SUBSCRIPTION AGREEMENT
PALOMAR MEDICAL TECHNOLOGIES, INC.
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
BECAUSE THEY ARE BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER SECTIONS 4(2) AND
4(6) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS SUBSCRIPTION
AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER
TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR
TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.
IN REACHING THE CONCLUSION THAT SUBSCRIBER DESIRES TO PURCHASE THE
DEBENTURES, SUBSCRIBER HAS CAREFULLY EVALUATED SUBSCRIBER'S FINANCIAL RESOURCES
AND INVESTMENT POSITION, AND THE RISKS ASSOCIATED WITH THIS INVESTMENT, AND
ACKNOWLEDGES THAT THE DEBENTURES INVOLVE A HIGH DEGREE OF RISK AND THAT
SUBSCRIBER COULD LOSE THE ENTIRE INVESTMENT.
This Subscription Agreement (the "Agreement") is executed by the
undersigned (the "Subscriber") in connection with the offer and subscription by
the undersigned to purchase 5% Convertible Debentures Due December __, 2001 (5
years from Closing Date), with all interest due at maturity ("Debentures") of
Palomar Medical Technologies, Inc., a Delaware corporation (the "Company") in an
aggregate principal amount of $_________________. The terms on which the
Debentures may be converted into Common Stock (such Common Stock underlying the
Debentures being referred to herein as "Shares") and the other terms of the
Debentures are set forth therein and in Sections herein. This Subscription and,
if accepted by the Company, the offer and sale of Debentures and the Shares
(collectively, the "Securities"), are being made in reliance upon the provisions
of Sections 4(2) and 4(6) of the United States Securities Act of 1933, as
amended (the "Act"). The undersigned, in order to induce the Company will rely
thereon, represents, warrants and agrees as follows:
1. OFFER TO SUBSCRIBE; PURCHASE PRICE
The Subscriber hereby offers to purchase and subscribes for the number of
Debentures set forth on the signature page hereto, at a price of 100%. The
Closing shall be deemed to occur when this Agreement has been executed by both
Subscriber and Company (the "Closing Date" or "Debenture Date"). The Company
agrees to deliver certificates representing the Debentures subscribed within 10
days of Closing. On or prior to the Closing Date, the Subscriber will deliver to
the Company the full amount of the Purchase Price by wire transfer to the
account set forth below.
Citibank
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA 000000000
Account Number: 00000000
Account Name: Xxxx Xxxxxx Xxxxxxxx, Inc.
For Further Credit to:
Account Number: 593109782
Account Name: Palomar Medical Technologies, Inc.
2. REPRESENTATIONS AND WARRANTIES BY SUBSCRIBER
Subscriber hereby represents and warrants as follows:
(a) Subscriber is an Accredited Investor as evidenced by the Subscriber
meeting at least one of the following standards:
(A) is an individual and had income in excess of $200,00 in
the two most recent tax years (or $300,000 income jointly with
his spouse) and reasonably expect to have income at the same
level in the current tax year; or
(B) is an individual and his net worth (i.e. excess of total
assets over total liabilities), either individually or together
with my spouse, is at least $1,000,000; or
(C) is a trust, corporation, partnership, or organization
defined in Section 501(c)(3) of the Code, not formed for the
purpose or purchasing the Debentures, with assets in excess of
$5,000,000; or
(D) is a national bank; a state banking institution, the
business of which is substantially confined to banking and is
supervised by state banking officials; a savings and loan
association; a broker or dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934; an insurance company; an
investment company registered under the Investment Company Act of
1940; a business development company as defined in Section
2(a)(48) of that Act or a private business development company as
defined in Section 202(a)(22) of the Investment Advisors Act of
1940; a Small Business Investment Company licensed by the Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; or an employee benefit plan
within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company,
or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, a self-directed plan
where the investment decisions are made by accredited investors;
or
(E) is an entity in which each of the equity owners meet the
standards set forth in any of the immediately preceding
subparagraphs (A), (B), (C), or (D). (IF YOU MEET THE STANDARDS
IN THIS SUBPARAGRAPH, PLEASE ALSO COMPLETE THE FOLLOWING:)
I certify that the following is a complete list of all
owners of equity or trustees, that each such owner or trustee has
initialed the space opposite his name and that each such owner or
trustee understands that by initialing that space he is
representing that he is an accredited investor satisfying either
A, B, C or D above.
Name of Owner of Type of
Equity or Trustee Accredited Investor Initials
----------------- -------------------- ----------
----------------- -------------------- ----------
----------------- -------------------- ----------
(b) The Subscriber and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Debentures and the offer of the
Shares which have been requested by the Subscriber. The Subscriber and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and have received complete and satisfactory answers to any such
inquiries. Without limiting the generality of the foregoing,
the Subscriber has had the opportunity to obtain and to review the Company's (1)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1995 (as
amended by Amendment No. 1 thereto on Form 10-KSB/A filed with the Securities
and Exchange Commission (the "SEC" on August 23, 1996), (2) Quarterly Reports on
Form 10-QSB for the fiscal quarters ended March 31, 1996 (as amended by
Amendment No. 1 thereto on Form 10-QSB/A filed with SEC on August 23, 1996),
June 30, 1996 and September 30, 1996, (3) Current Report on Form 8-K, dated May
3, 1996, as amended by Amendment No. 1 thereto on Form 8-K/A dated May 3, 1996,
(4) definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, and
(5) Registration Statement on Form S-3 (the "October Registration Statement")
declared effective on October 17, 1996 (Registration No. 333-10681), in each
case as filed with the SEC.
(c) Subscriber is acquiring the Debentures solely for Subscriber's own
account, for investment, and not with a view to the distribution thereof.
Subscriber's financial condition is such that he is not under any present
necessity or constraint to dispose of the Debentures to satisfy any existing or
contemplated debt or undertaking. If Subscriber is a corporation, trust,
association, partnership, or any other entity other than an individual, the
purchase of the Debentures by Subscriber has been duly authorized as required by
law or agreement to be taken, and the Debentures constitute a legal investment
for such entity.
(d) Subscriber is aware of the fact that the Debentures have not been
registered, nor is registration contemplated, under the Securities Act of 1933
(the "Act"), and, accordingly, no federal agency has recommended or endorsed the
purchase of the Debentures or passed on the adequacy or accuracy of the
information set forth in the Form 10-KSB. Subscriber understands that since the
Debentures have not been registered under the Act, they must be held
indefinitely unless they are subsequently registered under the Act or unless, in
the opinion of counsel for the Company, a sale or transfer may be made without
registration thereunder. Subscriber agrees that the Debentures may bear a legend
restricting the transfer thereof consistent with the foregoing and that a
notation may be made in the records of the Company's transfer agent restricting
the transfer of the Debentures in manner consistent with the foregoing.
(e) Subscriber, in electing to subscribe for the Securities hereunder, has
relied upon an independent investigation made by it and its representative, if
any. Subscriber has been given no oral or written representations or assurances
from the Company or any representation of the Company other than as set forth in
this Agreement or in a document executed by a duly authorized representative of
the Company making reference to this Agreement.
(f) If Subscriber desires to sell and distribute Registered Shares over a
period of time, or from time to time, at then prevailing market prices, then
Subscriber shall execute and deliver to the Company such written undertakings as
the Company and its Counsel may reasonably require in order to assure full
compliance with relevant provisions of the Securities Act and the Exchange Act
including, without limitation, providing the Company with 48 hours' prior
written notice of each such sale and providing the Company with assurances,
reasonably satisfactory to the Company, that Subscriber will meet the prospectus
delivery requirements under the Security Act.
3. REGISTRATION RIGHTS
The Company agrees to file and use reasonable efforts to make effective a
registration statement with the Securities and Exchange Commission (the "SEC")
(on Form S-3, its successor form, or any other form under the Securities Act of
1933 under which the Shares underlying the Debentures are eligible to be
registered), within 90 days of the Closing Date, covering the Shares underlying
the Debentures, at the Company's cost and expense (excluding the costs of legal
counsel to the holders of the Debentures). If the Registration Statement is not
declared effective within 90 days of the Closing Date, the rate of interest on
the Debentures shall increase by .5% per annum and continue to increase by an
additional .5% per annum for every 30 days thereafter, up to a maximum increase
of 5%, until such Registration Statement is declared effective. The subscriber
shall furnish the Company with such
information as the Company may request in writing and as shall be required in
connection with any registration thereunder.
4. RESALES
Subscriber acknowledges and agrees that the Securities may only be resold (a)
pursuant to a Registration Statement under the Act; or (b) pursuant to an
exemption from registration.
5. SUBSEQUENT TRANSFER OF SECURITIES
Once a registration statement has been filed and declared effective as
contemplated in Section 3 above, the Company agrees, and shall instruct its
transfer agent, that the Securities may be transferred to any person or entity
who is not an affiliate of the Company without (a) any further restriction on
transfer or (b) the entry of a "stop transfer" order against such Securities,
provided that the person(s) or entity(ies) requesting transfer furnish the
appropriate representations to the Company's legal counsel.
6. RELEASE OF PROCEEDS TO THE COMPANY
The proceeds of the offering shall be released to the Company upon the Closing
of this offering, as defined in Section 1 of this Agreement.
7. TERMS OF CONVERSION
The Debentures shall contain the following provisions in Section 3 thereof
regarding the conversion of the Debentures:
The Holder of this Debenture is entitled, at its option, at any time after
90 days after the Debenture Date until maturity hereof, to convert the principal
amount of the Debenture or any portion of the principal amount hereof which is
at least One Hundred Thousand Dollars ($100,000 U.S.) or, if at the time of such
election to convert, the aggregate principal amount of all Debentures registered
to the Holder is less than One Hundred Thousand Dollars ($100,000 U.S.), then
the whole amount thereof, into Shares of Common Stock of the Company at a
conversion price for each share of Common Stock equal to Eight Five Percent
(85%) of the Market Price of the Company's Common Stock; provided that in any 30
day period the Holder of these Debentures (or its transferee) may convert no
more than 33% (or 34% of the Debentures, in the last 30 day period available for
conversion of the Debentures) of the Debentures purchased by the Holder, whether
or not such Holder exercised its right to convert the Debenture after 90 days
after the Debenture Date. If such conversion price on the date of conversion
would be (x) less than or equal to $5.25 per share (the "Conversion Price
Floor"), the Company shall have the right to redeem the Debentures within 30
days of the Notice of Conversion at the face amount of the Debentures plus
accrued but unpaid interest, or (y) greater than $15 per share, the conversion
price shall be equal to $15 per share (the "Conversion Price Ceiling). As used
herein, the Market Price shall be the average closing bid price of the Common
Stock over the ten (10) trading days immediately prior to the conversion date,
as reported by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or the closing bid price in the over-the-counter
market or, in the event the Common Stock is listed on a stock exchange, the fair
market value per Share shall be the closing price on the exchange, as reported
in the Wall Street Journal, over such ten (10) day period. Such conversion shall
be effectuated by surrendering the Debentures to be converted to the Company
with the form of conversion notice attached hereto as Exhibit A, executed by the
Holder of this Debenture evidencing such Holder's intention to convert this
Debenture or a specified portion (as above provided) hereof, and accompanied, if
required by the Company, by proper assignment hereof in blank. The Company shall
use its best efforts to have the Shares of Common Stock issued and delivered to
the Holder thereof within ten business days of the receipt of the conversion
form and Debentures(s). If this Debenture is converted into Shares of Common
Stock of the Company pursuant to this Section, the amount of accrued but unpaid
interest shall be subject to conversion. No fractions of shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded down to the nearest whole share. The date on
which notice of conversion is given shall be deemed to be
the date on which the Holder has delivered this Debenture, with the conversion
notice duly executed, to the Company.
8. TERMS OF REDEMPTION
The Debentures shall contain the following provisions in Section 5 thereof
regarding the redemption of the Debentures:
The Company may, at any time the Debentures are outstanding, upon 20 days
written notice to the Holder, elect to redeem the full amount of the Debentures
then outstanding or a pro rata portion thereof. The Holder shall have 10 days
after receipt of written notice of redemption to submit a Notice of Conversion
to the Company if the Holder desires to convert. The redemption price shall be
calculated at 120% of the amount of the Debenture being redeemed. All accrued
but unpaid interest shall be waived at the time of redemption. Each Holder of
the Debenture shall be entitled to redeem a pro rata portion of the Debentures
being redeemed by the Company.
9. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts except for matter arising under the Act or the
Securities Exchange Act of 1934 which matters shall be construed and interpreted
in accordance with such laws.
10. NOTICES
All communications hereunder shall be in writing, and, if sent to the Subscriber
shall be sufficient in all respects if delivered, sent by registered mail, or by
telecopy and confirmed to the Subscriber at:
Name:
Address:
City:
Country:
Attention:
or, if sent to the Company, shall be delivered, sent by registered mail or by
telecopy and confirmed to the Company at:
Palomar Medical Technologies, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Director of Finance
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The undersigned hereby subscribes for $______________ in principal
amount of Debentures and pays herewith funds in the same amount.
The undersigned acknowledges that this subscription shall not be
effective unless accepted by the Company as indicated below.
Dated this day of ,1996.
(Printed Name)
(Signature)
(Mailing Address)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE DAY OF
, 1996.
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
Printed Name/Title:
AMENDMENT TO
SUBSCRIPTION AGREEMENT
THIS AMENDMENT TO SUBSCRIPTION AGREEMENT (this "Amendment"), dated as of
JANUARY 10, 1997, is by an between Palomar Medical Technologies, Inc., a
Delaware corporation (the "Company"), and Berckeley Investment Group, Ltd. (the
"Subscriber")
WHEREAS, the Company and the Subscriber entered into that certain
Subscription Agreement, dated December 31, 1996 (the "Agreement"), pursuant to
which the Subscriber acquired $5,000,000 5% Convertible Debentures Due December
31, 2001 (the "Debentures") of the Company; and
WHEREAS the Company and the Subscriber have agreed to amend certain
terms of the Agreement and certain terms of the Debentures;
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Amendment and good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
SECTION 1- AMENDMENT OF ITEM 3 OF SUBSCRIPTION AGREEMENT
Replace the following language:
"The Company agrees to file and use reasonable efforts to make effective a
registration statement with the Securities and Exchange Commission (the "SEC")
(on Form S-3, its successor form, or any other form under the Securities Act of
1933 under which the Shares underlying the Debentures are eligible to be
registered), within 90 days of the Closing Date, covering the Shares underlying
the Debentures, at the Company's cost and expense (excluding the costs of legal
counsel to the holders of the Debentures). If the Registration Statement is not
declared effective within 90 days of the Closing Date, the rate of interest on
the Debentures shall increase by .5% per annum and continue to increase by an
additional .5% per annum for every 30 days thereafter, up to a maximum increase
of 5%, until such Registration Statement is declared effective."
With:
"The Company agrees to file and use reasonable efforts to make effective a
registration statement with the Securities and Exchange Commission (the "SEC")
(on Form S-3, its successor form, or any other form under the Securities Act of
1933 under which the Shares underlying the Debentures are eligible to be
registered), within 120 days of the Closing Date, covering the Shares underlying
the Debentures, at the Company's cost and expense (excluding the costs of legal
counsel to the holders of the Debentures). If the Registration Statement is not
declared effective within 120 days of the Closing Date, then the Company will
pay a penalty equal to 0.5% of the amount of the Debenture per month in cash or
common stock up to a maximum of 5%, until such Registration Statement is
declared effective."
SECTION 2 - AMENDMENT OF ITEM 7 OF SUBSCRIPTION AGREEMENT AND
ITEM 3 OF DEBENTURE
Replace the following language:
"If such conversion price on the date of conversion would be (x) less than or
equal to $5.25 per share (the "Conversion Price Floor"), the Company shall have
the right to redeem the Debentures within 30 days of the Notice of Conversion at
the face amount of the Debentures plus accrued but unpaid interest, or (y)
greater than $15 per share, the conversion price shall be equal to $15 per share
(the "Conversion Price Ceiling)."
With:
"If such conversion price on the date of conversion would be less than or equal
to $5.25 per share (the "Conversion Price Floor"), the Company shall have the
right to redeem the Debentures within (30) thirty days from the Notice of
Conversion. The redemption price shall be calculated at 115% of the amount of
the Debenture being redeemed. All accrued but unpaid interest shall be waived at
the time of redemption. The Holder may fax a Notice to the Company, Attn.: Xxxx
X. Xxxxxx, requiring the Company to declare, by faxed notice within (5) five
business days of the Notice from the Holder, whether it intends to effect such
redemption. In the event the Company does not reply during said (5) five
business days, the Company may not redeem that Holder's Debenture during the
(30) thirty days following the Notice from the Holder. If such conversion price
on the date of conversion would be greater that $15 per share, the conversion
price shall be equal to $15 per share (the "Conversion Price Ceiling)."
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Subscription Agreement to be executed by their duly authorized representatives
as of the date set forth below.
BERCKELEY INVESTMENT GROUP, LTD.
By:
Name:
Title:
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
Name:
Title:
