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SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement"), dated as of March 10, 1997,
has been executed by the undersigned (the "Subscriber") in connection with the
purchase of 5% Convertible Debentures due March 10, 2002 (the "Debentures") of
Palomar Medical Technologies, Inc., a Delaware corporation, having an address at
00 Xxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"), convertible
into shares of Common Stock, par value $.01 per share (the "Common Stock"), of
the Company. The Company is offering an aggregate amount of up to 5,500,000 of
Debentures, at an aggregate price of up to $5,225,000 (the "Offering"). The form
of the Debentures to be purchased by the Subscriber hereunder, including the
terms on which such Debentures may be converted into Common Stock, is attached
hereto as Exhibit A. The solicitation of this Agreement and, if accepted by the
Company, the offer and sale of the Debentures are being made by the Company in
reliance upon the provisions of Regulation D ("Regulation D") promulgated by the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended (the "Securities Act"), or under the exemption from registration set
forth in Section 4(2) of the Securities Act. The shares of Common Stock issuable
upon the conversion of the Debentures are sometimes collectively referred to in
this Agreement as the "Shares." The Debentures and the Shares are sometimes
collectively referred to in this Agreement as the "Securities."
The Subscriber wishes to subscribe for, and the Company wishes to issue,
the aggregate principal amount of Debentures at the aggregate purchase price set
forth in Section 14 and in accordance with the other terms and conditions of
this Agreement. In consideration of the mutual promises, representations,
warranties and conditions set forth herein, and intending to be legally bound
hereby, the Company and the Subscriber agree as follows:
1. PURCHASE AND SALE OF SECURITIES; CLOSING CONDITIONS.
1.1. Purchase and Sale of Securities.
(a) Purchase of Debentures. The Company shall issue to the Subscriber
and the Subscriber shall purchase from the Company such number of
Debentures as is set forth in Section 14 hereof for an aggregate purchase
price equal to ____________________ Dollars (U.S. $_______)
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("Purchase Price"). The issuance, sale and purchase of the Debentures shall
take place in one closing (the "Closing").
(b) Form of Payment. On the Closing Date (as defined below), (i) the
Subscriber shall pay the Purchase Price for the Debentures to be issued and
sold at the Closing by wire transfer to the escrow agent ("Escrow Agent"),
in accordance with the Escrow Agent's written wiring instructions (the
"Escrow Agreement"), against delivery of duly executed Debentures which the
Subscriber is purchasing, and (ii) the Escrow Agent shall deliver to the
Subscriber such Debentures against delivery of such Purchase Price.
(c) Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 1.2 and Section 1.3 below, the date
and time of the issuance and sale of the Debentures pursuant to this
Agreement shall be 12:00 noon Eastern Standard Time on March 10, 1997 (the
"Closing Date"), or at such other mutually agreed upon time. The Closing
shall occur on the Closing Date at such place and time as the parties shall
determine.
1.2. Conditions Precedent to the Obligation of the Company to Issue the
Debentures. The obligation hereunder of the Company to issue the Debentures to
the Subscriber at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the conditions set forth below. These conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
(a) Payment of Purchase Price. The Subscriber shall have delivered to
the Escrow Agent the Purchase Price payable by the Subscriber at the
Closing.
(b) Accuracy of the Subscriber's Representations and Warranties. The
representations and warranties of the Subscriber contained herein shall be
true and correct as of the date when made and as of the Closing Date as
though made at such time.
(c) Performance by the Subscriber. The Subscriber shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Subscriber at or prior to the Closing.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of
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competent jurisdiction which prohibits or adversely affects any of the
transactions contemplated by this Agreement or any of the transactions
contemplated by any of the other agreements related to such transactions
(the "Related Agreements"), and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement or any of the Related
Agreements.
1.3. Conditions Precedent to the Obligation of the Subscriber to Acquire
the Debentures. The obligation of the Subscriber hereunder to acquire and pay
for the Debentures at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions. Each of these conditions
is for the Subscriber's sole benefit and may be waived in writing by the
Subscriber at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained herein and in the
Related Agreements shall be true and correct as of the date when made and
as of the Closing Date as though made at each such time.
