-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LTps2KeRBL+js/lqS8jST/xf9LyjLvdsM4wizbwz4hvudOz71ZJ+Q7Be/G5cfySZ MtEppAx6eS2lTpbi3BiM8Q== 0000893220-01-000439.txt : 20010410 0000893220-01-000439.hdr.sgml : 20010410 ACCESSION NUMBER: 0000893220-01-000439 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20010406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOTOMEDEX INC CENTRAL INDEX KEY: 0000711665 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 592858100 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-58450 FILM NUMBER: 1597390 BUSINESS ADDRESS: STREET 1: FIVE RADNOR CORPORATE CENTER STREET 2: SUITE 470 CITY: RADNOR STATE: PA ZIP: 19087 BUSINESS PHONE: 4072814103 MAIL ADDRESS: STREET 1: FIVE RADNOR CORPORATE CENTER STREET 2: SUITE 470 CITY: RADNOR STATE: PA ZIP: 19087 FORMER COMPANY: FORMER CONFORMED NAME: LASER PHOTONICS INC DATE OF NAME CHANGE: 19920703 S-3 1 w47540s-3.txt PHOTOMEDEX, INC. FORM S-3 - REGISTRATION STATEMENT 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 2001 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ PHOTOMEDEX, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 59-2058100 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
FIVE RADNOR CENTER, SUITE 470 RADNOR, PENNSYLVANIA 19087 (610) 971-9292 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) JEFFREY F. O'DONNELL CHIEF EXECUTIVE OFFICER PHOTOMEDEX, INC. FIVE RADNOR CENTER, SUITE 470 RADNOR, PENNSYLVANIA 19087 (610) 971-9292 (NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: LUCE, FORWARD, HAMILTON & SCRIPPS LLP ATTN: JEFFREY P. BERG, ESQ. 1990 SOUTH BUNDY DRIVE, SUITE 790 LOS ANGELES, CALIFORNIA 90025-5244 PHONE: (310) 820-0083 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. ------------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities only in connection with dividend or interest reinvestment plans, check the following box: [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------------ CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- PROPOSED PROPOSED TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE(1) - --------------------------------------------------------------------------------------------------------------------------------- Common Stock, par value $0.01........ 1,540,000 $4.01 $6,175,400 $1,543.85 - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
(1) Calculated in accordance with Rule 457(c) based on the high and low sale prices of the common stock as reported on the Nasdaq National Market on April 4, 2001. ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 THE INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED APRIL , 2001 PROSPECTUS 1,540,000 SHARES PHOTOMEDEX LOGO COMMON STOCK ------------------------ This prospectus relates to the public offering, which is not being underwritten, of 1,540,000 shares of our common stock, which is held by some of our current stockholders, or the selling shareholders. The prices at which such selling stockholders may sell shares will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive any of the proceeds from the sale of the shares. Our common stock is quoted on the NASDAQ National Market System under the symbol "PHMD." On April 4, 2001, the average of the high and low price for the common stock was $4.01. INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE THE SECTIONS ENTITLED "RISK FACTORS" IN THE DOCUMENTS WE FILE WITH THE SECURITIES AND EXCHANGE COMMISSION THAT ARE INCORPORATED BY REFERENCE IN THIS PROSPECTUS FOR CERTAIN RISKS AND UNCERTAINTIES THAT YOU SHOULD CONSIDER. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy or this prospectus. Any representations to the contrary is a criminal offense. The date of this prospectus , 2001 3 No person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with the offering made hereby, and if given or made, such information or representations must not be relied upon as having been authorized by PhotoMedex, Inc., a Delaware corporation and its subsidiaries (referred in this prospectus as "we," "us" or "our"), any stockholder or by any other person. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that information herein is correct as of any time subsequent to the date hereof. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities covered by this prospectus, nor does it constitute an offer to or solicitation of any person in any jurisdiction in which such offer or solicitation may not lawfully be made. THE COMPANY OVERVIEW OF OUR BUSINESS We develop, manufacture and market therapeutic excimer laser-based instrumentation designed to treat psoriasis and vitiligo. We are also developing our technology for the treatment of other skin disorders. In January 2000, we received the first Food and Drug Administration, or FDA, approval to market an excimer laser system, our XTRAC system, for the treatment of psoriasis. XTRAC(TM) is a registered trademark of PhotoMedex, Inc. PhotoMedex, Inc. and our logo are both registered trademarks of PhotoMedex, Inc. On March 1, 2001, we received the first FDA approval to market our XTRAC system for the treatment of vitiligo. We commercially launched the XTRAC system in the United States in August 2000. In February 2001, we received notification from a major healthcare insurer, CIGNA Corporation, or CIGNA, that CIGNA will reimburse medically necessary claims submitted by patients or their doctors for payment of treatments for psoriasis utilizing our XTRAC system. There is no known cure for psoriasis and although existing treatments provide some relief to psoriasis sufferers, they are extremely inconvenient and may involve substantial side effects. We believe that our patent-protected XTRAC system will enable more effective and convenient treatment with minimal side effects and, as a result, will become the "standard of care" for the majority of those afflicted with the disease. As a part of our commercialization strategy in the United States, we are providing our XTRAC system to targeted dermatologists at no capital cost to them. We believe that this strategy will create substantial incentives for these dermatologists to adopt our XTRAC system and will accelerate further market penetration. We expect to receive a recurring stream of revenue from per-treatment charges to dermatologists for use of our XTRAC system. Outside of the United States, our strategy includes both selling and leasing XTRAC systems directly to dermatologists through our distributors and providing XTRAC systems to dermatologists with a usage-based revenue stream to us. Our principal executive offices are located at Five Radnor Center, Suite 470, Radnor, Pennsylvania 19087. Our telephone number is (610) 971-9292. 2 4 RISK FACTORS Certain statements in this prospectus are "forward-looking statements." These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this prospectus that are not historical facts. Forward-looking statements in this prospectus hereafter included in other publicly available documents filed with the Securities and Exchange Commission, or the Commission, reports to our stockholders and other publicly available statements issued or released by us involve known and unknown risks, uncertainties and other factors which could cause our actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. Such future results are based upon management's best estimates based upon current conditions and the most recent results of operations. When used in this prospectus, the words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward- looking statements, including our plans, objectives, expectations and intentions and other factors discussed in the risk factors, described below. Our securities are highly speculative and involve a high degree of risk. Only investors who can afford the loss of their entire investment should make an investment in these securities. In addition to the factors set forth elsewhere in this prospectus, prospective investors should give careful consideration to the following risk factors in evaluating us and our business before purchasing our securities. There is a limited public market for our common stock. Persons who may own or intend to purchase shares of common stock in any market where the common stock may trade should consider the following risk factors, together with other information contained elsewhere in our reports, proxy statements and other available public information, as filed with the Commission, prior to purchasing shares of our common stock WE HAVE A HISTORY OF LOSSES, WE EXPECT FUTURE LOSSES AND CANNOT ASSURE YOU THAT WE WILL BECOME OR REMAIN PROFITABLE. Historically, we have incurred significant losses and have had negative cash flows from operations. To date, we have dedicated most of our financial resources to research and development and general and administrative expenses and only recently began to market our XTRAC system for commercial sale and to generate revenues from its use by dermatologists. We have historically financed our activities through working capital provided from loans and the private placement of our debt and equity securities. As of December 31, 2000, our accumulated deficit was approximately $39 million. Our future revenues and success depend upon acceptance of our excimer laser systems for the treatment of psoriasis and vitiligo. Our XTRAC system for the treatment of psoriasis has just begun to generate revenues. We have not generated any revenues for the treatment of vitiligo. Our ability to introduce our new products successfully and the expected benefits to be obtained from these new products may be adversely affected by a number of factors, such as unforeseen costs and expenses, technological changes, economic downturns, competitive factors or other events beyond our control. We expect to incur operating losses for at least the next nine to twelve months because we plan to spend substantial amounts on the marketing of our psoriasis and vitiligo treatment products and expansion of our operations. We cannot assure you that we will market any products successfully, operate profitably in the future, or that we will not require significant additional financing in order to accomplish our business plan. OUR LASER TREATMENTS OF PSORIASIS AND VITILIGO AND ANY OF OUR FUTURE PRODUCTS MAY FAIL TO GAIN MARKET ACCEPTANCE, WHICH WOULD ADVERSELY AFFECT OUR COMPETITIVE POSITION. No independent studies with regard to the feasibility of our proposed business plan have been conducted by ourselves or by any independent third parties with respect to our present and future business prospects and capital requirements. We have generated limited commercial distribution for our XTRAC system and our other products. Even if adequate financing is available and our products are ready for market, we cannot assure 3 5 you that our products will find sufficient acceptance in the marketplace to fulfill our long and short-term goals. We cannot assure you that the marketplace will be receptive to excimer laser technology over competing therapies or that a cure will not be found for the underlying diseases. Failure of our products to achieve market acceptance would have a material adverse effect on our business, financial condition and results of operations. We introduced our marketing plan for our psoriasis treatment system in August 2000. Market acceptance of laser treatment of psoriasis and vitiligo depends on our ability to establish, with the medical community, the clinical efficacy of excimer laser technology to treat psoriasis and vitiligo. While we have engaged in clinical studies for our psoriasis treatment, we have not had sufficient time to observe the long-term effectiveness or potential side effects of our treatment system for psoriasis and vitiligo. OUR SUCCESS MAY DEPEND ON THIRD-PARTY REIMBURSEMENT OF PATIENTS' COSTS FOR OUR XTRAC SYSTEM, WHICH COULD RESULT IN PRICE PRESSURE OR REDUCED DEMAND. Our ability to market products successfully will depend in part on the extent to which various third parties are willing to reimburse patients or providers for the costs of medical procedures utilizing our treatment products. These third parties include government authorities, private health insurers and other organizations, such as health maintenance organizations. Third-party payors are systematically challenging the prices charged for medical products and services. They may deny reimbursement if they determine that a prescribed device is not used in accordance with cost-effective treatment methods as determined by the payor, or is experimental, unnecessary or inappropriate. Accordingly, if less costly drugs are available, third-party payors may not authorize or may limit reimbursement for the use of our products, even if our products are safer or more effective than the alternatives. Additionally, they may require changes to our pricing structure and revenue model before authorizing reimbursement. To date, we have received approval from only one healthcare insurer to reimburse for claims submitted by patients or their doctors for treatment of psoriasis utilizing our XTRAC system. We can give no assurance that any other health insurer will agree to any reimbursement policy or that the one reimbursing insurer will not adversely modify its reimbursement policy for the use of our XTRAC system in the future. We are in discussions with the payment and coverage staff of the Health Care Finance Administration, or HCFA, to discuss Medicare coverage of, and payment for, the costs of treatments utilizing the XTRAC system. This is not a formal request for a national coverage decision by HCFA, a process that can take from 18 to 24 months to complete. We are pursuing an informal approach to obtain temporary reimbursement from HCFA in an effort to expedite the review process. We cannot assure you that a favorable response will be received from HCFA. If HCFA does not grant the right to reimbursement, it could have a material adverse effect on our business. We are not seeking Medicare coverage for treatment of vitiligo. We cannot assure you that psoriasis or vitiligo patients will be willing to pay the extra amount required to obtain treatment with our laser system. The failure to achieve this goal could have a material adverse effect on our business operations and financial condition. COST CONTAINMENT MEASURES AND ANY GENERAL HEALTHCARE REFORM COULD ADVERSELY AFFECT OUR ABILITY TO MARKET OUR PRODUCTS. Cost containment measures instituted by healthcare providers and insurers and any general healthcare reform could affect our ability to receive revenue from the use of our XTRAC system or to market our products and may have a material adverse effect on us. We cannot predict the effect of future legislation or regulation concerning the healthcare industry and third-party coverage and reimbursement on our business. In addition, fundamental reforms in the healthcare industry in the United States and the European Union or EU, continue to be considered, although we cannot predict whether or when any healthcare reform proposals will be adopted and what impact such proposals might have on demand for our products. THE XTRAC SYSTEM IS OUR ONLY MARKETED PRODUCT. IF PHYSICIANS DO NOT ADOPT OUR XTRAC SYSTEM, WE WILL NOT ACHIEVE FUTURE REVENUE GROWTH. We commercially introduced our XTRAC system, which consists of a laser system for the treatment of psoriasis, in August 2000. We are highly dependent on XTRAC system revenue because we anticipate that 4 6 usage for the XTRAC system will account for substantially all our revenue at least through the end of 2001. To achieve increasing revenue, our product must gain recognition and adoption by physicians who treat psoriasis and other skin disorders. The XTRAC system represents a significant departure from conventional psoriasis treatment methods. We believe that physicians will not use our XTRAC system unless they determine, based on published peer-reviewed journal articles, long-term clinical data and their professional experience, that the XTRAC system provides an effective and attractive alternative to conventional means of treatment for psoriasis. Currently, there are only limited peer-reviewed clinical reports and short-term clinical follow-up data on our XTRAC system. Physicians are traditionally slow to adopt new products and treatment practices, partly because of perceived liability risks and uncertainty of third-party reimbursement. If physicians do not adopt our XTRAC system, we may never achieve significant revenues or profitability. OTHER THAN OUR XTRAC SYSTEM, OUR PRODUCTS ARE IN EARLY STAGES OF DEVELOPMENT, AND FEW OF THESE PRODUCTS, IF ANY, MAY GENERATE REVENUES IN THE NEAR FUTURE. Other than our XTRAC system, our products and any new products we develop in the future face significant developmental, regulatory and financing obstacles. We cannot assure you that we will obtain the necessary financing and regulatory approvals for these products, nor can we assure you that these products will be successful in treating patients or result in commercially viable products. You must consider, based on our limited history, our ability to: - obtain the financial resources necessary to develop, test, manufacture and market products; - engage and maintain corporate partners to assist in developing, testing, manufacturing and marketing our products; - satisfy the requirements of clinical trial protocols; - establish and demonstrate the clinical efficacy of our products; - obtain necessary regulatory approvals; - achieve acceptance by third-party payors for reimbursement for procedures using our devices; and - market our products to achieve acceptance and use by the medical community in general. IF THE EFFECTIVENESS AND SAFETY OF OUR PRODUCTS ARE NOT SUPPORTED BY LONG-TERM DATA, OUR REVENUE COULD DECLINE AND WE COULD BE SUBJECT TO LIABILITY. Our products may not be accepted if we do not produce clinical data supported by the independent efforts of clinicians. We received clearance from the FDA for the use of the XTRAC system to treat psoriasis based upon the study of a limited number of patients. Also, we have received clearance from the FDA for the use of the XTRAC system to treat vitiligo based on equivalence. Safety and efficacy data presented to the FDA for the XTRAC system was based on studies on these patients. We may find that data from longer-term psoriasis patient follow-up studies may be inconsistent with those indicated by our relatively short-term data. If longer-term patient studies or clinical experience indicate that treatment with the XTRAC system does not provide patients with sustained benefits or that treatment with our product is less effective or less safe than our current data suggests, our revenues could decline and we could be subject to significant liability. Further, we may find that our data is not substantiated in studies involving more patients, in which case we may never achieve significant revenues or profitability. ANY FAILURE IN OUR PHYSICIAN EDUCATION EFFORTS COULD SIGNIFICANTLY REDUCE PRODUCT MARKETING. It is important to the success of our marketing efforts to educate physicians and technicians in the techniques of using the XTRAC system. We rely on physicians to spend their time and money to attend our pre-sale educational sessions. Positive results using the XTRAC system are highly dependent upon proper physician and technician technique. If physicians and technicians use the XTRAC system improperly, they may have unsatisfactory patient outcomes or cause patient injury, which may give rise to negative publicity or lawsuits against us, any of which could have a material adverse effect on our revenue and profitability. 5 7 OUR SUCCESS IS DEPENDENT ON INTELLECTUAL PROPERTY RIGHTS HELD BY US, AND OUR BUSINESS WILL BE ADVERSELY AFFECTED BY DIRECT COMPETITION IF WE ARE UNABLE TO PROTECT THESE RIGHTS. Our success will depend, in large part, on our ability to maintain and defend our patents. However, we cannot give you assurance that the technologies and processes covered by all of our patents are obvious or substantially similar to prior work, which could render these patents unenforceable. Without the protection of these patents, competitors may utilize our technology to commercialize their own excimer laser systems for the treatment of psoriasis and for other products. Trade secrets and other proprietary information, which are not protected by patents, are also critical to our business. We attempt to protect our trade secrets by entering into confidentiality agreements with third parties, employees and consultants. However, these agreements can be breached and, if they are, there may not be an adequate remedy available to us. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and even if we prevail in litigation, third parties may independently discover trade secrets and proprietary information that allow them to develop technologies and products that are substantially equivalent or superior to our own. Without the protection afforded by our patent, trade secret and proprietary information rights, we may face direct competition from others commercializing their products using our technology that would have a material adverse effect on our business. DEFENDING AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD BE TIME CONSUMING AND EXPENSIVE, AND IF WE ARE NOT SUCCESSFUL, COULD CAUSE SUBSTANTIAL EXPENSES AND DISRUPT OUR BUSINESS. We cannot be sure that the products, services, technologies and advertising we employ in our business do not or will not infringe valid patents, trademarks, copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of our business. Any legal action against us claiming damages or seeking to enjoin commercial activities relating to the affected products or our methods or processes could have a material adverse effect on our business by: - requiring us, or our collaborators, to obtain a license to continue to use, manufacture or market the affected products, methods or processes, which may not be available on commercially reasonable terms, if at all; - preventing us from making, using or selling the subject matter claimed in patents held by others and subject us to potential liability for damages; - consuming a substantial portion of our managerial and financial resources; and - resulting in litigation or administrative proceedings that may be costly, whether we win or lose. WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OUTSIDE THE UNITED STATES. Intellectual property law outside the United States is uncertain and in many countries is currently undergoing review and revision. The laws of some countries do not protect our intellectual property rights to the same extent as laws in the United States. It may be necessary or useful for us to participate in proceedings to determine the validity of our, or our competitors', foreign intellectual property rights, which could result in substantial cost and divert our efforts and attention from other aspects of our business. If we are unable to defend our intellectual property rights internationally, we may face direct competition outside the United States, which could materially adversely effect our future business, operating results and financial condition. WE WILL NEED ADDITIONAL FINANCING TO MAINTAIN AND EXPAND OUR BUSINESS, AND SUCH FINANCING MAY NOT BE AVAILABLE ON FAVORABLE TERMS, IF AT ALL. We have historically financed our operations through working capital provided from operations, loans and the private placement of equity and debt securities. On March 27, 2001, we raised the gross amount of approximately $6,150,000 through a private placement of our securities. The net proceeds of that financing, together with our existing financial resources and any revenues from our sales, distribution, licensing and manufacturing relationships, should be sufficient to meet our operating and capital requirements for a period 6 8 of at least 13 months following the date of this prospectus. However, we may have to raise substantial additional capital thereafter if: - changes in our research and development plans cause unexpected large future expenditures; or - changes in demand for our XTRAC system for the treatment of psoriasis or vitiligo. If we need additional financing, we cannot assure you that it will be available on favorable terms, if at all. If we need funds and cannot raise them on acceptable terms, we may not be able to: - execute our growth plan for our XTRAC system; - take advantage of future opportunities, including synergistic acquisitions; - expand our manufacturing facilities, if necessary, based on increased demand for our XTRAC system; or - respond to customers and competition. OUR FAILURE TO OBTAIN OR MAINTAIN NECESSARY FDA CLEARANCES OR APPROVALS COULD HURT OUR ABILITY TO COMMERCIALLY DISTRIBUTE AND MARKET OUR PRODUCTS IN THE UNITED STATES. Our products are considered medical devices and are subject to extensive regulation in the United States and in foreign countries, where we intend to do business. Unless an exemption applies, each medical device that we wish to market in the United States must first receive either 510(k) clearance or pre-market approval from the FDA. Either process can be