EXECUTION COPY
EXHIBIT B
TO
SECURITIES PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of September
30, 1997 by and among PALOMAR MEDICAL TECHNOLOGIES, INC., a corporation
organized under the laws of the State of Delaware, with headquarters located at
00 Xxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "COMPANY"), and the
undersigned purchasers of Debentures and Common Shares under the Securities
Purchase Agreement (together with affiliates, the "INITIAL INVESTORS").
WHEREAS:
A. In connection with the Securities Purchase Agreement of even date
herewith by and between the Company and the Initial Investors (the "SECURITIES
PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Initial Investors (i) 6%,
7% and 8% Convertible Debentures Due September 30, 2002 (the "DEBENTURES") that
are convertible into shares (the "CONVERSION SHARES") of the Company's common
stock, par value $.01 per share (the "COMMON STOCK"), upon the terms and subject
to the limitations and conditions set forth in the Debentures and (ii) shares of
Common Stock (the "COMMON SHARES"); and
B. To induce the Initial Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investors hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall
have the following meanings:
(i) "INVESTORS" means the Initial Investors and
any transferees or assignees who agree to become bound
by the provisions of this Agreement in accordance with
Section 9 hereof.
(ii) "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by
preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and
pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or
ordering of effectiveness of such Registration Statement
by the United States Securities and Exchange Commission
(the "SEC").
(iii) "REGISTRABLE SECURITIES" means the
Conversion Shares (including any Conversion Shares
issuable with respect to Conversion Default Payments
under the Debentures or in redemption of any Debentures)
issued or issuable with respect to the Debentures, the
Common Shares and any shares of capital stock issued or
issuable, from time to time (with any adjustments), on
or in exchange for or otherwise with respect to any of
the foregoing.
(iv) "REGISTRATION STATEMENT" means a
registration statement of the Company under the
Securities Act.
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b. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in
the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare,
and, on or prior to the sixtieth (60th) day after the Closing
Date (the "FILING DATE"), file with the SEC a Registration
Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to
effect a registration of all of the Registrable Securities,
subject to the reasonable consent of the Investors) covering the
resale of a number of Registrable Shares equal to at least
3,500,000 shares plus the amount of Common Shares (provided that
such number may be proportionally reduced if less than
$7,000,000 in principal amount of Debentures are issued under
the Securities Purchase Agreement), which Registration
Statement, to the extent allowable under the Securities Act and
the Rules promulgated thereunder (including Rule 416), shall
state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may
become issuable upon conversion of the Debentures to prevent
dilution resulting from stock splits, stock dividends or similar
transactions or as a result of fluctuations in the market price
of the Common Stock. The Registrable Securities included on the
Registration Statement shall be allocated to the Investors as
set forth in Section 11(k) hereof. The Registration Statement
(and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to (and
subject to the reasonable approval of) the Initial Investors and
their counsel prior to its filing or other submission.
b. Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves
an underwritten offering, the Investors who hold a majority in
interest of the Registrable Securities subject to such
underwritten offering, with the consent of the Initial
Investors, shall have the right to select a total of one legal
counsel to represent the Investors and an investment banker or
bankers and manager or managers to administer the offering,
which investment banker or bankers or manager or managers shall
be reasonably satisfactory to the Company. In the event the
Company determines such banker or manager to be unsatisfactory,
the Company shall bear the difference, if any, in costs of the
banker or manager ultimately accepted and such rejected
underwriter or manager.