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement or any of the Related Agreements to
be performed, satisfied or complied with by the Company at or prior to the
Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely effects any of the transactions
contemplated by this Agreement or any Related Agreement, and no proceeding
or investigation shall have been commenced or threatened which may have the
effect of prohibiting or adversely affecting any of such transactions.
(d) Adverse Changes. Since December 31, 1995, no event has occurred
which has had or is likely to have a material adverse effect on the
condition (financial or otherwise), earnings, operations, prospects or
business of the Company, other than continued operating losses consistent
with the historical operating losses of the Company disclosed in the
Exchange Act Reports (as defined in Section 2.4 hereof).
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(e) No Suspension of Trading In or Delisting of Common Stock. From the
date hereof to and including the Closing Date, the trading of the Common
Stock shall not have been suspended by the SEC, the Nasdaq Stock Market
("Exchange") or the National Association of Securities Dealers, Inc. (the
"NASD"), and the Common Stock shall not have been delisted from the
Exchange and trading in securities generally on the New York Stock Exchange
or the Exchange shall not have been suspended or limited.
(f) The Legal Opinion. The Company shall have delivered to the
Subscriber the opinion of Xxxxx, Xxxx & Xxxxx LLP, independent counsel to
the Company, dated as of the Closing Date and in form and substance
reasonably satisfactory to the Subscriber and its counsel.
(g) Officer's Certificate. The Company shall have delivered to the
Subscriber a certificate in form and substance reasonably satisfactory to
the Subscriber and its counsel, executed by an executive officer of the
Company as of the Closing Date, to the effect that all the conditions to
the Closing required to be satisfied by the Company shall have been
satisfied.
(h) Registration Rights Agreement. The Company and the Subscriber
shall have entered into the Registration Rights Agreement, in the form of
Exhibit B annexed hereto (the "Registration Rights Agreement").
(i) Transfer Agent Irrevocable Instruction. The Company shall have
delivered to the transfer agent for its Common Stock the Transfer Agent
Irrevocable Instruction, in the form of Exhibit C annexed hereto.
(j) Delivery of Debentures. The Company shall have executed and
delivered to the Escrow Agent the Debentures being purchased by the
Subscriber pursuant to the terms hereof.
2. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER.
The Subscriber represents and warrants to the Company that:
2.1. No Government Recommendation or Approval. The Subscriber understands
that no United States federal or state agency or similar agency of any other
country has passed upon or made any
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recommendation or endorsement of the Company or the offering of the Securities.
2.2. Intent. The Subscriber is purchasing the Securities for its own
account and not with a view towards distribution thereof and the Subscriber has
no present arrangement (whether or not legally binding) at any time to sell the
Securities to or through any person or entity; provided, however, that by making
the representations herein, the Subscriber does not agree to hold the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with federal and state securities laws
applicable to such disposition. The Subscriber understands that the Securities
must be held indefinitely unless such Securities are subsequently registered
under the Securities Act or an exemption from registration is available. The
Subscriber has been advised or is aware of the provisions of Rule 144.
2.3. Sophisticated Investor. The Subscriber is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D promulgated under the Securities
Act ("Regulation D")) and an accredited investor (as defined in Rule 501 of
Regulation D), and Subscriber has such experience in business and financial
matters that it is capable of evaluating the merits and risks of an investment
in the Securities. The Subscriber acknowledges that the Securities are
speculative and involve a high degree of risk.
