EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of September
30, 1997, by and among PALOMAR MEDICAL TECHNOLOGIES, INC., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), with
headquarters located at 00 Xxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 and
each of the purchasers (the "PURCHASERS") set forth on the execution pages
hereof (the "EXECUTION PAGES").
WHEREAS:
A. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "SECURITIES
ACT");
B. Each Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement; (i) 6%, 7% and 8% Convertible Debenture Due September
30, 2002 of the Company (each a "DEBENTURE" and, collectively, the "DEBENTURES")
convertible into its common stock, par value $.01 per share, of the Company (the
"COMMON STOCK") and (ii) shares of Common Stock (the "COMMON SHARES"). The form
of the Debenture, including the terms upon which such Debenture are convertible
into shares of Common Stock, is attached hereto as Exhibit A. The shares of
Common Stock issuable upon conversion of the Debenture or otherwise pursuant to
the Debentures are referred to herein as the "CONVERSION SHARES". The
Debentures, the Common Shares and the Conversion Shares are collectively
referred to herein as the "SECURITIES."
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as Exhibit B (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws;
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. PURCHASE AND SALE OF DEBENTURES AND COMMON SHARES
a. Purchase of Debentures and Common Shares. On the Closing Date
(as defined below), subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the Company shall issue
and sell to each Purchaser and each Purchaser severally agrees to
purchase from the Company, (i) a Debenture in such original principal
amount as is set forth on such Purchaser's signature page hereto and
(ii) a number of Common Shares equal to (A) fifteen percent (15%) of the
original principal amount of the Debenture referred to in clause (i)
divided by (B) the average of the closing bid prices of the Common Stock
on the Nasdaq SmallCap Market for the three (3) trading days commencing
on the first trading day after Closing Date. Each Investor represents
and agrees that neither it nor its affiliates has entered or will enter
into any transactions with respect to any securities of the Company
(other than the transactions contemplated by this Agreement) on the
Closing Date or the three trading days thereafter. The purchase price
(the "PURCHASE PRICE") for such Debenture and Common Shares to be issued
and sold to each Purchaser at such closing shall be as set forth on such
Purchaser's Execution Page hereto.
b. Form of Payment. On the Closing Date, each Purchaser shall
pay the aggregate Purchase Price for the Debentures and Common Shares
being purchased by such Purchaser hereunder by wire transfer to the
Company, in accordance with the Company's written wiring instructions,
against delivery of the duly executed Debenture being purchased by such
Purchaser hereunder and the Company shall deliver such Debenture against
delivery of such aggregate Purchase Price. Within twenty (20) days after
the second trading day following the Closing Date, the Company shall
deliver to each Purchaser a duly executed certificate representing the
Common Shares purchased by such Purchaser.
c. Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date
and time of the issuance and sale of the Debentures and Common Shares
pursuant to this Agreement (the "CLOSING DATE") shall be 12:00 noon
eastern time on September 30, 1997, or such other time as may be
mutually agreed upon by the Company and the Purchasers. The closing
shall occur at the offices of Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxx, XX 00000.
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2. PURCHASERS' REPRESENTATIONS AND WARRANTIES
Each Purchaser severally represents and warrants to the Company that:
a. Investment Purpose. Purchaser is purchasing the Debentures
and Common Shares for Purchaser's own account for investment only and
not with a present view towards the public sale or distribution thereof,
except pursuant to sales that are exempt from the registration
requirements of the Securities Act and/or sales registered under the
Securities Act. Purchaser understands that Purchaser must bear the
economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable state
securities or blue sky laws or an exemption from such registration is
available, and that the Company has no present intention of registering
any such Securities other than as contemplated by the Registration
Rights Agreement. Notwithstanding anything in this Section 2(a) to the
contrary, by making the representations herein, the Purchaser does not
agree to hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption
under the Securities Act.
b. Accredited Investor Status. Purchaser is an "Accredited
Investor" as defined in Rule 501(a) promulgated under the Securities
Act.
c. Reliance on Exemptions. Purchaser understands that the
Debentures and Common Shares are being offered and sold to Purchaser in
reliance upon specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and Purchaser's compliance with,
the representations, warranties, agreements, acknowledgments and
understandings of Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of Purchaser to
acquire the Debentures and Common Shares.
d. Information. Purchaser and its counsel or representative, if
any, have been furnished all materials relating to the business,
finances and operations of the Company and materials relating to the
offer and sale of the Debentures and Common Shares which have been
specifically requested by Purchaser or its counsel or representative.
