EXHIBIT 4.6
PHOTOELECTRON CORPORATION
AMENDED AND RESTATED
CONVERTIBLE NOTE PURCHASE AGREEMENT
Originally Dated As Of July 11, 1991
This Agreement is dated as of the 8th day of August, 1996 among
Photoelectron Corporation, a Massachusetts corporation (the "Company"), PYC
Corporation, formerly known as Photoelectron Investments Corporation of Liberia,
a Liberian corporation ("PYC") and Xxxxx X. Xxxxxxx (the "Purchaser").
The following sets forth the factual background to this Agreement:
A. The Company and PYC entered into a certain Subordinated Convertible
Note Purchase Agreement, dated as of July 11, 1991 (the "1991 Agreement")
pursuant to which the Company issued certain 8% Subordinated Notes Due 1998 to
Purchaser in a principal amount totaling $500,000.
B. On or about July 30, 1991, PYC assigned all of its rights, title and
interest in the 1991 Agreement, and any and all Notes issued thereunder, to
Xxxxx X. Xxxxxxx.
C. The Company is contemplating an Initial Public Offering (as defined
below) and the parties desire to amend and restate certain provisions of the
1991 Agreement. The parties also desire to set forth in writing waivers of the
Purchaser's rights regarding the Company's non-compliance with certain
provisions of the 1991 Agreement.
D. The Company and the Purchaser acknowledge that the amendments and
waivers set forth in this Agreement are in the best interests of the Company and
of Purchaser as a stockholder of the Company.
Now, therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SECURITIES
1.01 The Securities. The Company has authorized the issuance and sale of
---------------
the Company's 8% Convertible Note Due 1998 in a principal amount of $500,000
(the "Note"). The Note shall be substantially in the form set forth in Exhibit
A hereto. The term "Note" or "Notes" shall also include any note or notes
delivered in exchange or replacement for the Note. Any shares of Common Stock
issuable upon conversion of the Note, and such shares when issued, are herein
referred to as the "Conversion Shares."
-2-
1.02 Acknowledgment of Assignment.
-----------------------------
The Company acknowledges the assignment referenced in paragraph B above and
agrees to issue to the Purchaser, and, subject to and in reliance upon the terms
and conditions of this Agreement, the Purchaser agrees to accept an Amended and
Restated 8% Convertible Note Due 1998 substantially in the form set forth in
Exhibit A hereto.
1.03 Acknowledgment of Advances.
---------------------------
The Company hereby acknowledges the receipt of advances totalling $500,000
through the date hereof which shall bear interest at the rate of 8% per annum as
set forth herein and the Note as of the date first advanced to the Company, all
as set forth in Exhibit B hereto.
1.04 Transfer and Exchange of the Note. The registered holder of the Note
----------------------------------
may, prior to maturity or prepayment thereof, surrender the Note at the
principal office of the Company for transfer or exchange to any assignee.
Within a reasonable time after notice to the Company from a registered holder of
his intention to make such exchange and without expense (other than transfer
taxes, if any) to such registered holder, the Company shall issue in exchange
therefor another Note for the same aggregate principal amount as the unpaid
principal amount of the Note so surrendered (or in such multiples thereof as may
be requested by the registered holder) and having the same maturity and rate of
interest, containing the same provisions and subject to the same terms and
conditions as the Note so surrendered. Each new Note shall be made payable to
such Person or Persons, or registered assigns, as the registered holder of such
surrendered Note may designate, and such transfer or exchange shall be made in
such a manner that no gain or loss of principal or interest shall result
therefrom.
1.05 Replacement of the Note. Upon receipt of evidence satisfactory to
------------------------
the Company of the loss, theft, destruction or mutilation of the Note and, if
requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Note, the Company will issue a new Note, of like tenor and amount and
dated the date to which interest has been paid, in lieu of such lost, stolen,
destroyed or mutilated Note; provided, however, if any Note of which the
Purchaser, its nominees or any of its affiliates is the registered holder is
lost, stolen or destroyed, the affidavit of the owner or the president,
treasurer or assistant treasurer, as the case may be, of the registered holder,
including a representation to the effect that such Note has not been negotiated
and setting forth the circumstances with respect to such loss, theft or
destruction, shall be accepted as satisfactory evidence thereof, and no
indemnity bond or other security shall be required as a condition to the
execution and delivery by the Company of a new Note in replacement of such lost,
stolen or destroyed Note other than the registered holder's written agreement to
indemnify the Company.
-3-
1.06 Subordination. The Company, for itself, its successors and assigns,
-------------
covenants and agrees, and the Purchaser and each successor holder of the Note by
its or his acceptance thereof likewise covenants and agrees, that
notwithstanding any other provision of this Agreement or the Note, the payment
of the principal of and interest on the Note shall be subordinated in right of
payment, to the extent and in the manner hereinafter set forth, to the prior
payment in full of all Senior Debt (as hereinafter defined) at any time
outstanding.
(a) Payment of Senior Debt. In the event of any insolvency or
-----------------------
bankruptcy proceedings, or any proceedings in connection therewith, relative to
the Company or to its property, or, in the event of any proceedings for the
Company of distribution or marshalling of its assets or any composition with
creditors of the Company, whether or not involving insolvency or bankruptcy,
then and in any such event all Senior Debt shall be paid in full before any
payment or distribution of any character, whether in cash, securities or other
property, shall be made on account of the Note; and any such payment or
distribution, except securities that are subordinated and junior in right of
payment to the payment of all Senior Debt then outstanding in terms of
substantially the same tenor as this Section 1.06, which would, but for the
provisions hereof be payable or deliverable with respect to the Note shall be
paid or delivered directly to the holders of Senior Debt (or their duly
authorized representatives), in the proportions in which they hold the same,
until all Senior Debt shall have been paid in full, and any holder of the Note
by becoming a holder thereof shall have designated and appointed the holder or
holders of Senior Debt (and their duly authorized representatives) as its or his
agents and attorneys-in-fact to demand, xxx for, collect and receive such Senior
Debt holder's ratable share of all such payments and distributions and to file
any necessary proof of claim therefor and to take all other action (including
the right to vote such Senior Debt holder's ratable share of the Note), in the
name of the holders (or their authorized representatives), that such Senior Debt
holder may determine to be necessary or appropriate for the enforcement of this
Section 1.06. The Purchaser and each successor holder of the Note by its or his
acceptance thereof agrees to execute, at the request of the Company, a separate
agreement with any holder of Senior Debt on the terms set forth in this Section
1.06.
(b) No Payment on Note Under Certain Conditions.
--------------------------------------------
In the event that:
(i) any default occurs in the payment of principal of or interest on
any Senior Debt and during the continuance of such default, or (if a shorter
period) until such payment has been made or such default has been cured or
waived in writing by such holder of Senior Debt; or
-4-
(ii) the maturity of any Senior Debt is accelerated by any holder
thereof because of a default with respect thereto and until such acceleration
has been rescinded or said Senior Debt has been paid;
then and during the continuance of any of such events no payment shall be made
by the Company, directly or indirectly, on account of the principal of or
interest on the Note.