2.4. Independent Investigation. The Subscriber, in making its decision to
purchase the Securities subscribed for hereunder, has relied upon an independent
investigation made by it and/or its representatives of the public filings of the
Company described below, and has not relied on any information or
representations made by third parties or on any oral or written representations
or assurances from the Company or any representative or agent of the Company,
other than as set forth in this Agreement. Prior to the date hereof, the
Subscriber has been furnished with and has reviewed the Company's latest proxy
statement and Annual Report on Form 10-K sent to the Company's shareholders and
all documents filed by the Company with the SEC since December 31, 1995 pursuant
to sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (excluding preliminary proxy statement filings)
(such documents are collectively referred to in this Agreement as the "Exchange
Act Reports"). The Subscriber has had a reasonable opportunity to ask questions
of and receive answers from the Company concerning the Company and the Offering.
The Subscriber acknowledges that the price and terms of the Securities offered
hereby has been determined by negotiation based, in part, on the market price
for the
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Common Stock, and does not necessarily bear any relationship to the
assets, book value or potential performance of the Company or any other
recognized criteria of value.
2.5. Authority. This Agreement has been duly authorized and validly
executed and delivered by the Subscriber and is a valid and binding agreement of
the Subscriber enforceable against the Subscriber in accordance with its terms,
subject to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally.
2.6. No Legal Advice From Company. The Subscriber acknowledges that it has
had the opportunity to review this Agreement and the transactions contemplated
by this Agreement and the Related Agreements with his or its own legal counsel
and tax advisors. Except for any statements or representations of the Company
made in this Agreement or any Related Agreement and in the Exchange Act Reports,
the Subscriber is relying solely on such counsel and advisors and not on any
statements or representations of the Company or any of its representatives or
agents for legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
2.7. No Brokers. The Subscriber has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by the Company relating to this Agreement, the Related Agreements or
the transactions contemplated hereby or thereby, except for dealings with
Promethean Investment Group, L.L.C., whose fees will be paid for by the
Subscriber.
2.8. Not an Affiliate. The Subscriber is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.
2.9. Reliance on Representations and Warranties. The Subscriber understands
that the Securities are being offered and sold to it in reliance on specific
provisions of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Subscriber set
forth in this Agreement in order to determine the applicability of such
provisions.
2.10. Financial Condition. The Subscriber's financial condition is such
that it is not under any present necessity or constraint to dispose of
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the Debentures to satisfy any existing or contemplated debt or undertaking.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Subscriber that:
3.1. Company Status. The Company has registered its Common Stock pursuant
to Section 12(b) or 12(g) of the Exchange Act, is in full compliance with all
reporting requirements of the Exchange Act, and has maintained all requirements
for the continued listing of its Common Stock, and such Common Stock is
currently listed on the Exchange.
3.2. Current Public Information. The Exchange Act Reports are the only
filings made by the Company since December 31, 1995 pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act.
3.3. No Directed Selling Efforts or General Solicitation in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf has conducted any "directed selling
efforts" with respect to the Debentures, nor has the Company conducted any
general solicitation (as that term is used in Regulation D) with respect to any
of the Securities, nor has any such person made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of the Securities under the Securities Act.
3.4. Capitalization; Valid Issuance of Debentures and Capital Stock. The
Company has an authorized capitalization consisting of 100,000,000 shares of
Common Stock, par value $.01 per share, and 5,000,000 shares of Preferred Stock,
par value $.01 per share, convertible notes and unit options outstanding that
are convertible into or exercisable for an aggregate of no more than 19,963,168
shares of Common Stock, and stock options granted to employees as described in
the Exchange Act Reports. There are no other outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for any
shares of capital stock of the Company or arrangements by which the Company is
or may become bound to issue additional shares of its capital stock. As of
February 26, 1997, the Company had 31,028,049 shares of Common Stock issued, of
which 31,028,049 of such shares were outstanding. The Company has no more than
16,000 shares of Preferred Stock issued, of which no more than 16,000 of such
shares are outstanding. All of the issued shares of Common Stock and Preferred
Stock of the Company
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have been duly and validly authorized and issued and are fully paid and
non-assessable; upon issuance of the Securities, the Securities will be duly and
validly issued, fully paid and non-assessable; the shares of Common Stock
issuable upon conversion of the Debentures when issued and delivered in
accordance with the terms of the Debentures, will be duly and validly issued,
fully paid and non-assessable; and the holders of outstanding capital stock of
the Company are not and shall not be entitled to preemptive or other rights
afforded by the Company to subscribe for the capital stock or other securities
of the Company as a result of the sale of the Securities or the issuance of
Common Stock upon the conversion thereof.