c. Payments by the Company. The Company shall cause the
registration statement to become effective as soon as
practicable after filing, but in no event later than the one
hundred twentieth (120th) day following the Closing Date (the
"REGISTRATION DEADLINE"). If (i) the registration statement(s)
covering the Registrable Securities required to be filed by the
Company pursuant to Section 2(a) hereof is not declared
effective by the SEC on or before the Registration Deadline or
if, after the registration statement has been declared effective
by the SEC, sales of Registrable Securities (including any
Registrable Securities required to be registered pursuant to
Section 3(b) hereof) are not permitted pursuant to the
registration statement (including by reason of a stop order or
the Company's failure to update the registration statement) or
(ii) the Common Stock is not listed or included for quotation on
the NASDAQ SmallCap Market ("NASDAQ"), the NASDAQ National
Market (the "NNM"), the New York Stock Exchange (the "NYSE") or
the American Stock Exchange (the "AMEX") at any time after the
Registration Deadline, then the Company will make payments to
the Investors in such amounts and at such times as shall be
determined pursuant to this Section 2(c) as partial relief for
the damages to the Investors by reason of any such delay in or
reduction of their ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies
available at law or in equity). The Company shall pay to each
Investor an amount equal to the sum of (i) the aggregate
principal amount of the Debentures held by such Investor
(including, without limitation, Debentures that have been
converted into Conversion Shares then held by such Investor)
(the "AGGREGATE PURCHASE PRICE") multiplied by two hundredths
(.02) if the Registration Statement filed pursuant to Section
2(a) is not declared effective on or prior to the Registration
Deadline plus (ii) an amount equal to the Aggregate Purchase
Price multiplied by two hundredths (.02) for each full thirty
(30) day period thereafter that the Registration Statement has
not been declared effective or that sales are not permitted
pursuant to the Registration Statement after it has been
declared effective (including by reason of a stop order or the
Company's failure to update the registration statement) or that
the Common Stock is not listed or included for quotation on
NASDAQ, the NYSE or AMEX (which amount shall not be pro rated
for periods of less than thirty (30) days); PROVIDED, HOWEVER
that there shall be excluded from each such period any delays
which are solely attributable to changes (other than corrections
of Company mistakes with respect to information previously
provided by the Investors) required by the Investors in the
Registration Statement with respect to information relating to
the Investors, including, without limitation, changes to the
plan of distribution and PROVIDED, FURTHER, that the aggregate
amount payable to any Investor under this Section 2(c) shall not
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exceed ten percent (10%) of such Investor's Aggregate Purchase
Price. (For example, if the Registration Statement is not
effective by the Registration Deadline, the Company would pay
$20,000 for each $1,000,000 of Aggregate Purchase Price and the
Company would pay an additional $20,000 for each $1,000,000 of
Aggregate Purchase Price thereafter for each additional thirty
(30) days the Registration Statement is not effective (up to a
maximum of $100,000 for each $1,000,000 Aggregate Purchase
Price)). Such amounts shall be paid in cash or, at each
Investor's option, may be convertible into Common Stock at the
"CONVERSION PRICE" (as defined in the Debentures). Any shares of
Common Stock issued upon conversion of such amounts shall be
Registrable Securities. If the Investor desires to convert the
amounts due hereunder into Registrable Securities it shall so
notify the Company in writing within two (2) business days of
the date on which such amounts are first payable in cash and
such amounts shall be so convertible (pursuant to the mechanics
set forth under Article II of the Debentures), beginning on the
last day upon which the cash amount would otherwise be due in
accordance with the following sentence. Payments of cash
pursuant hereto shall be made within five (5) days after the end
of each period that gives rise to such obligation.
d. Eligibility for Form S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3
for registration of the sale by the Initial Investors and any
other Investor of the Registrable Securities and the Company
shall file all reports required to be filed by the Company with
the SEC in a timely manner so as to maintain such eligibility
for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall have the
following obligations:
a. The Company shall prepare promptly and file with the
SEC the Registration Statement required by Section 2(a), and
cause such Registration Statement relating to Registrable
Securities to become effective as soon as practicable after such
filing, but in no event later than the Registration Deadline,
and keep the Registration Statement effective pursuant to Rule
415 at all times until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold
and (ii) the date on which all Registrable Securities (in the
reasonable opinion of counsel to the Initial Investors) may be
immediately sold by the Investors to the public without
registration (including, in accordance with Rule 144(k)
promulgated under the Securities Act) (the "Registration
Period"), which Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein and
all documents incorporated by reference therein) shall not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein, or necessary to
make the statements therein not misleading.