(c) Payments Held in Trust. In case any payment or distribution shall
-----------------------
be paid or delivered to any holder of the Note in violation or contravention of
the terms of this subordination, before all Senior Debt shall have been paid in
full, such payment or distribution shall be held in trust for and paid and
delivered to the holders of Senior Debt (or their duly authorized
representatives) until all Senior Debt shall have been paid in full.
(d) Subrogation. Subject to the payment in full of all Senior Debt
------------
and until the Note shall be paid in full, the holder of the Note shall be
subrogated to the rights of the holders of the Senior Debt (to the extent of
payments or distributions previously made to such holders of Senior Debt
pursuant to the provisions of subsections (a) and (c) of this Section 1.06) to
receive payments or distributions of assets of the Company applicable to the
Senior Debt. No such payments or distributions applicable to the Senior Debt
shall, as between the Company and its creditors, other than the holders of
Senior Debt and the holder of the Note, be deemed to be a payment by the Company
to or on account of the Note; and for the purposes of such subrogation, no
payments or distributions to the holders of Senior Debt to which the holder of
the Note would be entitled except for the provisions of this Section 1.06 shall,
as between the Company and its creditors, other than the holders of Senior Debt
and the holder of the Note, be deemed to be a payment by the Company to or on
account of the Senior Debt.
(e) Scope of Section. The provisions of this Section 1.06 are
----------------
intended solely for the purpose of defining the relative rights of the holder of
the Note, on the one hand, and the holders of the Senior Debt on the other hand.
Nothing contained in this Section 1.06 or elsewhere in this Agreement or the
Note is intended to or shall impair, as between the Company and its creditors,
other than the holders of Senior Debt, and the holder of the Note, the
obligation of the Company, which is unconditional and absolute, to pay to the
holder of the Note the principal of and interest on the Note as and when the
same shall become due and payable in accordance with the terms thereof, or to
affect the relative rights of the holders of the Senior Debt, nor shall anything
herein or therein prevent the holder of the Note from accepting any payment,
with respect to such Note or exercising all remedies otherwise permitted by
applicable law upon default under such Note, subject to the rights, if any,
under this Section 1.06 of the holders of Senior Debt in respect of cash,
property or notes of the Company received by the holders of the Note.
(f) Survival of Rights. The right of any present or future holder of
-------------------
Senior Debt to enforce subordination of the Note pursuant to the provisions of
this Section 1.06 shall not at any time be prejudiced or impaired by any act or
failure to act on the part of the Company or any such holder of Senior Debt,
including without limitation,
-5-
any forbearance, waiver, consent, compromise, amendment, extension, renewal or
taking or release of security of or in respect of any Senior Debt or by
noncompliance by the Company with the terms of such subordination regardless of
any knowledge thereof such holder may have or otherwise been charged with.
(g) Amendment or Waiver. The provisions of this Section 1.06 may not
-------------------
be amended or waived in any manner that is detrimental to any Senior Debt
without the consent of the holders of all then existing Senior Debt.
(h) Senior Debt Defined. The term "Senior Debt" shall mean (i) all
--------------------
Indebtedness of the Company (which is not convertible into equity securities of
the Company and is not issued in conjunction with equity securities of the
Company or options or warrants to purchase equity securities of the Company) for
money borrowed, including any extension or renewals thereof, whether outstanding
on the date hereof or thereafter created or incurred, which is not by its terms
subordinate and junior to or on a parity with the Note, and (ii) all other
indebtedness to which the obligations of the Note shall be expressly
subordinated by the holder of the Note in writing, citing this Section 1.06.
(i) Proof of Subordination. The Purchaser agrees that he will execute
-----------------------
and deliver any other documents evidencing the subordination of the Note to
Senior Debt that may be reasonably requested by the Company or the holders of
Senior Debt so long as none of the provisions contained in such documents
diminish the rights of the Purchaser in any manner.
1.07 Payment of Interest. The Company shall pay interest on the
--------------------
outstanding principal balance on the Note at a rate of 8% per annum. Interest
shall accrue on March 31, June 30, September 30 and December 31, of each year
until the whole amount of the outstanding principal of the Note shall become due
and payable. The Company agrees to pay interest on all overdue principal
(including any overdue required redemption) and interest at a rate per annum
equal to the prime or base lending rate of the First National Bank of Boston
plus three percent (3%). Subject to the holder's option, referenced in Section
----
3.01, to convert all then accrued but unpaid interest to Common Stock, accrued
but unpaid interest shall be repaid on July 31, 1998.
1.08 Representations by the Purchaser. The Purchaser represents that it is
---------------------------------
its present intention to acquire the Note for its own account and that the Note
is being and will be acquired for the purpose of investment and not with a view
to distribution or resale thereof. The acquisition by the Purchaser of the Note
shall constitute a confirmation by him of this representation.
ARTICLE II
COVENANTS OF THE COMPANY
-6-
2.01 Affirmative Covenants of the Company Other Than Reporting
---------------------------------------------------------
Requirements. Without limiting any other covenants and provisions hereof, the
-------------
Company covenants and agrees that, so long as the Note is outstanding, it will
perform and observe the following covenants and provisions:
(a) Punctual Payment. Pay the principal of and interest on the Note
-----------------
at the times and place and in the manner provided in the Note and herein.
(b) Preservation of Corporate Existence. Preserve and maintain its
------------------------------------
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified, as a foreign corporation in
each jurisdiction in which such qualification is necessary or desirable in view
of its business and operations or the ownership of its properties; and preserve
and maintain all material licenses and other rights to use patents, processes,
licenses, trademarks, trade names, inventions, intellectual property rights or
copyrights owned or possessed by it and necessary to the conduct of its
business.
(c) Compliance with Laws. Comply, in all material respects with all
---------------------
applicable laws, rules, regulations and orders of any governmental authority,
noncompliance with which could materially adversely affect its business or
condition, financial or otherwise.
(d) Keeping of Records and Books of Account. Keep adequate records
----------------------------------------
and books of account in which complete entries will be made in accordance with
generally accepted accounting principles consistently applied, reflecting all
financial transactions of the Company and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection within its business shall be made.
(e) Budgets and Board Approval. Prior to the commencement of each
---------------------------
fiscal year, prepare and submit to, and obtain the approval of a majority of,
the Board of Directors of a budget for the upcoming fiscal year, including
projections of research and development expenditures, capital and operating
expenses, cash flow and profits and losses, all itemized in reasonable detail.
(f) Financings. Promptly, fully and in detail, inform the Board of
-----------
Directors in advance of any commitments or contracts relating to financing of
any nature for the Company or pledge of corporate assets.