3.5. Organization and Qualification. The Company is a corporation duly
incorporated and validly existing in good standing under the laws of the State
of Delaware and has the requisite corporate power and authority to own its
properties and to carry on its business as now being conducted. The Company does
not have any subsidiaries, except for those listed on Schedule 3.5 annexed
hereto and hereby made a part hereof. The Company and each such subsidiary is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary other than those in which the
failure so to qualify would not have a Material Adverse Effect. "Material
Adverse Effect" means any effect on the business, operations, properties,
prospects, or condition (financial or otherwise) of the entity with respect to
which such term is used and which is material and adverse to such entity or to
other entities controlling or controlled by such entity, and/or any condition or
situation which would prohibit or otherwise interfere with the ability of the
entity with respect to which said term is used to enter into and perform its
obligations under this Agreement, the Debentures or the Registration Rights
Agreement or any other Related Agreements.
3.6. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Debentures, the Registration Rights Agreement and such of the other Related
Agreements to which it is a party; and to issue the Securities in accordance
with the terms thereof; (ii) the execution, delivery and performance of this
Agreement, the Debentures, the Registration Rights Agreement and the other
Related Agreements by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby, including without limitation the
issuance of the Shares, have been duly authorized by all necessary corporate
action, and no further consent or authorization of the Company or its Board of
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Directors or stockholders is required; (iii) this Agreement, the Debentures, the
Registration Rights Agreement and the other Related Agreements have been duly
executed and delivered by the Company; and (iv) this Agreement, the Registration
Rights Agreement and the other Related Agreements constitute, and upon issuance
and delivery thereof the Debentures shall be, valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
3.7. Corporate Documents. The Company has furnished or made available to
the Subscriber true and correct copies of the Company's Certificate of
Incorporation, as amended and in effect on the date hereof (the "Certificate"),
and the Company's By-Laws, as amended and in effect on the date hereof (the
"By-Laws").
3.8. No Conflicts. The execution, delivery and performance by the Company
of this Agreement, the Debentures, the Registration Rights Agreement and the
other Related Agreements and the consummation by the Company of the transactions
contemplated hereby and thereby, including without limitation the issuance of
the Shares, do not and will not (i) result in a violation of the Certificate or
By-Laws or (ii) conflict with or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any federal, state, local
or foreign law, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). Neither
the business of the Company nor any of its subsidiaries is being conducted in
violation of any law, ordinance or regulation of any governmental entity, in any
manner or in any manner that is inconsistent with or in violation of the
Certificate or By-laws, or in violation of any contract or agreement to which
the Company or any of its subsidiaries is a party, except for possible
violations which either singly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation in the United States to obtain any consent,
authorization or
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order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Debentures, the Registration Rights
Agreement and the other Related Agreements or any of the Securities or to issue
and sell the Securities in accordance with the terms hereof and thereof (other
than any SEC, NASD, Exchange or state securities filings which may be required
to be made by the Company from time to time, and any registration statement
which may be filed pursuant hereto); provided, that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Subscriber
herein.
3.9. Exchange Act Reports. The Company has delivered or made available to
the Subscriber true and complete copies of the Exchange Act Reports (including,
without limitation, proxy information and solicitation materials). The Company
has not provided to the Subscriber any information which, according to
applicable law, rule or regulation, should have been disclosed publicly prior to
the date hereof by the Company but which has not been so disclosed. As of their
respective dates, the Exchange Act Reports complied in all material respects
with the requirements of the Exchange Act and rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such Exchange Act Reports, and none of the Exchange
Act Reports contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
Exchange Act Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). As of the Closing Date, the Company has filed all reports required
to be filed by it pursuant to the Exchange Act and is otherwise eligible to
effect registration of its Common Stock on Form S-3.
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3.10. No Material Adverse Change. Since December 31, 1995, no event or
circumstance has occurred or arisen which has had or is reasonably likely to
have a Material Adverse Effect on the Company or any of its subsidiaries, other
than continued operating losses consistent with the historical operating losses
of the Company disclosed in the Exchange Act Reports.
3.11. No Undisclosed Liabilities. The Company and its subsidiaries have no
liabilities or obligations which are not disclosed in the Exchange Act Reports,
other than those incurred in the ordinary course of the Company's or its
subsidiaries' respective businesses since December 31, 1995, and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect on the Company or any of its subsidiaries.
3.12. No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or condition (financial
or otherwise), which, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed.
3.13. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, at any time since August 26, 1996, made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under
Regulation D promulgated under the Securities Act in connection with the offer
and sale of the Securities as contemplated hereby.
3.14. No Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by the Subscriber relating to this Agreement, the Debentures, the
Registration Rights Agreement or any of the other Related Agreements for the
transactions contemplated hereby, except for dealings with Promethean Investment
Group, L.L.C., whose fees will be paid for by the Subscriber.
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4. COVENANTS OF THE COMPANY.
4.1. Registration Rights. The Company agrees that, at the Closing, it will
enter into a Registration Rights Agreement.
4.2. Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to satisfy any obligation to issue
shares of its Common Stock upon conversion of the Debentures; provided, however,
that (i) the aggregate number of shares so reserved, except as provided herein
and in the Debentures, shall initially be 1,320,000 shares and (ii) a pro rata
portion (based on the respective original principal amount of the Debentures) of
such aggregate amount shall be reserved for conversion of each Debenture, such
portion to be reduced by the number of shares actually issued upon conversion of
such Debenture. The number of shares so reserved may be reduced by the number of
shares actually delivered pursuant to conversion of Debentures (provided that in
no event shall the number of shares so reserved be less than the Minimum Number
of Shares (as defined in the Debentures) applicable to any Debenture) and the
number of shares so reserved shall be increased to reflect stock splits, stock
dividends and other distributions or reclassifications and other adjustments in
accordance with the terms of the Debentures. In the event that the number of
shares so reserved (either in the aggregate or as to any Debenture) shall be
insufficient for issuance upon conversion of the Debentures (without giving
effect to any applicable conversion restrictions), or if the Holders of the
Debentures would at any time upon conversion thereof be entitled to the issuance
of shares of Common Stock in excess of the limitation in Paragraphs 5(d) and
9(b) of the Debentures, then in either case, upon receipt by the Company of
notice from any Holder, the Company shall use its best efforts and all due
diligence to increase the number of shares so reserved (without giving effect to
any applicable conversion restrictions) to cure all such deficiencies (either in
the aggregate or as to any Debenture), and, if necessary, to obtain the approval
by its shareholders therefor, including the authorization of such additional
number of shares of Common Stock as may be required in excess of the number so
reserved (either in the aggregate or as to any Debenture) or in excess of such
limitation, as the case may be.
4.3. Listing of Underlying Shares. The Company hereby agrees to take such
action to cause the Shares to be listed on the Exchange on the first date
permitted by the rules of the Exchange. The Company further agrees, if the
Company applies to have the Common Stock traded on any
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other principal stock exchange or market, it will include in such application
the Shares and will take such other action as is necessary or desirable to cause
the Shares to be listed on such other exchange or market as promptly as
possible.
4.4. Exchange Act Registration. The Company will cause its Common Stock to
continue to be registered under Section 12(g) or 12(b) of the Exchange Act, will
comply in all respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act. The Company will take all action under its
control to continue the listing and trading of its Common Stock on the Exchange
and will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NASD and the Exchange.
4.5. Legends. The Shares and certificates evidencing the same shall,
promptly upon the effectiveness of the Registration Statement contemplated by
the Registration Rights Agreement, be free of legends, "stop transfers," "stock
transfer restrictions," or other restrictions, provided, that customary stock
transfer restriction legends may appear on any certificate evidencing any of
such Shares if the SEC or other governmental authority with appropriate
jurisdiction has issued an active stop order, injunction or other order or
requirement suspending the effectiveness of the Registration Statement.
4.6. Corporate Existence. The Company will take all steps necessary to
preserve and continue its corporate existence.
5. LEGENDS.
5.1. Legends. The Company will issue one or more Debentures in the name of
the Subscriber and in such denominations (of not less than $100,000 each, unless
the total principal amount of Debentures held by such Holder is less than
$100,000, then in a denomination equal to such lesser amount) to be specified by
the Subscriber prior to (or from time to time subsequent to) the Closing. The
Debentures and certificates evidencing any shares of Common Stock issued upon
conversion thereof prior to the effectiveness of the Registration Statement will
bear the following legend (the "Legend"):
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
Prior to Closing, the Company will issue to the transfer agent for its
Common Stock (and to any substitute or replacement transfer agent for its Common
Stock concurrently with the Company's appointment of any such substitute or
replacement transfer agent) instructions in substantially the form and substance
of the Transfer Agent Irrevocable Instruction in the form attached as Exhibit C.
Such instructions shall be irrevocable by the Company from and after the Closing
or from and after the issuance thereof to any such substitute or replacement
transfer agent, as the case may be. Such instructions shall provide that the
transfer agent will immediately confirm its receipt of a Conversion Notice (as
defined in the Debentures) by facsimile to the Company. It is the intent and
purpose of such instructions, as provided therein, to require the transfer agent
for the Common Stock from time to time to issue certificates evidencing Shares
free of the Legend during the following periods and under the following
circumstances and without consultation by the transfer agent with the Company or
its counsel and without the need for any further advice or instruction to the
transfer agent by or from the Company, or its counsel, except with respect to
the Company's ability to immediately verify the calculation of the number of
Shares issuable upon conversion of the Debentures to the holder thereof:
(a) At any time from and after the effectiveness of the Registration
Statement, and so long as no stop order, injunction or other order of the
SEC or other applicable governmental authority with appropriate
jurisdiction is then in effect suspending effectiveness of the Registration
Statement:
(i) upon any surrender of one or more Debentures for conversion
into Shares;
(ii) upon any surrender of one or more certificates evidencing
Shares and which bear the Legend; and
(b) At any time from and after the Closing Date, upon any surrender of
one or more certificates evidencing Shares and
205
which bear the Legend, to the extent accompanied by a notice requesting the
issuance of new certificates free of the Legend to replace those
surrendered and accompanied by representations and an opinion of counsel
that (i) the Holder thereof is permitted to dispose thereof pursuant to
Rule 144(k) under the Securities Act or (ii) the Holder intends to effect
the sale or other disposition of such Shares, whether or not pursuant to
the Registration Statement, to a purchaser or purchasers in a transaction
not subject to the registration requirements of the Securities Act, or
(iii) such Holder is not then subject to such requirements.
If any Holder does not transfer any Shares received by such Holder
upon conversion of its Debentures within 20 business days after conversion
of such Debentures, the Holder will return any certificate evidencing such
unsold Shares to the transfer agent so that the transfer agent may add the
Legend, as applicable, unless such Legend is not required pursuant to
Section 5.1 herein.
In addition, and if applicable, the Company shall reissue the Debentures
without the Legend set forth above at such time as (i) the Holder thereof is
permitted to dispose thereof pursuant to Rule 144(k) under the Securities Act or
(ii) the Holder intends to effect a sale thereof to a purchaser or purchasers in
a transaction not subject to the registration requirements of the Securities
Act, or (iii) the Holder is not then subject to such requirements.
5.2. No Other Legend or Stock Transfer Restrictions. No Legend has been or
shall be placed on the share certificates representing the Securities and no
instructions or "stop transfers," "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as set forth in this Section 5.1.
5.3. Subscriber's Compliance. Nothing in this section shall affect in any
way the Subscriber's obligations under and agreement to comply with all
applicable securities laws upon resale of the Securities.
6. [INTENTIONALLY OMITTED]
7. CHOICE OF LAW AND VENUE.
THIS AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE
206
OF LAW THEREOF. Each of the parties hereby (i) irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York for the purposes of any suit, action or proceeding arising
out of or relating to this Agreement, the Debentures, the Registration Rights
Agreement or any other Related Agreement and (ii) waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the parties consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
8. ASSIGNMENT; ENTIRE AGREEMENT; AMENDMENT.
8.1. Assignment. Neither this Agreement nor any rights of the Subscriber
hereunder may be assigned by either party to any other person. Notwithstanding
the foregoing, the provisions of this Agreement shall inure to the benefit of,
and be enforceable by, any transferee of any of the Securities purchased or
acquired by the Subscriber hereunder with respect to the Securities held by such
person.
8.2. Entire Agreement; Amendment. This Agreement (including the Schedules
and Exhibits hereto), the Debentures, the Registration Rights Agreement, the
other Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof, and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth in this Agreement
or therein. Except as expressly provided in this Agreement, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
9. PUBLICITY.
The Company agrees that it will not disclose, and will not include in any
public announcement, the name of the Subscriber without its consent, unless and
until such disclosure is required by law or
207
applicable regulation, and then only to the extent of such requirement. In the
case of any such required disclosure, the Company shall, prior to any such
disclosure, (i) notify the Subscriber, (ii) permit the Subscriber the
opportunity to review the proposed disclosure, and (iii) accommodate all
reasonable comments and requests for changes made by the Subscriber or its
counsel.
10. NOTICES, ETC.; EXPENSES; INDEMNITY.
10.1. Notices. Any notice, demand or request required or permitted to be
given by either the Company or the Subscriber pursuant to the terms of this
Agreement shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by registered or certified mail, return receipt
requested, postage prepaid with a copy in each case sent on the same day to the
party by facsimile, Federal Express or other such expedited means to said party
at its address set forth at the end of this Agreement or such other address as a
party may request by notifying the other in writing and communications shall be
deemed to have been received when delivered personally or, if sent by mail or
facsimile, when actually received by the party to whom it is addressed. Copies
of all notices to the Company shall be sent to Xxxx X. Xxxxxx, Director of
Finance of the Company, and to the attention of the General Counsel of the
Company. Copies of all notices to the Subscriber shall be sent to its designee
or representative.
10.2. Indemnification. Each party shall indemnify the other against any
loss, cost, expenses, liabilities or damages (including reasonable attorney's
fees and expenses) incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this Agreement.
11. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
208
12. SURVIVAL; SEVERABILITY.
The representations, warranties, covenants and agreements of the parties
hereto shall survive the Closing, provided that the representations and
warranties shall survive only until the fifth anniversary of the Closing. In the
event that any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision.
13. TITLE AND SUBTITLES.
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
14. AMOUNT.
The undersigned Subscriber hereby subscribes for U.S. $_______ in principal
amount of Debentures and agrees to pay therefor funds, which constitute 95% of
the principal amount of the Debentures, in the amount of
_____________________________ Dollars (U.S. $________).
The undersigned acknowledges that this subscription shall not be effective
unless accepted by the Company as indicated below.
Subscriber's Representative: Name of Subscriber:
--------------------------- ------------------------------
Attn: By
Name:
Title:
Subscription dated as of:
March 10, 1997
Address:
Place of Execution:
Telephone: Place of Organization or Citizenship:
Fax: Place of Residency and/or Principal
Place of Business:
With a copy to:
--------------------------
Registration Instructions:
------------------------- ----------------------------------
(Name)
-------------------------
(Please Print)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY AS OF THE 10TH DAY OF MARCH,
1997.
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
----------------------------
Name:
Title:
