly its consolidated
financial position as of those dates and the results of its operations and
cash flows for the years then ended, in conformity with GAAP applied on a
consistent basis.
(b) Premier has delivered to EyeSys an unaudited consolidated
balance sheet as of December 31, 1996 and the related unaudited statements of
operations for the nine (9) months then ended (the "PREMIER INTERIM
FINANCIALS"). Premier's Interim Financials present fairly its financial
condition as of December 31, 1996 and the results of its operations and cash
flows for the nine (9) months then ended, in conformity with GAAP applied on
a basis consistent with the Premier Audited Financials (except for the
absence of notes thereto and subject to normal year-end audit adjustments
which are not material). The Audited Financials and the Interim Financials
are hereinafter collectively referred to as the "PREMIER FINANCIALS."
4.5 MATERIAL CHANGES. Since December 31, 1996, there has not been
any material change in Premier's assets, liabilities, financial condition or
operating results from that reflected in the Premier Financials or the
Registration Statement, except changes in the ordinary course of business that
have not been, in the aggregate, material.
4.6 ABSENCE OF LITIGATION. Neither Premier nor, to the best of its
knowledge, any of its officers or directors is engaged in, or has been
threatened with, any litigation, arbitration, investigation or other proceeding
relating to it, its employee benefit plans, property, business, assets,
licenses, permits or goodwill, or against or affecting the Merger or the actions
taken or contemplated in connection therewith, nor, to the best of its
knowledge, is there any reasonable basis therefor. There is no action, suit,
proceeding or investigation pending or threatened against Premier that questions
the validity of this Agreement or the right of Premier or PAI to enter into this
Agreement or to consummate the transactions contemplated hereby or thereby or
which might result in any Material Adverse Effect. The foregoing includes,
without limitation, actions pending or threatened (or any reasonable basis
therefor known to Premier) involving the prior employment of any of its
employees, their use in connection with its business of any information or
techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers. There is no action,
suit, proceeding or investigation by Premier currently pending or which it
intends to initiate. Neither Premier nor, to the best of its knowledge, any of
its officers or directors is bound by any judgment, decree, injunction, ruling
or order of any court, governmental, regulatory or administrative department,
commission, agency or instrumentality, arbitrator or any other person which
would or could have a Material Adverse Effect.
4.7 NO BROKERS. Except with respect to the fees payable to Cowen
pursuant to Section 5.21, Premier is not obligated for the payment of fees or
expenses of any broker or finder in connection with the origin, negotiation or
execution of this Agreement or in connection with any transaction contemplated
hereby.
4.8 INSURANCE. Premier maintains policies of insurance covering its
assets, properties and business in types and amounts customary for similarly
sized companies engaged
-36-
in similar businesses. Premier is in compliance with each of such policies
such that none of the coverage provided under such policies has been
invalidated. Premier has fully paid all premiums and other payments which
may be due to its insurers. The Premier Letter contains a complete and
accurate list of all insurance policies, bonds and surety instruments. There
is no threat by any of the insurers to terminate or materially increase the
premiums payable under any of such insurance policies due to the activities
or loss experience of Premier.
4.9 CAPITALIZATION.
(a) Premier's capitalization (common stock, preferred stock,
warrants and options and any other issued or granted security) is as set
forth in the Premier Letter. Premier does not have in effect any stock
appreciation rights plan and no stock appreciation rights are currently
outstanding.
(b) Other than as set forth in the Premier Letter, Premier
does not have outstanding any preemptive or subscription rights, options,
warrants, rights to convert, capital stock equivalents or other rights to
purchase or otherwise acquire any of Premier's capital stock or other
securities.
(c) All of the issued and outstanding shares of Premier's
capital stock have been duly authorized, validly issued, are fully paid and
nonassessable, and such capital stock has been issued in full compliance with
all applicable federal and state securities laws. All of Premier's incentive
stock options have been issued in compliance with all laws, rules and
regulations necessary to preserve such incentive stock option treatment. All
of Premier's options have been issued in accordance with Premier's current
stock option plans. None of Premier's options are entitled to be accelerated
as a result of the Merger.
(d) Except for any restrictions imposed by applicable state
and federal securities laws, there is no right of first refusal, co-sale
right, right of participation, right of first offer, or other restriction on
transfer applicable to any shares of Premier capital stock.
(e) Except as described in the Premier Letter, Premier is not
and will not be under any obligation to register under the Securities Act any
shares of its capital stock or any other of its securities that might be
issued in the future if the Merger were not consummated.
(f) Premier is not a party or subject to any agreement or
understanding, and, to Premier's knowledge, there is no agreement or
understanding between or among any persons that affects or relates to the
voting or giving of written consent with respect to any security.
4.10 COMPLIANCE WITH LAWS. The business and operations of Premier
and PAI are in compliance with all foreign, federal, state, local and county
laws, ordinances, regulations, judgments, orders, decrees or rules of any court,
arbitrator or governmental, regulatory or administrative agency or entity,
except where the failure so to comply would not have a Material Adverse Effect.
Each of Premier and Premier PAI has all valid and current permits, licenses,
orders, authorizations, registrations, approvals and other analogous instruments
(and each is in
-37-
full force and effect) and each of Premier and PAI has made all filings and
registrations and the like necessary or required by law to conduct its
business as presently conducted, except where the failure to maintain such
permits and other instruments or to make such filings and registrations would
not have a Material Adverse Effect. Neither Premier nor PAI has received any
governmental notice within two years of the date hereof of any violation by
it of any such laws, rules, regulation or orders. Neither Premier nor PAI is
in material default or material noncompliance under any such permits,
consents, or similar instruments.
4.11 THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. The
Registration Statement pursuant to which the Premier Common Stock to be issued
in the Merger will be registered with the SEC shall not, at the time the
Registration Statement is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
information supplied by Premier and PAI for inclusion in the Proxy
Statement/Prospectus to be sent to the holders of Interests in EyeSys will not,
on the date the Proxy Statement/Prospectus (or any amendment thereof or
supplement thereto) is first mailed to holders of Interests in EyeSys, at the
time of the EyeSys Stockholder Meeting or at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material fact, or
shall omit to state any material fact necessary in order to make the statement
made therein not false or misleading. If at any time prior to the Effective
Time any event relating to Premier or PAI or any of their respective affiliates,
officers or directors should be discovered by Premier or PAI which should be set
forth in an amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Premier and PAI shall promptly inform EyeSys. The Proxy
Statement/Prospectus, including all financial statements of Premier and PAI
required to be included therein, shall comply in all material respects as to
form with the requirements of the Securities Act, the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, Premier and PAI make
no representation or warranty with respect to any information supplied by EyeSys
which is contained in any of the foregoing documents.
4.12 TAXES.
(a) Prior to the Merger, Premier will be in control of PAI
within the meaning of Section 368(c) of the Code. Premier shall not cause or
permit PAI to issue additional shares of its stock that would result in
Premier losing control of PAI within the meaning of Section 368(c) of the
Code. No stock of PAI will be issued in the Merger.
(b) During its corporate existence, PAI has owned no assets,
and prior to the Merger shall not own any assets other than the Merger Shares
of Premier to be distributed in the Merger.
(c) As of the date hereof and as of the Effective Time,
Premier has no plan or intention to reacquire any of its stock issued in the
Merger, other than the possible acquisition of the Escrow Shares pursuant to
Article 7 hereof.
-38-
(d) Premier shall not: liquidate PAI; merge PAI with or into
another corporation; sell or otherwise dispose of the stock of PAI in any
transaction other than this Merger, nor cause PAI to sell or otherwise
dispose of any of the assets of EyeSys acquired in the Merger, except for
dispositions made in the ordinary course of business transfers described in
Section 368(a) of the Code, or other liquidations, dispositions or transfers
which may be made without disqualifying the Merger as a tax-free
reorganization under the Code. Following the Merger, Premier will cause
EyeSys to continue the historic business of EyeSys or to use a significant
portion of EyeSys' business assets in a business.
(e) There is no intercorporate indebtedness existing between
EyeSys and Premier nor between EyeSys and PAI that was issued, acquired, or
will be settled at a discount. Premier is not an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
4.13 SHARES FULLY PAID AND NON-ASSESSABLE. The shares of Premier
Common Stock issuable to holders of Interests in EyeSys pursuant to Section 2.2,
when issued as contemplated by this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable and free of any preemptive rights of any
security holder of Premier.
4.14 SEC DOCUMENTS. Premier has furnished, or within 10 days of the
date hereof shall furnish, EyeSys with a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by Premier
with the SEC since November 1, 1994 (the "SEC DOCUMENTS"), which are all the
documents that Premier was required to file with the SEC under the Exchange Act
since that date. The SEC Documents as of their respective dates complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC thereunder, applicable to such SEC Documents, and none of
the SEC Documents as of the date thereof contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. Except to the
extent that the information contained in Premier's Annual Report on Form 10-K
for its fiscal year ended March 31, 1996 ("FORM 10-K") has been revised or
superseded by a later-filed SEC Document, or except as set forth in the
Registration Statement or the Premier Letter, the Form 10-K does not currently
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Premier included in the SEC Documents
as of their respective dates complied as to form in all material respects with
applicable accounting requirements and the rules and regulations of the SEC with
respect thereto and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved,
except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q and subject to normally recurring audit
adjustments.
-39-
ARTICLE 5
COVENANTS OF PREMIER, PAI AND EYESYS
Each of Premier, PAI and EyeSys, as the case may be, covenants to the
other, except as expressly provided otherwise herein, as follows:
5.1 MAINTENANCE OF BUSINESS.
(a) During the period from the date hereof to the Effective
Time, it shall carry on and preserve its business, goodwill and its
relationships with distributors, customers, suppliers, officers, employees,
agents and others in substantially the same manner as it did prior to the
date of this Agreement. It will use its reasonable efforts to keep and
maintain the existing favorable business relationship with each of such
distributors, customers, suppliers, officers, employees and agents. If it
becomes aware of a deterioration in a relationship with any distributor,
customer, supplier, officer, employee or agent which is material to its
business or prospects, it will promptly bring such information to the
attention of the other and will use its best efforts to restore such
relationship or establish a reasonable replacement relationship, as may be
appropriate. EyeSys recognizes that Premier and PAI intend to continue
certain of EyeSys' existing businesses after the Effective Date and that
Premier and PAI intend to continue EyeSys' current relationships with its
customers and other parties.
(b) EyeSys agrees to consult with Premier concerning any
material operating decisions (including, without limitation, proposed
employee hiring layoff and termination decisions). Notwithstanding the
foregoing, EyeSys expressly acknowledges that EyeSys alone shall make such
operating decisions and shall be solely responsible for their implementation,
consequences and liabilities, if any.
5.2 ABSENCE OF CERTAIN CHANGES. Prior to the Closing, except as
expressly permitted or contemplated hereby, or except as set forth in the
EyeSys Letter or the Premier Letter, as the case may be, neither party shall,
without the prior written consent of the other party:
(a) incur any additional indebtedness for money borrowed or
guarantee any indebtedness or obligation of any other party; set aside or pay
any dividend or distribution of assets to, or repurchase any of its stock
from any of its shareholders; issue or grant any securities or securities
convertible into capital stock or grant or issue any options, warrants or
rights to subscribe for its capital stock or securities convertible into its
capital stock;
(b) enter into, amend or terminate any employment or
consulting agreement or any similar agreement or arrangement; increase the
compensation payable or to become payable to any of its officers, employees
or agents above the amount payable as of December 31, 1996, or adopt or amend
any employee benefit plan or arrangement;
(c) acquire or dispose of any properties or assets used in
its business except in the ordinary course of business; permit any change in
the nature of business or the manner in which its books and records are
maintained;
-40-
(d) waive any statute of limitations so as to extend any tax
or other liability; create or suffer to be imposed any lien, mortgage,
security interest or other charge on or against its properties or assets; or
enter into, amend or terminate any lease of real or personal property
otherwise than in the ordinary course of business;
(e) except as contemplated by Section 2.1, amend its
Certificate of Incorporation or Bylaws; engage in any activities or
transactions outside the ordinary course of its business as conducted at the
date hereof; make any amendments or changes in any instruments, agreements,
other documents or written information delivered by it or its representatives
to the other or its representatives; or accelerate the vesting of any
employee stock benefit (including vesting under stock purchase agreements or
the exercisability of stock options).
5.3 ACTIONS CONTRARY TO STATED INTENT. Each party will use its
best efforts to cause the Merger to qualify as a tax-free reorganization
under Section 368(a) of the Code and accordingly will not, either before or
after consummation of the Merger, take any action or fail to take any action
that would prevent the Merger from so qualifying as a tax-free reorganization
under Section 368(a) of the Code, or that would be inconsistent with such
qualification.
5.4 ACCESS TO INFORMATION. Each party will give to the other
party and their respective accountants, legal counsel and other
representatives full access, during normal business hours throughout the
period prior to the Closing, to all of the properties, books, contracts,
commitments and records relating to its business, assets and liabilities, and
each party will furnish to the other party, their respective accountants,
legal counsel and other representatives during such period all such
information concerning its affairs as the other may reasonably request but
subject to Section 9.10 below; provided, that any furnishing of such
information pursuant hereto or any investigation by each party hereto shall
not affect such party's right to rely on the representations, warranties,
agreements and covenants made by the other party in this Agreement.
5.5 OTHER DISCUSSIONS. From the date hereof until the Closing or
the termination of this Agreement in accordance with Article 8 hereof,
whichever occurs first, neither EyeSys nor any officer, director,
shareholder, agent or representative of EyeSys will discuss or negotiate, or
authorize any person or entity to discuss or negotiate on its or their
behalf, with any other party, concerning the possible disposition of EyeSys'
business, assets or capital stock, except that such persons may discuss and
negotiate back-up offers to sell or otherwise dispose of EyeSys' business,
assets or capital stock in case the Merger is not consummated pursuant to
this Agreement, provided that EyeSys must inform any potential purchaser or
acquirer that EyeSys has entered into this definitive Agreement with Premier.
5.6 EYESYS LOCK-UP AGREEMENTS. EyeSys shall use its reasonable
best efforts to cause the EyeSys Shareholders to execute and deliver to
Premier the EyeSys Lock-Up Agreements.
5.7 REASONABLE BEST EFFORTS. Each party will use its reasonable
best efforts to cause all conditions to the Closing to be satisfied,
including obtaining any of its consents
-41-
necessary or desirable in connection with the consummation of the
transactions contemplated by this Agreement.
5.8 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. As
promptly as practicable, Premier, PAI and EyeSys shall prepare and file with
the SEC preliminary proxy materials which shall constitute the Proxy
Statement/Prospectus and the Registration Statement of Premier with respect
to the Premier Common Stock to be issued in connection with the Merger and
shall use all reasonable efforts to cause the Registration Statement to
become effective as soon as practicable, and to mail the Proxy
Statement/Prospectus to EyeSys shareholders, as soon thereafter as
practicable. The Proxy Statement/Prospectus shall include the recommendation
of the Boards of Directors of Premier and EyeSys in favor of the Merger;
provided, that the Boards of Directors of Premier or EyeSys may, at any time
prior to the Effective Time, withdraw, modify or change such recommendation
if, in the opinion of either such Board of Directors, the Board determines in
good faith that there is a reasonable possibility that the failure to
withdraw, modify or change such recommendation could be a breach of its
fiduciary duties under applicable law. EyeSys shall call and hold a
shareholder meeting as promptly as practicable after the date on which the
Registration Statement becomes effective and in accordance with applicable
laws for the purpose of obtaining the approvals required herein.
5.9 EYESYS PAYABLES. EyeSys shall pay its accounts payable,
including (without limitation) its payroll, amounts due under equipment and
facilities leases, loan agreements and similar leases and agreements, sales
and payroll taxes and trade payables, and all other taxes, in a timely manner.
5.10 TAX FORMS. EyeSys shall not make or change any material Tax
election, adopt or change any material Return or any amendment to a material
Return, enter into any closing agreement, settle any Tax claim or assessment,
file any state or federal income tax return, or consent to any extension or
waiver of limitation period applicable to any Tax claim or assessment,
without the prior consent of Premier, which consent will not be unreasonably
withheld.
5.11 NOTIFICATION OF CERTAIN MATTERS. EyeSys shall give prompt
notice to Premier, and Premier and PAI shall give prompt notice to EyeSys, of
(a) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or
warranty of the notifying party contained in this Agreement to become
materially untrue or inaccurate, or (b) any failure of the notifying party to
materially comply with or to satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder.
5.12 MERGER EXPENSES. EyeSys will use its best efforts to limit
all of its non merger-related fees and expenses to be incurred by it prior to
or on the Closing.
5.13 ASSUMPTION OF BANK LOAN AGREEMENT. EyeSys and the Silicon
Valley Bank ("BANK") have entered into that certain Bank Loan Agreement,
dated as of March 11, 1995, as amended, pursuant to which the Bank agreed to
loan EyeSys up to $2,100,000 (the "LOAN AGREEMENT"). Up to $650,000 of such
loan has been guaranteed by each of Frontenac VI Limited Partnership and
American Healthcare Fund II, L.P., shareholders of EyeSys (the
-42-
"SHAREHOLDER GUARANTEES"). EyeSys shall use its reasonable best efforts to
obtain the agreement of the Bank, or another lender acceptable to Premier, to
agree to advance at least $2,100,000 for at least one year after Closing at
advance rates no greater than those specified in the Loan Agreement, with
such adjustments to the loan covenants as reflect the merged companies and
are acceptable to Premier. Premier agrees to provide to Bank the corporate
guaranty of Premier with respect to $300,000 principal amount of indebtedness
of EyeSys to Bank; provided, however, that (i) Bank's recourse under such
guaranty shall be limited to Premier's accounts receivable, inventory and
fixed assets; (ii) Premier's obligation to provide such guaranty is subject
to the condition that Frontenac Company and/or other shareholders reasonably
acceptable to Premier shall have agreed that in the event the Merger is
terminated for any reason, Frontenac and such other shareholders shall
provide a guaranty to Bank in substitution for the guaranty provided by
Premier; and (iii) Bank shall have agreed to accept such substitute guaranty
in lieu of the Premier guaranty.
5.14 PREMIER COVENANT REGARDING SEC FILINGS. For the benefit of
affiliates of EyeSys, Premier agrees to make all filings it is required to
make pursuant to the Exchange Act through 1998 on a timely basis; provided,
however, that Premier shall be entitled to cure any late filings in
accordance with the Exchange Act and the rules and regulations promulgated
thereunder.
5.15 PREMIER BOARD SEAT. Commencing with the next annual meeting
of Premier shareholders at which directors are to be elected after the
Closing (or at such earlier time as there may be a vacancy on Premier Board
of Directors), Premier shall nominate for election to its Board of Directors
a person who is designated from time to time by Frontenac Co., and who is
reasonably acceptable to Premier. The foregoing obligation shall terminate
on the earlier of: (i) three (3) years from the Closing Date of the Merger;
or (ii) at such time as the persons receiving Premier Common Stock in the
Merger hold in the aggregate less than five percent (5%) of the outstanding
Premier voting stock.
5.16 FUNDING FOR EYESYS. From the date hereof until the earlier of
the Closing or the termination of the Merger in accordance with Article 8
below, Premier will loan to EyeSys, pursuant to a Demand Promissory Note
bearing interest at the rate of 10.5% per annum (or, if less, the maximum
rate permitted by law) and secured by substantially all of the assets of
EyeSys, the Reasonable Cash Requirements of EyeSys; provided that Premier's
obligation to provide such loan shall be subject to the conditions that: (i)
all necessary approvals of shareholders of EyeSys with respect to the Merger
and the transactions contemplated hereby shall have been obtained and shall
be irrevocable (provided that for this purpose, the delivery of irrevocable
written consents to the Merger by those EyeSys shareholders holding
sufficient votes to approve the Merger under its charter documents and
applicable law shall be deemed to satisfy this condition); (ii) EyeSys shall
not be in breach of any material representation, warranty or covenant set
forth in this Agreement; (iii) no regulatory approvals or licenses shall be
required as a condition to the Closing (other than approval of the Securities
and Exchange Commission of the Registration Statement); (iv) the condition
set forth in Section 6.17 concerning the Bank's credit facilities shall have
been met, and (v) the employees of EyeSys identified on Schedule 5.16 shall
have agreed to be employed by Premier after the Closing. For purposes
hereof, the term "REASONABLE CASH REQUIREMENTS" shall mean the monthly cash
requirements of EyeSys following the execution of this Agreement as set forth
in that certain
-43-
operating plan of EyeSys attached hereto as Exhibit G (the "OPERATING PLAN"),
but in no event shall exceed $100,000 per month.
5.17 NONINCLUDED COSTS. EyeSys shall make arrangements for the
payment of the Nonincluded Costs either out of the Merger Shares or from the
proceeds received by EyeSys after the date hereof from the exercise of any
option or warrant, but in no event from the funds or other assets of EyeSys.
5.18 OPTIONS AND WARRANTS. Prior to the Closing, EyeSys shall make
arrangements for the exercise, termination or exchange of the EyeSys Options
and EyeSys Warrants, as set forth herein. Any cash proceeds received as a
result of such exercise may be applied by EyeSys to the payment of the
Nonincluded Costs.
5.19 MARCH 31, 1997 FINANCIAL STATEMENTS. Prior to the Closing,
EyeSys shall prepare and forward to Premier unaudited financial statements
for the three-month period ended March 31, 1997, which statements shall be
prepared in accordance with GAAP, and shall be subject to normal audit
adjustments, but shall reflect accounting policies and conventions with
respect to reserves, write-offs and other similar matters approved by
Premier. Prior to the Closing, Premier shall prepare and forward to EyeSys
unaudited financial statements for the year ended March 31, 1997, which shall
be prepared in accordance with GAAP but shall be subject to normal audit
adjustments, and shall further deliver, upon completion, copies of its
audited financial statements for such fiscal year (provided that EyeSys shall
maintain such financial statements as confidential until such time as a press
release or other public announcement concerning Premier's results of
operations for such fiscal year has been published).
5.20 "STAY BONUSES," RSS PAYABLE. Prior to the Closing, EyeSys
shall make arrangements for the termination and/or satisfaction of all
bonuses or other consideration payable to EyeSys employees, consultants or
advisers in order to induce them to remain in the employ of, or to continue
to render services to, EyeSys (the "Stay Bonuses"). Prior the Closing,
EyeSys shall also make arrangements for the compromise and payment of all
amounts due by EyeSys to RSS, LLC. Any amounts payable in connection with
the foregoing arrangements shall be paid from the Merger Shares or the
proceeds thereof.
5.21 TRANSACTIONAL COSTS. EyeSys shall deliver to Premier at least
two business days prior to the Closing a list of the transactional fees
claimed by the parties listed on Schedule 5.21 in connection with the Merger.
At the Effective Time, Premier shall pay the lesser of: (i) the
Transactional Costs of such parties, or (ii) the amount of $100,000, to be
applied to the Transactional Costs other than the fees payable to Cowen. In
addition, Premier shall pay a cash payment to Cowen of the lesser of
(i) $75,000 or (ii) one-fourth of the investment banking fee of Cowen (the
"COWEN FEES"), and shall issue the Cowen Shares to Cowen, all of which shall
be in payment of one-half of the investment fee due Cowen. EyeSys shall be
responsible for paying the remaining portion of such transactional costs and
remaining portion of the Cowen Fee, pursuant to Section 5.17 hereof. At the
Effective Time, Premier also shall repay on behalf of EyeSys the amount of
$72,500 in full satisfaction of the Frontenac Payable.
-44-
5.22 REIMBURSEMENT OF AMOUNTS PAID TO DISSENTING SHAREHOLDERS. The
Principal Shareholder agrees that if the total amount payable to Dissenting
Shareholders under the Delaware General Corporation Law ("APPRAISAL RIGHTS"),
as a result of the exercise of their Appraisal Rights, exceeds $250,000, the
Principal Shareholder shall sell Premier Common Stock received by it in the
Merger, in a manner reasonably acceptable to Premier, until the net proceeds
from such sale(s) equals the total amount payable to such Dissenting
Shareholders, and shall remit such net proceeds to Premier to reimburse it
for the amounts so paid to Dissenting Shareholders. The Principal
Shareholder shall be released from its Lock Up Agreements to the extent
necessary to sell Premier Common Stock under this Section 5.22. The maximum
number of shares that the Principal Shareholder shall sell hereunder is equal
to the number of Escrowed Dissenting Shares.
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF PREMIER, PAI AND EYESYS
The obligations of Premier, PAI and EyeSys to consummate the
transactions contemplated hereby are, at the election of each such party,
subject to satisfaction of the following conditions by the other party, to
the extent applicable to the other party, or waiver thereof:
6.1 CONSENTS AND APPROVALS. The parties hereto shall have
obtained all consents and approvals of stockholders and third parties
(including governmental authorities) required to consummate the transactions
contemplated by this Agreement and the Certificate of Merger, or as required
by applicable law.
6.2 REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties (including those contained in the Premier and
EyeSys Letters) made herein by the other party and those contained in any
documents executed by stockholders of the other party shall be true, accurate
and correct in all material respects as of the date made and as if made as of
the Closing. The other party shall have performed in all material respects
all obligations and agreements undertaken by it herein to be performed at or
prior to the Closing.
6.3 CERTIFICATE. The parties shall have received at the Closing a
certificate, dated as of the Closing and executed by the other's President
and Secretary, to the effect that the conditions set forth in Sections 6.1
and 6.2 shall have been satisfied or waived by the other party.
6.4 OPINIONS OF COUNSEL. Premier and PAI shall have received at
the Closing the opinion of Epstein Becker & Green, P.C., counsel to EyeSys,
in form and substance satisfactory to Premier and PAI and their counsel.
EyeSys shall have received at the Closing the opinion of Rutan & Tucker, LLP,
counsel to Premier and PAI, in form and substance satisfactory to EyeSys and
its counsel.
6.5 NO ACTIONS. Consummation of the transactions contemplated by
this Agreement shall not violate any order, decree or judgment of any court
or governmental body
-45-
having jurisdiction, and no litigation, arbitration, action or other
proceeding shall have been commenced or overtly threatened against either
party hereto as a result of or relating to the transactions contemplated
hereby.
6.6 PROCEEDING AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be in form and substance
reasonably satisfactory to its counsel, and it shall have received all such
counterpart originals or certified or other copies of such documents as it
may reasonably request.
6.7 ACCURACY OF DOCUMENTS AND INFORMATION. The copies of all
material instruments, agreements, other documents and written information
delivered to the other by it or its representatives, including, without
limitation, the EyeSys Letter and the Premier Letter, shall be complete and
correct as of the Closing.
6.8 LOCK-UP AGREEMENTS. Premier and PAI shall have received an
EyeSys Shareholder Lock-Up Agreement executed by each EyeSys Shareholder.
6.9 CONTRACTS. Premier shall be satisfied that EyeSys shall have
amended or obtained waivers in respect of any and all rights pursuant to
contract that will be necessary in order to consummate the Merger and to
enable EyeSys to conduct its business and operations after the Effective Time
of the Merger substantially as EyeSys did immediately preceding the Effective
Time of the Merger.
6.10 SECURITIES APPROVAL. The Registration Statement shall have
been declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose and no similar
proceeding in respect of the Proxy Statement/Prospectus shall have been
initiated or threatened by the SEC.
6.11 DELAWARE FILINGS. Premier and EyeSys shall be satisfied that
as of the Effective Time, the First Amendment to the Restated Certificates of
Incorporation of EyeSys, and the Certificate of Merger shall have been filed
in the office of the Secretary of State of the State of Delaware.
6.12 TERMINATION OF EYESYS STOCK OPTION PLAN. The EyeSys Board of
Directors shall have voted to terminate the EyeSys' Stock Option Plan as of
the Effective Time.
6.13 INTENTIONALLY OMITTED.
6.14 OPTIONS, WARRANTS AND EYESYS NOTES. Those persons identified
on Exhibit 2.1 as converting their EyeSys Notes or waiving Contingency
Payments thereon shall have converted such EyeSys Notes, or waived their
Contingency Payments, to the extent shown in such schedule. All outstanding
rights, options, warrants and convertible securities of EyeSys described in
the EyeSys Letter shall have been terminated, canceled, replaced or otherwise
eliminated, to the satisfaction of Premier, consistent with the other
provisions of this Agreement. All existing registration rights of holders of
Interests in EyeSys shall have been terminated and
-46-
Premier shall have received a certificate to such effect, signed on behalf of
EyeSys by the President and Secretary of EyeSys.
6.15 FOREIGN STATUS REPRESENTATION LETTER. EyeSys shall furnish
Premier with an affidavit stating under penalty of perjury that EyeSys is not
a foreign corporation, foreign partnership, foreign trust or foreign
establishment (as each term is defined in the Code) and will provide in such
affidavit its taxpayer identification number and shall have executed a
representation letter substantially in the form provided by Premier to EyeSys
and its counsel before Closing.
6.16 ESCROW AGREEMENT. The Escrow Agreement shall be executed by
all of the appropriate parties.
6.17 BANK LOAN AGREEMENT. Bank, or another lender acceptable to
Premier, shall have consented to the Merger and shall have agreed to continue
to loan at least $2,100,000 for at least one year after Closing at the
advance rates currently available to EyeSys, as specified in the Loan
Agreement, with such adjustments to the loan covenants and other terms as
reflect the merged companies and are acceptable to Premier, and shall further
have agreed to release the Shareholder Guarantees at the Closing.
6.18 NO EYESYS MATERIAL ADVERSE EFFECT. Premier shall not have
become aware of any fact, event or condition, or the absence of any fact,
event or condition, as the context requires, which, individually or in the
aggregate would have a material adverse effect on the business, properties,
condition (financial or otherwise) or results of operations of EyeSys.
6.19 NO PREMIER MATERIAL ADVERSE EFFECT. EyeSys shall not have
become aware of any fact, event or condition, or the absence of any fact,
event or condition, as the context requires, which, individually or in the
aggregate would have a material adverse effect on the business, properties,
condition (financial or otherwise) or results of operations of Premier.
6.20 APPRAISAL RIGHTS. At the Closing, EyeSys shareholders holding
in the aggregate less than 10% of the EyeSys Common Stock, shall have
perfected their Appraisal Rights, and none of the holders of EyeSys Preferred
Stock shall have perfected their Appraisal Rights.
6.21 DILIGENCE REVIEW. Premier shall have completed, to its
reasonable satisfaction, a "due diligence review" of: (i) the patent and
proprietary rights, including potential infringement of patents, relating to
the products sold or proposed to be sold and technology owned by EyeSys; and
(ii) the relationships between EyeSys and its distributors and vendors. Such
due diligence review shall be deemed satisfactorily completed unless Premier
notifies EyeSys: (x) within 21 days of the date hereof that it is
dissatisfied with the relationships between EyeSys and its distributors
and/or vendors; (y) prior to the Closing Date, that it is dissatisfied with
issues pertaining to the validity of EyeSys' patents or to the possible
infringement of the patent rights of others by products sold by EyeSys; and
(z) within 10 days of the date hereof that it is dissatisfied with EyeSys'
title to the proprietary rights to the technology used in EyeSys' products.
-47-
6.22 AMOUNT OF SHARES ISSUABLE. The number of shares of Premier
Common Stock issuable hereunder shall not exceed the maximum amount that is
issuable without the approval of the Merger by the shareholders of Premier
(the "MAXIMUM AMOUNT") as required under the California Corporations Code.
To the extent the number of shares of Premier Common Stock issuable hereunder
exceeds such Maximum Amount, Premier shall deliver, in lieu of such excess,
Premier Class AA Options, Premier Class BB Options, cash or promissory notes
(having a maturity of not more than three years and bearing interest at the
rate of 10.5% per annum), selected by Premier, having a value equivalent to
the value of such excess.
6.23 ESTOPPEL CERTIFICATE. Premier shall have received from
General Electric Company and Colloptics Inc. an Estoppel Certificate, in form
and substance acceptable to Premier, confirming that the License Agreement
among them and EyeSys dated September 23, 1994 is in full force and effect.
6.24 COMPLIANCE WITH RULE 145. All persons who are "affiliates" of
EyeSys at the Closing Date shall have executed and delivered to Premier an
agreement in form and substance satisfactory to Premier providing that such
persons will not sell or otherwise dispose of any securities of Premier
received pursuant to the Merger except in compliance with Rule 145
promulgated under the Securities Act of 1933, as amended.
6.25 EYESYS FINANCIAL INFORMATION. EyeSys shall have delivered to
Premier its audited financial statements for the year ended December 31,
1996, and such additional financial information concerning EyeSys as is
necessary to permit Premier to comply with its reporting requirements under
the Securities Exchange Act of 1934, as amended.
6.26 EYESYS PERSONNEL. No more than three of the EyeSys personnel
identified on Schedule 5.16 shall have failed to agree to be employed by
Premier after the closing, and no more than two of Joe Wakil, Ken Carbonari,
David Liu, Michel Olsas, David Headlee and Eric Serfoss shall have failed to
so agree.
ARTICLE 7
INDEMNITY
7.1 INDEMNIFICATION. EyeSys agrees to indemnify, defend and hold
harmless Premier and PAI from and against and shall reimburse Premier and PAI
against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, remedies and penalties,
including interest, penalties and reasonable attorneys' fees and expenses
(collectively, "LOSSES") that Premier or PAI shall incur or suffer and which
arise from or are attributable to by reason of or in connection with any
breach or inaccuracy of or any failure to perform or comply with any of
EyeSys' representations, warranties, agreements or covenants contained in
this Agreement (including any exhibit, letter, schedule or certificate
referred to herein) or in the Escrow Agreement. Notwithstanding the
foregoing, in the absence of fraud, EyeSys shall have no obligations under
this Section 7.1 with respect to Losses that would otherwise be deemed to
have incurred: (a) due to a breach of a representation or warranty by EyeSys
with respect to its inventory, or (b) as a result of the condition of its
fixed assets, so
-48-
long as the representations and warranties set forth in the first two
sentences of Section 3.8(a) hereof are true and correct.
7.2 ESCROW AGREEMENT. The indemnity obligations of EyeSys
hereunder shall be met pursuant to the terms and conditions of the Escrow
Agreement. The indemnification made pursuant to Section 7.1 and the
representations, warranties, covenants and other agreements set forth in this
Agreement and in the Escrow Agreement, shall survive Closing for a period of
twelve (12) months after the Effective Time, except that indemnity for Losses
for which claim has been made pursuant to the terms of the Escrow Agreement
against the Escrow Shares within such twelve (12)-month period shall survive
until resolved pursuant to the terms of the Escrow Agreement. As set forth
herein, the indemnity obligations of EyeSys under this Article 7 (together
with all of EyeSys' representations, warranties, covenants and other
agreements) set forth herein shall survive the Closing and, absent fraud,
shall be satisfied solely and exclusively by recourse against the Escrow
Shares in accordance with the Escrow Agreement and this Agreement.
7.3 NO WAIVER. No investigation made by or on behalf of Premier
or PAI with respect to EyeSys shall be deemed to affect Premier's or PAI's
reliance on the representations, warranties, covenants and agreements made by
EyeSys contained in this Agreement and shall not be a waiver of Premier's or
PAI's rights to indemnity as herein provided for the breach or inaccuracy of
or failure to perform or comply with any of EyeSys' representations,
warranties, covenants or agreements under this Agreement or the Escrow
Agreement.
7.4 INDEMNIFICATION OF EYESYS AGENTS. Premier agrees that until
six (6) years from the Effective Time, Premier shall maintain all rights to
indemnification existing in favor of the present and former directors,
officers, employees, fiduciaries and agents of EyeSys under the terms of its
charter and bylaws in effect immediately prior to the Effective Time, and
that the charter and bylaws of EyeSys as the surviving corporation, or any
successor in interest of EyeSys, shall not be amended to reduce or limit the
rights of indemnity afforded to such persons.
7.5 INDEMNIFICATION REGARDING SECURITIES ACT ISSUES. In connection
with the registration by Premier of any of its securities under the Securities
Act pursuant to this Agreement, EyeSys shall indemnify and hold harmless
Premier, each underwriter (as defined in the Securities Act) and each
controlling person of any holder or underwriter, if any (within the meaning of
the Securities Act), against any losses, claims, damages of liabilities, joint
or several (or actions in respect thereof), to which Premier, such underwriter
or controlling person may be subject under the Securities Act, under any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement (or alleged untrue statement) of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary proxy statement/prospectus or final proxy
statement/prospectus contained therein, or any amendment to supplement thereto,
or any other document, or (ii) any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any violation by EyeSys of the Securities Act or any Blue
Sky law, or any rule or regulation promulgated under the Securities Act or any
Blue Sky law, or any other
-49-
law, applicable to Premier in connection with any such registration,
qualification or compliance, and shall reimburse each such holder,
underwriter or controlling person for any legal or other expenses reasonably
incurred by such holder, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that EyeSys shall not be liable to Premier, any
underwriter or any controlling person in any such case unless and to the
extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or omission made in such registration
statement, preliminary prospectus, summary prospectus, prospectus, or
amendment or supplement thereto, or any other document, in reliance upon and
in conformity with written information furnished to Premier by EyeSys
specifically for use therein. The indemnity provided for herein shall remain
in full force and effect regardless of any investigation made by or on behalf
of Premier or such underwriter or controlling person.
ARTICLE 8
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. At any time prior to the
Closing, this Agreement and the Agreement of Merger may be terminated by
written consent of Premier, PAI and EyeSys, notwithstanding approval of the
Merger by the stockholders of PAI or EyeSys.
8.2 TERMINATION BY PREMIER OR PAI OR EYESYS.
(a) Premier or PAI may terminate this Agreement at any time
prior to the Closing by delivery of written notice to EyeSys if: (1) EyeSys
has breached or violated this Agreement in any material respect and, if such
breach or violation is curable, has failed to cure such violations within ten
(10) days of receiving written notice thereof, (2) any representation or
warranty made by EyeSys is false or inaccurate in any material respect or
there is any material misrepresentation or omission by EyeSys; (3) upon the
occurrence of a Material Adverse Effect with respect to EyeSys; (4) the rate
of sales received by EyeSys, measured on a monthly basis, shall have declined
by more than 10% (calculated separately for international sales and domestic
sales) as compared to the average monthly sales rate over the corresponding
period as set forth in the Operating Plan; (5) any of the EyeSys foreign
distributors who have been responsible on an annual basis for more than ten
percent (10%) of EyeSys' foreign sales, or any EyeSys domestic independent
manufacturing representative who has been responsible on an annual basis for
more than ten percent (10%) of EyeSys' domestic sales, shall have terminated
his, her or its relationship with EyeSys; or (6) the Closing has not occurred
by July 15, 1997.
(b) EyeSys may terminate this Agreement at any time prior to
the Closing by delivery of written notice to Premier and PAI if: (1) Premier
or PAI has breached or violated this Agreement in any material respect and,
if such breach or violation is curable, has failed to cure such violations
within ten (10) days of receiving written notice thereof, (2) any
representation or warranty made by Premier or PAI is false or inaccurate in
any material respect or there is any material misrepresentation or omission
by either Premier or PAI; (3) upon the
-50-
occurrence of a Material Adverse Effect with respect to Premier; or (4) the
Closing has not occurred by July 15, 1997.
8.3 EFFECT OF TERMINATION. In the event of termination as
provided above, all parties hereto shall bear their own costs associated with
this Agreement and all transactions mentioned herein and there shall be no
obligation on the part of either party's officers, directors or stockholders;
provided, that (a) Sections 9.5, 9.9, 9.10 and 9.11 shall survive such
termination and continue in full force and effect, and (b) nothing herein
will relieve any party from liability for any breach of this Agreement which
occurred prior to such termination.
ARTICLE 9
MISCELLANEOUS
9.1 NOTICES. Any notice given hereunder shall be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by facsimile) or the third day after mailing by certified
or registered mail, postage prepaid as follows:
(a) If to Premier or PAI:
Premier Laser Systems, Inc.
3 Morgan
Irvine, CA 92718
Attention: Chief Executive Officer
Facsimile: (714) 951-7218
With a copy to:
Rutan & Tucker
611 Anton Boulevard, Suite 1400
Costa Mesa, California 92626
Attention: Thomas G. Brockington, Esq.
Facsimile: (714) 546-9035
(b) If to EyeSys:
EyeSys Technologies, Inc.
2776 Bingle Road
Houston, TX 77055
Attention: President and Chief Executive Officer
Facsimile: (713) 465-2418
-51-
With a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attention: Lowell S. Lifschultz, Esq.
Facsimile: (212) 661-0989
or to such other address as any party may have furnished in writing to the
other parties in the manner provided above.
9.2 ENTIRE AGREEMENT; MODIFICATIONS; WAIVER. Except as set forth
in Section 9.10 herein, this Agreement constitutes the final, exclusive and
complete understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior agreements, understandings and
discussions with respect thereto, including, without limitation, the Letter
of Intent dated March 3, 1997, by and between Premier and EyeSys. No
variation or modification of this Agreement and no waiver of any provision or
condition hereof or granting of any consent contemplated hereby, shall be
valid unless in writing and signed by the party against whom enforcement of
any such variation, modification, waiver or consent is sought. After the
Effective Time, the rights and remedies available to Premier and PAI pursuant
to this Agreement and all exhibits hereunder shall be as set forth in
Article 7.
9.3 CAPTIONS. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
9.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original
copy hereof but all of which together shall constitute one agreement.
9.5 PUBLICITY. Except for disclosure (if any) required by any law
to which any party is subject, the timing and content of any announcements,
press releases and public statements concerning the acquisition contemplated
hereby shall be by mutual agreement of Premier and EyeSys.
9.6 SUCCESSORS AND ASSIGNS. No party may, without the prior
express written consent of each other party, assign this Agreement in whole
or in part. This Agreement shall be binding upon and inure to the benefit of
the respective successors and permitted assigns of the parties hereto.
9.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied
to contracts between California residents made and to be performed entirely
within the State of California; provided that matters affecting the validity
of the corporate action taken by the parties relating to the Merger shall be
governed by the applicable General Corporation Laws of the States of Delaware
and California.
-52-
9.8 FURTHER ASSURANCES. At the request of any of the parties
hereto, and without further consideration, the other parties agree to execute
such documents and instruments and to do such further acts as may be
necessary or desirable to effect the Merger.
9.9 EACH PARTY TO BEAR OWN COSTS. Subject to Section 5.21, each
of the parties shall pay all costs and expenses incurred or to be incurred by
it in negotiating and preparing this Agreement and the Agreement of Merger
and in closing and carrying out the transactions contemplated by this
Agreement and the Agreement of Merger; provided, however, that any costs
related to the Merger, other than the Transactional Costs to be paid by
Premier pursuant to Section 5.21, shall be paid by EyeSys shareholders. Each
of the parties and its respective advisors shall use its best efforts to
minimize all Merger-related fees and expenses.
9.10 CONFIDENTIALITY AND NONDISCLOSURE AGREEMENTS. Except as
required by law, statute, rule or regulation, all confidential information
which shall have been finished or disclosed by one party to the other
pursuant to this Agreement shall be held in confidence pursuant hereto or
pursuant to the confidential information non-disclosure agreements entered
into by such parties, and shall not be disclosed to any person other than
those with a need to have access to such information, including their
respective employees, directors, legal counsel, accountants or financial
advisors.
9.11 ATTORNEYS' FEES. In the event of any suit or other proceeding
to construe or enforce any provision of this Agreement or any other agreement
to be entered into pursuant hereto, or otherwise in connection with this
Agreement, the prevailing party's or parties' reasonable attorneys, fees and
costs (in addition to all other amounts and relief to which such party or
parties may be entitled) shall be paid by the other party or parties.
9.12 TRANSFER OF EYESYS BOOKS AND ASSETS. EyeSys agrees, at any
time after the Closing, upon the request of Premier or PAI to do, execute,
acknowledge and deliver or to cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances as may be required for the better
assigning, transferring, conveying and confirming to Premier, or to its
successors and assigns, or for the aiding, assisting, collecting and reducing
to possession of any or all of the books, records and assets of EyeSys.
EyeSys and its counsel shall provide Premier and its counsel upon request all
documentation covering all aspects of EyeSys' business operations.
9.13 APPOINTMENT AND INDEMNITY OF ESCROW COMMITTEE.
(a) By approval of this Agreement (by written consent or at a
duly authorized shareholders' meeting) the EyeSys shareholders shall appoint
James E. Crawford, or any successor designated by James E. Crawford or his
legal representative as the EyeSys Representative pursuant to the Escrow
Agreement. Mr. Crawford or his designated successor shall have all of the
authority granted to the EyeSys Representative pursuant to the Escrow
Agreement.
(b) The EyeSys Representative shall not be liable to anyone
whatsoever by reason of any error or judgment or of any act done or step
taken or omitted by him in good
-53-
faith or for any mistake of fact or law except as is provided in Section 11
of the Escrow Agreement.
9.14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by EyeSys in this Agreement shall survive
the Effective Time for a one (1)-year period consistent with the provisions
of Article 7 of this Agreement. The representations and warranties of
Premier and PAI shall terminate as of the Effective Time; provided, however,
the representation made by Premier and PAI in Sections 4.11 and 4.13 of this
Agreement shall survive the Closing for a one (1)-year period.
-54-
IN WITNESS WHEREOF, each of the parties has executed this Agreement
as of the date first above written.
PREMIER LASER SYSTEMS, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
PREMIER ACQUISITION OF DELAWARE, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
EYESYS TECHNOLOGIES, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
FRONTENAC COMPANY (signing as the "Principal
Shareholder" and with respect to the obligations
in Section 5.22 of this Agreement only)
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
-55-
EXHIBIT B
ESCROW AGREEMENT AND INSTRUCTIONS
This Escrow Agreement and Instructions ("AGREEMENT") is entered
into by and among Premier Laser Systems, Inc., a California corporation,
EyeSys Technologies, Inc., a Delaware corporation, James E. Crawford or his
duty appointed successor in interest, and _____________________.
RECITALS
A. Pursuant to the terms of the Merger Agreement, Premier and
EyeSys have agreed to establish an escrow to hold twenty percent (20%) of the
Merger Securities issued in respect of the EyeSys Common Stock, Preferred
Stock and the EyeSys Notes (collectively, the "ESCROW SHARES") for a one
(1)-year period as the source of payment for certain indemnification
obligations of EyeSys. In addition, pursuant to the terms of Section 2.3(b)
of the Merger Agreement, the escrow shall hold the "Escrowed Dissenting
Shares," as such term is defined in the Merger Agreement, for disposition
pursuant to such Section 2.3(b). The term "Escrow Shares," as used herein,
does not include the "Escrowed Dissenting Shares."
B. ______________ has agreed to act as Escrow Holder. James E.
Crawford has been appointed to serve as the EyeSys Representative pursuant to
Section 9.13 of the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto, intending to be legally
bound, do hereby agree as follows:
1. DEFINITIONS. Unless the context requires to the contrary or
terms are otherwise defined herein, terms used in this Agreement, but not
defined herein shall have the meaning given in the Merger Agreement. The
following terms shall have the meanings specified below:
"AGREEMENT" shall mean this Escrow Agreement and Instructions.
"DISTRIBUTION DATE" shall mean the date which is five (5) business
days after Escrow Holder has received written authorization from both Premier
and the EyeSys Representative to distribute Escrow Shares, or Escrow Holder
is otherwise authorized to make a distribution of Escrow Shares pursuant to
the terms of this Agreement.
"ESCROW HOLDER" shall mean ______________.
"ESCROW PERIOD" shall have the meaning set forth in Section 4 of this
Agreement.
"ESCROW SHARES" shall have the meaning given in Recital A of this
Agreement, and shall also include any stock resulting from stock
recapitalizations, any stock dividends paid
-1-
on such shares during the period of time they are held in escrow, and any
cash or other property received by EyeSys prior to the Distribution Date from
account debtors on account of receivables, invoices or other payables with
respect to which an indemnification claim has been made under Sections 7.1
and 3.25 of the Agreement, and for which Premier has been reimbursed as a
result thereof.
"ESCROW SHAREHOLDERS" shall mean the former holders of EyeSys
Common Stock, Preferred Stock and EyeSys Notes who have Merger Shares held in
escrow pursuant to the terms of the Agreement.
"ESCROWED DISSENTING SHARES" shall have the meaning set forth in
Section 2.3(b) of the Merger Agreement.
"EYESYS" shall mean EyeSys Technologies, Inc., a Delaware corporation.
"EYESYS REPRESENTATIVE" shall mean James Crawford or any successor
duly appointed pursuant to the terms of the Merger Agreement.
"LOSSES" shall have the meaning given in Section 1 of this Agreement.
"MERGER AGREEMENT" shall mean that certain Agreement and Plan of
Merger, entered into by and among Premier, EyeSys and Premier Acquisition,
Inc., dated as of April 24, 1997.
"PREMIER" shall mean Premier Laser Systems, Inc., a California
corporation, or any of its subsidiaries.
"PREMIER CERTIFICATE" shall have the meaning given in Section 6 of
this Agreement.
"PREMIER NOTICE" shall have the meaning given in Section 6 of this
Agreement.
"SHARE PRICE" shall mean the Per Share Value, as defined in the
Merger Agreement, and shall be calculated by using the same measuring period
selected by Premier in computing the Per Share Value under the Merger
Agreement, but substituting the date three (3) business days prior to the
date of a distribution of Shares to Premier hereunder for the "Closing Date"
in such definition (except in the case of reimbursements under
Section 2.2(d)(v) of the Merger Agreement, in which case Escrow Shares shall
be valued as set forth in such Section 2.2(d)(v)).
2. INDEMNIFICATION. Pursuant to Article 7 of the Merger Agreement,
EyeSys has entered into the following indemnification agreement:
"EyeSys agrees to indemnify, defend and hold harmless Premier and PAI
from and against and shall reimburse Premier and PAI against and in
respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages,
-2-
remedies and penalties, including interest, penalties and reasonable
attorneys' fees and expenses (collectively, "LOSSES") that Premier or
PAI shall incur or suffer and which arise from or are attributable
to by reason of or in connection with any breach or inaccuracy of or
any failure to perform or comply with any of EyeSys' representations,
warranties, agreements or covenants contained in this Agreement
(including any exhibit, letter, schedule or certificate referred to
herein) or in the Escrow Agreement. Notwithstanding the foregoing,
in the absence of fraud, EyeSys shall have no obligations under this
Section 7.1 with respect to Losses that would otherwise be deemed to
have incurred: (a) due to a breach of a representation or warranty
by EyeSys with respect to its inventory, or (b) as a result of the
condition of its fixed assets, so long as the representations and
warranties set forth in the first two sentences of Section 3.8(a)
hereof are true and correct."
EyeSys has also agreed in the Agreement that in the circumstances set
forth in Section 2.2(c)(vi) of the Agreement, it may be required to return
certain Escrow Shares to Premier. Any claim by Premier that it is entitled
to the receipt of such securities under Section 2.2(c)(vi) shall be deemed a
"claim for indemnification" hereunder, and the amount of Escrow Shares
Premier believes it is entitled to as a result thereof shall be treated as a
"LOSS" hereunder.
3. ESCROW HOLDER. Pursuant to Section 1.3 of the Merger
Agreement, as of the Effective Time, Premier shall cause the Escrow Shares to
be deposited with Escrow Holder. Escrow Holder shall hold, safeguard, and
distribute the Escrow Shares in accordance with the terms and instructions
set forth in this Agreement.
4. ESCROW PERIOD. The Escrow Shares shall be held in escrow by
the Escrow Holder for a period of twelve (12) months after the Effective
Time, except that if any notice of a claim for indemnification has been given
to Escrow Holder by Premier against the Escrow Shares within such twelve
(12)-month period, such number of Escrow Shares as may be necessary to
satisfy the claim for indemnification (as determined pursuant to Section 10
below) shall remain in escrow until such time as all of such indemnification
claims have been resolved pursuant to Section 8 or Section 9 of this
Agreement (the "ESCROW PERIOD").
5. THE EYESYS REPRESENTATIVE. The EyeSys Representative shall
act as the agent of EyeSys and the Escrow Shareholders, for the purpose of
receiving all notices, giving all approvals, and doing all other things and
exercising all other rights of EyeSys and the Escrow Shareholders pursuant to
this Agreement. The EyeSys Representative has agreed to waive the right to
any fees for performing such services. Any costs or expenses incurred by the
EyeSys Representative in performance of his obligations under this Agreement
shall be reimbursed from the Escrow Shares at the expiration of the Escrow
Period, subject to the prior satisfaction of any rights of Premier to
reimbursement from the Escrow Shares.
6. PREMIER CERTIFICATION. In the event that Premier believes in
good faith that it is entitled to indemnification pursuant to the Merger
Agreement, or to receive Escrow Shares under Section 2.2(c)(vi) of the Merger
Agreement, Premier shall deliver a notice (the "PREMIER NOTICE") to the
Escrow Holder and the EyeSys Representative which:
-3-
(a) states that Premier anticipates that it may sustain
Losses for which it is entitled to indemnification pursuant to the Merger
Agreement; and the nature of the misrepresentation, breach of warranty or
covenant, or other basis upon which the claim for indemnification is based;
and
(b) provides a good faith estimate of the amount of Losses
which Premier may sustain, if Premier has sufficient information upon which
to estimate reasonably the amount of the Losses, including any amounts paid
or accrued as of the date of the Premier Certificate, if applicable.
At such time as Premier has determined the exact amount of any claim for
Losses, Premier shall deliver a certificate signed by the chief executive
officer, president or any vice president of Premier to Escrow Holder and the
EyeSys Representative ("PREMIER CERTIFICATE") which certifies that Premier is
entitled to payment of the amount specified pursuant to this Merger Agreement
and this Agreement.
7. DISTRIBUTIONS TO PREMIER OF THE ESCROW SHARES. Subject to the
provisions of Section 8 of this Agreement, within no more than forty-five
(45) days after receipt of a Premier Certificate which makes claim for a
specific amount, Escrow Holder shall distribute to Premier such number of the
Escrow Shares, based upon the Share Price, as is equal to the amount claimed
by Premier in the Premier Certificate. To the extent that the Escrow Shares
consist of different types of securities (e.g., Common Stock or different
types of options), Premier shall be entitled to specify which types of such
securities are to be distributed to it under this Section 7.
8. OBJECTIONS TO DISTRIBUTIONS. Notwithstanding Section 7 of
this Agreement, Escrow Holder shall not make any distribution of Escrow
Shares claimed by Premier unless Escrow Holder either (a) has received
written authorization from the EyeSys Representative to make the
distribution, or (b) at least thirty (30) days have elapsed from the date
that Escrow Holder determines that a Premier Certificate was delivered to the
EyeSys Representative without any response from the EyeSys Representative.
Escrow Holder shall distribute such number of Escrow Shares to Premier as is
required pursuant to Section 7 no later than five (5) days after receipt of
authorization from the EyeSys Representative or expiration of the thirty
(30)-day period. If the EyeSys Representative has a reasonable basis for
objecting to a claim for Losses from Premier and has provided the Escrow
Holder with written notice of an objection ("NOTICE OF OBJECTION") within
such thirty (30)-day period, Escrow Holder shall make a distribution of the
Escrow Shares only when permitted pursuant to Section 9 of this Agreement.
9. SETTLEMENT OF DISPUTED CLAIMS; ARBITRATION.
(a) If the EyeSys Representative delivers a Notice of
Objection to the reimbursement of Premier for any claim made in any Premier
Certificate, the EyeSys Representative and Premier shall attempt in good
faith to agree on the rights of the respective parties regarding any disputed
claims. At such time as the EyeSys Representative and Premier may reach
agreement, a memorandum setting forth the agreement shall be prepared and
signed by both parties and shall be furnished to Escrow Holder. Escrow
Holder shall be entitled to rely
-4-
on any such memorandum, and shall promptly make distributions of the Escrow
Shares in accordance with the terms of such a memorandum.
(b) If no such agreement has been reached within fifteen (15)
days after a Notice of Objection from the EyeSys Representative, such
disputed claim may be sent to mediation in accordance with such mediation
procedures as the parties may agree. If the dispute has not been resolved
within sixty (60) days after issuance of a Notice of Objection from the
EyeSys Representative, the dispute shall be submitted to arbitration as set
forth below. The mediator of any dispute submitted to mediation under this
section shall not serve as arbitrator of such dispute unless otherwise agreed
to by all of the parties to the arbitration. In addition to resolving
pending disputes, the mediator shall provide assistance with respect to
allocating responsibility for the costs of mediation.
(c) If, and to the extent that, any disputed claim is not
resolved through good faith negotiation or through mediation in accordance
with subsections (a) and (b) above, such disputed claim shall, upon demand of
a party, be submitted to and decided by binding arbitration. The arbitration
shall be conducted pursuant to Part 3, Title 9 of the California CODE OF
CIVIL PROCEDURE (Sections 1280-1288.8). Discovery, including depositions for
the purpose of discovery, shall be broadly permitted, and the provisions of
CODE OF CIVIL PROCEDURE Section 1283.05 shall apply. Any demand to
arbitrate, for purposes of the statute of limitations, shall have the same
effect as if suit had been filed on the date the demand is made. The
arbitration shall occur in Orange County, California. The parties shall
agree upon an arbitrator twenty-one (21) days after the demand is made, and
if the parties fail to so agree, then any of them may apply to the court for
an order appointing an arbitrator meeting the requirements of this section.
The decision of the arbitrator shall be final and binding, and shall be
subject to confirmation, correction or vacation in accordance with the
provisions of Code of Civil Procedure Sections 1285-1287.4. Any application,
petition or other proceeding (i) to enforce the award or the provisions of
this Agreement, (ii) to the extent that the arbitrator does not have the
power or authority to resolve or grant the relief sought, and/or (iii) for
provisional or equitable relief pending appointment of the arbitrator, shall
be commenced in the appropriate state or federal courts having jurisdiction
in Orange County, California and the parties hereby consent to jurisdiction
and venue in such courts. The decision of the arbitrator about the validity
of any claim in a Premier Certificate shall be binding and conclusive on the
parties to this Agreement; and notwithstanding anything to the contrary in
this Escrow Agreement, Escrow Holder shall make or withhold distributions of
the Escrow Shares or otherwise act in accordance with the arbitrator's
decision. The prevailing party in the arbitration, as determined by the
arbitrator, shall be entitled to reimbursement of any costs or expenses
incurred by it in connection with any mediation or arbitration hereunder,
except to the extent decided to the contrary by the arbitrator. Judgment on
any award rendered by the arbitrator may be entered in any court having
jurisdiction over the matter.
10. FINAL DISTRIBUTION OF ESCROW SHARES. Upon expiration of the
Escrow Period and receipt of written authorization from Premier, Escrow
Holder shall distribute to Escrow Shareholders all shares then remaining in
the escrow, except (a) such number of Escrow Shares as are sufficient, in the
reasonable judgment of Premier to satisfy any unsatisfied claims specified in
any Premier Notice or Premier Certificate previously delivered to Escrow
Holder; (b) such number of Escrow Shares as are sufficient, in the reasonable
judgment of the EyeSys
-5-
Representative to pay the costs and expenses incurred or likely to be
incurred by the EyeSys Representative, and (c) the fees and disbursements of
the Escrow Holder. As soon as all claims have been resolved, Escrow Holder
shall distribute to the EyeSys Shareholders all shares then remaining in the
escrow not required to satisfy those claims, amounts due to the EyeSys
Representative and the unpaid fees and disbursements of the Escrow Holder.
Distributions of the remaining Escrow Shares to the EyeSys Shareholders
pursuant to this Escrow Agreement, whenever made, shall be proportionate to
the EyeSys Shareholders respective interests as determined pursuant to
Section 2.2 of the Merger Agreement.
11. DISPOSITION OF ESCROWED DISSENTING SHARES. In the event the
Principal Shareholder (as defined in the Merger Agreement) sells any shares
and remits the proceeds thereof to Premier pursuant to Section 5.22 of the
Merger Agreement, upon the notification to Escrow Holder of such sale and
acknowledgment of receipt by Premier of such proceeds, Escrow Holder shall
distribute to the Principal Shareholder, out of the Escrowed Dissenting
Shares, shares of Premier Class A Common Stock in an amount equal to the
number of shares sold by the Principal Shareholder. At such time as the
Principal Shareholder has no further obligations under Section 5.22 of the
Merger Agreement, all of the Escrowed Dissenting Shares then remaining in the
Escrow shall be returned to Premier.
12. LIABILITY AND INDEMNIFICATION OF ESCROW HOLDER AND THE EYESYS
REPRESENTATIVE.
(a) In performing any duties under this Escrow Agreement,
neither Escrow Holder nor the EyeSys Representative shall be liable to any
party hereto for damages, losses or expenses, except for gross negligence or
willful misconduct on the part of the Escrow Holder. Escrow Holder shall not
incur any such liability for (i) any act or failure to act made or omitted in
good faith, or (ii) any action taken or omitted in reliance upon any
instrument, including any written statement or affidavit provided for in this
Agreement, that Escrow Holder shall in good faith believe to be genuine, nor
shall Escrow Holder be liable or responsible for forgeries, fraud,
impersonations, or determining the scope of any representative authority.
Escrow Holder is not responsible for determining and verifying the authority
of any person acting or purporting to act on behalf of any party to this
Escrow Agreement.
(b) The parties hereto agree jointly and severally to
indemnify and hold Escrow Holder harmless against any and all losses, claims,
damages, liabilities, and expenses, including reasonable costs of
investigation, reasonable attorneys' fees and disbursements that may be
imposed on or incurred by Escrow Holder in connection with the performance of
Escrow Holder's duties under this Agreement, including but not limited to any
litigation arising from this Agreement or involving its subject matter, but
excluding any losses, claims, damages, liabilities and expenses (including
costs of investigation, attorneys' fees and disbursements) resulting from
Escrow Holder's negligence or willful misconduct.
(c) Notwithstanding the foregoing, the EyeSys Representative
shall have no personal responsibility with respect to any actions taken or
not taken in connection with the performance of his obligations hereunder.
To the extent that the EyeSys Representative may incur costs or expenses
under this Agreement, including with respect to the indemnity provided
-6-
to the Escrow Holder, such obligations shall be satisfied solely by the
Escrow Shares, subject to the prior satisfaction of any rights of Premier to
reimbursement from the Escrow Shares.
13. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and, except as otherwise expressly provided herein, shall inure to the
benefit of the parties hereto and their respective successors and assigns.
(b) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied
to contracts between California residents made and to be performed entirely
within the State of California.
(c) ATTORNEYS' FEES. Except as provided otherwise in Section
9 of this Agreement, in the event of any suit or other proceeding to construe
or enforce any provision of this Agreement or any other agreement to be
entered into pursuant hereto, or otherwise in connection with this Agreement,
the prevailing party's or parties' reasonable attorneys' fees and costs (in
addition to all other amounts and relief to which such party or parties may
be entitled) shall be paid by the other party or parties.
(d) CAPTIONS AND HEADINGS. The captions and headings
included in this Agreement are for the convenience of the parties only and
shall not affect the construction or interpretation of this Agreement.
(e) ENTIRE AGREEMENT; MODIFICATIONS; WAIVER. This Agreement,
together with the Merger Agreement, constitutes the final, exclusive and
complete understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior agreements, understandings and
discussions with respect thereto, including, without limitation, the
Memorandum of Understanding, dated ____________, 1997, by and among Premier
and EyeSys. No variation nor modification of this Agreement and no waiver of
any provision or condition hereof, nor granting of any consent contemplated
hereby, shall be valid unless in writing and signed by the party against whom
enforcement of any such variation, modification, waiver or consent is sought.
(f) SEVERABILITY. If any provision of this Agreement or the
application thereof to any person, entity or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances
shall not be affected and shall be enforced to the greatest extent permitted
by law.
(g) NOTICE. Any notice given hereunder shall be in writing
and shall be deemed delivered upon the earlier of personal delivery
(including personal delivery by facsimile) or the third day after mailing by
certified or registered mail, postage prepaid as follows:
-7-
If to Premier:
Premier Laser Systems, Inc.
3 Morgan
Irvine, CA 92718
Attention: Chief Executive Officer
Facsimile: (714) 951-7218
With a copy to:
Rutan & Tucker
611 Anton Boulevard, Suite 1400
Costa Mesa, California 92626
Attention: Thomas G. Brockington, Esq.
Facsimile: (714) 546-9035
If to EyeSys:
EyeSys Technologies, Inc.
2776 Bingle Road
Houston, TX 77055
Attention: President and Chief Executive Officer
Facsimile: (713) 465-2418
With a copy to:
Epstein Becker & Green, PC
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
Facsimile: (212) 661-0989
or to such other address as any party may have furnished in writing to the
other parties in the manner provided above.
(h) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, enforceable
against the signatory thereto, but all of which together shall constitute but
one agreement.
-8-
IN WITNESS WHEREOF, each of the parties hereto has executed, or
caused to be executed on its behalf by its duly authorized officer, this
Agreement, all as of the day and year first above written.
PREMIER LASER SYSTEMS, INC.
a California corporation
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
EYESYS TECHNOLOGIES, INC.
a Delaware corporation
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
EYESYS REPRESENTATIVE
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ESCROW HOLDER
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-9-
EXHIBIT C-1
PREMIER LASER SYSTEMS, INC.
LOCK-UP AGREEMENT
(for holders of 5% or more of the Shares)
___________, 1997
Premier Laser Systems, Inc.
3 Morgan
Irvine, CA 92718
Ladies and Gentlemen:
The undersigned understands that you have entered into that certain
Agreement and Plan of Merger dated as of ______________, 1997, by and among
Premier Laser Systems, Inc., a California corporation ("PREMIER"), Premier
Acquisition, Inc., a California corporation, and a wholly owned subsidiary of
Premier, and EyeSys Technologies, Inc., a Delaware corporation (the "MERGER
AGREEMENT"), which provides for the issuance of Class A Common Stock, no par
value, of Premier ("COMMON STOCK") pursuant to Premier's Registration
Statement on Form S-4 filed with the Securities and Exchange Commission on
____________, 1997 (Registration No. 333-_______) (as may be amended or
supplemented, the "REGISTRATION STATEMENT"). For purposes hereof, the term
"PRIMARY EYESYS SHAREHOLDER GROUP" shall mean the ___ former holders of
EyeSys securities who receive the largest number of shares of Common Stock as
a result of the transactions described in the Merger Agreement.
In consideration of the foregoing and in acknowledgment of the benefit
therefrom to the undersigned, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the undersigned hereby agrees:
(i) for a period of four and one-half (4 1/2) months from the Effective Time
(as defined in the Merger Agreement), not to offer for sale, sell or
otherwise dispose of (or enter into any transaction which is designed to, or
could be expected to, result in the disposition by any person of), directly
or indirectly (collectively, a "DISPOSITION") any of the shares of Common
Stock, any then-vested options or any then-vested warrants to purchase any
shares of Common Stock or any securities convertible into or exchangeable for
shares of Common Stock (collectively, "SECURITIES"), now owned by the
undersigned; and (ii) for a period commencing at the end of such four and
one-half (4 1/2) month period and ending November 30, 1997, an amount which,
when added to all other Dispositions by the Primary EyeSys Shareholder Group,
does not exceed 65,000 shares per month, and thereafter, during each month,
an amount equal to one-ninth (1/9) of the number of shares held by such
person on November 30, 1997; provided, however, that if at any time Premier
notifies the undersigned that it will commence within thirty (30) days a
"call" with respect to Premier's outstanding Class A or Class B Warrants, the
undersigned will not make any further Dispositions until the termination of
such call (provided that the foregoing suspension of dispositions shall
not exceed ninety (90) days in length). The restrictions set forth in
section (i) above are expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
Securities during the four and one-half (4 1/2) month lock-up period, even if
such Securities would be disposed of by someone other than the undersigned.
Notwithstanding any other provision of this Agreement to the contrary,
in no event shall the undersigned offer for sale, sell or otherwise dispose
of any Securities received pursuant to the Merger Agreement in an amount or
manner which violates Rule 145(d) promulgated under the Securities Act of
1933, as amended.
Furthermore, the undersigned hereby agrees and consents to the entry of
stop-transfer instructions with Premier's transfer agent against the transfer
of the Securities held by the undersigned except in compliance with this
Lock-Up Agreement.
------------------------------------------------
Name:
Accepted as of the date
first set forth above:
PREMIER LASER SYSTEMS, INC.
By:
-------------------------------------
Authorized Representative
Premier requests that this Lock-Up Agreement be completed and delivered to
Premier's counsel, Rutan & Tucker, LLP, 611 Anton Boulevard, Suite 1400,
Costa Mesa, California 92626, Attn: Thomas G. Brockington, Esq.
-2-
EXHIBIT C-2
PREMIER LASER SYSTEMS, INC.
LOCK-UP AGREEMENT
(for holders of less than 5% of the Shares)
__________, 1997
Premier Laser Systems, Inc.
3 Morgan
Irvine, CA 92718
Ladies and Gentlemen:
The undersigned understands that you have entered into that certain
Agreement and Plan of Merger dated as of ______________, 1997, by and among
Premier Laser Systems, Inc., a California corporation ("PREMIER"), Premier
Acquisition, Inc., a California corporation, and a wholly owned subsidiary of
Premier, and EyeSys Technologies, Inc., a Delaware corporation (the "MERGER
AGREEMENT"), which provides for the issuance of Class A Common Stock, no par
value, of Premier ("COMMON STOCK") pursuant to Premier's Registration
Statement on Form S-4 filed with the Securities and Exchange Commission on
____________, 1997 (Registration No. 333-_______) (as may be amended or
supplemented, the "REGISTRATION STATEMENT").
In consideration of the foregoing and in acknowledgment of the benefit
therefrom to the undersigned, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the undersigned hereby agrees that
the undersigned shall not offer for sale, sell or otherwise dispose of, (or
enter into any transaction which is designed to, or could be expected to,
result in the disposition by any person of), directly or indirectly
(collectively, a "DISPOSITION"), any of the shares of Common Stock, any
then-vested options or any then-vested warrants to purchase any shares of
Common Stock or any securities convertible into or exchangeable for shares of
Common Stock (collectively, "SECURITIES"), except that during each calendar
month after the closing of the transactions contemplated by the Merger
Agreement the undersigned shall be entitled to sell or otherwise dispose of
Securities in an amount equal to (but not more than) one-tenth (1/10) of the
number of shares of Common Stock issued to such person in connection with the
Merger Agreement (treating, for such purposes, warrants, options and
convertible securities as though they had been exercised or converted in
accordance with their terms). The restrictions set forth above are
expressly agreed to preclude the holder of the Securities from engaging in
any hedging or other transaction which is designed to or reasonably expected
to lead to or result in a Disposition of Securities in excess of the amount
specified above, even if such Securities would be disposed of by someone
other than the undersigned.
Furthermore, the undersigned hereby agrees and consents to the entry of
stop-transfer instructions with Premier's transfer agent against the transfer
of the Securities held by the undersigned except in compliance with this
Lock-Up Agreement.
------------------------------------------------
Name:
Accepted as of the date
first set forth above:
PREMIER LASER SYSTEMS, INC.
By:
------------------------------------
Authorized Representative
Premier requests that this Lock-Up Agreement be completed and delivered to
Premier's counsel, Rutan & Tucker, LLP, 611 Anton Boulevard, Suite 1400,
Costa Mesa, California 92626, Attn: Thomas G. Brockington, Esq.
-2-
EXHIBIT D
CERTIFICATE OF MERGER
OF DOMESTIC CORPORATIONS
CERTIFICATE OF MERGER
OF
PREMIER ACQUISITION, INC.
INTO
EYESYS TECHNOLOGIES, INC.
The undersigned corporation, organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
Premier Acquisition, Inc. Delaware
EyeSys Technologies, Inc. Delaware
SECOND: That a plan and agreement of merger between the parties
to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance
with the requirements of Section 251 of the General Corporation Law of
the State of Delaware.
THIRD: That the name of the surviving corporation of the merger
is EyeSys Technologies, Inc.
FOURTH: That the certificate of incorporation in the form of the
Certificate of Incorporation of EyeSys attached hereto, shall be the
certificate of incorporation of the surviving corporation.
FIFTH: That the executed plan and agreement of merger is on file
at the principal place of business of the surviving corporation. The
address of the principal place of business of the surviving
corporation is EyeSys Technologies, Inc., c/o Premier Laser Systems,
Inc., 3 Morgan, Irvine, California 92618.
SIXTH: That a copy of the plan and agreement of merger will be
furnished by the surviving corporation, on request and without cost,
to any stockholder of any constituent corporation.
EYESYS TECHNOLOGIES, INC.
By:
---------------------------------------------
President
ATTEST:
By:
---------------------------------------
- ------------------------------------------
Secretary
-2-
EXHIBIT F
TERMS OF SECURITIES
PREMIER CLASS AA OPTIONS
Each Premier Class AA Option shall represent the right to purchase one
share of Premier's Class A Common Stock at an exercise price of $6.50 at any
time through November 30, 1999. Commencing immediately, such Premier Class
AA Option shall be redeemable by Premier at a price of $.05 per option on
thirty (30) days written notice, so long as the average closing bid price, as
reported by the Nasdaq Stock Market, of the Class A Common Stock exceeds
$9.10 per share, for thirty (30) consecutive trading days ending within
fifteen (15) days of the notice of redemption.
PREMIER CLASS BB OPTIONS
Each Premier Class BB Option shall represent the right to purchase one
share of Premier's Class A Common Stock at an exercise price of $8.00 at any
time through November 30, 1999. Commencing immediately, such Premier Class
BB Option shall be redeemable by Premier at a price of $.05 per option on
thirty (30) days written notice, so long as the average closing bid price, as
reported by the Nasdaq Stock Market, of the Class A Common Stock exceeds
$11.20 per share, for thirty (30) consecutive trading days ending within
fifteen (15) days of the notice of redemption.
PREMIER OPTIONS
Each Premier Option shall represent the right to purchase one share of
Class A Common Stock for a period commencing twelve (12) months from the
Closing Date and ending of three (3) years from the Closing Date, at an
exercise price equal to the Per Share Value. The Premier Options shall not
be redeemable.
EXHIBIT G
OPERATING PLAN
-2-
EXHIBIT H
LOANS INCLUDED IN NONINCLUDED COSTS
The obligations for money borrowed included in the Nonincluded Costs shall
consist of $300,000 principal amount of loans from shareholders made in 1997,
together with accrued interest thereon.
-3-
SCHEDULE 2.1
NOTEHOLDERS
EYESYS AFFILIATE NOTEHOLDERS
Frontenac VI Limited Partnership
Trinity Ventures II, L.P.
Trinity Ventures III, L.P.
Trinity Ventures Side-by-Side Fund I, L.P.
American Healthcare Fund II, L.P.
Robert G. Martin, M.D.
Frederick Ruegseggar
EYESYS NONAFFILIATE NOTEHOLDERS
All other Noteholders
-4-
SCHEDULE 5.16
EYESYS PERSONNEL
David Headlee
Lisa Manis
Bonnie Schwebb
Chris Boyle
Liz Ojeda
Michel Ulsas
Victor Lau
Debbie Gabriel
Beth Soper
David Liu
Eddie Phillipe
James Tang
Eric Serfoss
John Clark
Ken Carbonari
Joe Wakil
-5-