(g) Board of Directors: Indemnification. The Board of Directors shall
------------------------------------
not consist of more than four (4) directors. The By-laws of the Company shall
at all times provide for the indemnification of the Board of Directors to the
full extent provided by the law of the jurisdiction in which the Company is
organized. The Company shall
-7-
maintain directors and officers insurance with coverage and premium levels
consistent with policies carried by companies of similar size engaged in similar
businesses.
2.02 Negative Covenants of the Company. Without limiting any other
----------------------------------
covenants and provisions hereof, the Company covenants and agrees that, so long
as the Conversion Shares issuable upon conversion of the Note and the shares
issued by the Company on January 4, 1989 or issuable upon conversion of the 8%
Subordinated Convertible Note issued by the Company on January 4, 1989, or the
8% Subordinated Convertible Notes issued by the Company on May 22, 1990, in the
aggregate, are greater than 50% of the total outstanding voting securities of
the Company, without the consent of the Purchaser, the Company will not:
(a) Mergers, Sale of Assets, Etc. Merge or consolidate with, or sell,
-----------------------------
assign, lease or otherwise dispose of or voluntarily part with the control of
(whether in one transaction or in a series of transactions) a material portion
of its assets (whether now owned or hereafter acquired) to, any Person, except
for sales or other dispositions of assets in the ordinary course of business.
(b) Dealings with Affiliates and Others. From and after the date of
------------------------------------
this Agreement, enter into any transaction, including, without limitation, any
loans or extensions of credit or royalty agreements, with any officer or
director of the Company or holder of any class of capital stock of the Company,
or any member of their respective immediate families or any corporation or other
entity directly or indirectly controlled by one or more of such officers,
directors or stockholders or members of their immediate families.
(c) Change in Nature of Business. Make any material change in the
-----------------------------
nature of its business as carried on as of the date hereof.
(d) Dividends. Declare or pay any dividends on any class of the
----------
Company's capital stock now or hereafter outstanding or purchase, redeem or
otherwise acquire or retire any of the Company's capital stock of any class now
or hereafter outstanding or otherwise return capital or make distributions of
assets to stockholders as such, except the repurchase of capital stock pursuant
to a certain Stockholders' Agreement of January 4, 1989 among the parties
hereto.
2.03 Reporting Requirements. The Company will furnish the following to
-----------------------
each holder who owns of record or beneficially or has the right to acquire from
the Company any Conversion Shares, to each holder of the Note and to each holder
of 15% or more of the Company's Common Stock:
(a) As soon as available and in any event within thirty (30) days
after the end of each fiscal quarter of the Company, a balance sheet of the
Company as of the end of such quarter and a statement of income and retained
earnings and of changes in
-8-
financial position of the Company for the period ending with such quarter, all
in reasonable detail and duly certified (subject to year-end audit adjustments)
by the chief financial officer of the Company as having been prepared in
accordance with the accounting principles applied in the prior annual audited
financial statements of the Company, and such financial statements shall set
forth in comparative form the corresponding figures for the corresponding period
of the prior fiscal year.
(b) As soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Company, a balance sheet of the Company
as of the end of such fiscal year and statements of income and retained earnings
and of changes in financial position of the Company for such fiscal year,
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year, and, if audited, all such statements in audited form and
duly certified by a nationally recognized independent public accountant;
(c) Any written report submitted to the Company by independent public
accountants in connection with any annual or interim audit of the books of the
Company made by such accountants;
(d) Promptly after the commencement thereof, notice of all actions,
suits and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, materially
affecting the Company when considered as a whole that are not fully covered by
insurance; and
(e) At least thirty (30) days prior to the commencement of each fiscal
year of the Company, a copy of the operating plan and budget.
ARTICLE III
CONVERSION OF THE NOTE
3.01 Conversion Rights.
------------------
(a) Principal. Subject to and in compliance with the provisions of
----------
this Article III, at the option of the holder, all or any part of the principal
amount outstanding on the Note may be converted at any time at the Applicable
Principal Conversion Value (as defined below) into fully paid and non-assessable
shares of Common Stock in accordance with the provisions of Sections 3.02 to
3.15.
(b) Interest. Subject to and in compliance with the provisions of
---------
this Article III, at the option of the holder, all of the accrued and unpaid
interest on the Note may be converted at any time at the Applicable Interest
Conversion Value (as defined below) into fully paid and non-assessable shares of
Common Stock in accordance with the provisions of Sections 3.02 and 3.06 to
3.15; provided, however, that upon conversion
-9-
of all or any part of the principal amount of the Note pursuant to clause (a) of
this Section, all accrued and unpaid interest on such Note up to and including
the Conversion Date (as defined below) shall be converted at the Applicable
Interest Conversion Value into fully paid and non-assessable shares of Common
Stock.
3.02 Conversion Values.
------------------
(a) Applicable Principal Conversion Value. The price at which the
--------------------------------------
outstanding principal of the Note may be converted into Common Stock (the
"Applicable Principal Conversion Value") shall, subject to adjustment as
provided in Sections 3.03 through 3.15, be one dollar and fifty cents ($1.50).
(b) Applicable Interest Conversion Value. The price at which accrued
-------------------------------------
and unpaid interest on the outstanding principal balance of any Note issued
under this Agreement may be converted into Common Stock (the "Applicable
Interest Conversion Value") shall, subject to adjustment as provided in Sections
3.06 through 3.15, be equal to the fair market value of the Common Stock on the
first day of the fiscal quarter in which the interest to be converted accrued.
Prior to the time that the Common Stock is traded over-the-counter, on the New
York or American stock exchanges or on the National Association of Securities
Dealers Automated Quotation National Market System ("NASDAQ"), the fair market
value shall be the price at which the Company most recently issued any stock,
Common or Preferred, in a private placement of securities. From and after the
date upon which the Common Stock is traded over-the-counter, on the New York or
American stock exchanges or on NASDAQ, the fair market value of the Common Stock
shall be the Market Price of such stock on the date upon which the interest
accrued as determined in accordance with the provisions of clause (d) of this
Section.
(c) Applicable Conversion Value. For the purposes of Section 3.06,
----------------------------
the Applicable Principal Conversion Value and the Applicable Interest Conversion
Value are collectively referred to as the "Applicable Conversion Value."
(d) Market Price. The term "Market Price" shall mean the average of
-------------
the per share daily closing prices of Common Stock for the 10 consecutive
business days beginning with the first day of the fiscal quarter in which the
interest to be converted accrued. The closing price for each day shall be (i)
the last reported sales price or, in case no such reported sale takes place on
such day, the average of the reported closing bid and ask prices, in either case
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or admitted
to trading on any national securities exchange, on NASDAQ, (ii) if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted on NASDAQ, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
reasonably selected from time to time by the Company for that purpose, or (iii)
if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on NASDAQ and the
-10-
average price cannot be determined as contemplated by clause (ii), the fair
market value as reasonably determined in good faith by the Company's Board of
Directors or in any manner reasonably prescribed by the Company's Board of
Directors. For the purposes of this Section 3.02, the term "business day" shall
mean each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on
which securities are not traded on such exchange or in such market.
3.03 Adjustments for Sale of Common Stock at Less Than Applicable
------------------------------------------------------------
Principal Conversion Value. Except for the issuance of up to 120,000 shares of
--------------------------
the Company's Common Stock to employees, directors or consultants of the Company
pursuant to an option plan or plans approved by the Company's Board of Directors
(the "Reserved Employee Shares"), if the Company shall, while there is any Note
outstanding, issue or sell shares of its Common Stock without consideration or
at a price per share less than the Applicable Principal Conversion Value in
effect immediately prior to such issuance or sale, then in each such case such
Applicable Principal Conversion Value upon each such issuance or sale, except as
hereinafter provided, shall be lowered so as to be equal to an amount determined
by multiplying the Applicable Principal Conversion Value by a fraction:
(1) the numerator of which shall be (a) the number of shares of
Common Stock outstanding immediately prior to the issuance of such
additional shares of Common Stock, plus (b) the number of shares of
Common Stock that the net aggregate consideration if any, received by
the Company for the total number of such additional shares of Common
Stock so issued would purchase at the Applicable Principal Conversion
Value in effect immediately prior to such issuance; and
(2) the denominator of which shall be (a) the number of shares of
Common Stock outstanding immediately prior to the issuance of such
additional shares of Common Stock plus (b) the number of such
additional shares of Common Stock so issued.
For purposes of computation of the Applicable Principal Conversion Value, if
part or all of the consideration to be received by the Company in connection
with the issuance of shares of Common Stock or any of the other securities
described in this Article III consists of property other than cash, such
consideration shall be deemed to have a fair market value that is reasonably
determined in good faith by the Board of Directors.
3.04 Warrants, Options, Etc., for Common Stock. For the purposes of this
-------------------------------------------
Article III, the issuance after the date of this Agreement of any warrants,
options (other than the Reserved Employee Shares), subscriptions or purchase
rights with respect to shares of Common Stock and the issuance of any securities
convertible into or exchangeable for shares of Common Stock (or the issuance of
any warrants, options or any rights with respect to such convertible or
exchangeable securities) shall be deemed an issuance at such time of such Common
Stock if the Net Consideration Per Share (as
-11-
hereinafter determined) that may be received by the Company for such Common
Stock shall be less than the Applicable Principal Conversion Value at the time
of such issuance. Any obligation, agreement or undertaking to issue warrants,
options, subscriptions or purchase rights at any time in the future shall be
deemed to be an issuance at the time such obligation, agreement or undertaking
is made or arises. No adjustment of the Applicable Principal Conversion Value
shall be made upon the issuance of any shares of Common Stock that are issued
pursuant to the exercise of any conversion or exchange rights in any convertible
securities to the extent a corresponding adjustment shall previously have been
made upon the issuance of any such warrants, options or subscriptions or
purchase rights or upon the issuance of any convertible securities (or upon the
issuance of any warrants, options or any rights therefor) as provided above. Any
adjustment of the Applicable Principal Conversion Value that relates to
warrants, options, subscriptions or purchase rights with respect to shares of
Common Stock shall be disregarded if, as and when all of such warrants, options,
subscriptions or purchase rights expire or are canceled without being exercised,
so that the Applicable Principal Conversion Value effective immediately upon
such cancellation or expiration shall be equal to the Applicable Principal
Conversion Value in effect immediately prior to the issuance of the expired or
canceled warrants, options, subscriptions or purchase rights, with such
additional adjustments as would have been made to that Applicable Principal
Conversion Value had the expired or canceled warrants, options, subscriptions or
purchase rights not been issued. For purposes of this Article III, the "Net
Consideration Per Share" that may be received by the Company shall be determined
as follows:
(A) The "Net Consideration Per Share" shall mean the amount equal to
the total amount of consideration, if any, received by the Company
for the issuance of such warrants, options, subscriptions or other
purchaser rights or convertible or exchangeable securities, plus the
minimum amount of consideration, if any, payable to the Company upon
exercise or conversion thereof, divided by the aggregate number of
shares of Common Stock that would be issued if all such warrants,
options, subscriptions or other purchase rights or convertible or
exchangeable securities were exercised, exchanged or converted.
(B) The "Net Consideration Per Share" that may be received by the
Company shall be determined in each instance as of the date of
issuance of warrants, options, subscriptions or other purchase rights
or convertible or exchangeable securities without giving effect to
any possible future price adjustments or value adjustment that may be
applicable with respect to such warrants, options, subscriptions or
other purchase rights or convertible or exchangeable securities.
(C) If a part or all of the consideration received by the Company in
connection with the issuance of shares of the Common Stock or the
issuance of any of the securities described in this Section 3.04
consists of property other than cash, and the Board of Directors of
the Company is
-12-
unable to arrive at any valuation of such property, the Company at
its expense will promptly cause independent accountants of recognized
standing selected by the Company to value such property, whereupon
such value shall be given to such consideration and shall be recorded
on the books of the Company with respect to receipt of such property.
3.05 Dilution in Case of Other Securities. In case any Other Securities
-------------------------------------
shall be issued or sold, or shall become subject to issue upon the conversion or
exchange of any stock (or Other Securities) of the Company (or any other issuer
of Other Securities or any other Person referred to in Section 3.08) or to
subscription, purchase or other acquisition pursuant to any rights or options
granted by the Company (or such other issuer or Person), for a consideration per
share so as to dilute the conversion rights evidenced by the Note, the
computations, adjustments and readjustments provided for in Sections 3.03 and
3.04 with respect to the Applicable Principal Conversion Value shall be made as
nearly as possible in the manner so provided and applied to determine the amount
of Other Securities from time to time receivable on the conversion of the Note,
so as to protect the holders of the Note against the effect of such dilution.
3.06 Extraordinary Events. If the Company shall after the date of this
---------------------
Agreement (i) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock or (iii) combine its outstanding shares of the Common stock into
a smaller number of shares of the Common Stock, then, in each such event, the
Applicable Conversion Value shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Applicable Conversion Value by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
event, and the product so obtained shall thereafter be the Applicable Conversion
Value then in effect. The Applicable Conversion Value, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 3.06.
3.07 Adjustment for Dividends in Other Stock, Property, Etc.;
--------------------------------------------------------
Reclassification, Etc. In case at any time or from time to time after the date
----------------------
of this Agreement the holders of Common Stock (or Other Securities) shall have
received, or (on or after the record date fixed for the determination of
shareholders eligible to receive) shall have become entitled to receive, without
payment therefor,
(a) other or additional stock or other securities or property (other
than cash) by way of dividend, or
(b) any cash, or
(c) other or additional stock or other securities or property
(including
-13-
cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement, other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock split
(adjustments in respect of which are provided for in Section 3.06)
and normal cash dividends,
then and in each such case the holder of the Note, on the conversion thereof as
provided in this Article III, shall be entitled to receive the amount of stock
and other securities and property (including cash in the cases referred to in
clauses (b) and (c) of this Section 3.07) that such holder would hold on the
date of such conversion if on the date thereof it had been the holder of record
of the number of shares of Common Stock that it would have received had the Note
been converted into Common Stock immediately before the date of such event to
and including the Conversion Date (as that term is defined in Section 3.11), and
had thereafter, during the period from the date hereof to and including the date
of such conversion, retained such shares and all such other or additional stock
and other securities and property (including cash in the cases referred to in
clauses (b) and (c) of this Section 3.07) receivable by it as aforesaid during
such period, giving effect to all adjustments called for during such period
under this Article III.
3.08 Adjustment for Reorganization, Consolidation, Merger, Etc.
----------------------------------------------------------
(a) Generally. If at any time or from time to time the Company shall
----------
(i) effect a reorganization, (ii) consolidate with or merge into any other
Person or (iii) transfer all or substantially all of its properties or assets to
any other Person under any plan or arrangement contemplating the dissolution of
the Company, then, in each such case, the holder of the Note, on the conversion
thereof as provided in this Article III at any time after the consummation of
such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such holder had so
converted the Note immediately prior thereto, all subject to further adjustment
thereafter as provided under this Article III.
(b) Dissolution. In the event of any dissolution of the Company
------------
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, if
applicable) receivable by the holder of the Note after the effective date of
such dissolution pursuant to this Section 3.08 to a bank or trust company having
its principal office in Boston, Massachusetts, as trustee for the holder or
holders of the Note, which shall establish procedures for the exchange of such
property for the Note.
-14-
(c) Continuation of Terms. Upon any reorganization,
----------------------
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3.08, the Note shall continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and other
securities and property receivable on the conversion of the Note after the
consummation of such reorganization, consolidation or merger or the effective
date of dissolution following any such transfer, as the case may be, and shall
be binding upon the issuer of any such stock or other securities, including, in
the case of any such transfer, the person acquiring all or substantially all of
the properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of the Note as provided in Section 3.09.
3.09 No Dilution or Impairment. The Company will not, by amendment
-------------------------
of its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Note, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the holders of shares of Common Stock issuable
upon conversion of the Note against dilution or other impairment.
3.10 Certificate as to Adjustments. In each case of any adjustment or
-----------------------------
readjustment in the shares of Common Stock (or Other Securities) issuable on the
conversion of the Note, the Company at its expense will promptly provide each
holder of the Note, at the election of such holder, a certificate of the
President and of the chief financial officer of the Company setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding and (c) the Applicable Principal
Conversion Value in effect immediately prior to such issue or sale and as
adjusted and readjusted on account hereof.
3.11 Exercise of Conversion Privilege.
---------------------------------
(a) Principal. To exercise the principal conversion privilege, a
----------
holder of the Note shall surrender the Note being converted to the Company at
the Company's principal office, and shall give written notice to the Company at
that office that such holder elects to convert the outstanding principal
balance of such Note, or a portion thereof. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock issuable upon such conversion shall be
issued. The Note surrendered for conversion shall be accompanied by proper
assignment thereof to the Company or in blank. For purposes of this clause
(a), the date when such written notice is received by the Company, together
with the Note being converted, shall be the "Conversion Date." As promptly as
practicable, but
-15-
in any event within 15 days after the Conversion Date, the Company shall issue
and shall deliver to the holder of the Note being converted, or on its written
order, such certificate or certificates as it may request for the number of
whole shares of Common Stock issuable upon the conversion of such Note in
accordance with the provisions of this Article III, the number of whole shares
of Common Stock issuable upon the conversion of all accrued and unpaid interest
on such Note up to and including the Conversion Date, any property or
securities issuable upon conversion as provided in Section 3.07 and cash, as
provided in Section 3.12, in respect of any fraction of a share of Common Stock
issuable upon such conversion. Such conversion shall be deemed to have been
made immediately prior to the close of business on the Conversion Date, and at
such time the rights of the holder as holder of the Note shall cease and the
Person or Persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed
to have become the holder or holders of record of the shares of Common Stock
represented thereby.
(b) Interest. To exercise the interest conversion privilege, a holder
---------
of the Note shall give written notice to the Company at the Company's principal
office that such holder elects to convert all accrued and unpaid interest on
such Note. Such notice shall also state the name or names (with address or
addresses) in which the certificate or certificates for shares of Common Stock
issuable upon such conversion shall be issued. For purposes of this clause
(b), the date when such written notice is received by the Company shall be the
"Conversion Date." As promptly as practicable, but in any event within 15 days
after the Conversion Date, the Company shall issue and shall deliver to the
holder of the Note, or on its written order, such certificate or certificates
as it may request for the number of whole shares of Common Stock issuable upon
the conversion of the interest and cash, as provided in Section 3.12, in
respect of any fraction of a share of Common Stock issuable upon such
conversion.
3.12 Cash in Lieu of Fractional Shares. No fractional shares of Common
----------------------------------
Stock shall be issued upon the conversion of principal and/or interest with
respect to the Note. Instead of any fractional shares of Common Stock that
would otherwise be issuable upon such conversion, the Company shall pay to the
holder of the Note a cash adjustment in respect of such fractional shares in an
amount equal to the same fraction of the Applicable Principal Conversion Value
(in a case of conversion of principal) or the Applicable Interest Conversion
Value (in a case of conversion of interest).
3.13. Partial Conversion. In the event some but not all of the principal
------------------
amount represented by the Note surrendered by a holder is converted, the
Company shall execute and deliver to or on the order of the holder, at the
expense of the Company, a new Note representing the principal amount that was
not converted.
3.14 Reservation of Common Stock. The Company shall at all times reserve
----------------------------
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the Note, sufficient
shares of Common Stock to effect the conversion of all outstanding Notes, and
if at any time the number of
-16-
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding Notes, the Company shall take
such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to a number of shares that shall be sufficient
for that purpose.
3.15 Notice of Record Date. In the event of:
---------------------
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof that are entitled
to receive any dividend or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company or any transfer of all or substantially all of the
assets of the Company to any other corporation, or any other entity or person,
or
(c) any voluntary or involuntary dissolution, liquidation or winding up of
the Company, then and in each such event the Company shall mail or cause to be
mailed to each holder of a Note a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right and a description of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective and (iii) the time, if any, that is to be fixed, as to when the
holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding up. Such notice shall be mailed at least 30 days prior to the date
specified in such notice on which such action is to be taken.
ARTICLE IV
4.01 Right of First Refusal. Except for the Reserved Employee shares, the
-----------------------
Company shall not issue, sell or exchange, agree to issue, sell or exchange, or
reserve or set aside for issuance, sale or exchange, (i) any shares of Common
Stock, (ii) any other equity security of the Company, including, without
limitation, shares of preferred stock, (iii) any option, warrant or other right
to subscribe for, purchase or otherwise acquire any equity security of the
Company or (iv) any Debt Security, unless in each such case the Company shall
have first received an unconditional bona fide offer from a third party to
purchase such securities (the "Offered Securities") and shall have offered to
sell such Offered Securities to Thermo Electron Corporation ("Thermo") and the
Purchaser as follows: The Company shall offer to sell to each of Thermo and the
Purchaser a portion
-17-
of the Offered Securities so that the aggregate number of shares of Common Stock
and Conversion Shares then held by or issuable to each of Thermo and the
Purchaser equals forty percent (40%) of the total number shares of Common Stock
to be outstanding after the proposed issuance by the Company (assuming the
conversion of the Note and exercise of all options held by employees of the
Company and the issuance and exercise of all options reserved for issuance to
employees of the Company by the Board of Directors pursuant to any option plan
approved by the Directors and shareholders of the Company), at a price and on
the other terms specified by the Company in writing delivered to Thermo and the
Purchaser (the "Offer"), and the Offer by its terms shall remain open and
irrevocable for a period of twenty (20) days, unless waived by Thermo and the
Purchaser.
4.02 Notice of Acceptance. Notice of Thermo's or the Purchaser's
---------------------
intention to accept, in whole or in part, an Offer made pursuant to Section 4.01
shall be evidenced by a writing signed by Thermo or the Purchaser, as the case
may be, and delivered to the Company prior to the end of the twenty (20) day
period of the Offer, setting forth the portion of the Offered Securities that
such party elects to purchase. If either Thermo or the Purchaser elects not to
purchase all such portion of Offered Securities, then any such securities not
elected to be purchased shall be then offered to whichever of Thermo or the
Purchaser elected to purchase all of its portion of the Offer, in the same
manner as set forth in Section 4.01. Such secondary offer shall be open for 10
days.
4.03 Conditions to Acceptance and Purchase.
--------------------------------------
(a) Permitted Sales of Refused Securities. If Notices of Acceptance
--------------------------------------
are not given by Thermo and the Purchaser in respect of all the Offered
Securities pursuant to Sections 4.01 and 4.02, the Company shall have sixty (60)
days from the expiration of the 10-day period set forth in Section 4.02 to sell
all or any part of such Offered Securities as to which a Notice of Acceptance
has not been given by Thermo or the Purchaser and all of the Offered Securities
not subject to the option of Thermo or the Purchaser pursuant to this Article IV
(the "Refused Securities") to the Person or Persons specified in the Offer, but
only for cash and otherwise in all respects upon terms and conditions,
including, without limitation, unit price and interest rates, which are not more
favorable, in the aggregate, to such other Person or Persons or less favorable
to the Company than those set forth in the Offer.
(b) Reduction in Amount of Offered Securities. In the event the
------------------------------------------
Company shall propose to sell less than all the Refused Securities (any such
sale to be in the manner and on the terms specified in Section 4.03(a) above),
then Thermo and the Purchaser shall reduce the number of, or other units of, the
Offered Securities specified in their respective Notices of Acceptance to an
amount that shall be not less than the amount of the Offered Securities that
each of Thermo and the Purchaser elected to purchase pursuant to Section 4.02
multiplied by a fraction, (i) the numerator of which shall be the amount of
Offered Securities the Company actually proposes to sell, and (ii) the
denominator of which shall be the amount of all Offered Securities. In such
event, the
-18-
Company may not sell or otherwise dispose of more than the reduced amount of the
Offered Securities until such securities have again been offered to Thermo and
the Purchaser in accordance with Section 4.01.
(c) Closing. Upon the closing, which shall include full payment to
--------
the Company, of the sale to such other Person or Persons of all or less than all
the Refused Securities, Thermo and the Purchaser shall purchase from the
Company, and the Company shall sell to Thermo and the Purchaser, the number of
Offered Securities specified in their respective Notices of Acceptance, as
reduced pursuant to Section 4.03(b), upon the terms and conditions specified in
the Offer. The purchase by Thermo and the Purchaser of any Offered Securities
is subject in all cases to the preparation, execution and delivery by the
Company, Thermo and the Purchaser of a purchase agreement relating to such
Offered Securities reasonably satisfactory in form and substance to Thermo, PIC
and their counsel.
4.04 Further Sale. In each case, Offered Securities not purchased by
-------------
Thermo, the Purchaser or other Person or Persons in accordance with Section 4.03
may not be sold or otherwise disposed of until they are again offered to Thermo
under the procedures specified in Sections 4.01, 4.02 and 4.03.
4.05 Exceptions. The rights of Thermo under this Article IV shall not
-----------
apply to:
(a) Common stock issued as a stock dividend to holders of Common Stock
or upon any subdivision or combination of shares of Common Stock, or
(b) up to 800,000 shares of Common Stock, or options exercisable
therefor, including options outstanding on the date of this Agreement (such
number to be equitably adjusted in the event of any stock split, combination,
reclassification or other similar event occurring on or after the date of this
Agreement) issuable to current and future officers, employees, directors or
consultants of the Company pursuant to any stock option plan or stock purchase
plan approved by a vote of not less than a majority of the Board of Directors of
the Company.
ARTICLE V
EVENTS OF DEFAULT
5.01 Events of Default. If any of the following events ("Events of
------------------
Default") shall occur and be continuing seven days after delivery of notice (as
described below) to the Company:
(a) The Company shall fail to pay any installment of principal of the
Note when due; or
-19-
(b) The Company shall fail to pay any interest on the Note when due or
shall default in the performance of any covenant contained in Section 2.02 and
such failure or default shall continue for seven (7) business days; or
(c) The Company shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or the Note on its part to be
performed or observed and any such failure remains unremedied for thirty (30)
days after written notice thereof shall have been given to the Company by the
holder of the Note; or
(d) The Company shall fail to pay any Indebtedness for borrowed money
(other than as evidenced by the Note) owing by the Company or any interest or
premium thereon, when due (or, if permitted by the terms of the relevant
document, within any applicable grace period), whether such Indebtedness shall
become due by scheduled maturity, by required prepayment, by acceleration, by
demand or otherwise, or shall fail to perform any term, covenant or agreement on
its part to be performed under any agreement or instrument (other than this
Agreement or the Note) evidencing or securing or relating to any Indebtedness
owing by the Company when required to be performed (or, if permitted by the
terms of the relevant document, within any applicable grace period), if the
effect of such failure to pay or perform is to accelerate, or to permit the
holder or holders of such Indebtedness, or the trustee or trustees under any
such agreement or instrument, to accelerate, the maturity of such Indebtedness,
unless such failure to pay or perform shall be waived by the holder or holders
of such Indebtedness or such trustee or trustees; or
(e) The Company shall be involved in financial difficulties as
evidenced (i) by its admitting in writing its inability to pay its debts
generally as they become due, (ii) by its commencement of a voluntary case under
Title 11 of the United States Code as from time to time in effect, or by its
authorizing, by appropriate proceedings of its Board of Directors or other
governing body, the commencement of such a voluntary case, (iii) by its filing
an answer or other pleading admitting or failing to deny the material
allegations of a petition filed against it commencing an involuntary case under
said Title 11, or seeking, consenting to or acquiescing in the relief therein
provided, or by its failing to controvert timely the material allegations of any
such petition, (iv) by the entry of an order for relief in any involuntary case
commenced under said Title 11, (v) by its seeking relief as a debtor under any
applicable law, other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or alteration of
the rights of creditors, or by its consenting to or acquiescing in such relief,
(vi) by the entry of an order by a court of competent jurisdiction (a) finding
it to be bankrupt or insolvent, (b) ordering or approving its liquidation,
reorganization or any modification or alteration of the rights of its creditors
or (c) assuming custody of, or appointing a receiver or other custodian for, all
or a substantial part of its property or (vii) by its making an assignment for
the benefit of, or entering into a composition with, its creditors, or
appointing or consenting to the appointment of a receiver or other custodian for
all or a substantial part of its property; or
-20-
(f) Any judgment, writ, warrant of attachment or execution or similar
process shall be issued or levied against a substantial part of the property of
the Company and such judgment, writ or similar process shall not be released,
vacated or fully bonded within ninety (90) days after its issue or levy;
then, and in any such event, the Purchaser or any other holder of a Note may, by
notice to the Company, declare the entire unpaid principal amount of the Note,
all interest accrued and unpaid thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Note, all such accrued
interest and all such amounts shall become and be forthwith due and payable
(unless there shall have occurred an Event of Default under subsection 5.01 (e)
in which case all such amounts shall automatically become due and payable),
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Company.
ARTICLE VI
DEFINITIONS AND ACCOUNTING TERMS
6.01 Certain Defined Terms. As used in this Agreement, the following
---------------------
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Debt Security" means and includes (i) any debt security of the Company
that by its terms is convertible into or exchangeable for any equity security of
the Company, (ii) any security of the Company that is a combination of debt and
equity or (iii) any option, warrant or other right to subscribe for, purchase or
otherwise acquire any such debt security of the Company.
"Indebtedness" means all obligations, contingent and otherwise, which
should, in accordance with generally accepted accounting principles consistently
applied, be classified upon the obligor's balance sheet as liabilities,
excluding any liabilities in respect of deferred federal or state income taxes,
but in any event including, without limitation, liabilities secured by any
mortgage on property owned or acquired subject to such mortgage, whether or not
the liability secured thereby shall have been assumed, and also including,
without limitation, (i) all guaranties, endorsements and other contingent
obligations, in respect of Indebtedness of others, whether or not the same are
or should be so reflected in said balance sheet, except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business and (ii) the present value of
any lease payments due under leases required to be capitalized in accordance
with applicable Statements of Financial Accounting Standards, determined by
discounting all such payment at the interest rate determined in accordance with
applicable Statements of Financial Accounting Standards.
-21-
"Initial Public Offering" shall mean the effectiveness of the Company's
Registration Statement on Form S-1 under the Securities Act of 1933, as amended,
in connection with an initial public offering of the Company's Common Stock
which yields at least $7,500,000 in gross proceeds to the Company.
"Other Securities" shall mean any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) that the
holder of the Note at any time shall be entitled to receive, or shall have
received, on the conversion of the Note, in lieu of or in addition to Common
Stock, or that at any time may be issuable or shall have been issued in exchange
for or in replacement of Common Stock or Other Securities pursuant to Article
III.
"Permitted Assignee" shall mean with respect to the Purchaser any person or
entity directly or indirectly controlling, controlled by or under common control
with such assigning person. For the purposes of this definition, "Control"
shall mean the power and authority to direct the affairs of the entity in
question through the direct or indirect ownership or control over not less than
50.1% of the such entity's voting securities or equity.
"Person" means an individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or political
subdivision thereof.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission (or of any other federal agency then administering the
Securities Act) thereunder, all as the same shall be in effect at the time.
ARTICLE VII
AMENDMENTS EFFECTIVE UPON AN
INITIAL PUBLIC OFFERING
7.01 Effective upon the consummation of an Initial Public Offering, the
parties hereto amend this Agreement as follows:
(a) by deleting the first sentence of Section 2.01(g);
(b) by deleting Section 2.02 in its entirety;
(c) by deleting Section 2.03 in its entirety; and
(d) by deleting Article IV in its entirety.
-22-
ARTICLE VIII
WAIVERS OF PRIOR NON-COMPLIANCE
8.01. Purchaser hereby waives any and all defaults which may have occurred
under the following provisions of the 1991 Agreement prior to the date hereof:
(i) the obligation to pay interest on any Note issued under the 1991
Agreement at the times and place and in the manner provided in the
Note and in the 1991 Agreement in compliance with Section 2.01(a);
(ii) the obligation to prepare, submit to, and obtain approval from a
majority of the Company's Board of Directors, of a budget for the
upcoming year in compliance with Section 2.01(e);
(iii) the obligation to maintain directors and officers insurance in
compliance with the last sentence of Section 2.01(g);
(iv) the negative covenant restricting affiliated transactions as set
forth in Section 2.02(b) as applied to transactions with the
Purchaser, or affiliates of the Purchaser, that were approved by
the Board of Directors of the Company and pursuant to which
Nomikos or his affiliates loaned money to or acquired capital
stock, warrants or other securities in the Company;
(v) the negative covenant restricting change in the nature of the
business of the Company as set forth in Section 2.02(c) as applied
to the change in the Company's business from the photocathode
business in which the Company was engaged at the time of its
organization to the medical devices business in which it is now
engaged;
(vi) the reporting requirements set forth in Section 2.03; and
(vii) the consent requirements of Section 7.02 of the 1991 Agreement (now
amended and restated as Section 9.02 of this Amended and Restated
Agreement).
8.02 Purchaser also waives any rights that it may have under this
Agreement arising from the Company's non-compliance with the terms of Article
IV as applied to the Initial Public Offering and all issuances prior thereto
approved by the Board of Directors of the Company of capital stock, debt
instruments, options and warrants of the Company.