lengthy and expensive. The FDA's 510(k) clearance process may take from four to twelve months, or longer. The pre-market application approval process is much more costly, lengthy and uncertain. It may take one to three years or even longer. Delays in obtaining regulatory clearance or approval could adversely affect our revenues and profitability. Although we have obtained 510(k) clearances for our XTRAC system for use in treating psoriasis and vitiligo, our clearance can be revoked if post-marketing data demonstrates safety issues or lack of effectiveness. EVEN IF WE OBTAIN THE NECESSARY REGULATORY APPROVALS FOR OUR PRODUCTS FROM FOREIGN GOVERNMENTS, MARKET ACCEPTANCE IN INTERNATIONAL MARKETS MAY DEPEND ON THIRD PARTY REIMBURSEMENT OF PARTICIPANT'S COSTS. As of January 31, 2001, we introduced our XTRAC system into markets in Italy and South Africa. As of March 14, 2001, we entered into a distribution agreement with a distributor to sell the XTRAC system in Israel. We intend to market our products in other international markets. We cannot be certain that our distributors will be successful in marketing XTRAC systems in these or other countries or that our distributors will purchase more then their contractual obligations. Even if we obtain the necessary foreign regulatory registrations or approvals, market acceptance of our products in international markets may be dependent, in part, upon the availability of reimbursement within applicable healthcare payment systems. Reimbursement and healthcare payment systems in international markets vary significantly by country, and include both government-sponsored healthcare and private insurance. Although we intend to seek international reimbursement approvals for our products, we cannot assure you that any such approvals will be obtained in a timely manner, if at all. Failure to receive international reimbursement approvals in any given market could have a material adverse effect on the acceptance of our products in that market or others. WE HAVE LIMITED MARKETING EXPERIENCE, AND OUR FAILURE TO BUILD AND MANAGE OUR MARKETING FORCE OR TO MARKET AND DISTRIBUTE OUR PRODUCTS EFFECTIVELY WILL HURT OUR REVENUES AND PROFITS. We have limited marketing experience. We currently rely on 14 direct account representatives to market our XTRAC system in the United States. We must expand this marketing team over the next 24 months to achieve our market share and revenue growth goals. Since we have only recently launched the XTRAC system, our personnel have limited experience marketing the product, and we cannot predict how successful 7 9 they will be in their marketing efforts. There are significant risks involved in building and managing our marketing force and marketing our products, including our ability: - to hire a sufficient number of qualified marketing people with the skills and understanding to market the XTRAC system effectively; - to adequately train our marketing force in the use and benefits of our system, making them less effective promoters; and - to accurately price our treatments using an XTRAC system as attractive alternatives to conventional treatments. WE HAVE LIMITED EXPERIENCE MANUFACTURING OUR PRODUCTS IN COMMERCIAL QUANTITIES, WHICH COULD ADVERSELY IMPACT THE RATE AT WHICH WE GROW. We may encounter difficulties manufacturing our products for the following reasons: - we have limited experience manufacturing our products in commercial quantities; - we do not have extensive experience manufacturing our products in compliance with the FDA's Quality System Regulation; - to increase our manufacturing output significantly, we will have to attract and retain qualified employees, who are in short supply, for assembly and testing operations; and - some of the components and materials necessary for manufacturing our products are currently provided by a single supplier. Although we believe that our current manufacturing facility is adequate to support our commercial manufacturing activities for the foreseeable future, we may be required to expand our manufacturing facilities to substantially increase capacity. If we are unable to provide customers with high-quality products in a timely manner, we may not be able to achieve market acceptance for our XTRAC system. Our inability to successfully manufacture or commercialize our devices could have a material adverse effect on our revenue. WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH. We expect to continue to experience significant growth in the number of our employees and customers and the scope of our operations. This growth may continue to place a significant strain on our management and operations. Our ability to manage this growth will depend upon our ability to broaden our management team and our ability to attract, hire and retain skilled employees. Our success will also depend on the ability of our officers and key employees to continue to implement and improve our operational and other systems, to manage multiple, concurrent customer relationships and to hire, train and manage our employees. Our future success is heavily dependent upon growth and acceptance of new products. If we cannot scale our business appropriately or otherwise adapt to anticipated growth and new product introductions, a key part of our strategy may not be successful. OUR PRODUCTS REQUIRE SPECIFIC COMPONENT PARTS THAT MAY NOT BE READILY AVAILABLE OR COST EFFECTIVE, WHICH MAY ADVERSELY AFFECT OUR COMPETITIVE POSITION OR PROFITABILITY. Production of our XTRAC system requires specific component parts obtained from our suppliers. In the event that our suppliers cannot meet our needs, we believe that we could find alternative suppliers. However, a change in suppliers or any significant delay in our ability to have access to such resources would have a material adverse effect on our delivery schedules, business, operating results and financial condition. OUR FAILURE TO RESPOND TO RAPID CHANGES IN TECHNOLOGY AND ITS APPLICATIONS AND INTENSE COMPETITION IN THE MEDICAL DEVICES INDUSTRY OR THE DEVELOPMENT OF A CURE FOR PSORIASIS COULD MAKE OUR TREATMENT SYSTEM OBSOLETE. The medical devices industry is subject to rapid and substantial technological development and product innovations. To be successful, we must respond to new developments in technology, new applications of existing technology and new treatment methods. We compete against numerous companies offering alterna- 8 10 tive treatment systems to ours, some of which have greater financial, marketing and technical resources to utilize in pursuing technological development and new treatment methods. Our financial condition and operating results could be adversely affected if our XTRAC system fails to compete favorably with these technological developments, or if we fail to be responsive on a timely and effective basis to competitors' new devices, applications, treatments or price reductions. The development of a cure for psoriasis or vitiligo would eliminate the need for our XTRAC system for either of these diseases and would require us to focus on other uses of our technology, which would have a material adverse effect on our business. On August 15, 2000, SurgiLight, Inc., or SurgiLight, announced it had received FDA clearance on its own excimer laser for the treatment of psoriasis. We have sued SurgiLight for misappropriation of our trade secrets and other confidential information, which we believe SurgiLight utilized to develop this laser. If we do not prevail in this litigation to protect our intellectual property, we may face direct competition from SurgiLight and other potential competitors. WE DO NOT HAVE A STRATEGIC PARTNER TO DEVELOP AND MARKET OUR TMR PRODUCTS. In August 1997, we entered into an agreement with Edwards LifeSciences Corporation, or Edwards. Under the terms of this agreement, we granted Edwards exclusive worldwide rights to sell our modified excimer laser and associated disposable products, known as the AL5000M, for the treatment of cardiovascular and vascular disease using the surgical procedure known as transmyocardial revascularization, or TMR. Under the terms of the agreements with Edwards, Edwards had agreed, among other things, to: - absorb many of the significant expenses of bringing our TMR products to market; - fund the total cost of obtaining regulatory approvals worldwide for the use of the AL5000M for the treatment of cardiovascular and vascular disease; and - fund all sales and marketing costs related to the introduction and marketing of the AL5000M to treat cardiovascular and vascular disease. Our strategic relationship with Edwards has terminated, which termination is the subject of certain disputes between Edwards and us. We no longer have a strategic partner to develop and market our TMR system. We do not have sufficient financial resources to conduct the necessary human clinical trials to commercialize the application of the AL5000M for TMR. If we intend to continue to try to bring our AL5000M to market, we will have to seek out other parties for the purpose of financing the conduct of human clinical trials that otherwise would have been paid for by Edwards. We believe that third parties may have an economic incentive to provide such assistance due to the fact that we believe that the AL5000M is technically superior and less expensive than lasers from other manufacturers used for the same medical applications. However, we cannot assure you that we will be able to find another alliance in connection with our AL5000M and even if we do so that such alliance will be on terms as favorable as those of the alliance we had with Edwards. In late January, 2001, we learned that on November 10, 2000, Edwards and LaserSight, Inc., or Lasersight, granted a non-exclusive sublicense of the Lasersight license to Spectranetics, Inc., or Spectranetics, without our consent. We believe that the grant of this sublicense violated certain agreements between Edwards and us. We are currently evaluating what measures we should take in connection with these actions by Edwards. We believe that this action by Edwards, if not reversed, may restrict our ability to protect products that we may develop in the cardiovascular field from competition by Spectranetics and others. OUR PRODUCTS MAY BE FOUND DEFECTIVE OR PHYSICIANS AND TECHNICIANS MAY MISUSE OUR PRODUCTS AND DAMAGES MAY EXCEED OUR INSURANCE COVERAGE. To date, there have been no tests completed observing the long-term effects of our XTRAC system. One or more of our products may be found to be defective after we have already shipped them in volume, requiring a product replacement. Product returns and the potential need to remedy defects or provide replacement products or parts could result in substantial costs and have a material adverse effect on our business and results of operations. The clinical testing, manufacturing, marketing and use of our products and procedures may also expose us to product liability claims. In addition, our training of technicians whom we do not supervise in the 9 11 use of our XTRAC system may expose us to medical malpractice claims. We maintain liability insurance with coverage limits of $10,000,000 per occurrence. We cannot assure you that the coverage limits of our insurance policies are adequate or that one or more successful claims brought against us would not have a material adverse effect upon our business, financial condition and results of operations. IF WE USE HAZARDOUS MATERIALS IN A MANNER THAT CAUSES INJURY OR VIOLATES LAWS, OUR BUSINESS AND OPERATIONS MAY SUFFER. Our XTRAC system utilizes a xenon chloride gas mixture under high pressure, which is extremely corrosive. While methods for proper disposal and handling of this gas are well-known, we cannot completely eliminate the risk of accidental contamination, which could cause: - an interruption of our research and development efforts; - injury to our employees, physicians, technicians or patients which could result in the payment of damages; or - liabilities under federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. WE DEPEND ON OUR EXECUTIVE OFFICERS AND KEY PERSONNEL TO IMPLEMENT OUR BUSINESS STRATEGY AND COULD BE HARMED BY THE LOSS OF THEIR SERVICES. We believe that our growth and future success will depend in large part upon the skills of our management and technical team. The competition for qualified personnel in the laser industry is intense, and the loss of our key personnel or an inability to continue to attract, retain and motivate key personnel could adversely affect our business. We cannot assure you that we will be able to retain our existing key personnel or to attract additional qualified personnel. We do not have key-person life insurance on any of our employees. Our success depends in part upon the continued service and performance of: - Jeffrey F. O'Donnell, President and Chief Executive Officer; and - Dennis M. McGrath, Chief Financial Officer. Although we have employment agreements with Mr. O'Donnell and Mr. McGrath, the loss of the services of one or more of our executive officers could impair our ability to develop and introduce our new products. OUR HIGH AMORTIZATION OF GOODWILL AND PATENT EXPENSES MAY REDUCE OR ELIMINATE OUR NET INCOME. Our business depends on the commercialization of a number of technologies, some of which are the subject of patents. For financial statement purposes, we are required to amortize the cost of acquisition of these patents and licenses of patents owned by others over a period of years. In addition, acquisitions of business operations have required us to record certain assets as goodwill on our financial statements and to amortize such goodwill over periods of years. We amortize license fees paid over the life of the license and patent expenses over the life of the patent. This amortization reduces net income on our current and future financial statements. For 1998, 1999 and 2000, the totals of such amortization were $1,028,034, $998,590 and $649,501, respectively. This amount of amortization, when compared to our revenue for any year, may make it very difficult for us to show profitability until net revenues from operations increase significantly or until we have completely amortized most of the items requiring amortization or that we will not incur other expenditures, which will require us to book significant additional amounts of amortization. We cannot assure you that we will ever earn enough net revenue to offset most or all of our then current amortization expenses. 10 12 DELAWARE LAW HAS ANTI-TAKEOVER PROVISIONS THAT COULD DELAY OR PREVENT ACTUAL AND POTENTIAL CHANGES IN CONTROL, EVEN IF THEY WOULD BENEFIT STOCKHOLDERS. We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a business combination between a corporation and an "interested stockholder" within three years of the stockholder becoming an interested stockholder, except in limited circumstances. POTENTIAL FLUCTUATIONS IN OUR OPERATING RESULTS COULD LEAD TO FLUCTUATIONS IN THE MARKET PRICE FOR OUR COMMON STOCK. Our results of operations are expected to fluctuate significantly from quarter to quarter, depending upon numerous factors, including: - healthcare reform and reimbursement policies; - demand for our products; - changes in our pricing policies or those of our competitors; - increases in our manufacturing costs; - the number, timing and significance of product enhancements and new product announcements by ourselves and our competitors; - our ability to develop, introduce and market new and enhanced versions of our products on a timely basis considering, among other things, delays associated with the FDA and other regulatory approval processes and the timing and results of future clinical trials; and - product quality problems, personnel changes, and changes in our business strategy. Our quarter to quarter operating results could also be affected by the timing and usage of individual laser units in the treatment of patients, since our revenue model for the excimer laser system for the treatment of psoriasis patients is based on a payment per usage plan. OUR STOCK PRICE HAS BEEN AND CONTINUES TO BE VOLATILE. The market price for our common stock could fluctuate due to various factors. These factors include: - acquisition-related announcements; - announcements by us or our competitors of new contracts, technological innovations or new products; - changes in government regulations; - fluctuations in our quarterly and annual operating results; and - general market conditions. In addition, the stock markets have, in recent years, experienced significant price fluctuations. These fluctuations often have been unrelated to the operating performance of the specific companies whose stock is traded. Market fluctuations, as well as economic conditions, have adversely affected, and may continue to adversely affect, the market price of our common stock. OUR ABILITY TO PAY DIVIDENDS ON OUR COMMON STOCK MAY BE LIMITED. We do not expect to pay any cash dividends in the foreseeable future. We intend to retain earnings, if any, to provide funds for the expansion of our business. LIMITATIONS ON DIRECTOR LIABILITY MAY DISCOURAGE STOCKHOLDERS FROM BRINGING SUIT AGAINST A DIRECTOR. Our certificate of incorporation provides, as permitted by governing Delaware law, that a director shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, with certain exceptions. These provisions may discourage stockholders from bringing suit against a director for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by 11 13 stockholders on our behalf against a director. In addition, our certificate of incorporation and bylaws provide for mandatory indemnification of directors and officers to the fullest extent permitted by Delaware law. IN 1997, PRIOR MANAGEMENT ENTERED INTO A SETTLEMENT ORDER WITH THE COMMISSION REGARDING CERTAIN EVENTS, WHICH MAY ADVERSELY AFFECT OUR ABILITY TO CONDUCT FINANCING IN THE FUTURE. In 1997, as a result of certain alleged securities law violations in 1992 and early 1993 under prior management, we entered into a Settlement Order with the Commission, in which we consented to the entry of an order finding that prior management violated the securities laws and ordering prior management to cease and desist from any future securities law violations. The alleged events occurred prior to the change in our management and board of directors. We cannot assure you that the Settlement Order will not have an adverse effect on our ability to conduct financing in the future. WHERE YOU CAN FIND MORE INFORMATION We have filed a registration statement on Form S-3 with the Securities and Exchange Commission, or the Commission, under the Securities Act of 1933, as amended, or the Securities Act, with respect to the shares of common stock offered hereby, together with any amendments, exhibits and schedules. This prospectus does not contain all of the information contained in the registration statement on Form S-3, certain portions of which we have omitted as permitted by the rules and regulations of the Commission. For further information concerning us and the shares offered hereby, please refer to the registration statement on Form S-3. You may inspect the registration statement without charge at the Commission's principal office in Washington, D.C., and you may obtain copies of all or any part of the registration statement from the Public Reference Room of the Commission, Washington, D.C., 20549, upon payment of prescribed fees. We are a reporting company and file annual, quarterly and special reports, proxy statements and other information with the Commission. You may inspect and copy these materials at the Public Reference Room maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for more information on the Public Reference Room. You can also find our Commission filings at the Commission's website at www.sec.gov. You may also inspect reports and other information concerning us at the offices of the Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C. 20006. Any documents we file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, after the date of this prospectus, but before the end of this offering, will be deemed to be incorporated by reference. The Commission allows us to incorporate by reference information into this prospectus, which means we can disclose important information to you by referring you to another document filed separately with the Commission. The information incorporated by reference is considered to be part of this prospectus, except for any information superseded by information in this prospectus. This prospectus incorporates by reference the documents listed below, which we have previously filed with the Commission. These documents contain important information about us, our business and our finances: - Annual Report on Form 10-K for the year ended December 31, 2000. - The description of our common stock contained in our registration statements filed under the Exchange Act, including any amendments or reports filed for the purpose of updating such descriptions. If you request, either orally or in writing, we will provide to you a copy of any or all documents which are incorporated by reference. We will provide these documents to you free of charge, but will not include any exhibits, unless those exhibits are incorporated by reference into the document. You should address written requests for documents to: PhotoMedex, Inc., Attn: Investor Relations, Five Radnor Center, Suite 470, Radnor, Pennsylvania 19087, (610) 971-9292. You should rely only on the information incorporated by reference or provided in this prospectus or the prospectus supplement. We have authorized no one to provide you with different information. We are not 12 14 making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of the document. PLAN OF DISTRIBUTION We are registering all 1,540,000 shares on behalf of certain selling stockholders. We originally issued: - 1,230,000 shares in connection with a private placement to certain of the selling stockholders, - 300,000 shares in connection with the acquisition of the 23.9% minority interest of our currently, wholly-owned subsidiary, Acculase, Inc., a California corporation, and - 10,000 shares to a consultant for consulting services rendered to us, with each issuance under exemption from the registration requirements of the Securities Act. We will receive no proceeds from this offering. In connection with the private placement, we sold the 1,230,000 shares at a purchase price per share of $5.00, resulting in gross proceeds to us of $6,150,000. We paid a placement fee of approximately $400,000 to Pacific Growth Equities, Inc., or PGE, a broker-dealer registered with the National Association of Securities Dealers, Inc., and reimbursed PGE for certain other expenses. PGE agreed to pay PMG Capital Corp., our investment banker and one of our principal stockholders, 10% of the total placement fee paid to PGE, net of unreimbursed expenses paid in the private placement. We did not pay any commissions or finder's fees in connection with the other share issuances. The selling stockholders named in the table below or pledges, donees, transferees or other successors-in-interest, who may sell shares received from a named selling stockholder as a gift, partnership distribution or other non-sale-related transfer after the date of this prospectus, collectively, the selling stockholders, may sell the shares from time to time. The selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. The sales may be made on one or more exchanges or in the over-the-counter market or otherwise, at prices and at terms then prevailing or at prices related to the then current price, or in negotiated transactions. The selling stockholders may effect such transactions by selling the shares to or through broker-dealers. The shares may be sold by one or more of, or a combination of, the following: - a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent by may position and resell a portion of the block as principal to facilitate the transaction, - purchases by a broker-dealer as principal and resale by such broker-dealer for its account pursuant to this prospectus, - an exchange distribution in accordance with the rules of such exchange, - ordinary brokerage transactions and transactions in which the broker solicits purchasers, and - in privately negotiated transactions. To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. In effecting sales, broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in the resales. The selling stockholders may enter into hedging transactions with broker-dealers in connection with distributions of the shares or otherwise. In such transactions, broker-dealers may engage in short sales of the shares in the course of hedging the positions they assume with selling stockholders. The selling stockholders also may sell shares short and redeliver the shares to close out such short positions. The selling stockholders may enter into option or other transactions with broker-dealers, which require the delivery to the broker-dealer of the shares. The broker-dealer may then resell or otherwise transfer such shares pursuant to this prospectus. The selling stockholders also may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the shares so loaned, or upon a default, the broker-dealer may sell the pledged shares pursuant to this prospectus. 13 15 Broker-dealers or agents may receive compensation in the form of commissions, discounts or concessions from the selling stockholders. Broker-dealers or agents may also receive compensation from the purchasers of the shares for which they act as agents or to whom they sell as principals, or both. Compensation as to a particular broker-dealer might be in excess of customary commissions and will be in amounts to be negotiated in connection with the sale. Broker-dealers or agents and any other participating broker-dealers or the selling stockholders may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act in connection with sales of the shares. Accordingly, any such commission, discount or concession received by them and any profit on the resale of the shares purchased by them may be deemed to be underwriting discounts or commissions under the Securities Act. Because selling stockholders may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, the selling stockholders will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus, which qualify for sale pursuant to Rule 144 promulgated under the Securities Act, may be sold under Rule 144 rather than pursuant to this prospectus. There is no underwriter or coordinating broker acting in connection with the sale of shares by selling stockholders. The shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the shares may not simultaneously engage in market making activities with respect to our common stock for a period of two business days prior to the commencement of such distribution. In addition, each selling stockholder will be subject to applicable provisions of the Exchange Act and the associated rules and regulations under the Exchange Act, including Regulation M, which provisions may limit the timing of purchases and sales of shares of our common stock by the selling stockholders. We will make copies of this prospectus available to the selling stockholders and have informed them of the need for delivery of copies of this prospectus to purchasers at or prior to the time of any sale of the shares. We will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, upon being notified by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer. Such supplement will disclose: - the name of each such selling stockholder and of the participating broker-dealer(s), - the number of shares involved, - the price at which such shares were sold, - the commissions paid or discounts or concessions allowed to such brokerdealer(s), where applicable, - that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and - other facts material to the transaction. We will bear all costs, expenses and fees in connection with the registration of the shares. The selling stockholders will bear all commissions and discounts, if any, attributable to the sales of the shares. The selling stockholders may agree to indemnify any broker-dealer or agent that participates in transactions involving sales of the shares against certain liabilities, including liabilities arising under the Securities Act. The selling stockholders have agreed to indemnify certain persons, including broker-dealers and agents, against certain liabilities in connection with the offer of the shares, including liabilities arising under the Securities Act. SELLING STOCKHOLDERS The following table sets forth certain information regarding the selling stockholders and the number of shares owned by each of the selling stockholders. None of the selling stockholders has had a material 14 16 relationship with us within the past three years other than as a result of the ownership of our shares or other securities. No estimate can be given as to the amount of shares that will be held by the selling stockholders after completion of this offering because the selling stockholders may offer all or some of the shares and because there currently are no agreements, arrangements or understandings with respect to the sale of any of the shares. The shares offered by this prospectus may be offered from time to time by the selling stockholders named below:
NUMBER OF SHARES NAME OF NUMBER OF SHARES PERCENTAGE OF REGISTERED FOR SELLING STOCKHOLDER BENEFICIALLY OWNED SHARES OUTSTANDING(1) RESALE HEREBY(2) - ------------------- ------------------ --------------------- ---------------- Baystar Capital LP...................... 300,000(3) 1.57 200,000 Baystar International, Ltd. ............ 300,000(3) 1.57 100,000 Clarion Capital Corp. .................. 100,000(4) * 30,000 Clarion Offshore Fund, Ltd. ............ 100,000(4) * 30,100 Clarion Partners LP..................... 100,000(4) * 39,900 Marcuard Cook & Cie, S.A. .............. 50,000(5) * 50,000 Knott Partners, LP...................... 100,000(5) * 61,800 The Common Fund......................... 100,000(5) * 20,800 Trinkhuas & Burkhardt International..... 100,000(5) * 2,300 Matterhorn Offshore Fund................ 100,000(5) * 15,100 J. Steven Emerson R/O IRA II............ 95,000 * 50,000 Fidelity National Title Insurance Co. .................................. 15,000 * 15,000 Gruber & McBaine International.......... 125,500 * 45,000 Lagunitas Partners LP................... 392,250 2.05 55,000 Gryphon Master Fund L.P. ............... 50,000 * 50,000 Lancaster Investment Partners, L.P. .... 475,000 2.48 145,000 EDJ Limited............................. 100,000 * 100,000 Ben Joseph Partners..................... 20,000 * 20,000 Sonz Partners LP........................ 110,000 * 10,000 Talkot Crossover Fund................... 276,400(6) 1.45 50,000 Thomas B. Aken.......................... 276,400(6) 1.45 50,000 North Olmstead Partners, LP............. 100,000 * 50,000 TCMP3 Partners LP....................... 30,000 * 30,000 Stephen J. Mossacca Investment Fund..... 10,000 * 10,000 Baxter Marine International, Ltd. ...... 115,485 * 115,485 Wallace A. Booth........................ 5,358 * 5,358 Sherry E. Brainerd...................... 48,713 * 48,713 Chalm, Inc. ............................ 5,358 * 5,358 Jeffrey I. Levatter..................... 67,454 * 67,454 Charles W. Missler...................... 58,726 * 58,726 Clarence A. Robinson, Jr. .............. 1,774 * 1,774 Bruce G. Rossiter....................... 1,774 * 1,774 Charles A. Von Urff..................... 5,358 * 5,358 --------- TOTAL................................... 1,540,000
- --------------- * Represents beneficial ownership of less than one percent. (1) Beneficial ownership is determined in accordance with the rules of the Commission. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days of April 4, 2001, are deemed outstanding for computing the percentage ownership of the stockholder holding the options or warrants, but are not deemed outstanding for computing the percentage ownership of any other 15 17 stockholder. Unless otherwise indicated in the footnotes to this table, we believe stockholders named in the table have sole voting and sole investment power with respect to the shares set forth opposite such stockholder's name. Unless otherwise indicated, the officers, directors and stockholders can be reached at our principal offices. Percentage of ownership is based on 19,128,345 shares of common stock outstanding as of April 4, 2001. All share numbers and percentages assume no exercise of the underwriters' over- allotment option. (2) This registration statement also shall cover any additional shares of common stock, which become issuable in connection with the shares registered for sale hereby by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration, which results in an increase in the number of outstanding shares of our common stock. (3) Includes shares registered in this prospectus in the names of Baystar Capital LP and Baystar International, Ltd., which may be deemed to be affiliates of each other. (4) Includes shares registered in this prospectus in the names of Clarion Capital Corp., Clarion Offshore Fund, Ltd. and Clarion Partners LP., which may be deemed to be affiliates of each other. (5) Includes shares registered in this prospectus in the names of Knott Partners, LP, The Common Fund, Trinkhaus & Burkhardt International and Matterhorn Offshore Fund, which may be deemed to be affiliates of each other. (6) Includes shares registered in this prospectus in the names of Talkot Crossover Fund and Thomas B. Aken, which may be deemed to be affiliates of each other. LEGAL MATTERS Luce, Forward, Hamilton & Scripps LLP, Los Angeles, California, will pass upon the validity of the shares of common stock offered in this prospectus for us. As of the date hereof, Messrs. Michael R. Matthias and Jeffrey P. Berg, partners in Luce, Forward, Hamilton & Scripps LLP, hold 43,562 shares of our common stock. EXPERTS The consolidated financial statements incorporated by reference to the Annual Report on Form 10-K of PhotoMedex, Inc. for the year ended December 31, 2000, to the extent and for the periods indicated in their reports, have been audited by Arthur Andersen LLP and Hein + Associates LLP, independent public accountants, and are incorporated by reference herein in reliance upon the authority of said forms as experts in giving said reports. On May 4, 2000, we terminated our relationship with Hein + Associates LLP, as our principal independent accountants. The decision to terminate Hein + Associates LLP as our principal independent accountants was approved by our Board of Directors on May 4, 2000. In connection with the audits for the 3 most recent fiscal years ended December 31, 1999, 1998 and 1997, and the subsequent interim period through May 4, 2000, there were no disagreements between Hein + Associates LLP and us, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Hein + Associates LLP would have caused Hein + Associates LLP to make reference in connection with its report for the related periods with respect to the subject matter of the disagreement. The audit reports of Hein + Associates LLP on our consolidated financial statements, as of and for the fiscal years ended December 31, 1999 and 1998, did not contain any adverse opinion, or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. As of June 23, 2000, we engaged Arthur Andersen LLP, as our independent public accountant. Prior to engaging Arthur Andersen LLP, neither we nor anyone on our behalf consulted Arthur Andersen LLP regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements. Since no disagreements were 16 18 reported between us and our former independent public accountant, Arthur Andersen LLP has not been consulted on any matter that was either the subject of a disagreement or a reportable event. We have not authorized any person to make a statement that differs from what is in this prospectus. If any person does make a statement that differs from what is in this prospectus, you should not rely on it. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state in which the offer or sale is not permitted. The information in this prospectus is complete and accurate as of its date, but the information may change after that date. 17 19 - ------------------------------------------------------ - ------------------------------------------------------ YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE ON THE DATE OF THIS DOCUMENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. ------------------------ TABLE OF CONTENTS
PAGE ---- THE COMPANY........................... 2 WHERE YOU CAN FIND MORE INFORMATION... 12 PLAN OF DISTRIBUTION.................. 13 SELLING STOCKHOLDERS.................. 15 LEGAL MATTERS......................... 16 EXPERTS............................... 16
- ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ 1,540,000 SHARES PHOTOMEDEX, INC. COMMON STOCK ------------------------ PROSPECTUS ------------------------ , 2001 - ------------------------------------------------------ - ------------------------------------------------------ 20 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The registrant estimates that expenses in connection with the offering described in this Registration Statement, other than underwriting discounts and commissions, will be as follows: Securities and Exchange Commission Registration Fee......... $ 1,543.85 Legal Fees and Expenses..................................... $10,000.00 Accounting Fees and Expenses................................ $10,000.00 Transfer Agent Fees and Expenses............................ $ 1,000.00 Printing Expenses........................................... $ 7,500.00 Miscellaneous............................................... $ 1,000.00 ---------- Total............................................. $31,043.85
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Our Certificate of Incorporation generally provides for the maximum indemnification of a corporation's officers and directors as permitted by law in the State of Delaware. Delaware law empowers a corporation to indemnify any person who was or is a party or who is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except in the case of an action by or in the right of the corporation, by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other enterprise. Depending on the character of the proceeding, a corporation may indemnify against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceedings, had no reasonable cause to believe his or her conduct was unlawful. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other enterprise, against expenses, including amounts paid in settlement and attorney's fees actually and reasonably incurred by him or her in connection with the defense or settlement of the action or suit if he or she acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, he or she must be indemnified by the corporation against expenses, including attorney's fees, actually and reasonably incurred by him in connection with the defense. The corporation, unless ordered by a court or advanced pursuant to this section, must make any indemnification under this section, only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made: (a) by the stockholders; (b) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; (c) if a majority vote of a quorum consisting of directors who were not parties to the action, suit II-1 21 or proceeding so orders, by independent legal counsel in a written opinion; or (d) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion. The certificate of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the corporation. The provisions of this section do not affect any rights to advancement of expenses to which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this section: (a) does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his or her official capacity or an action in another capacity while holding his or her office, except that indemnification, unless ordered by a court pursuant to this section or for the advancement of any director or officer if a final adjudication establishes that his or her acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action; and (b) continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person. Further, we may enter into agreements of indemnification with our directors to provide for indemnification to the fullest extent permitted under Delaware law. ITEM 16(a)
EXHIBITS - -------- 2.1 Form of Stock Purchase Agreement by and between PhotoMedex, Inc. and the Selling Stockholders, dated March 27, 2001. 2.2 Form of Registration Rights Agreement by and between PhotoMedex, Inc. and the Selling Stockholders, dated March 27, 2001. 2.3 Form of Share Exchange Agreement, by and between PhotoMedex, Inc. and the Holders of Common Stock of Acculase, Inc., dated July 1, 2000. 5.1 Opinion of Luce, Forward, Hamilton & Scripps LLP. 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Hein + Associates LLP 23.3 Consent of Luce, Forward, Hamilton & Scripps LLP (included in Exhibit 5.1 hereto) 24.1 Power of Attorney (included on signature page of this Registration Statement)
ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) That, for purposes of determining any liability under the Securities Act of 1933, as amended (the "Securities Act"), each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) That, for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon II-2 22 Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (3) That, for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (4) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a) (3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; provided, however, that paragraphs (4)(i) and (4)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this registration statement. (5) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 23 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Radnor, Pennsylvania on April 5, 2001. PHOTOMEDEX, INC. By: /s/ JEFFREY F. O'DONNELL ------------------------------------ Jeffrey F. O'Donnell, President and Chief Executive Officer II-4 24 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jeffrey F. O'Donnell and Dennis M. McGrath, as his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) and supplements to this Registration Statement, and to file the same with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith , as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY IN WHICH SIGNED DATE --------- ------------------------ ---- /s/ WARWICK ALEX CHARLTON Chairman of the Board of Directors April 5, 2001 - --------------------------------------------------- Warwick Alex Charlton /s/ JEFFREY F. O'DONNELL President, Chief Executive Officer April 5, 2001 - --------------------------------------------------- and Director Jeffrey F. O'Donnell /s/ DENNIS M. MCGRATH Chief Financial Officer (Principal April 5, 2001 - --------------------------------------------------- Accounting Officer) Dennis M. McGrath /s/ ALAN R. NOVAK Director April 5, 2001 - --------------------------------------------------- Alan R. Novak /s/ JOHN J. MCATEE, JR. Director April 5, 2001 - --------------------------------------------------- John J. McAtee, Jr. /s/ SAMUEL E. NAVARRO Director April 5, 2001 - --------------------------------------------------- Samuel E. Navarro /s/ RICHARD DEPIANO Director April 5, 2001 - --------------------------------------------------- Richard DePiano
II-5 EX-2.1 2 w47540ex2-1.txt STOCK PURCHASE AGREEMENT DATED MARCH 27, 2001 1 Exhibit 2.1 STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT is dated as of the 27th day of March, 2001 by and between PHOTOMEDEX, INC., a Delaware corporation with its principal office at 5 Radnor Corporate Center, Suite 470 Radnor, PA 19087 (the "Company"), and the several purchasers named in the attached Exhibit A (individually, a "Purchaser" and collectively, the "Purchasers"). WHEREAS, the Company desires to issue and sell to the Purchasers an aggregate of up to 3,000,000 shares (the "Shares") of the authorized but unissued shares of common stock, $.01 par value per share, of the Company (the "Common Stock"); and WHEREAS, the Purchasers, severally, wish to purchase the Shares on the terms and subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants herein contained, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following respective meanings: (a) "Affiliate" of a party, means any corporation or other business entity controlled by, controlling or under common control with such party. For this purpose "control" shall mean direct or indirect beneficial ownership of fifty percent (50%) or more of the voting or income interest in such corporation or other business entity. (b) "Closing Date" means the date of the Closing. (c) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated there under. (d) "Registration Rights Agreement" shall mean that certain Registration Rights Agreement, dated as of the date hereof, among the Company and the Purchasers. (e) "Majority Purchasers" shall mean Purchasers, which, at any given time, hold greater than fifty percent (50%) of the voting power of the outstanding Shares. (f) "SEC" shall mean the Securities and Exchange Commission. (g) "Securities Act" shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated there under. 1 2 2. Purchase and Sale of Shares. 2.1 Purchase and Sale. Subject to and upon the terms and conditions set forth in this Agreement, the Company agrees to issue and sell to each Purchaser, and each Purchaser, severally, hereby agrees to purchase from the Company, at the Closing, the number of shares of Common Stock set forth opposite the name of such Purchaser under the heading "Number of Shares to be Purchased" on Exhibit A hereto, at a purchase price of $5.00 per share. The total purchase price payable by each Purchaser for the number of shares of Common Stock that such Purchaser is hereby agreeing to purchase is set forth opposite the name of such Purchaser under the heading "Purchase Price" on Exhibit A hereto. The aggregate purchase price payable by the Purchasers to the Company for all of the Shares shall be $6,150,000. 2.2 Closing. The closing of the transactions contemplated under this Agreement (the "Closing") shall take place at the offices of Luce, Forward, Hamilton & Scripps LLP, 1990 South Bundy Drive, Suite 790, Los Angeles, California 90025, on the second business day after the Company shall have given written notice to (the "Closing Notice") the Purchasers that all of the conditions precedent set forth in Section 6.1 have been satisfied in full or at such other location, date and time as may be agreed upon between the Purchasers and the Company. At the Closing, the Company shall deliver to each Purchaser a single stock certificate, registered in the name of such Purchaser, representing the number of shares of Common Stock purchased by such Purchaser, against payment of the purchase price therefore by wire transfer of immediately available funds to such account or accounts as the Company shall designate in writing. 3. Representations and Warranties of the Company. The Company hereby represents and warrants to each of the Purchasers as follows: 3.1 Incorporation. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect upon the Company. The Company has all requisite corporate power and authority to carry on its business as now conducted. 3.2 Capitalization. The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, of 17,802,283 shares are outstanding on the date hereof. Except as set forth in Schedule 3.2 hereto, there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character obligating the Company to issue, transfer or sell, or cause to be issued, transferred or sold, any shares of the capital stock of the Company or other equity interests in the Company or any securities convertible into or exchangeable for such shares of capital stock or other equity interests, and there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of its capital stock or other equity interests. 2 3 3.3 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein has been taken. When executed and delivered by the Company, each of this Agreement and the Registration Rights Agreement shall constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors' rights generally and by general equitable principles. The Company has all requisite corporate power to enter into this Agreement and the Registration Rights Agreement and to carry out and perform its obligations under the terms of this Agreement, and the Registration Rights Agreement. 3.4 Valid Issuance of the Shares. The Shares being purchased by the Purchasers hereunder will, upon issuance pursuant to the terms hereof, be duly authorized and validly issued, fully paid and nonassessable. 3.5 Financial Statements. The Company has furnished to each Purchaser its audited Statements of Operations, Stockholders' Equity and Cash Flows for the fiscal year ended (most recent), its audited Balance Sheet as of (most recent audit), its unaudited Statements of Operations, Stockholders' Equity and Cash Flows for the period from (through most recent Form 10-Q), and its unaudited Balance Sheet as of (most recent 10-Q). All such financial statements are hereinafter referred to collectively as the "Financial Statements." The Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved, and fairly present, in all material respects, the financial position of the Company and the results of its operations as of the date and for the periods indicated thereon, except that the unaudited financial statements may not be in accordance with generally accepted accounting principles because of the absence of footnotes normally contained therein and are subject to normal year-end audit adjustments which, individually, and in the aggregate, will not be material. Since (most recent Form 10-Q), to the Company's knowledge, there has been no material adverse change (actual or threatened) in the assets, liabilities (contingent or other), affairs, operations, prospects or condition (financial or other) of the Company. 3.6 SEC Documents. The Company has furnished to each Purchaser, a true and complete copy of the Company's Annual Report on Form 10-K for the (most recent year), the Company's Quarterly Report on Form 10-Q for the nine months ended (most recent Form 10-Q), and any other statement, report, registration statement (other than registration statements on Form S-8) or definitive proxy statement filed by the Company with the SEC during the period commencing (date of most recent Form 10-Q) and ending on the date hereof. The Company will, promptly upon the filing thereof, also furnish to each Purchaser all statements, reports (including, without limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K), registration statements and definitive proxy statements filed by the Company with the SEC during the period commencing on the date hereof and ending on the Closing Date (all such materials required to be furnished to each Purchaser pursuant to this sentence or pursuant to the next preceding sentence of this Section 3.6 being called, collectively, the "SEC Documents"). As of their respective filing dates, the SEC Documents complied or will comply in all material 3 4 respects with the requirements of the Exchange Act or the Securities Act, as applicable, and none of the SEC Documents contained or will contain any untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, as of their respective filing dates, except to the extent corrected by a subsequently filed SEC Document. 3.7 Consents. All consents, approvals, orders and authorizations required on the part of the Company in connection with the execution, delivery or performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein, other than for Regulation D and state blue sky filings with respect to the sale of shares, and therein have been obtained and will be effective as of the Closing Date. 3.8 No Conflict. The execution and delivery of this Agreement and the Registration Rights Agreement by the Company and the consummation of the transactions contemplated hereby and thereby will not conflict with or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of the Certificate of Incorporation or By-laws of the Company or (ii) any agreement or instrument, permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations, applicable to the Company or its respective properties or assets. 3.9 Brokers or Finders. Except for Pacific Growth Equities, Inc., the Company has not dealt with any broker or finder in connection with the transactions contemplated by this Agreement, and, except for certain fees and expenses payable by the Company to Pacific Growth Equities, Inc., the Company has not incurred, and shall not incur, directly or indirectly, any liability for any brokerage or finders' fees or agents commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby. 3.10 NASDAQ National Market. The Common Stock is listed on the NASDAQ National Market System, and there are no proceedings to revoke or suspend such listing and the company has no knowledge of any fact that would give rise to a delisting. 3.11 Absence of Litigation. There is no action, suit or proceeding or, to the Company's knowledge, any investigation, pending, or to the Company's knowledge, threatened by or before any governmental body against the Company and in which an unfavorable outcome, ruling or finding in any said matter, or for all matters taken as a whole, might have a material adverse effect on the Company. The foregoing includes, without limitation, any such action, suit, proceeding or investigation that questions this Agreement or the Registration Rights Agreement or the right of the Company to execute, deliver and perform under same. 4. Representations and Warranties of the Purchasers. Each Purchaser severally for itself, and not jointly with the other Purchasers, represents and warrants to the Company as follows: 4 5 4.1 Authorization. All action on the part of such Purchaser and, if applicable, its officers, directors and shareholders necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein has been taken. When executed and delivered, each of this Agreement and the Registration Rights Agreement will constitute the legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors' rights generally and by general equitable principles. Such Purchaser has all requisite corporate power to enter into each of this Agreement and the Registration Rights Agreement and to carry out and perform its obligations under the terms of this Agreement and the Registration Rights Agreement. 4.2 Purchase Entirely for Own Account. Such Purchaser is acquiring the Shares being purchased by it hereunder for investment, for its own account, and not for resale or with a view to distribution thereof in violation of the Securities Act. 4.3 Investor Status; Etc. Such Purchaser certifies and represents to the Company that at the time such Purchaser acquires any of the Shares, such Purchaser will be an "Accredited Investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act and was not organized for the purpose of acquiring the Shares. Such Purchaser's financial condition is such that it is able to bear the risk of holding the Shares for an indefinite period of time and the risk of loss of its entire investment. Such Purchaser has been afforded the opportunity to ask questions of and receive answers from the management of the Company concerning this investment and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company's stage of development so as to be able to evaluate the risks and merits of its investment in the Company. 4.4 Shares Not Registered. Such Purchaser understands that the Shares have not been registered under the Securities Act, by reason of their issuance by the Company in a transaction exempt from the registration requirements of the Securities Act, and that the Shares must continue to be held by such Purchaser unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration. The Purchaser understands that the exemptions from registration afforded by Rule 144 (the provisions of which are known to it) promulgated under the Securities Act depend on the satisfaction of various conditions, and that, if applicable, Rule 144 may afford the basis for sales only in limited amounts. 4.5 No Conflict. The execution and delivery of this Agreement and the Registration Rights Agreement by such Purchaser and the consummation of the transactions contemplated hereby and thereby will not conflict with or result in any violation of or default by such Purchaser (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of the organizational documents of such Purchaser or (ii) any agreement or instrument, permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations, applicable to such Purchaser or its respective properties or assets. 5 6 4.6 Brokers. Such Purchaser has not retained, utilized or been represented by any broker or finder in connection with the transactions contemplated by this Agreement. 4.7 Consents. All consents, approvals, orders and authorizations required on the part of such Purchaser in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated herein have been obtained and are effective as of the Closing Date. 5. Conditions Precedent. 5.1. Conditions to the Obligation of the Purchasers to Consummate the Closing. The obligation of each Purchaser to consummate the Closing and to purchase and pay for the Shares being purchased by it pursuant to this Agreement is subject to the satisfaction of the following conditions precedent: (a) The representations and warranties contained herein of the Company shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date (it being understood and agreed by each Purchaser that, in the case of any representation and warranty of the Company contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all material respects in order to satisfy as to such representation or warranty the condition precedent set forth in the foregoing provisions of this Section 5.1(a)). (b) The Registration Rights Agreement shall have been executed and delivered by the Company. (c) The Company shall not have been adversely affected in any material way prior to the Closing Date; and the Company shall have performed all obligations and conditions herein required to be performed or observed by the Company on or prior to the Closing Date. (d) No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending. (e) The purchase of and payment for the Shares by the Purchasers shall not be prohibited by any law or governmental order or regulation. All necessary consents, approvals, licenses, permits, orders and authorizations of, or registrations, declarations and filings with, any governmental or administrative agency or of any other person with respect to any of the transactions contemplated hereby, other than for Regulation D and state blue sky filings with respect to the sale of the shares, shall have been duly obtained or made and shall be in full force and effect. (f) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at the Closing shall be satisfactory in form and substance to such Purchaser, and such Purchaser shall have received 6 7 copies (executed or certified, as may be appropriate) of all documents which such Purchaser may have reasonably requested in connection with such transactions. 5.2. Conditions to the Obligation of the Company to Consummate the Closing. The obligation of the Company to consummate the Closing and to issue and sell to each of the Purchasers the Shares to be purchased by it at the Closing is subject to the satisfaction of the following conditions precedent: (a) The representations and warranties contained herein of such Purchaser shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date (it being understood and agreed by the Company that, in the case of any representation and warranty of each Purchaser contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all material respects in order to satisfy as to such representation or warranty the condition precedent set forth in the foregoing provisions of this Section 5.2(a). (b) The Registration Rights Agreement shall have been executed and delivered by each Purchaser. (c) The Purchasers shall have performed all obligations and conditions herein required to be performed or observed by the Purchasers on or prior to the Closing Date. (d) No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the Closing, shall have been instituted before any court, arbitrator or governmental body, agency or official and shall be pending. (e) The sale of the Shares by the Company shall not be prohibited by any law or governmental order or regulation. All necessary consents, approvals, licenses, permits, orders and authorizations of, or registrations, declarations and filings with, any governmental or administrative agency or of any other person with respect to any of the transactions contemplated hereby, other than for Regulation D and state blue sky filings with respect to the sale of the shares, shall have been duly obtained or made and shall be in full force and effect. (f) Each of the Purchasers shall have executed and delivered to the Company a Purchaser's Questionnaire, in the form attached hereto as Exhibit B, pursuant to which each such Purchaser shall provide information necessary to confirm each such Purchaser's status as an "accredited investor" (as such term is defined in Rule 501 promulgated under the Securities Act)." (g) Each of the other Purchasers shall have purchased, in accordance with this Agreement, the number of shares of Common Stock set forth opposite its name under the heading "Number of Shares to be Purchased." 7 8 (h) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at the Closing shall be satisfactory in form and substance to the Company, and the Company shall have received counterpart originals, or certified or other copies of all documents, including without limitation records of corporate or other proceedings, which it may have reasonably requested in connection therewith. 6. Transfer, Legends. 6.1. Securities Law Transfer Restrictions. No Purchaser shall sell, assign, pledge, transfer or otherwise dispose or encumber any of the Shares being purchased by it hereunder, except (i) pursuant to an effective registration statement under the Securities Act or (ii) pursuant to an available exemption from registration under the Securities Act and applicable state securities laws and, if requested by the Company, upon delivery by such Purchaser of an opinion of counsel reasonably satisfactory to the Company to the effect that the proposed transfer is exempt from registration under the Securities Act and applicable state securities laws. Any transfer or purported transfer of the Shares in violation of this Section 6.1 shall be voidable by the Company. The Company shall not register any transfer of the Shares in violation of this Section 6.1. The Company may, and may instruct any transfer agent for the Company, to place such stop transfer orders as may be required on the transfer books of the Company in order to ensure compliance with the provisions of this Section 6.1. 6.2. Legends. Each certificate requesting any of the Shares shall be endorsed with the legends set forth below, and each Purchaser covenants that, except to the extent such restrictions are waived by the Company, it shall not transfer the shares represented by any such certificate without complying with the restrictions on transfer described in this Agreement and the legends endorsed on such certificate: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT." 7. Termination; Liabilities Consequent Thereon. This Agreement may be terminated and the transactions contemplated hereunder abandoned at any time prior to the Closing only as follows: (a) by the Purchasers, upon notice to the Company if the conditions set forth in Section 5.1 shall not have been satisfied on or prior to April 2, 2001, or (b) by the Company, upon notice to the Purchasers if the conditions set forth in Section 5.2 shall not have been satisfied on or prior to April 2, 2001, or 8 9 (c) at any time by mutual agreement of the Company and the Purchasers; or (d) by the Purchasers, if there has been any breach of any representation or warranty or any material breach of any covenant of the Company contained herein and the same has not been cured within 15 days after notice thereof, (it being understood and agreed by each Purchaser that, in the case of any representation or warranty of the Company contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation or warranty will be deemed to have been breached for purposes of this Section 7.1(d) only if such representation or warranty was not true and correct in all material respects at the time such representation or warranty was made by the Company); or (e) by the Company, if there has been any breach of any representation, warranty or any material breach of any covenant of any Purchaser contained herein and the same has not been cured within 15 days after notice thereof (it being understood and agreed by the Company that, in the case of any representation and warranty of the Purchaser contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation or warranty will be deemed to have been breached for purposes of this Section 7.1(e) only if such representation or warranty was not true and correct in all material respects at the time such representation or warranty was made by such Purchaser). Any termination pursuant to this Section 7 shall be without liability on the part of any party, unless such termination is the result of a material breach of this Agreement by a party to this Agreement in which case such breaching party shall remain liable for such breach notwithstanding any termination of this Agreement. 8. Miscellaneous Provisions. 8.1 Public Statements or Releases. None of the parties to this Agreement shall make, issue, or release any announcement, whether to the public generally, or to any of its suppliers or customers, with respect to this Agreement or the transactions provided for herein, or make any statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without the prior consent of the other parties, which shall not be unreasonably withheld or delayed, provided, that nothing in this Section 8.1 shall prevent any of the parties hereto from making such public announcements as it may consider necessary in order to satisfy its legal obligations, but to the extent not inconsistent with such obligations, it shall provide the other parties with an opportunity to review and comment on any proposed public announcement before it is made. 8.2 Further Assurances. Each party agrees to cooperate fully with the other party and to execute such further instruments, documents and agreements and to give such further written assurances, as may be reasonably requested by the other party to better evidence and reflect the transactions described herein and contemplated hereby, and to carry into effect the intents and purposes of this Agreement. 9 10 8.3 Rights Cumulative. Each and all of the various rights, powers and remedies of the parties shall be considered to be cumulative with and in addition to any other rights, powers and remedies which such parties may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy shall neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such party. 8.4 Pronouns. All pronouns or any variation thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require. 8.5 Notices. (a) Any notices, reports or other correspondence (hereinafter collectively referred to as "correspondence") required or permitted to be given hereunder shall be sent by postage prepaid first class mail, courier or telecopy or delivered by hand to the party to whom such correspondence is required or permitted to be given hereunder. The date of giving any notice shall be the date of its actual receipt. (b) All correspondence to the Company shall be addressed as follows: PhotoMedex, Inc. 5 Radnor Corporate Center, Suite 470 Radnor, PA 19087 Attention: Jeffrey O'Donnell, President Telecopier: (610) 971-9303 with a copy to: Luce, Forward, Hamilton & Scripps LLP 1990 South Bundy Drive, Suite 790 Los Angeles, California 90025 Attention: Jeffrey P. Berg, Esq. Telecopier: (310) 820-8313 (c) All correspondence to any Purchaser shall be sent to such Purchaser at the address set forth in Exhibit A. (d) Any entity may change the address to which correspondence to it is to be addressed by notification as provided for herein. 8.6 Captions. The captions and paragraph headings of this Agreement are solely for the convenience of reference and shall not affect its interpretation. 8.7 Severability. Should any part or provision of this Agreement be held unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, the 10 11 invalid or unenforceable part or provisions shall be replaced with a provision which accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Agreement shall remain binding upon the parties hereto. 8.8 Governing Law; Injunctive Relief. (a) This Agreement shall be governed by and construed in accordance with the internal and substantive laws of Delaware and without regard to any conflicts of laws concepts which concepts, which would apply the substantive law of some other jurisdiction. (b) Each of the parties hereto acknowledges and agrees that damages will not be an adequate remedy for any material breach or violation of this Agreement if such material breach or violation would cause immediate and irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a threatened or ongoing Irreparable Breach, each party hereto shall be entitled to seek, in any state or federal court in the State of Massachusetts Delaware, equitable relief of a kind appropriate in light of the nature of the ongoing or threatened Irreparable Breach, which relief may include, without limitation, specific performance or injunctive relief; provided, however, that if the party bringing such action is unsuccessful in obtaining the relief sought, the moving party shall pay the non-moving party's reasonable costs, including attorney's fees, incurred in connection with defending such action. Such remedies shall not be the parties' exclusive remedies, but shall be in addition to all other remedies provided in this Agreement. 8.9 Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or be construed as, a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 8.10 Expenses. Each party will bear its own costs and expenses in connection with this Agreement. 8.11 Assignment. The rights and obligations of the parties hereto shall inure to the benefit of and shall be binding upon the authorized successors and permitted assigns of each party. Neither party may assign its rights or obligations under this Agreement or designate another person (i) to perform all or part of its obligations under this Agreement or (ii) to have all or part of its rights and benefits under this Agreement, in each case without the prior written consent of the other party. In the event of any assignment in accordance with the terms of this Agreement, the assignee shall specifically assume and be bound by the provisions of the Agreement by executing and agreeing to an assumption agreement reasonably acceptable to the other party. 8.12 Survival. The respective representations and warranties given by the parties hereto, and the other covenants and agreements contained herein, shall survive the Closing Date and the consummation of the transactions contemplated herein for a period of two years, without regard to any investigation made by any party. 11 12 8.13 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto respecting the subject matter hereof and supersedes all prior agreements, negotiations, understandings, representations and statements respecting the subject matter hereof, whether written or oral. No modification, alteration, waiver or change in any of the terms of this Agreement shall be valid or binding upon the parties hereto unless made in writing and duly executed by the Company and the Majority Purchasers. 8.14 Counterparts. This Agreement may be executed in a number of counterparts, each of which together, shall for all purposes constitute one Agreement, binding on all of the parties hereto, notwithstanding that all such parties have not signed the same counterpart. 12 13 IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement under seal as of the day and year first above written. PhotoMedex, Inc. By: _____________________________ Name: Dennis McGrath Title: Chief Financial Officer THE PURCHASER'S SIGNATURE TO THE INVESTOR QUESTIONNAIRE DATED EVEN DATE HEREWITH SHALL CONSTITUTE THE PURCHASER'S SIGNATURE TO THIS STOCK PURCHASE AGREEMENT. 13 14 Exhibit A PURCHASERS
Number of Shares Purchaser to be Purchased - --------- --------------- Baystar Capital LP 200,000 Baystar International LTD. 100,000 Clarion Capital Corporation 30,000 Clarion Partners, L.P. 39,900 Clarion Offshore Fund Ltd. 30,100 Marcuard Cook & Cie S.A. 50,000 Knott Partners, LP 61,800 The Common Fund 20,800 Trinkaus & Burkhardt Int'l. 2,300 Matterhorn Offshore Fund 15,100 J. Steven Emerson R/O IRA II 50,000 Fidelity National Title Insurance Co. 15,000 Gruber & McBaine International 45,000 Lagunitas Partners L.P. 55,000 Gryphon Master Fund 50,000 Lancaster Investment Partners, L.P. 145,000 EDJ Limited 100,000 Ben Joseph Partners 20,000 Sonz Partners LP 10,000 Talkot Crossover Fund, L.P. 50,000 Thomas B. Akin 50,000 North Olmsted Partners, L.P. 50,000 TCMP3 Partners LP 30,000 Stephen J. Massocca Investment Fund 10,000 Total Shares 1,230,000
14 EX-2.2 3 w47540ex2-2.txt REGISTRATION RIGHTS AGREEMENT DATED MARCH 27, 2001 1 Exhibit 2.2 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of March 27, 2001 by and among PhotoMedex, Inc., a Delaware corporation (the "Company"), (ii) each person listed on Exhibit A attached hereto (collectively, the "Initial Investors" and each individually, an "Initial Investor"), and (iii) each person or entity that subsequently becomes a party to this Agreement pursuant to, and in accordance with, the provisions of Section 12 hereof (collectively, the "Investor Permitted Transferees" and each individually an "Investor Permitted Transferee"). WHEREAS, the Company has agreed to issue and sell to the Initial Investors, and the Initial Investors have agreed to purchase from the Company, 1,225,000 shares (the "Purchased Shares") of the Company's common stock, $0.01 par value per share (the "Common Stock"), all upon the terms and conditions set forth in that certain Stock Purchase Agreement, dated of even date herewith, between the Company and the Initial Investors (the "Stock Purchase Agreement"); and WHEREAS, the terms of the Stock Purchase Agreement provide that it shall be a condition precedent to the closing of the transactions there under, for the Company and the Initial Investors to execute and deliver this Agreement. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows: 1. DEFINITIONS. The following terms shall have the meanings provided therefore below or elsewhere in this Agreement as described below: "Board" shall mean the board of directors of the Company. "Closing" shall have the meaning ascribed to such term in the Stock Purchase Agreement. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated there under. "Investors" shall mean, collectively, the Initial Investors and the Investor Permitted Transferees; provided, however, that the term "Investors" shall not include any of the Initial Investors or any of the Investor Permitted Transferees that ceases to own or hold any Purchased Shares. "Majority Holders" shall mean, at the relevant time of reference thereto, those Investors holding and/or having the right to acquire, as the case may be, more than fifty percent (50%) of the Registrable Shares held by all of the Investors. "Qualifying Holder" shall have the meaning ascribed thereto in Section 12 hereof. 1 2 "Registrable Shares" shall mean the Purchased Shares, provided, however, such term shall not, after the Mandatory Registration Termination Date, include any of the Purchased Shares that become or have become eligible for resale pursuant to Rule 144 or pursuant to Regulation S. "Rule 144" shall mean Rule 144 promulgated under the Securities Act and any successor or substitute rule, law or provision. "SEC" shall mean the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated there under. 2. EFFECTIVENESS; TERMINATION. This Agreement shall become effective and legally binding only if the Closing occurs. This Agreement shall terminate and be of no further force or effect, automatically and without any action being required of any party hereto, upon the termination of the Stock Purchase Agreement pursuant to Section 8 thereof. 3. MANDATORY REGISTRATION. (a) Within 10 business days after the Closing, the Company will prepare and file with the SEC a registration statement on Form S-3 for the purpose of registering under the Securities Act all of the Registrable Shares for resale by, and for the account of, the Investors as selling stockholders there under (the "Registration Statement"). The Registration Statement shall permit the Investors to offer and sell, on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, any or all of the Registrable Shares. The Company agrees to use reasonable efforts to cause the Registration Statement to become effective as soon as practicable. The Company shall be required to keep the Registration Statement effective until such date that is the earlier of (i) the date when all of the Registrable Shares registered there under shall have been sold, (ii) the date on which the Registrable Shares may be resold pursuant to an exemption under Rule 144(k) promulgated under the Securities Act, or (iii) the second anniversary of the Closing, subject to extension as set forth below (such date is referred to herein as the "Mandatory Registration Termination Date"). Thereafter, the Company shall be entitled to withdraw the Registration Statement and the Investors shall have no further right to offer or sell any of the Registrable Shares pursuant to the Registration Statement (or any prospectus relating thereto). In the event the right of the selling Investors to use the Registration Statement (and the prospectus relating thereto) is delayed or suspended pursuant to Sections 5(c) or 11 hereof, if the events described in subsection (a)(i) or (ii) have not yet occurred, the Company shall be required to extend the Mandatory Registration Termination Date beyond the second anniversary of the Closing by the same number of days as such delay or Suspension Period (as defined in Section 11 hereof). (b) In the event that the Registration Statement is not declared effective by the SEC within ninety (90) days after the Closing Date, the Company will pay each Purchaser a penalty of 2.0% of the original Purchase Price (on a prorated basis) for each 30-day period thereafter until 2 3 such time that the Registration Statement is declared effective by the SEC (all such payments to be made in cash and nonrefundable, pro-rated for partial months) and payable at the earlier of (1) the end of each such 30-day period or (2) the declared effectiveness of the Registration Statement. (c) The offer and sale of the Registrable Shares pursuant to the Registration Statement shall not be underwritten. 4. "PIGGYBACK" REGISTRATION RIGHTS. (a) If, at any time after the Mandatory Registration Termination Date, the Company proposes to register any of its Common Stock under the Securities Act, whether as a result of a primary or secondary offering of Common Stock or pursuant to registration rights granted to holders of other securities of the Company (but excluding in all cases any registrations to be effected on Forms S-4 or S-8 or other applicable successor Forms), the Company shall, each such time, give to the Investors holding Registrable Shares written notice of its intent to do so. Upon the written request of any such Investor given within 20 days after the giving of any such notice by the Company, the Company shall use reasonable efforts to cause to be included in such registration the Registrable Shares of such selling Investor, to the extent requested to be registered; provided that (i) the number of Registrable Shares proposed to be sold by such selling Investor is equal to at least seventy-five percent (75%) of the total number of Registrable Shares then held by such participating selling Investor, (ii) such selling Investor agrees to sell those of its Registrable Shares to be included in such registration in the same manner and on the same terms and conditions as the other shares of Common Stock which the Company proposes to register, and (iii) if the registration is to include shares of Common Stock to be sold for the account of the Company or any party exercising demand registration rights pursuant to any other agreement with the Company, the proposed managing underwriter does not advise the Company that in its opinion the inclusion of such selling Investor's Registrable Shares (without any reduction in the number of shares to be sold for the account of the Company or such party exercising demand registration rights) is likely to affect materially and adversely the success of the offering or the price that would be received for any shares of Common Stock offered, in which case the rights of such selling Investor shall be as provided in Section 4(b) hereof. (b) If a registration pursuant to Section 4(a) hereof involves an underwritten offering and the managing underwriter shall advise the Company in writing that, in its opinion, the number of shares of Common Stock requested by the Investors to be included in such registration is likely to affect materially and adversely the success of the offering or the price that would be received for any shares of Common Stock offered in such offering, then, notwithstanding anything in Section 4(a) to the contrary, the Company shall only be required to include in such registration, to the extent of the number of shares of Common Stock which the Company is so advised can be sold in such offering, (i) first, the number of shares of Common Stock proposed to be included in such registration for the account of the Company and/or any stockholders of the Company (other than the Investors) that have exercised demand registration rights, in accordance with the priorities, if any, then existing among the Company and/or such stockholders of the Company with registration rights (other than the Investors), and (ii) second, the shares of Common Stock requested to be included in such registration by all other 3 4 stockholders of the Company who have piggyback registration rights (including, without limitation, the Investors), pro rata among such other stockholders (including, without limitation, the Investors) on the basis of the number of shares of Common Stock that each of them requested to be included in such registration. (c) In connection with any offering involving an underwriting of shares, the Company shall not be required under Section 4 hereof or otherwise to include the Registrable Shares of any Investor therein unless such Investor accepts and agrees to the terms of the underwriting, which shall be and reasonable and customary, as agreed upon between the Company and the underwriters selected by the Company. 5. OBLIGATIONS OF THE COMPANY. In connection with the Company's obligation under Section 3 and 4 hereof to file the Registration Statement with the SEC and to use its best efforts to cause the Registration Statement to become effective as soon as practicable, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Shares covered by the Registration Statement; (b) Furnish to the selling Investors such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents (including, without limitation, prospectus amendments and supplements as are prepared by the Company in accordance with Section 5(a) above) as the selling Investors may reasonably request in order to facilitate the disposition of such selling Investors' Registrable Shares; (c) Notify the selling Investors, at any time when a prospectus relating to the Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in or relating to the Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in light of the circumstances in which they are made; and, thereafter, the Company will promptly prepare (and, when completed, give notice to each selling Investor) a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in light of the circumstances in which they are made; provided that upon such notification by the Company, the selling Investors will not offer or sell Registrable Shares until the Company has notified the selling Investors that it has prepared a supplement or amendment to such prospectus and delivered copies of such supplement or amendment to the selling Investors (it being understood and agreed by the Company that the foregoing proviso shall in no way diminish or otherwise impair the Company's obligation to promptly prepare a prospectus amendment or supplement as above provided in this Section 5(c) and deliver copies of same as above provided in Section 5(b) hereof); and 4 5 (e) Use commercially reasonable efforts to register and qualify the Registrable Shares covered by the Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably appropriate in the opinion of the Company and the managing underwriters, if any, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, and provided further that (notwithstanding anything in this Agreement to the contrary with respect to the bearing of expenses) if any jurisdiction in which any of such Registrable Shares shall be qualified shall require that expenses incurred in connection with the qualification therein of any such Registrable Shares be borne by the selling Investors, then the selling Investors shall, to the extent required by such jurisdiction, pay their pro rata share of such qualification expenses. 6. FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the selling Investors shall furnish to the Company such information regarding them and the securities held by them as the Company shall reasonably request and as shall be required in order to effect any registration by the Company pursuant to this Agreement. 7. EXPENSES OF REGISTRATION. All expenses incurred in connection with the registration of the Registrable Shares pursuant to this Agreement (excluding underwriting, brokerage and other selling commissions and discounts), including without limitation all registration and qualification and filing fees, printing, and fees and disbursements of counsel for the Company, shall be borne by the Company. 8. DELAY OF REGISTRATION. The Investors shall not take any action to restrain, enjoin or otherwise delay any registration as the result of any controversy which might arise with respect to the interpretation, or implementation of this Agreement. 9. INDEMNIFICATION. (a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Investor, any investment banking firm acting as an underwriter for the selling Investors, any broker/dealer acting on behalf of any selling Investors and each officer and director of such selling Investor, such underwriter, such broker/dealer and each person, if any, who controls such selling Investor, such underwriter or broker/dealer within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement, in any preliminary prospectus or final prospectus relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading in light of the circumstances in which they are made; and will reimburse such selling Investor, such underwriter, broker/dealer or such officer, director or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such 5 6 loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission made in connection with the Registration Statement, any preliminary prospectus or final prospectus relating thereto or any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, in reliance upon and in conformity with written information furnished expressly for use in connection with the Registration Statement or any such preliminary prospectus or final prospectus by the selling Investors, any underwriter for them or controlling person with respect to them. (b) To the extent permitted by law, each selling Investor will severally and not jointly indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, each person, if any, who controls the Company within the meaning of the Securities Act, any investment banking firm acting as underwriter for the Company or the selling Investors, or any broker/dealer acting on behalf of the Company or any selling Investors, and all other selling Investors against any losses, claims, damages or liabilities to which the Company or any such director, officer, controlling person, underwriter, or broker/dealer or such other selling Investor may become subject to, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement or any preliminary prospectus or final prospectus, relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they are made, in each case to the extent and only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, in any preliminary prospectus or final prospectus relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, in reliance upon and in conformity with written information furnished by the selling Investor expressly for use in connection with the Registration Statement, or any preliminary prospectus or final prospectus; and such selling Investor will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter, broker/dealer or other selling Investor in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that the liability of each selling Investor hereunder shall be limited to the proceeds (net of underwriting discounts and commissions, if any) received by such selling Investor from the sale of Registrable Shares covered by the Registration Statement, and provided, further, however, that the indemnity agreement contained in this Section 9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of those selling Investor(s) against which the request for indemnity is being made (which consent shall not be unreasonably withheld). 6 7 (c) Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 9, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in and, to the extent the indemnifying party desires, jointly with any other indemnifying party similarly noticed, to assume at its expense the defense thereof with counsel mutually satisfactory to the indemnifying parties with the consent of the indemnified party which consent will not be unreasonably withheld, conditioned or delayed. In the event that the indemnifying party assumes any such defense, the indemnified party may participate in such defense with its own counsel and at its own expense, provided, however, that the counsel for the indemnifying party shall act as lead counsel in all matters pertaining to such defense or settlement of such claim and the indemnifying party shall only pay for such indemnified party's expenses for the period prior to the date of its participation on such defense. The failure to notify an indemnifying party promptly of the commencement of any such action, if prejudicial to his ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 9, but the omission so to notify the indemnifying party will not relieve him of any liability which he may have to any indemnified party otherwise other than under this Section 9. (d) Notwithstanding anything to the contrary herein, the indemnifying party shall not be entitled to settle any claim, suit or proceeding unless in connection with such settlement the indemnified party receives an unconditional release with respect to the subject matter of such claim, suit or proceeding and such settlement does not contain any admission of fault by the indemnified party. 10. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the Investors the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit the Investors to sell the Purchased Shares to the public without registration, the Company agrees to use commercially reasonable efforts: (i) to make and keep public information available, as those terms are understood and defined in the General Instructions to Form S-3, or any successor or substitute form, and in Rule 144, (ii) to file with the SEC in a timely manner all reports and other documents required to be filed by an issuer of securities registered under the Securities Act or the Exchange Act, (iii) as long as any Investor owns any Purchased Shares, to furnish in writing upon such Investor's request a written statement by the Company that it has complied with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, and to furnish to such Investor a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as may be reasonably requested in availing such Investor of any rule or regulation of the SEC permitting the selling of any such Purchased Shares without registration and (iv) undertake any additional actions reasonably necessary to maintain the availability of the Registration Statement or the use of Rule 144. 11. DEFERRAL AND LOCK-UP. (a) Notwithstanding anything in this Agreement to the contrary, if the Company shall furnish to the selling Investors a certificate signed by the President or Chief Executive Officer of 7 8 the Company stating that the Board of Directors of the Company has made the good faith determination (i) that continued use by the selling Investors of the Registration Statement for purposes of effecting offers or sales of Registrable Shares pursuant thereto would require, under the Securities Act, premature disclosure in the Registration Statement (or the prospectus relating thereto) of material, nonpublic information concerning the Company, its business or prospects or any proposed material transaction involving the Company, (ii) that such premature disclosure would be materially adverse to the Company, its business or prospects or any such proposed material transaction or would make the successful consummation by the Company of any such material transaction significantly less likely and (iii) that it is therefore essential to suspend the use by the Investors of such Registration Statement (and the prospectus relating thereto) for purposes of effecting offers or sales of Registrable Shares pursuant thereto, then the right of the selling Investors to use the Registration Statement (and the prospectus relating thereto) for purposes of effecting offers or sales of Registrable Shares pursuant thereto shall be suspended for a period (the "Suspension Period") of not more than 60 days after delivery by the Company of the certificate referred to above in this Section 11. During the Suspension Period, none of the Investors shall offer or sell any Registrable Shares pursuant to or in reliance upon the Registration Statement (or the prospectus relating thereto). The Company may not exercise this right more than three times in each year after the Closing. 12. TRANSFER OF REGISTRATION RIGHTS. None of the rights of any Investor under this Agreement shall be transferred or assigned to any person unless (i) such person is a Qualifying Holder (as defined below), and (ii) such person agrees to become a party to, and bound by, all of the terms and conditions of, this Agreement by duly executing and delivering to the Company an Instrument of Adherence in the form attached as Exhibit B hereto. For purposes of this Section 12, the term "Qualifying Holder" shall mean, with respect to any Investor, (i) any partner thereof, (ii) any corporation, partnership controlling, controlled by, or under common control with, such Investor or any partner thereof, or (iii) any other direct transferee from such Investor of at least 50% of those Registrable Shares held or that may be acquired by such Investor. None of the rights of any Investor under this Agreement shall be transferred or assigned to any Person (including, without limitation, a Qualifying Holder) that acquires Registrable Shares in the event that and to the extent that such Person is eligible to resell such Registrable Shares pursuant to Rule 144(k) of the Securities Act or may otherwise resell such Registrable Shares pursuant to an exemption from the registration provisions of the Securities Act. 13. ENTIRE AGREEMENT. This Agreement constitutes and contains the entire agreement and understanding of the parties with respect to the subject matter hereof, and it also supersedes any and all prior negotiations, correspondence, agreements or understandings with respect to the subject matter hereof. 14. MISCELLANEOUS. (a) This Agreement may not be amended, modified or terminated, and no rights or provisions may be waived, except with the written consent of the Majority Holders and the Company. 8 9 (b) This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts, and shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors or assigns, provided that the terms and conditions of Section 12 hereof are satisfied. This Agreement shall also be binding upon and inure to the benefit of any transferee of any of the Purchased Shares provided that the terms and conditions of Section 12 hereof are satisfied. Notwithstanding anything in this Agreement to the contrary, if at any time any Investor shall cease to own any Purchased Shares, all of such Investor's rights under this Agreement shall immediately terminate. (c) (i) Any notices, reports or other correspondence (hereinafter collectively referred to as "correspondence") required or permitted to be given hereunder shall be sent by courier (overnight or same day) or telecopy or delivered by hand to the party to whom such correspondence is required or permitted to be given hereunder. The date of giving any notice shall be the date of its actual receipt. (ii) All correspondence to the Company shall be addressed as follows: PhotoMedex, Inc. 5 Radnor Corporate Center, Suite 470 Radnor, PA 19087 Attention: Jeffrey O' Donnell, President Telecopier: (610) 971-9303 with a copy to: Luce, Forward, Hamilton & Scripps LLP 1990 South Bundy Drive, Suite 790 Los Angeles, California 90025 Attention: Jeffrey P. Berg, Esq. Telecopier: (310) 820-8313 (iii) All correspondence to any Investor shall be sent to such Purchaser at the address set forth in Exhibit A. (d) Any entity may change the address to which correspondence to it is to be addressed by notification as provided for herein. (e) The parties acknowledge and agree that in the event of any breach of this Agreement, remedies at law may be inadequate, and each of the parties hereto shall be entitled to seek specific performance of the obligations of the other parties hereto and such appropriate injunctive relief as may be granted by a court of competent jurisdiction. (f) This Agreement may be executed in a number of counterparts, each of which together shall for all purposes constitute one Agreement, binding on all the parties hereto notwithstanding that all such parties have not signed the same counterpart. 9 10 IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date and year first above written. PhotoMedex, Inc. By: _____________________________ Name: Dennis McGrath Title: Chief Financial Officer THE INITIAL INVESTOR'S SIGNATURE TO THE INVESTOR QUESTIONNAIRE DATED EVEN DATE HEREWITH SHALL CONSTITUTE THE INITIAL INVESTOR'S SIGNATURE TO THIS REGISTRATION RIGHTS AGREEMENT. 10 11 EXHIBIT A Name and Address Baystar Capital LP c/o Baystar Capital 1500 West Market Street Suite 200 Mequon, WI 53092 Baystar International LTD. c/o Baystar Capital 1500 West Market Street Suite 200 Mequon, WI 53092 Clarion Capital Corporation c/o Clarion Capital Ohio Savings Plaza 1801 East Ninth Street, Suite 510 Cleveland, OH 44114 Clarion Partners, L.P. c/o Clarion Capital Ohio Savings Plaza 1801 East Ninth Street, Suite 510 Cleveland, OH 44114 Clarion Offshore Fund Ltd. c/o Clarion Capital Ohio Savings Plaza 1801 East Ninth Street, Suite 510 Cleveland, OH 44114 Marcuard Cook & Cie S.A. 7 rue des Alpes P.O. Box 1380 1211 Geneva 1 Switzerland Knott Partners, L.P. c/o DM Knott 485 Underhill Blvd. Suite 205 Syosset, NY 11791 11 12 The Common Fund c/o DM Knott 485 Underhill Blvd. Suite 205 Syosset, NY 11791 Trinkaus & Burkhardt Int'l. c/o DM Knott 485 Underhill Blvd. Suite 205 Syosset, NY 11791 Matterhorn Offshore Fund c/o DM Knott 485 Underhill Blvd. Suite 205 Syosset, NY 11791 J. Steven Emerson R/O IRA II Emerson Investment Group 10506 Ilona Avenue #1410 Los Angeles, CA 90064 Fidelity National Title Insurance Co. 4050 Calle Real Suite 260 Santa Barbara, CA 93110 Gruber & McBaine International c/o Gruber & McBaine Capital Management 50 Osgood Place, Penthouse San Francisco, CA 94133 Lagunitas Partners L.P. c/o Gruber & McBaine Capital Management 50 Osgood Place, Penthouse San Francisco, CA 94133o Gryphon Master Fund c/o Gryphon Master Fund L.P. 500 Crescent Court, #270 Dallas, Texas 75201 12 13 Lancaster Investment Partners, L.P. Parkview Tower 1150 First Avenue, Suite 600 King of Prussia, PA 19406 EDJ Limited c/o Porter Capital 300 Drakes Landing Road Suite 175 Greenbrae, CA 94904 Ben Joseph Partners c/o Porter Capital 300 Drakes Landing Road Suite 175 Greenbrae, CA 94904 Sonz Partners LP c/o Sonz Partners 100 Shoreline Way Suite #2908 Mill Valley, CA 94941 Talkot Crossover Fund, L.P. c/o Talkot Fund 2400 Bridgeway, Suite 200 Sausalito, CA 94965 Thomas B. Akin c/o Talkot Fund 2400 Bridgeway, Suite 200 Sausalito, CA 94965 North Olmsted Partners, L.P. c/o Langley Capital, LLC 535 Madison Avenue, 15th Floor New York, NY 10022 TCMP3 Partners LP c/o Titan Capital Management 600 Third Avenue, 17th Floor New York 10016 13 14 Stephen Massocca Investment Fund c/o Pacific Growth Equities, Inc. Four Maritime Plaza San Francisco, CA 94111 14 15 EXHIBIT B Instrument of Adherence Reference is hereby made to that certain Registration Rights Agreement, dated as of March 27, 2001, among PhotoMedex, Inc., a Delaware corporation (the "Company"), the Initial Investors and the Investor Permitted Transferees, as amended and in effect from time to time (the "Registration Rights Agreement"). Capitalized terms used herein without definition shall have the respective meanings ascribed thereto in the Registration Rights Agreement. The undersigned, in order to become the owner or holder of [___________] shares of common stock, par value $0.01 per share (the "Common Stock"), of the Company], hereby agrees that, from and after the date hereof, the undersigned has become a party to the Registration Rights Agreement in the capacity of an Investor Permitted Transferee, and is entitled to all of the benefits under, and is subject to all of the obligations, restrictions and limitations set forth in, the Registration Rights Agreement that are applicable to Investor Permitted Transferees. This Instrument of Adherence shall take effect and shall become a part of the Registration Rights Agreement immediately upon execution. Executed under seal as of the date set forth below under the laws of ___________________. Signature: __________________________________ Name: Title: Accepted: Company Name By: __________________________________ Name: Title: Date: ___________________________ 15 EX-2.3 4 w47540ex2-3.txt FORM OF SHARE EXCHANGE AGREEMENT DATED 07/01/2000 1 EXHIBIT 2.3 SHARE EXCHANGE AGREEMENT by and between LASER PHOTONICS, INC. a Delaware corporation and THE HOLDERS OF COMMON STOCK OF ACCULASE, INC., a California corporation July 1, 2000 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 2 TABLE OF CONTENTS
ARTICLE I REPRESENTATIONS, COVENANTS AND WARRANTIES OF PURCHASER Page ---- Section 1.1 Title to Acculase Shares.............................. 1 Section 1.2 Organization.......................................... 2 Section 1.3 Binding Obligation; No Default........................ 2 Section 1.4 Compliance with Other Instruments, etc................................... 3 Section 1.5 Consents.............................................. 3 Section 1.6 Accuracy of Information Furnished..................... 3 Section 1.7 Securities Warranties................................. 3 Section 1.8 Accredited Investor Warranties........................ 5 Section 1.9 Purchaser Schedules................................... 7 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES OF LPI Section 2.1 Organization.......................................... 8 Section 2.2 Binding Obligation; No Default........................ 8 Section 2.3 Compliance with Other Instruments, etc................ 9 Section 2.4 Consents.............................................. 9 Section 2.5 Accuracy of Information Furnished..................... 9 Section 2.6 Compliance with Exchange Act.......................... 9 Section 2.7 LPI Financial Statements.............................. 9 Section 2.8 Acculase Financial Statements......................... 10 Section 2.9 Fairness Opinion...................................... 10 Section 2.10 LPI Schedules......................................... 10 ARTICLE III CLOSING Section 3.1 Purchase and Sale..................................... 10 Section 3.2 Closing............................................... 11 Section 3.3 Closing Events........................................ 11 Section 3.4 Termination........................................... 11 ARTICLE IV SPECIAL COVENANTS Section 4.1 Availability of Rule 144.............................. 12 Section 4.2 Information for LPI Registration Statement and Public Reports....................... 12 Section 4.3 Special Covenants and Representations Regarding the LPI Shares........................... 13 Section 4.4 Third Party Consents.................................. 13
i SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 3 Section 4.5 Indemnification....................................... 13 Section 4.6 General Release....................................... 13 Section 4.7 Registration Rights Agreement......................... 15 ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF LPI Section 5.1 Accuracy of Representations........................... 15 Section 5.2 Delivery of Certain Documents and Items............... 15 Section 5.3 Other Items........................................... 15 ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER Section 6.1 Accuracy of Representations........................... 15 Section 6.2 Delivery of Certain Documents and Items............... 16 Section 6.3 Other Items........................................... 16 ARTICLE VII MISCELLANEOUS Section 7.1 Brokers and Finders................................... 16 Section 7.2 Choice of Law......................................... 16 Section 7.3 Notices............................................... 16 Section 7.4 Attorneys' Fees....................................... 17 Section 7.5 Confidentiality....................................... 17 Section 7.6 Schedules; Knowledge.................................. 17 Section 7.7 Third Party Beneficiaries............................. 17 Section 7.8 Entire Agreement...................................... 17 Section 7.9 Survival; Termination................................. 17 Section 7.10 Counterparts.......................................... 18 Section 7.11 Amendment or Waiver................................... 18 Section 7.12 Incorporation of Recitals............................. 18 Section 7.13 Expenses.............................................. 18 Section 7.14 Headings; Context..................................... 18 Section 7.15 Benefit............................................... 18 Section 7.16 Severability.......................................... 18 Section 7.17 Failure of Conditions; Termination.................... 18 Section 7.18 No Strict Construction................................ 18 Section 7.19 Execution Knowing and Voluntary....................... 19 EXHIBIT "A" Transfer and Assignment of Securities................. A-1 EXHIBIT "B" Purchaser and Purchaser Representative Questionnaires. B-1
ii SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 4 SHARE EXCHANGE AGREEMENT THIS SHARE EXCHANGE AGREEMENT (the "Agreement"), is entered into as of July 1, 2000, by and between Laser Photonics, Inc., a Delaware corporation ("LPI"), on the one hand, and the undersigned purchaser ("Purchaser"), on the other hand, who is one of the holders (collectively, the "Purchasers") of shares of common stock, no par value (the "Acculase Common Stock"), of Acculase, Inc., a California corporation, other than LPI. Premises WHEREAS, this Agreement provides for the issuance and delivery by LPI to Purchaser of the number of shares (the "LPI Shares") of the common stock of LPI (the "LPI Common Stock"), par value $0.01 per share, set forth in Section 3.1 of this Agreement, in consideration of the exchange and delivery by Purchaser of the number of shares (the "Acculase Shares") of Acculase Common Stock, set forth in Section 3.1 of this Agreement, on the terms and conditions set forth in this Agreement (the "Exchange Offer"), including, but not limited to the general release provided by Purchaser to LPI and certain other parties, as set forth in Section 4.6 of this Agreement; and WHEREAS, the parties intend and believe that it is in their best interests to enter into this Agreement and the other agreements contemplated herein. Agreement NOW, THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the parties to be derived here from, it is hereby agreed as follows: ARTICLE I REPRESENTATIONS, COVENANTS AND WARRANTIES OF PURCHASER As an inducement to, and to obtain the reliance of LPI, Purchaser represents and warrants, as follows: Section 1.1 Title to Acculase Shares. Purchaser is the owner, beneficially and of record, of all the Acculase Shares exchanged hereby, free and clear of all Encumbrances. For purposes of this Agreement, the term "Encumbrance" means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, security interest, lien (statutory or other) or preference, equity, option, charge, limitation on voting rights, right to receive dividends, dissenters' or appraisal rights, priority or other security or similar agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect 1 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 5 as any of the foregoing). Purchaser has full power to transfer the Acculase Shares exchanged hereby to LPI without obtaining the consent or approval of any other person, entity or governmental authority. Upon exchange and delivery to LPI of the certificates for the Acculase Shares described in Article III of this Agreement, LPI shall receive good and marketable title to the Acculase Shares, all of the Acculase Shares shall be received by LPI as validly issued, fully paid and nonassessable, free and clear of all Encumbrances (other than any restrictions generally imposed by federal, corporate or territorial securities laws or as otherwise provided for in this Agreement). The Acculase Shares being exchanged hereby constitute all of the Acculase Shares beneficially owned by Purchaser. Simultaneously with the delivery of this Agreement, Purchaser shall deliver to LPI certificates or other documents evidencing ownership of the Acculase Shares exchanged hereby, either duly endorsed in blank for transfer or accompanied by appropriate stock power duly executed in blank, with medallion guaranteed signatures, as shown on Exhibit "A-1," attached hereto and incorporated herein by this reference. Such certificates shall be held by LPI without further action until the Closing. Purchaser shall remain the beneficial and record owner of the tendered Acculase Shares and shall not become the beneficial and record owner of any shares of LPI Common Stock until the closing. Section 1.2 Organization. If the Purchaser is not an individual, the Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in the states in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification, except where the failure to so qualify, which, in the aggregate, would not have an adverse effect on the assets, business, properties, operations or condition, financial or otherwise (a "Material Adverse Effect") upon the Purchaser. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not, violate any provision of (a) the organizational or charter documents of the Purchaser, or (b) any resolution adopted by the governing bodies or owners of Purchaser. Purchaser has the full power, authority and legal right, and, subject to approval by the stockholders of Purchaser of the transactions contemplated by this Agreement, has taken all actions required by law, its organizational or charter documents or otherwise to execute and deliver this Agreement and consummate the transactions herein contemplated. Section 1.3 Binding Obligation; No Default. Purchaser has duly taken all action necessary to authorize the execution, delivery and performance of this Agreement and the other instruments and agreements contemplated hereby. Such execution, delivery and performance does not and will not (a) contravene, conflict with, or result in a violation of, or give any person the right to challenge any of the transactions contemplated hereby or to exercise any remedy or obtain any relief under, any law, rule, regulation, judgment, order, injunction, decree or ruling of any court, tribunal, arbitrator or governmental authority, domestic or foreign to which any of Purchaser, or any of the assets owned or used by Purchaser, may be subject; (b) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any person the right to revoke, withdraw, suspend, cancel, terminate, or modify, any license, permit or other authorization that is held by Purchaser or that otherwise relates to the business of, or any of the 2 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 6 assets owned or used by, Purchaser; or (c) contravene, conflict with, or result in a violation or breach of any provision of, or give any person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any contract, commitment, agreement, arrangement, plan or understanding (each, a "Contract") to which Purchaser is a party. This Agreement constitutes the legal, valid and binding obligation Purchaser, enforceable against Purchaser in accordance with its terms, subject to laws of general application affecting creditors generally. Section 1.4 Compliance with Other Instruments, etc. Neither the execution and delivery of this Agreement by Purchaser nor compliance by Purchaser with the terms and conditions of this Agreement will: (a) require Purchaser to obtain the consent of any governmental agency or any other person; (b) constitute a material default under any indenture, mortgage or deed of trust to which Purchaser is a party or by which Purchaser, or its properties may be subject; or (c) cause the creation or imposition of any Encumbrance on any of the assets of Purchaser. Section 1.5 Consents. No consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or any third party is required to be made or obtained by Purchaser in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby. Section 1.6 Accuracy of Information Furnished. No representation or warranty by Purchaser contained in this Agreement or in respect of the exhibits, schedules or documents delivered to LPI by Purchaser and expressly referred to herein, and no statement contained in any certificate furnished or to be furnished by or on behalf of Purchaser pursuant hereto, or in connection with the transactions contemplated hereby, contains, or will contain as of the date such representation or warranty is made or such certificate is or will be furnished, and as of the Closing Date, any untrue statement of a material fact, or omits, or will omit to state as of the date such representation or warranty is made or such certificate is or will be furnished, any material fact which is necessary to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. True and correct copies of each agreement and other document referred to in the schedules hereto have been furnished by Purchaser to LPI. Section 1.7 Securities Warranties. With respect to the LPI Shares to be issued and delivered by LPI to Purchaser pursuant to Section 3.1 hereof, Purchaser represents and warrants to LPI that: (a) The LPI Shares are being acquired for the account of Purchaser and not with a view to sale in connection with any distribution of the LPI Shares; (b) Purchaser is acquiring the LPI Shares hereunder without having received any form of general solicitation or general advertising; (c) Purchaser or its representative, if any, have been provided with, or given reasonable access to, full and fair disclosure of all material information concerning LPI; 3 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 7 (d) Purchaser has a preexisting personal or business relationship with LPI or certain of its officers, directors or controlling persons, or by reason of its business or financial experience, Purchaser could reasonably be assumed to have the capacity to represent his own interests in connection with this Agreement; (e) Purchaser understands and hereby acknowledges that the LPI Shares will be issued pursuant only to those restrictions imposed by and exemptions available pursuant to applicable federal and state laws and that the certificates to be issued in respect of the LPI Shares may bear a legend in a form satisfactory to counsel for LPI; in part, LPI's reliance upon such exemptions is based on the representations and warranties made by Purchaser in this Section 1.6; (f) Purchaser agrees that the certificates to be issued in respect of the LPI Shares shall bear a legend in a form satisfactory to counsel for LPI reflecting the status of the LPI Shares as restricted securities under Rule 144(a)(3) promulgated under the Securities Act of 1933, as amended (the "Securities Act") and acknowledges that the transfer agent or registrar for LPI may be instructed to restrict the transfer of the LPI Shares in accordance with such legend and any other restrictions provided in this Agreement; (g) Purchaser hereby agrees that it will not sell, transfer, hypothecate, pledge, assign or otherwise dispose of any of the LPI Shares, except pursuant to the terms of this Agreement and to a registration statement filed under the provisions of the Securities Act, a favorable no-action or interpretive letter received from the United States Securities and Exchange Commission (the "Commission") or an opinion of counsel satisfactory to LPI that such sale, transfer, hypothecation, pledge, assignment or other disposition will not violate the registration requirements of the Securities Act, and does not in any way violate the terms of this Agreement; (h) Purchaser hereby acknowledges that: (i) the LPI Shares referred to herein are being acquired after adequate investigation of the business plan and prospects of LPI; (ii) that Purchaser is not relying upon the accuracy of any predictions as to the future prospects or developments of LPI or its business and is well informed as to the business of LPI and has reviewed its operations and financial statements; (iii) Purchaser or its professional advisors have discussed the financial condition and business operations of LPI with the officers, directors and principal stockholders of LPI and has been afforded the opportunity to ask questions with respect thereto; and (iv) there can be no assurance that LPI will achieve its business objectives or, in particular, that it will ever have cash available for distribution to its stockholders; (i) Purchaser either alone or with Purchaser's Purchaser Representative has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the securities. Purchaser acknowledges that the securities are speculative and involve a high degree of risk, including the potential loss of Purchaser's investment herein and Purchaser has taken cognizance of and understands the risk factors related to the purchase of the securities; and (j) Each certificate evidencing the LPI Shares shall be issued in the name of Purchaser. 4 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 8 (k) If the Purchaser is an individual, Purchaser has reached the age of majority according to the laws of the jurisdiction in which he resides and has adequate means of providing for the Purchaser's current needs and possible personal contingencies and has need for only limited liquidity of this investment. The Purchaser's commitment to liquid investments is reasonable in relation to the Purchaser's net worth. (l) If the Purchaser is a corporation, the Purchaser is duly and validly organized, validly existing and in good tax and corporate standing as a corporation under the laws of the jurisdiction of its incorporation with full power and authority to purchase the securities to be purchased by it and to execute and deliver this Agreement. (m) If the Purchaser is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners in the Purchaser (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby. (n) If the Purchaser is purchasing in a representative or fiduciary capacity, the above representations and warranties shall be deemed to have been made on behalf of the person or persons for whom the Purchaser is so purchasing. (o) Purchaser has completed and executed the Purchaser Questionnaire, which is attached as Exhibit "B" hereto. The information contained in the Purchaser Questionnaire is true and correct, and Purchaser acknowledges that LPI will rely on the information contained therein in connection with the Closing of the Exchange Offer. (p) If the Purchaser has consulted a purchaser representative ("Purchaser Representative") to evaluate the merits and risks of the undersigned's investment in the securities, the Purchaser Representative has completed a Purchaser Representative Questionnaire in the form supplied to him, and included in Exhibit "B" hereto. The Purchaser or the Purchaser Representative has been granted the opportunity to examine documents and files, to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this Exchange Offer, LPI and its business and prospects, and to obtain any additional information which the Purchaser or the Purchaser Representative deems necessary to verify the accuracy of the information received. Section 1.8 Accredited Investor Warranties. With respect to the LPI Shares to be issued and delivered by LPI to Purchaser pursuant to Section 3.1 hereof, Purchaser represents and warrants to LPI that: 5 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 9 1.8.1 The Purchaser is (check applicable box below): (a) [ ] a bank as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act acting in either an individual or fiduciary capacity. (b) [ ] an insurance company as defined in Section 2(13) of the Securities Act. (c) [ ] an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that act. (d) [ ] a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958. (e) [ ] a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000. (f) [ ] an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, and the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan having total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors. (g) [ ] a private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940. (h) [ ] an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, corporation, Massachusetts or similar business trust, or partnership not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000. (i) [ ] any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person who has such knowledge and experience in financial and business matters that he 6 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 10 is capable of evaluating the merits and risks of the prospective investment. (j) [ ] a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934. (k) [ ] an individual. (See paragraph 1.8.2(a) below.) (l) [ ] none of the above. (See paragraph 1.8.2(b) below.) --------- (Initial) 1.8.2 (a) If the Purchaser checked the box in paragraph .1.8.1(k) for "an individual," then the Purchaser (check applicable box): [ ] is a director, executive officer or general partner of the issuer of the securities being offered or sold or a director, executive officer or general partner of a general partner of that issuer. [ ] has an individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeding $ 1,000,000. [ ] had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. [ ] none of the above. --------- (Initial) (b) [ ] If the Purchaser checked the box in paragraph 1.8.1(l) for "none of the above," then the Purchaser is an entity each equity owner of which is an entity described in a - h under paragraph 1.8.1 or is an individual who could check one of the first three boxes under paragraph 1.8.2(a). --------- (Initial) Section 1.9 Purchaser Schedules. Purchaser shall cause the schedules (the "Purchaser Schedules") to be delivered by Purchaser to LPI hereunder at or before the Closing. 7 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 11 ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES OF LPI As an inducement to, and to obtain the reliance of the Purchaser, LPI represents and warrants, as follows: Section 2.1 Organization. Each of LPI and the subsidiaries of LPI described in the Commission Filings (as defined hereinafter) (collectively, the "LPI Group") is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its respective incorporation and has the corporate power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in the states in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification, except where the failure to so qualify, which, in the aggregate, would not have an adverse effect on the assets, business, properties, operations or condition, financial or otherwise (a "Material Adverse Effect") upon LPI Group. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not, violate any provision of (a) the certificate of incorporation or bylaws of LPI, or (b) any resolution adopted by the board of directors or the stockholders of LPI. LPI has the full power, authority and legal right, and, subject to approval by the stockholders of LPI of the transactions contemplated by this Agreement, has taken all actions required by law, its certificate of incorporation, bylaws or otherwise to execute and deliver this Agreement and consummate the transactions herein contemplated. Section 2.2 Binding Obligation; No Default. LPI has duly taken all action necessary to authorize the execution, delivery and performance of this Agreement and the other instruments and agreements contemplated hereby. Such execution, delivery and performance does not and will not (a) contravene, conflict with, or result in a violation of, or give any person the right to challenge any of the transactions contemplated hereby or to exercise any remedy or obtain any relief under, any law, rule, regulation, judgment, order, injunction, decree or ruling of any court, tribunal, arbitrator or governmental authority, domestic or foreign to which LPI, or any of its assets, may be subject; (b) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any person the right to revoke, withdraw, suspend, cancel, terminate, or modify, any license, permit or other authorization that is held by LPI or that otherwise relates to the business of, or any of the assets owned or used by, LPI; or (c) contravene, conflict with, or result in a violation or breach of any provision of, or give any person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract to which LPI is a party. This Agreement constitutes the legal, valid and binding obligation of LPI, enforceable against LPI in accordance with its terms, subject to laws of general application affecting creditors generally. 8 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 12 Section 2.3 Compliance with Other Instruments, etc. Neither the execution and delivery of this Agreement by LPI nor compliance by LPI with the terms and conditions of this Agreement will: (a) require LPI to obtain the consent of any governmental agency or any other person; (b) constitute a material default under any indenture, mortgage or deed of trust to which LPI is a party or by which it, or any of its properties may be subject; or (c) cause the creation or imposition of any Encumbrance on any of LPI's assets. Section 2.4 Consents. No consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority or any third party is required to be made or obtained by LPI in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby. Section 2.5 Accuracy of Information Furnished. No representation or warranty by LPI contained in this Agreement or in respect of the exhibits, schedules or documents delivered to Purchaser by LPI and expressly referred to herein, and no statement contained in any certificate furnished or to be furnished by or on behalf of LPI pursuant hereto, or in connection with the transactions contemplated hereby, contains, or will contain as of the date such representation or warranty is made or such certificate is or will be furnished, and as of the Closing Date, any untrue statement of a material fact, or omits, or will omit to state as of the date such representation or warranty is made or such certificate is or will be furnished, any material fact which is necessary to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. True and correct copies of each agreement and other document referred to in the schedules hereto have been furnished by LPI to Purchaser. Section 2.6 Compliance With Exchange Act. Schedule 2.6 attached hereto includes true, complete and correct copies of the following: (a) Schedule 2.6(a) - - LPI's Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 1999, and (b) Schedule 2.6(b) - LPI's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2000 (collectively, the "Commission Filings"), as filed with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Commission Filings were prepared in accordance and complied in all material respects with the applicable requirements of the Exchange Act. None of such forms, reports and statements, including, without limitation, any financial statements, exhibits and schedules included therein and documents incorporated therein by reference, at the time filed, contained, or now contains, and at the Closing Date, will contain an untrue statement of a material fact or omitted or will 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. Section 2.7 LPI Financial Statements. Included in Schedule 2.6(a) attached hereto are true, complete and correct copies of LPI's audited financial statements, including LPI's audited consolidated balance sheets as of December 31, 1999 and 1998, and the related audited consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1999 (the "LPI Audited Financial Statements"). The LPI Audited Financial Statements, together with the notes thereto, fairly present the financial position of LPI at December 31, 1999 and 1998, as the case may be, and the consolidated results 9 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 13 of the operations and the changes in stockholders' equity and cash flows for LPI for the periods covered by the LPI Audited Financial Statements and have been prepared in accordance with generally accepted accounting principles ("GAAP") consistently applied with prior periods. Included in Schedule 2.6(b) attached hereto are true, complete and correct copies of LPI's unaudited financial statements, including LPI's unaudited consolidated balance sheet as of March 31, 2000, and the related unaudited consolidated statements of operations and cash flows for the three (3) month periods ended March 31, 2000 and 1999 and the related unaudited consolidated statements of stockholders' equity for the three (3) month period ended March 31, 2000 (the "LPI Unaudited Financial Statements"). The LPI Unaudited Financial Statements, together with the notes thereto, fairly present the financial position of LPI at March 31, 2000, and the consolidated results of the operations and the changes in stockholders' equity and cash flows for LPI for the periods covered by the LPI Unaudited Financial Statements and have been prepared in accordance with GAAP consistently applied with prior periods. (The LPI Audited Financial Statements and LPI Unaudited Financial Statements are collectively referred to herein as the "LPI Financial Statements"). Section 2.8 Acculase Financial Statements. Included in Schedule 2.8 attached hereto are true, complete and correct copies of Acculase's audited financial statements, including Acculase's audited consolidated balance sheets as of December 31, 1999 and 1998, and the related audited consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1999 (the "Acculase Audited Financial Statements"). The Acculase Audited Financial Statements, together with the notes thereto, fairly present the financial position of Acculase at December 31, 1999 and 1998, as the case may be, and the consolidated results of the operations and the changes in stockholders' equity and cash flows for Acculase for the periods covered by the Acculase Audited Financial Statements and have been prepared in accordance with generally accepted accounting principles ("GAAP") consistently applied with prior periods. Section 2.9 Fairness Opinion. The Board of Directors of Acculase has engaged ING Barings LLC to deliver a fairness opinion with respect to the proposed exchange of up to an aggregate of 300,000 shares of LPI Common Stock for all of the issued and outstanding shares of Acculase Common Stock owned by persons other than LPI. A copy of such opinion will be made available upon request to Purchaser on or before the Closing Date. Section 2.10 LPI Schedules. LPI shall cause the schedules (the ("LPI Schedules") to be delivered by LPI to Purchaser hereunder at or before the Closing. ARTICLE III CLOSING Section 3.1 Share Exchange. (a) Upon the terms and subject to the conditions contained herein, at the Closing (defined in Section 3.2 below), LPI shall issue and deliver 0.1774184 shares of LPI Common Stock (the "LPI Shares") to Purchaser for each Acculase Share exchanged and delivered by Purchaser. No fractional shares shall be issued in connection with such Exchange Offer, and the number of shares of LPI Common Stock to be issued shall be rounded up or down to the nearest whole number of shares, provided that all fractions less than 10 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 14 one-half (1/2) shall be rounded downward and all fractions equal to or greater than one half (1/2) shall be rounded upward. (b) Simultaneously with the delivery of this Agreement, Purchaser shall deliver to LPI certificates or other documents evidencing ownership of the Acculase Shares exchanged hereby, either duly endorsed in blank for transfer or accompanied by appropriate stock power duly executed in blank, with medallion guaranteed signatures, as shown on Exhibit "A-1," attached hereto and incorporated herein by this reference. Such certificates shall be held by LPI without further action until the Closing. Purchaser shall remain the beneficial and record owner of the tendered Acculase Shares and shall not become the beneficial and record owner of any shares of LPI Common Stock until the Closing. (c) Purchaser hereby irrevocably constitutes and appoints LPI as attorney to transfer the Acculase Shares tendered hereby (as evidenced by the tendered stock certificates) on the books of Acculase with full power of substitution in the premises. Section 3.2 Closing. Subject to the terms and conditions of this Agreement, the closing ("Closing") of the transactions contemplated by this Agreement shall occur on July 31, 2000, or such other date as the parties may agree (the "Closing Date") at the offices of Luce, Forward, Hamilton & Scripps LLP, 1990 South Bundy Drive, Suite 790, Los Angeles, California 90025. Section 3.3 Closing Events. At the Closing, each of the respective parties hereto shall execute, acknowledge and deliver (or shall cause to be executed, acknowledged and delivered) any and all certificates, opinions, financial statements, schedules, agreements, resolutions, rulings, or other instruments required by this Agreement to be so delivered at or prior to the Closing, together with such other items as may be reasonably requested by the parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby. However, in no event shall the Closing occur without the satisfaction or waiver of the conditions set forth in Articles V and VI of this Agreement. Section 3.4 Termination. (a) This Agreement may be terminated by LPI or by Purchaser at any time prior to the Closing Date if: (i) there shall be any actual or threatened action or proceeding before any court or any governmental body which shall seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement and which, in the judgment of the boards of directors or general partners of LPI or Purchaser, as the case may be, made in good faith and based on the advice of their legal counsel, makes it inadvisable to proceed with the transactions contemplated by this Agreement; or (ii) any of the transactions contemplated hereby are disapproved by any regulatory authority whose approval is required to consummate such transactions or in the judgment of the boards of directors or general partners of LPI or Purchaser, as the case may be, 11 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 15 made in good faith and based on the advice of counsel, there is substantial likelihood that any such approval will not be obtained or will be obtained only on a condition or conditions which would be unduly burdensome, making it inadvisable to proceed with the merger and consolidation. In the event of termination pursuant to this paragraph (a) of Section 3.4, no obligation, right or liability shall arise hereunder, and each party shall bear all of the expenses incurred by it in connection with the negotiation, drafting and execution of this Agreement and the transactions herein contemplated; (b) This Agreement may be terminated at any time prior to the Closing Date by action of the Board of Directors of LPI, if Purchaser shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of Purchaser contained herein shall be inaccurate in any material respect. If this Agreement is terminated pursuant to this paragraph (b) of Section 3.4, this Agreement shall be of no further force or effect, and no obligation, right or liability shall arise hereunder; and (c) This Agreement may be terminated at any time prior to the Closing Date by Purchaser if LPI shall fail to comply in any material respect with any of its covenants or agreements contained in this Agreement or if any of the representations or warranties of LPI contained herein shall be inaccurate in any material respect. If this Agreement is terminated pursuant to this paragraph (c) of Section 3.4, this Agreement shall be of no further force or effect and no obligation, right or liability shall arise hereunder. ARTICLE IV SPECIAL COVENANTS Section 4.1 Availability of Rule 144. Each of the parties acknowledge that the LPI Shares to be issued pursuant to this Agreement will be "restricted securities," as that term is defined in Rule 144 promulgated pursuant to the Securities Act. LPI is under no obligation, except as set forth herein, to register such shares under the Securities Act. Notwithstanding the foregoing, however, LPI will use its best efforts to: (a) make publicly available on a regular basis not less than semi-annually, business and financial information regarding LPI so as to make available to the stockholders of LPI the provisions of Rule 144 pursuant to subparagraph (c)(1) thereof; and (b) within ten (10) days of any written request of any stockholder of LPI, LPI will provide to such stockholder written confirmation of compliance with such of the foregoing subparagraph as may then be applicable. The covenants set forth in this Section 4.1 shall survive the Closing and the consummation of the transactions herein contemplated. Section 4.2 Information for LPI Registration Statement and Public Reports. Purchaser will furnish LPI with all information concerning Purchaser, including all financial statements, required for inclusion in any registration statement or public report required to be filed by LPI pursuant to the Securities Act, the Exchange Act or any other applicable federal or state law. Purchaser represents and warrants to LPI that, to the best of its knowledge and belief, all information so furnished for either such registration statement or other public release by LPI, 12 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 16 shall be true and correct in all material respects without omission of any material fact required to make the information stated not misleading. Section 4.3 Special Covenants and Representations Regarding the LPI Shares. The consummation of this Agreement and the transactions herein contemplated, including the issuance and delivery of the LPI Shares to Purchaser, as contemplated hereby, constitutes the offer and sale of securities under the Securities Act, and applicable state statutes. Such transaction shall be consummated in reliance on exemptions from the registration and prospectus delivery requirements of such statutes, which depend, inter alia, upon the circumstances under which Purchaser and LPI acquire such securities. Section 4.4 Third Party Consents. LPI and Purchaser agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein and therein contemplated. Section 4.5 Indemnification. (a) Purchaser hereby agrees to indemnify LPI and each of the officers and directors of LPI as of the date of execution of this Agreement and as of the Closing Date against any loss, liability, claim, damage or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made in this Agreement as a result of information provided by the Purchaser. The indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement; and (b) LPI hereby agrees to indemnify Purchaser and each of the general partners officers and directors of Purchaser, as the case may be, as of the date of execution of this Agreement and as of the Closing Date against any loss, liability, claim, damage or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made in this Agreement. The indemnification provided for in this Paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement. Section 4.6 General Release. (a) In consideration of the terms and conditions of this Agreement, Purchaser, on behalf of Purchaser, and Purchaser's officers, directors, stockholders, partners, employees, spouses, agents, successors, assigns, heirs, legatees and representatives, hereby fully and forever releases and discharges each of LPI and Acculase, and, each of their parents, subsidiaries, directors, officers, stockholders, members, partners, attorneys, accountants, employees, agents, successors, assigns, heirs, legatees and representatives (the "Released Parties"), and each of them, of and from all manner of actions, causes of action, claims, demands, costs, damages, liabilities, 13 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 17 losses, obligations, expenses and compensation of any nature whatsoever in law or in equity, known and unknown, including, but not limited to, those asserted or which could have been asserted against each other with respect to all claims, disputes and differences between them, including, but not limited to, those asserted or which could have been asserted in connection with the Acculase Shares (the "Released Claims"). (b) This Agreement and the General Release set forth in Section 4.6 hereof, are and shall be, releases of all claims, whether known or unknown. Purchaser acknowledges that Purchaser may hereafter discover facts in addition to or different from those which Purchaser now believes to be true with respect to the subject matter of the disputes and other matters herein released, but agree that the releases herein given shall be and remain in effect as full and complete general releases notwithstanding the discovery or existence of any such additional or different facts, of which Purchaser expressly assumes the risk, except as expressly represented and warranted herein (c) It is understood and agreed that this Agreement constitutes a compromise of disputed claims, and that neither this Agreement nor any consideration given hereunder, concurrently herewith, or pursuant hereto, is to be advocated or construed as an admission of any liability on the part of any party hereto. (d) Purchaser hereto acknowledges and represents that Purchaser: (i) has fully and carefully read this Agreement prior to execution, (ii) has been, or has had the opportunity to be, fully apprised by Purchaser's attorneys of the legal effect and meaning of this document and all the terms and conditions hereof, (iii) has had the opportunity to make whatever investigation or inquiry deemed necessary or appropriate in connection with the subject matter of this Agreement, (iv) has been afforded the opportunity to negotiate as to any and all terms hereof, and (v) is executing this Agreement as a free and voluntary act. (e) This Agreement and the General Release set forth in this Section 4.6 hereof, is and shall be, a release of all claims, whether known or unknown, and Purchaser hereby releases all rights reserved to Purchaser by Section 1542 of the Civil Code of the State of California, and all other similar statutes of any jurisdiction that might apply hereto, which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." In waiving the provisions of Section 1542 of the Civil Code, Purchaser acknowledges that Purchaser may hereafter discover facts in addition to or different from those which Purchaser now believes to be true with respect to the subject matter of the disputes and other matters herein released, but agrees that the release herein given shall be and remain in effect as a full and complete general release notwithstanding the discovery or existence of any such additional or different facts, of which Purchaser expressly assumes the risk. 14 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 18 Section 4.7 Registration Rights Agreement. Each of the Company and the Purchaser shall enter into the Registration Rights Agreement, on the Closing Date, in the form attached as Exhibit 4.7 hereto. ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF LPI The obligations of LPI under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions: Section 5.1 Accuracy of Representations. The representations and warranties made by Purchaser in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made as of the date of this Agreement (except for changes therein permitted by this Agreement), and Purchaser shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by Purchaser prior to or at the Closing. Section 5.2 Delivery of Certain Documents and Items. At the Closing, Purchaser shall have satisfied the following: (a) Purchaser shall have delivered certificates for the Acculase Shares to LPI in accordance with Section 3.1 hereof; (b) Purchaser shall have delivered to LPI all of the exhibits and schedules referenced in this Agreement to be delivered by Purchaser to LPI; and (c) Purchaser shall have executed and delivered this Agreement. Section 5.3 Other Items. LPI shall have received such further documents, certificates or instruments relating to the transactions contemplated hereby as LPI may reasonably request. ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER The obligations of Purchaser under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions: Section 6.1 Accuracy of Representations. The representations and warranties made by LPI in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the date of this Agreement, and LPI shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by LPI prior to or at the Closing. 15 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 19 Section 6.2 Delivery of Certain Documents and Items. At the Closing, LPI shall have satisfied the following: (a) LPI shall have delivered certificates for the LPI Shares to Purchaser in accordance with Section 3.1 hereof; (b) Purchaser shall have delivered to LPI all of the exhibits and schedules referenced in this Agreement to be delivered by LPI to Purchaser; and (c) LPI shall have executed and delivered this Agreement. Section 6.3 Other Items. Purchaser shall have received such further documents, certificates, or instruments relating to the transactions contemplated hereby as it may reasonably request. ARTICLE VII MISCELLANEOUS Section 7.1 Brokers and Finders. Neither LPI nor Purchaser, nor any of their respective officers, directors, agents or employees has employed any investment banker, broker or finder, or incurred any liability on behalf of LPI or Purchaser, as the case may be, for any brokerage fees, commissions or finders' fees, in connection with the transactions contemplated by this Agreement. The parties each agree to indemnify the other against any other claim by any third person for any commission, brokerage or finder's fee or other payment with respect to this Agreement or the transactions contemplated hereby based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party. Section 7.2 Choice of Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of California. Any dispute arising under this Agreement shall be resolved exclusively in the federal or state courts of the State of California. Section 7.3 Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to it or sent by overnight mail, registered mail or certified mail, postage prepaid, or by prepaid telegram, or when telecopied and followed by confirmation copy hand-delivered or sent by first class mail, addressed as follows: If to Purchaser, to the Purchaser's address, and telephone and facsimile numbers set forth on the signature page of this Agreement: If to LPI, to: Laser Photonics, Inc 2431 Impala Drive Carlsbad, California 92008 Attn: Jeffrey O'Donnell Telephone no. (760) 602-3300 Facsimile no. (760) 602-3320 16 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 20 With copies to: Luce, Forward, Hamilton & Scripps LLP 1990 South Bundy Drive, Suite 790 Los Angeles, California 90025 Attn: Jeffrey P. Berg, Esq. Telephone no. (310) 820-0083 Facsimile no. (310) 820-8313 or such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given as of the date so delivered, mailed or telegraphed. Section 7.4 Attorneys' Fees. In the event that any party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the non-prevailing party or parties shall reimburse the prevailing party or parties for all costs, including reasonable attorneys' fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein (including any appeal therefrom). Section 7.5 Confidentiality. Each party hereto agrees with the other parties that, until the Closing Date, they and their representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except: (a) to the extent such data is a matter of public knowledge or is required by law to be published; and (b) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement. Section 7.6 Schedules; Knowledge. Each party is presumed to have full knowledge of all information set forth in the other party's schedules delivered pursuant to this Agreement. Section 7.7 Third Party Beneficiaries. This Agreement is solely among LPI and Purchaser and as otherwise as specifically provided no director, officer, stockholder, employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement. Section 7.8 Entire Agreement. This Agreement represents the entire agreement between the parties relating to the subject matter hereof. This Agreement alone fully and completely expresses the agreement of the parties relating to the subject matter hereof. There are no other courses of dealing, understandings, agreements, representations or warranties, written or oral, except as set forth herein. Section 7.9 Survival; Termination. The representations, warranties and covenants of the respective parties shall survive the consummation of the transactions herein contemplated until the executory provisions of this Agreement shall be completed. 17 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 21 Section 7.10 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. Section 7.11 Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance hereof may be extended by a writing signed by the party or parties for whose benefit the provision is intended. This Agreement may not be amended or modified, except by a written agreement signed by all parties hereto. Section 7.12 Incorporation of Recitals. All of the recitals hereof are incorporated by this reference and are made a part hereof as though set forth at length herein. Section 7.13 Expenses. Each of the parties to this Agreement shall bear all of its own expenses incurred by it in connection with the negotiation of this Agreement and in the consummation of the transactions provided for herein and the preparation therefor. Section 7.14 Headings; Context. The headings of the sections and paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of this Agreement. Section 7.15 Benefit. This Agreement shall be binding upon and shall inure only to the benefit of the parties hereto, and their permitted assigns hereunder. This Agreement shall not be assigned by any party without the prior written consent of the other party. Section 7.16 Severability. In the event that any particular provision or provisions of this Agreement or the other agreements contained herein shall for any reason hereafter be determined to be unenforceable, or in violation of any law, governmental order or regulation, such unenforceability or violation shall not affect the remaining provisions of such agreements, which shall continue in full force and effect and be binding upon the respective parties hereto. Section 7.17 Failure of Conditions; Termination. In the event any of the conditions specified in this Agreement shall not be fulfilled on or before the Closing Date, the parties, or any one of them, have the right either to proceed or, upon prompt written notice to the other, to terminate and rescind this Agreement without liability to any other party. The election to proceed shall not affect the right of such electing party reasonably to require the other party to continue to use its efforts to fulfill the unmet conditions. Section 7.18 No Strict Construction. The language of this Agreement shall be construed as a whole, according to its fair meaning and intendment, and not strictly for or against either party hereto, regardless of who drafted or was principally responsible for drafting the Agreement or terms or conditions hereof. 18 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 22 Section 7.19 Execution Knowing and Voluntary. In executing this Agreement, the parties severally acknowledge and represent that each: (a) has fully and carefully read and considered this Agreement; (b) has been or has had the opportunity to be fully apprised of its attorneys of the legal effect and meaning of this document and all terms and conditions hereof; (c) has been afforded the opportunity to negotiate as to any and all terms hereof; and (d) is executing this Agreement voluntarily, free from any influence, coercion or duress of any kind. 19 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 23 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and entered into as of the date first above written at Carlsbad, California. ("LPI") LASER PHOTONICS, INC. a Delaware corporation By:_________________________________ Jeffrey F. O'Donnell Chief Executive Officer ("Purchaser") By: _________________________________ Signature of Purchaser Authorized Signatory ____________________________________ Print Name of Purchaser ____________________________________ Print Name and Title (if applicable) of Authorized Signatory ____________________________________ ____________________________________ ____________________________________ ____________________________________ Attn: ______________________________ Telephone no. (___) _______-________ Facsimile no. (___) _______-________ PRINT NAME, ADDRESS AND TELEPHONE AND FACSIMILE NUMBERS OF PURCHASER ABOVE WLA 18.1 SHARE EXCHANGE AGREEMENT 20 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 24 Transfer and Assignment of Securities FOR VALUE RECEIVED, the undersigned, Purchaser, hereby sells, assigns, transfers, conveys and delivers to Laser Photonics, Inc., a Delaware corporation ("LPI"), ___________ shares of the common stock, no par value (the "Acculase Common Stock"), of Acculase, Inc., a California corporation ("Acculase"), represented by share certificate number(s) _________________, and irrevocably constitutes and appoints LPI as my attorney to transfer these shares of Acculase Common Stock on the books and records of Acculase, with full power of substitution. Name of Assignee Laser Photonics, Inc. (and Joint Assignee if applicable): Address, Telephone 2431 Impala Drive and Telecopier Numbers Carlsbad, California 92008 of Assignee Tel No. (760) 602-3300 (and Joint Assignee Fax No. (760) 602-3320 if applicable): Social Security No. 59-2058100 or Tax ID of Assignee (and Joint Assignee, if applicable): Dated: ___________________, 2000 ______________________________ Signature of Purchaser Authorized Signatory ______________________________ Print Name of Purchaser Dated: ___________________, 2000 ______________________________ Signature Guaranteed by a Firm which is a Member of a Registered National Stock Exchange or by a Commercial Bank or a Trust Company A-1 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 25 PURCHASER QUESTIONNAIRE SECTION A ITEM I. ALL INVESTORS MUST INITIAL THE FOLLOWING LINE AND COMPLETE THE FOLLOWING: _________ A. I understand that the representations contained in this Section A are made for the purpose of qualifying me as an accredited investor as that term is defined by the Securities and Exchange Commission for the purpose of inducing a sale of the LPI Shares to me. I hereby represent that the statement or statements initialed below and throughout this Purchaser Questionnaire or information set forth in this Purchaser Questionnaire are true and correct in all respects. I understand that a false representation may constitute a violation of law, and that any person who suffers damage as a result of a false representation may have a claim against me for damages. B. Name of Purchaser Provide the full legal name of the Purchaser(s). In the case of organizations, provide the type of entity (e.g., corporation, partnership, or trust) and its state of organization. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- C. Residence Address and Telephone Number (Individuals). Please indicate your residence address and telephone number. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- B-1 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 26 D. Business Address and Telephone Number (All Investors). Please indicate your business address and telephone number. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Method of Investment Evaluation. Please select and initial one of the following alternatives: __________ ALTERNATIVE ONE: The undersigned has knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of an investment in the LPI Shares and protecting the undersigned's own interest in this transaction, and does not desire to utilize the services of any other person in connection with evaluating such merits and risks. As evidence of the requisite degree of knowledge and experience, the undersigned hereby offers the information provided in this Purchaser Questionnaire. __________ ALTERNATIVE TWO: The undersigned intends to utilize the services of a Purchaser Representative acceptable to LPI in connection with evaluating the merits and risks of an investment in the LPI Shares. The undersigned hereby acknowledges the following named person(s) to be the undersigned's Purchaser Representative(s) in connection with evaluating the merits and risks of an investment in the LPI Shares: If applicable, list name(s), address(es), and telephone number(s) of Purchaser Representative(s): - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Purchasers who utilize a Purchaser Representative should have their Purchaser Representative complete the Purchaser Representative Questionnaire set forth below. The undersigned understands that the undersigned may not have the opportunity to enter into the proposed transaction unless the Purchaser Representative(s) provides all such information to LPI in the attached Purchaser Representative Questionnaire and LPI finds such information acceptable. B-2 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 27 The undersigned represents that the undersigned and the above-named Purchaser Representative(s) have such knowledge and experience in financial and business matters that together they are capable of evaluating the merits and risks of an investment in the LPI Shares. ITEM II. ALL INDIVIDUAL PURCHASERS QUALIFYING AS ACCREDITED INVESTORS MUST INITIAL ONE OR MORE OF THE FOLLOWING THREE (3) STATEMENTS WHICH ARE TRUE: _________ A. I certify that I am an accredited investor because I had individual income (exclusive of any income attributable to my spouse) of more than $200,000 in each of the most recent two (2) years and I reasonably expect to have an individual income in excess of $200,000 for the current year. For purposes of this Purchaser Questionnaire, individual income means adjusted gross income, as reported for federal income tax purposes, less any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (but not including any amounts attributable to a spouse or to property owned by a spouse): (i) the amount of any tax exempt interest income received, (ii) the amount of losses claimed as a limited partner in a limited partnership, (iii) any deduction claimed for depletion, (iv) amounts contributed to an IRA or Keogh retirement plan, (v) alimony paid and (vi) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Internal Revenue Code. _________ B. I certify that I am an accredited investor because I and my spouse had joint income of more than $300,000 in each of the most recent two (2) years and I reasonably expect to have such joint income with my spouse in excess of $300,000 for the current year. For purposes of this Purchaser Questionnaire, joint income shall be determined as set forth in Item II(A) above for individual's income, except any income attributable to a spouse or property owned by a spouse shall be included. _________ C. I certify that I am an accredited investor because I have an individual net worth, or my spouse and I have a combined net worth, in excess of $1,000,000. For purposes of this paragraph, "net worth" means the excess of total assets at fair market value, including home and personal property, over total liabilities. D. Business. Please indicate your present business affiliation and your present title. ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- B-3 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 28 Please indicate any corporations of which you are a director or any partnership in which you are a general partner. ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- E. Education. Please describe any education following high school, including degrees obtained and schools attended. ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- F. Prior Investment Experience. Please indicate how frequently you invest in marketable securities (e.g., publicly-traded stock, bonds and debentures): [ ] often [ ] occasionally [ ] seldom [ ] never Please indicate how frequently you invest in unmarketable securities: [ ] often [ ] occasionally [ ] seldom [ ] never Please briefly describe the nature of your investment experience identified in your answers to (a) and (b) above, and any other investment experience not covered above which would indicate you ability to evaluate an investment in the LPI Shares. If additional space is necessary, please use the opposite side of this page or attach additional pages. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Do you make your own investment decisions with respect to the investment listed above? Yes No ---------- --------- B-4 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 29 What are the principal sources of your investment knowledge or advice? (Check all that apply) _____ First hand experience _____ Broker(s) _____ Attorney(s) _____ Financial publications _____ Investment Advisor(s) _____ Accountant(s) ITEM III. PARTNERSHIPS, CORPORATIONS OR TRUSTS WHICH QUALIFY AS ACCREDITED INVESTORS MUST INITIAL ONE OR BOTH OF THE FOLLOWING STATEMENTS WHICH ARE TRUE: _________ A. On behalf of the Purchaser, I hereby certify that the Purchaser (i) if a corporation, business trust or partnership was not formed for the purpose of acquiring the LPI Shares and has total assets in excess of $5,000,000, or (ii) if a trust was not formed for the purpose of acquiring the LPI Shares, has total assets in excess of $5,000,000 and the trustee has such experience in financial and business matters that the trustee is capable of evaluating the merits and risks of the investment in the LPI Shares. (For purposes of this provision only, partnerships may aggregate the net worth (as defined in Item II (C) above) of their partners to qualify as an accredited Purchaser and each general partner should complete the separate special Purchaser Representative Questionnaire, set forth in Section C hereof.) _________ B. On behalf of the Purchaser, I hereby certify that all of the beneficial owners of equity in the Purchaser qualify as accredited investors. Trusts may qualify under this provision only if the trust may be amended or revoked by the grantor(s), each of whom qualifies as an accredited individual investor. For purposes hereof, Individual Retirement Accounts (IRA) for a person who is an "accredited investor" is itself an accredited investor. (Purchasers attempting to qualify under this Item should have each beneficial owner or grantor complete the separate Purchaser Representative Questionnaire.) B-5 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 30 C. Organization. Please provide the following information: (i) Date organization was formed:__________________________ (ii) Was the organization formed for the specific purpose of investing in LPI? ______________________________________________________________ (iii) Describe the type of business conducted by the organization. ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ITEM IV. EMPLOYEE BENEFIT PLANS WITHIN THE MEANING OF TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 WHICH QUALIFY AS ACCREDITED INVESTORS MUST INITIAL ONE OR MORE OF THE FOLLOWING STATEMENTS WHICH ARE TRUE: _________ A. The Purchaser is such an employee benefit plan with total assets in excess of $5,000,000. _________ B. The Purchaser is such a self-directed employee benefit plan with the investment decisions made solely by persons who are accredited investors. (Investors who qualify under this Item should have each person making the investment decisions on behalf of the plan complete the separate Purchaser Representative Questionnaire.) _________ C. The Purchaser is such an employee benefit plan, and the investment decision is made by a plan fiduciary, as defined in Section 3 (21) of such act, which is either a bank, savings and loan association, insurance company or registered investment adviser. ITEM V. Equity Owners. (This Item must be completed by any organization, which is an accredited investor because all of its equity owners are accredited investors, i.e., all organizations which initialed Section 1.8.2(b) of this Agreement.) B-6 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 31 The names of all of the equity owners of the organizations are as follows: ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ IMPORTANT: All organizations required to complete this Item V must furnish a completed, dated and signed copy of this Purchaser Questionnaire for each individual or organization listed above as an equity owner. Any organization listed above which is an accredited investor because all of its equity owners are accredited investors must, in turn, submit appropriate Purchaser Questionnaires for its equity owners. SECTION B ALL INVESTORS REPRESENT THAT: 1. The information contained herein is complete and accurate and may be relied upon, 2. I will notify you immediately of any material adverse change in any of such information occurring prior to the acceptance of my subscription, and 3. The undersigned is a resident of ________________________. IN WITNESS WHEREOF, the undersigned has supplied the requested information and executed this Purchaser Questionnaire this _______ day of _______________, 2000. __________________________________________ Signature of Purchaser __________________________________________ Print Name __________________________________________ Signature of Additional Purchaser __________________________________________ Print Name B-7 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 32 PURCHASER REPRESENTATIVE QUESTIONNAIRE 1. Name and address of prospective Purchaser: ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ 2. Name of Purchaser Representative: ______________________________________________________________ Business Address: ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ 3. List your: (i) present occupation or position, indicating the period of such practice or employment and any field of professional specialization; (ii) business or professional education, indicating any degrees received; and (iii) professional licenses or registrations, including brokerage licenses, broker-dealer registrations, etc. ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ 4. Describe your experience in advising clients about investments of this type. ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ 5. Describe generally any professional, business, financial or investment experience which would assist you in evaluating the merits and risks of an investment as described in this Agreement. ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ 6. State the length of time and capacity in which you have known the prospective Purchaser. ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ B-8 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 33 7. Are you an affiliate of LPI or its officers, directors, employees, controlling stock Purchasers or any of their affiliates, or the beneficial owner of 10% or more of the equity interest in or any class or equity securities of, any of the foregoing? (An "affiliate" of a person or entity directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with such person or entity.) Yes ( ) No ( ) If "yes," please describe:____________________________________ ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ 8. In advising the prospective Purchaser, will you rely in part on the prospective Purchaser's own expertise in certain areas or on the expertise of an additional Purchaser Representative or Representatives? Yes ( ) No ( ) If "yes," please explain and provide the additional Purchaser Representatives' names and address: ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ 9. I understand that LPI will rely on the accuracy and completeness of my responses to the foregoing questions and the following representations: (a) I will act as Purchaser Representative for the Purchaser in connection with his consideration of a possible investment as described in the Memorandum. (b) The answers to the above questions are complete and correct and LPI may rely upon them. I will immediately notify LPI of any material change in any statement made herein that occurs prior to the closing on the prospective Purchaser's securities of LPI. (c) I personally (or, if I have answered "Yes" to question 8, together with the prospective Purchaser or the additional Purchaser Representative indicated) have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of the prospective Purchaser's investment. B-9 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE 34 (d) Except as described in the Purchaser Representative Questionnaire, I will not receive any compensation for acting as Purchaser Representative in connection with this Exchange Offer from LPI or the officers, directors, employees, agents, controlling stock Purchasers or their affiliates of LPI. DATED: _________________, 2000 _________________________________________ (Signature of Purchaser Representative) B-10 SHARE EXCHANGE AGREEMENT EXECUTION DOCUMENT - ACCULASE EX-5.1 5 w47540ex5-1.txt OPINION OF LUCE, FORWARD, HAMILTON & SCRIPPS LLP 1 Exhibit 5.1 April 5, 2001 30487-00001 PhotoMedex, Inc. Five Radnor Corporate Center Suite 470 Radnor, Pennsylvania 19087 RE: PHOTOMEDEX, INC. Gentlemen: We have acted as counsel for PhotoMedex, Inc., a Delaware corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission, under the Securities Act of 1933, as amended (the "Securities Act"), of a Registration Statement on Form S-3 (the "Registration Statement"). The Registration Statement relates to the offer and sale by the selling stockholders named in the Registration Statement (the "Selling Stockholders"), of up to 1,540,000 shares (the "Shares") of common stock, par value $0.01, of the Company. In acting as counsel to the Company, we have examined originals or copies, certified to our satisfaction, of such documents, corporate records and other instruments, as we have deemed necessary. In addition, we have examined such books and records of the Company, as in our judgment, is necessary or appropriate to enable us to render the opinions expressed below. We are opining herein only as to the effect of the federal laws of the United States, the internal laws of the State of California and the General Corporation Law of the State of Delaware, and we express no opinion with respect to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction, or in the case of the State of Delaware, any other laws, including without limitation, any matters of municipal law or the laws of any other local agencies within the State of Delaware. Based upon the foregoing, it is our opinion that the Shares, when sold by the Selling Stockholders in the manner contemplated by the Prospectus, which forms a part of the Registration Statement, and in conformity with the Certificate of Incorporation of the Company, 2 PhotoMedex, Inc. April 5, 2001 Page 2 as amended and restated and in effect as of the date hereof, will be legally and validly issued, fully paid and non-assessable. We consent to the use of this opinion as an exhibit to the Registration Statement and the use of our name in the Registration Statement and the Prospectus. By giving you this opinion and consent, we do not admit that we are experts with respect to any part of the Registration Statement or the Prospectus, within the meaning of the term "expert," as used in Section 11 of the Securities Act, or the rules and regulations promulgated thereunder, nor do we admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations promulgated thereunder. Very truly yours, LUCE, FORWARD, HAMILTON & SCRIPPS LLP EX-23.1 6 w47540ex23-1.txt CONSENT OF ARTHUR ANDERSEN LLP 1 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated February 23, 2001 included in PhotoMedex, Inc.'s Form 10-K for the year ended December 31, 2000 and to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP Philadelphia, Pennsylvania April 6, 2001 EX-23.2 7 w47540ex23-2.txt CONSENT OF HEIN + ASSOCIATES LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Registration Statement and Prospectus on Form S-3 of our report dated February 23, 2000, accompanying the consolidated financial statements of PhotoMedex, Inc. and subsidiaries contained in the December 31, 2000 annual report on Form 10-K of PhotoMedex, Inc. We also consent to the use of our name and the statements with respect to us, appearing under the heading "Experts" in the Prospectus. /s/ HEIN + ASSOCIATES LLP -------------------------------------- HEIN + ASSOCIATES LLP Certified Public Accountants Orange, California April 6, 2001 -----END PRIVACY-ENHANCED MESSAGE-----