b. The Company shall prepare and file with the SEC such
additional Registration Statements and such amendments
(including post-effective amendments) and supplements to any
Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the
Registration Statement or Statements effective as to all
Registrable Securities at all times during the Registration
Period, and, during such period, comply with the provisions of
the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the
Registration Statement or Statements until such time as all of
such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or
sellers thereof as set forth in the Registration Statement. In
the event an Investor notifies the Company that the number of
shares available (including, if permissible, shares available by
reason of Rule 416 under the Securities Act) under a
Registration Statement filed pursuant to this Agreement was, for
any three (3) consecutive trading days (the date the Investor
notifies the Company of such occurrence being the "REGISTRATION
TRIGGER DATE"), insufficient to cover a number of shares equal
to the applicable Registration Percentage (as defined below)
multiplied by all of the Registrable Securities issued or
issuable upon conversion of the Debentures held by such Investor
(without giving effect to any limitations on conversion
contained in Article II.C of the Debentures), the Company shall
amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable),
or both, so as to cover one hundred fifty percent (150%) of the
Registrable Securities issued or issuable to such Investor
(without giving effect to any limitations on conversion
contained in Article II.C of the Debentures), in each case, as
soon as practicable, but in any event within fifteen (15) days
after the Registration Trigger Date (based on the market price
of the Common Stock and other relevant factors on which the
Company reasonably elects to rely). The Company shall cause such
amendment and/or new Registration Statement to become effective
as soon as practicable following the filing thereof. In the
event the Company fails to obtain the effectiveness of any such
Registration Statement within ninety (90) days after a
Registration Trigger Date, each Investor shall thereafter have
the option, exercisable in whole or in part at any time and from
time to time by delivery of a written notice to the Company (a
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"REGISTRATION TRIGGER PREPAYMENT NOTICE"), to require the
Company to pay a portion of such Investor's Outstanding Amount
(as defined in Article I of the Debentures), such that the total
number of shares of Common Stock issuable to such Investor upon
conversion of its Debentures (without giving effect to any
limitations on conversion contained in Article II.C of the
Debentures) does not exceed the number of shares then registered
under an effective Registration Statement. If the Corporation
fails to pay any portion of such Outstanding Amount within five
(5) business days after its receipt of a Registration Trigger
Prepayment Notice, then such failure shall be deemed a Mandatory
Prepayment Event as defined in the Debentures, and the Investor
shall be entitled to the remedies provided in Article V.B of the
Debentures. As used herein, "REGISTRATION PERCENTAGE" means one
hundred percent (100%) for the period ending on the 150th day
following the Closing Date and means one hundred and thirty-five
percent (135%) thereafter.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration
Statement and its legal counsel (i) promptly after the same is
prepared and publicly distributed, filed with the SEC, or
received by the Company, one copy of the Registration Statement
and any amendment thereto, each preliminary prospectus and
prospectus and each amendment or supplement thereto and, in the
case of the Registration Statement referred to in Section 2(a),
to counsel to the Investors only, each letter written by or on
behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the
SEC, in each case relating to such Registration Statement (other
than the portion, if any, thereof which contains information for
which the Company has sought confidential treatment) and (ii)
such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order
to facilitate the disposition of the Registrable Securities
owned by such Investor.
d. The Company shall use reasonable efforts to (i)
register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or "blue sky"
laws of such jurisdictions in the United States as each Investor
who holds Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements
to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; PROVIDED,
HOWEVER, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (b) subject
itself to general taxation in any such jurisdiction, (c) file a
general consent to service of process in any such jurisdiction,
(d) provide any undertakings that cause the Company undue
expense or burden, or (e) make any change in its charter or
bylaws, which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the Company
and its stockholders.
e. In the event the Investors who hold a majority in
interest of the Registrable Securities being offered in an
offering select underwriters for the offering, the Company shall
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution
obligations, with the underwriters of such offering.
f. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor of the
happening of any event, of which the Company has knowledge, as a
result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct
such untrue statement or omission, and deliver such number of
copies of such supplement or amendment to each Investor as such
Investor may reasonably request.
g. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness
of a Registration Statement, and, if such an order is issued, to
obtain the withdrawal of such order at the earliest practicable
moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such
order and the resolution thereof.
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h. The Company shall permit a single firm of counsel
designated by the Initial Investors to review the Registration
Statement, all amendments and supplements thereto and all
written responses by the Company to the SEC regarding the
Registration Statement which relate to the Investors a
reasonable period of time (and in no event less than three (3)
business days) prior to their filing with the SEC, and not file
any document in a form to which such counsel reasonably objects.
In the event such counsel fails to convey to the Company all of
its comments (or that it has no comments) to such Registration
Statement prior to the scheduled filing date of such
Registration Statement (which date shall comply with the
requirements set forth in this Section 3(h)), the sixty (60) and
the one hundred and twenty (120) day periods referred to in
Section 2(a) and 2(c) shall be extended by such number of
business days after such scheduled filing date that such counsel
so conveys such comments (or that it has no comments).
i. The Company shall make generally available to its
security holders as soon as practical, but not later than ninety
(90) days after the close of the period covered thereby, an
earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month
period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the
Registration Statement.