-23-
ARTICLE IX
MISCELLANEOUS
9.01 No Waiver: Cumulative Remedies. No failure or delay on the part of
-------------------------------
the Purchaser, or any other holder of the Note, in exercising any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
9.02 Amendments, Waivers and Consents. Any provision in this Agreement to
---------------------------------
the contrary notwithstanding, changes in or additions to this Agreement may be
made, and compliance with any covenant or provision herein set forth may be
omitted or waived, only upon the consent of the Purchaser. Any provision of
this Agreement or the Note notwithstanding, changes in or additions to the Note
may be made, and compliance with any provision of the Note or this Agreement
relating to the Note may be omitted or waived, only upon the consent of holders
of greater than 50% of the principal amount of the Note; provided, however, that
no such consent shall be effective to reduce or to postpone the date fixed for
the payment of the principal (including any required redemption) or interest
payable on any Note, without the consent of the holder thereof, or to reduce the
percentage of the Note the consent of the holders of which is required under
this Section. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
9.03 Address for Notices, Etc. All notices, requests, demands and other
-------------------------
communications provided for hereunder shall be in writing and mailed by means of
certified mail (or other form of registered mail) or telegraphed or delivered to
the applicable party at the addresses indicated below:
If to the Company: Photoelectron Corporation
0 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
If to the Purchaser: At the Purchaser's address for notice as set forth in
the register maintained by the Company
If to any other
holder of the Note: At such holder's address for notice as set forth in
the register maintained by the Company
-24-
In addition, as to each of the foregoing, at such other address as shall be
designated by such Person in a written notice to the other party complying as to
delivery with the terms of this Section.
9.04 Binding Effect: Assignment. This Agreement shall be binding upon and
---------------------------
inure to the benefit of the Company and the Purchaser and their respective
successors and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the consent of the
Purchaser obtained in accordance with Section 9.02 hereof and the rights and
interests of the Purchaser, including rights and interests in any shares of
Common Stock or in the Note, shall be assignable without the consent of the
Company to any Permitted Assignee.
9.05 Prior Agreements. This Agreement constitutes the entire agreement
-----------------
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.
9.06 Severability. The invalidity or unenforceability of any provision
-------------
hereof shall in no way affect the validity or enforceability of any other
provision.
9.07 Governing Law. This Agreement and the Note shall be governed by, and
--------------
construed in accordance with, the laws of the Commonwealth of Massachusetts
without regard to its law governing conflicts of law.
9.08 Headings. Article, Section and subsection headings in this Agreement
---------
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
9.09 Sealed Instrument. This Agreement is deemed to be executed as an
-----------------
instrument under seal.
9.10 Counterparts. This Agreement may be executed in any number of
-------------
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
-25-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
PHOTOELECTRON CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxxx
Vice President and
Chief Operating Officer
/s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
PYC Corporation, formerly known as Photoelectron Investments
Corporation of Liberia, hereby acknowledges and confirms the accuracy of the
factual recitations set forth in paragraphs A and B above.
PHOTOELECTRON INVESTMENTS
CORPORATION OF LIBERIA
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
-26-
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT, AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
PLEDGED, MORTGAGED, HYPOTHECATED OR OTHERWISE TRANSFERRED (1) WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THESE SECURITIES OR (2)
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
PHOTOELECTRON CORPORATION
8% Subordinated Convertible Note Due 1998
Lexington, Massachusetts
No. 1996-1 August 8, 1996
For value received, PHOTOELECTRON CORPORATION, a Massachusetts corporation
(the "Company"), hereby promises to pay to Xxxxx X. Xxxxxxx (hereinafter
referred to as the "Payee"), or registered assigns, on July 31, 1998, as
described below, the principal sum of Five Hundred Thousand Dollars
($500,000.00) in consideration of advances made by the Payee and his predecessor
in interest under the Subordinated Convertible Note Purchase Agreement
hereinafter referred to, or such part thereof as then remains unpaid. The
Company further agrees to pay interest from the date hereof on the principal
amount of such advance remaining from time to time unpaid at the rate of eight
percent (8%) per annum. Such interest shall accrue on March 31, June 30,
September 30 and December 31 of each year, until the whole amount of the
principal hereof remaining unpaid shall become due and payable. The Company
agrees to pay interest on all overdue principal (including any overdue required
redemption) and interest at a rate per annum equal to the prime or base lending
rate of the First National Bank of Boston plus three percent (3%). Subject to
----
the holder's option (referenced below) to convert all or a portion of the
outstanding principal and all then accrued but unpaid interest to Common Stock,
principal and all accrued but unpaid interest shall be repaid on July 31, 1998.
Principal and interest shall be payable in lawful money of the United States of
America, in immediately available funds, at the principal office of the Payee or
at such other place as the legal holder may designate from time to time in
writing to the Company. Interest shall be computed on the basis of a 360-day
year.
This Note is issued pursuant to and is entitled to the benefits of a
certain Subordinated Convertible Note Purchase Agreement dated as of July 11,
1991, between the Company and Payee identified therein (as the same may be
amended from time to time, the "1991 Agreement"), and each holder of this Note,
by its acceptance hereof,
agrees to be bound by the provisions of the 1991 Agreement, a copy of which may
be inspected by the legal holder hereof at the principal office of the Company.
As provided in the 1991 Agreement, (i) this Note is subject to prepayment as
specified in the 1991 Agreement, (ii) the principal of and interest on this Note
is subordinated to Senior Debt, as defined in the 1991 Agreement, and (iii) all
or a portion of the outstanding principal balance under the Note, and all then
accrued but unpaid interest, is convertible into Common Stock of the Company in
the manner set forth in the 1991 Agreement.
As further provided in the 1991 Agreement, upon surrender of this Note for
transfer or exchange, a new Note of the same tenor dated the date to which
interest has been paid on the surrendered Note and in an aggregate principal
amount equal to the unpaid principal amount of the Note so surrendered will be
issued to, and registered in the name of, the transferee or transferees. The
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes.
In case any payment herein provided for shall not be paid when due, the
Company further promises to pay all costs of collection, including all
reasonable attorney's fees.
This Note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts, without regard to its law governing conflicts
of law, and shall have the effect of a sealed instrument effective as of the
date first written above.
The Company and all endorsers and guarantors of this Note hereby waive
presentment, demand, notice of nonpayment, protest and all other demands and
notices in connection with the delivery, acceptance, performance or enforcement
of this Note.
PHOTOELECTRON CORPORATION
By:
-----------------------------
Xxxxx X. Xxxxxxxxx
Vice President and Chief Operating
Officer
Attest:
--------------------------
-2-
Exhibit B
Date Amount
--------- --------
12-4-90 $ 52,000
2-28-91 50,000
3-15-91 50,000
4-16-91 25,000
4-18-91 25,000
5-21-91 50,000
6-24-91 60,000
7-19-91 70,000
8-18-91 70,000
9-24-91 48,000
Total $500,000
========