j. At the request of any Investor, if the Registration
Statement pertains to an underwritten public offering, the
Company shall furnish, on the date of effectiveness of the
Registration Statement (i) an opinion, dated as of such date,
from counsel representing the Company addressed to the Investors
and in form, scope and substance as is customarily given in an
underwritten public offering and (ii) a letter, dated such date,
from the Company's independent certified public accountants in
form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and the
Investors.
k. The Company shall make available for inspection by
(i) any Investor, (ii) any underwriter participating in any
disposition pursuant to the Registration Statement, (iii) one
firm of attorneys and one firm of accountants or other agents
retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the
"INSPECTORS") all pertinent financial and other records, and
pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise
its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information
which any Inspector may reasonably request for purposes of such
due diligence; PROVIDED, HOWEVER, that each Inspector shall hold
in confidence and shall not make any disclosure (except to an
Investor) of any Record or other information which the Company
determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (b) the
release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been
made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall
not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall
have entered into confidentiality agreements (in form and
substance satisfactory to the Company) with the Company with
respect thereto, substantially as set forth in this Section
3(k). Each Investor agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company,
at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein shall be deemed to limit the
Investor's ability to sell Registrable Securities in a manner
which is otherwise consistent with applicable laws and
regulations.
l. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary
to comply with federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct
a misstatement or omission in any Registration Statement, (iii)
the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of
competent jurisdiction, (iv) such information has been made
generally available to the public other than by disclosure in
violation of this or any other agreement, or (v) such Investor
consents to the form and content of any such disclosure. The
Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through
other means, give prompt notice to such Investor prior to making
such disclosure, and allow the Investor, at its expense, to
undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
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m. The Company shall use its best efforts to promptly
either (i) cause all the Registrable Securities covered by the
Registration Statement to be listed on the NYSE or the AMEX or
another national securities exchange and on each additional
national securities exchange on which securities of the same
class or series issued by the Company are then listed, if any,
if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) secure the designation
and quotation, of all the Registrable Securities covered by the
Registration Statement on the NASDAQ Small Cap Market or the NNM
and, without limiting the generality of the foregoing, to
arrange for or maintain at least two market makers to register
with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities.
n. The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable
Securities not later than the effective date of the Registration
Statement.
o. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and the managing
underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any
restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case
may be, as the managing underwriter or underwriters, if any, or
the Investors may reasonably request and registered in such
names as the managing underwriter or underwriters, if any, or
the Investors may request, and, within three (3) business days
after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall
cause legal counsel selected by the Company to deliver, to the
transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such
Registration Statement) an opinion of such counsel in the form
attached hereto as EXHIBIT 1.
p. At the request of any Investor, the Company shall
prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with the
Registration Statement as may be necessary in order to change
the plan of distribution set forth in such Registration
Statement.
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
a. It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of
the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable
Securities and shall execute such documents in connection with
such registration as the Company may reasonably request. At
least ten (10) business days prior to the first anticipated
filing date of the Registration Statement, the Company shall
notify each Investor in writing of the information the Company
reasonably requires from each such Investor and each such
Investor shall provide such information no later than five (5)
business days prior to such anticipated filing date.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder,
unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
c. Each Investor whose Registrable Securities are
included in a Registration Statement understands that the
Securities Act may require delivery of a prospectus relating
thereto in connection with any sale thereof pursuant to such
Registration Statement and each such Investor shall deliver a
prospectus in connection with any such sale.
d. Each Investor agrees to notify the Company promptly,
but in any event within 72 hours after the date on which all
Registrable Securities, Debentures and Common Shares owned by
such Investor have been sold by such Investor, if such date is
prior to the expiration of the Registration Period, so that the
Company may comply with its obligation to terminate the
Registration Statement in accordance with Item 512 of Regulation
S-K or Regulation S-B, as the case may be.
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e. In the event Investors holding a majority in interest
of the Registrable Securities being offered determine to engage
the services of an underwriter, each Investor agrees to enter
into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable
Securities, unless such Investor has notified the Company in
writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration
Statement.
f. Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind
described in Section 3(f) or 3(g), such Investor will
immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f)
or 3(g) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the
time of receipt of such notice.
g. No Investor may participate in any underwritten
offering of Registrable Securities hereunder unless such
Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting
arrangements in usual and customary form entered into by the
Company, (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company pursuant to
Section 5 below.
5. EXPENSES OF REGISTRATION. All expenses incurred by the
Company in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting
fees, the fees and disbursements of counsel for the Company and the fees
and disbursements contemplated by Section 3(j) hereof shall be borne by
the Company. The Investors shall be responsible for any underwriting
discounts and commissions attributable to the Registrable Securities to
be sold by them and the legal fees and disbursements contemplated by
Section 2(b) hereof, except to the extent otherwise set forth in Section
2(b).
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will
indemnify, hold harmless and defend (i) each Investor who holds
such Registrable Securities, and (ii) the directors, officers,
partners, members, employees, agents and each person who
controls any Investor within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), if any, (each, an
"INDEMNIFIED PERSON"), against any joint or several losses,
claims, damages, liabilities or expenses (collectively, together
with actions, proceedings or inquiries by any regulatory or
self-regulatory organization, whether commenced or threatened,
in respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or the omission or
alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary
prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any other law, including,
without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (i)
through (iii) being, collectively, "VIOLATIONS"). Subject to the
restrictions set forth in Section 6(c) with respect to the
number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person,
48
promptly as such expenses are incurred and are due and payable,
for any reasonable legal fees or other reasonable expenses
incurred by them in connection with investigating or defending
any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in
this Section 6(a): (i) shall not apply to a Claim arising out of
or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company
by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto;
(ii) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent
of the Company, which consent shall not be unreasonably
withheld; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the
untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, if such corrected
prospectus was timely made available by the Company pursuant to
Section 3(c) hereof, and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to
the use giving rise to a Violation and such Indemnified Person,
notwithstanding such advice, used it. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees
severally and not jointly to indemnify, hold harmless and
defend, to the same extent and in the same manner set forth in
Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees,
agents and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors
or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the
Exchange Act (each an "INDEMNIFIED PARTY"), against any Claim to
which any of them may become subject, under the Securities Act,
the Exchange Act or otherwise, insofar as such Claim arises out
of or is based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with
such Registration Statement; and subject to Section 6(c) such
Investor will reimburse any legal or other expenses (promptly as
such expenses are incurred and are due and payable) reasonably
incurred by them in connection with investigating or defending
any such Claim; PROVIDED, HOWEVER, that the indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; PROVIDED, FURTHER,
HOWEVER, that the Investor shall be liable under this Agreement
(including this Section 6(b) and Section 7) for only that amount
as does not exceed the net proceeds actually received by such
Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in
this Section 6(b) with respect to any preliminary prospectus
shall not inure to the benefit of any Indemnified Party if the
untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, and the Indemnified
Party failed to utilize such corrected prospectus.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the
commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim
in respect thereof is to made against any indemnifying party
under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying
party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; PROVIDED, HOWEVER, that such
indemnifying party shall not be entitled to assume such defense
and an Indemnified Person or Indemnified Party shall have the
right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation
by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual
or potential conflicts of interest between such Indemnified
Person or Indemnified Party and any other party represented by
such counsel in such proceeding or the actual or potential
defendants in, or targets of, any such action include both the
Indemnified Person or the Indemnified Party and the indemnifying
party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available
to such Indemnified Person or Indemnified Party which are
different from or in addition to those available to such
indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall
be selected by Investors holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to
which the Claim relates (with the approval of the Initial
Investors if they holds Registrable Securities included in such
Registration Statement), if the Investors are entitled to
indemnification hereunder, or by the Company, if the Company is
entitled to indemnification hereunder, as applicable. The
49
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action
shall not relieve such indemnifying party of any liability to
the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party is actually
prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying
party agrees to make the maximum contribution with respect to any
amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; PROVIDED, HOWEVER, that (i) no
contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth
in Section 6, (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation, and (iii)
contribution (together with any indemnification or other obligations
under this Agreement) by any seller of Registrable Securities shall be
limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT. With a view to making
available to the Investors the benefits of Rule 144 promulgated under
the Securities Act or any other similar rule or regulation of the SEC
that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company
agrees to:
a. file with the SEC in a timely manner and make and
keep available all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as
the Company remains subject to such requirements (it being
understood that nothing herein shall limit the Company's
obligations under Section 4(c) of the Securities Purchase
Agreement) and the filing and availability of such reports and
other documents is required for the applicable provisions of
Rule 144; and
b. furnish to each Investor so long as such Investor
owns Debentures, Common Shares or Registrable Securities,
promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule
144, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit
the Investors to sell such securities pursuant to Rule 144
without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the
Investors hereunder, including the right to have the Company register
Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any transferee of all or
any portion of the Debentures, Common Shares or the Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment,
(ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of
such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the
Securities Act and applicable state securities laws, (iv) at or before
the time the Company receives the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein, and
(v) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.
50
10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, the Initial
Investors (to the extent the Initial Investors still own Debentures,
Common Shares or Registrable Securities) and Investors who hold a
majority in interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon
each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of
record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more
persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered
owner of such Registrable Securities.
b. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or
registered mail (return receipt requested) or delivered
personally or by courier or by confirmed telecopy, and shall be
effective five days after being placed in the mail, if mailed,
or upon receipt or refusal of receipt, if delivered personally
or by courier or confirmed telecopy, in each case addressed to a
party. The addresses for such communications shall be:
If to the Company:
Palomar Medical Technologies, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx, Director of Finance
with a copy to each of the Company's General Counsel at the same address
and to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
and if to any Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 11(b).
c. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver
thereof.
d. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The
Company irrevocably consents to the jurisdiction of the United
States federal courts located in the County of Kent in the State
of Delaware in any suit or proceeding based on or arising under
this Agreement and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in such courts. The
Company irrevocably waives the defense of an inconvenient forum
to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company, mailed
by first class mail shall be deemed in every respect effective
service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect the Investors' right to
serve process in any other manner permitted by law. The Company
agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful
manner.
e. This Agreement and the Securities Purchase Agreement
(including all schedules and exhibits thereto) constitute the
entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement and the
Securities Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the
subject matter hereof and thereof.
51
f. Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the
meaning hereof.
h. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. All consents and other determinations to be made by
the Investors or the Initial Investors pursuant to this
Agreement shall be made by the Investors or the Initial
Investors holding a majority of the Registrable Securities
(determined as if all Debentures then outstanding had been
converted into or exercised for Registrable Securities) held by
all Investors or Initial Investors, as the case may be.
k. The initial number of Registrable Securities included
on any Registration Statement and each increase to the number of
Registrable Securities included thereon shall be allocated pro
rata among the Investors based on the number of Registrable
Securities held by each Investor at the time of such
establishment or increase, as the case may be. In the event an
Investor shall sell or otherwise transfer any of such holder's
Registrable Securities, each transferee shall be allocated a pro
rata portion of the number of Registrable Securities included on
a Registration Statement for such transferor. Any shares of
Common Stock included on a Registration Statement and which
remain allocated to any person or entity which does not hold any
Registrable Securities shall be allocated to the remaining
Investors, pro rata based on the number of shares of Registrable
Securities then held by such Investors.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
Name:
Its:
Initial Investors:
Name:
By:
Name:
Its:
52
EXHIBIT 1
to
REGISTRATION RIGHTS AGREEMENT
[Date]
VIA FACSIMILE: (000) 000-0000
Xxxxxxx Xxxxxx, Esq.
AMERICAN STOCK TRANSFER & TRUST COMPANY
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
RE: PALOMAR MEDICAL TECHNOLOGIES, INC.
Dear Xx. Xxxxxx:
We are counsel to PALOMAR MEDICAL TECHNOLOGIES, INC., a corporation organized
under the laws of the State of Delaware (the "COMPANY"), and we understand that
[Name of Investor] (the "HOLDER") has purchased from the Company (i) 6%, 7% and
8% Convertible Debentures Due September 30, 2002 (the "DEBENTURES") that are
convertible into shares of the Company's Common Stock, par value $.01 per share
(the "COMMON STOCK") and (ii) shares of Common Stock (the "COMMON SHARES"). The
Debentures and Common Shares were purchased by the Holder pursuant to a
Securities Purchase Agreement, dated as of September 30, 1997, by and among the
Company and the signatories thereto (the "AGREEMENT"). Pursuant to a
Registration Rights Agreement, dated as of September 30, 1997, by and among the
Company and the signatories thereto (the "REGISTRATION RIGHTS AGREEMENT"), the
Company agreed with the Holder, among other things, to register the Registrable
Securities (as that term is defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), upon the terms
provided in the Registration Rights Agreement. In connection with the Company's
obligations under the Registration Rights Agreement, on ________, 1997, the
Company filed a Registration Statement on Form S-___ (File No. 333-
_____________) (the "REGISTRATION STATEMENT") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder.
[Customary introductory and scope of examination language to be inserted]
Based on the foregoing, we are of the opinion that the Registrable Securities
have been registered under the Securities Act.
[Other customary language to be included.]
Very truly yours,
cc: [Name of Investor]
53