Purchaser and its counsel, if any, have been afforded the opportunity to
ask questions of the Company and have received what Purchaser believes
to be complete and satisfactory answers to any such inquiries. Neither
such inquiries nor any other due diligence investigation conducted by
Purchaser or its counsel or any of its representatives shall modify,
amend or affect Purchaser's right to rely on the Company's
representations and warranties contained in Section 3 below. Purchaser
understands that Purchaser's investment in the Securities involves a
high degree of risk.
e. Governmental Review. Purchaser understands that no United
States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities.
f. Transfer or Resale. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not
been and are not being registered under the Securities Act or any state
securities laws, and may not be transferred unless (a) subsequently
registered thereunder, or (b) Purchaser shall have delivered to the
Company an opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions)
to the effect that the Securities to be sold or transferred may be sold
or transferred pursuant to an exemption from such registration,
including without limitation Rule 144 promulgated under the Securities
Act (or a successor rule) ("RULE 144"), or (c) transferred without
consideration to an affiliate of Purchaser; (ii) any sale of such
Securities made in reliance on Rule 144 may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable,
any resale of such Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the
rules and regulations of the Securities and Exchange Commission (the
"SEC") thereunder; and (iii) neither the Company nor any other person is
under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each case, other than
pursuant to the Registration Rights Agreement).
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g. Legends. Purchaser understands that the Debentures and Common
Shares and, until such time as the Conversion Shares have been
registered under the Securities Act as contemplated by the Registration
Rights Agreement or otherwise may be sold by Purchaser pursuant to Rule
144 without any restriction as to the public resale thereof, the
certificates for the Conversion Shares may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for such Securities):
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or an
opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, that
registration is not required under said Act or unless the
Company is provided with reasonable assurances that the
securities were sold pursuant to Rule 144 under said Act.
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend upon conversion of the
Debentures to the holder of any Security upon which it is stamped, if
(a) the resale of such Security is registered under the Securities Act,
or (b) such holder provides the Company with an opinion of counsel, in
form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or transfer of
such Security may be made without registration under the Securities Act
or (c) such holder provides the Company with reasonable assurances that
such Security has been sold pursuant to Rule 144 or can be sold pursuant
to Rule 144 without any restriction as to the number of Securities
acquired as of a particular date that can then be immediately sold.
Purchaser agrees to sell all Securities, including those represented by
a certificate(s) from which the legend has been removed, pursuant to an
effective registration statement and to deliver a prospectus in
connection with such sale (if and to the extent such delivery is
required) or in compliance with an exemption from the registration
requirements of the Securities Act. In the event the above legend is
removed from any Security and thereafter the effectiveness of a
registration statement covering such Security is suspended or the
Company determines that a supplement or amendment thereto is required by
applicable securities laws, then upon reasonable advance notice to
Purchaser the Company may require that the above legend be placed on any
such Security that cannot then be sold pursuant to an effective
registration statement or Rule 144 without any restriction as to the
number of Securities acquired as of a particular date that can then be
immediately sold, which legend shall be removed when such Security has
been sold pursuant to Rule 144 or may be sold pursuant to an effective
registration statement or Rule 144 without any restriction as to the
number of Securities acquired as of a particular date that can then be
immediately sold.
h. Authorization; Enforcement. This Agreement and the
Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of Purchaser and are valid and binding
agreements of Purchaser enforceable in accordance with their respective
terms.
i. Location of Purchaser. Each of the Purchasers has advised the
Company in writing with respect to the jurisdictions wherein the
investment decision regarding Purchaser's acquisition of the Debentures
and the Common Shares has been made.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser that:
a. Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated,
and has the requisite corporate power to own its properties and to carry
on its business as now being conducted. The Company and each of its
subsidiaries is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction where the failure so to
qualify would have a Material Adverse Effect. "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the operations, properties,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole on a consolidated basis or on the ability
of the Company to perform its obligations in connection with the
transactions contemplated hereby on a timely basis. The Company does not
have any significant subsidiaries (as defined in Rule 1-02 of Regulation
S-X under the Securities Act) other than those subsidiaries set forth on
Schedule 3(a).
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b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement
and the Registration Rights Agreement, to issue and sell the Debentures
and Common Shares in accordance with the terms hereof, and to issue the
Conversion Shares upon conversion of the Debentures in accordance with
their terms; (ii) the execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Debentures by the
Company and the consummation by it of the transactions contemplated
hereby and thereby (including without limitation the issuance of the
Debentures and Common Shares and the issuance and reservation for
issuance of the Conversion Shares) have been duly authorized by the
Company's Board of Directors and no further consent or authorization of
the Company, its Board or Directors, or its stockholders is required
(under Rules promulgated by the National Association of Securities
Dealers or otherwise); (iii) this Agreement has been duly executed and
delivered by the Company; and (iv) this Agreement constitutes, and, upon
execution and delivery by the Company of the Registration Rights
Agreement and the Debentures, such agreement and such instrument will
constitute, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms.
c. Capitalization. The capitalization of the Company as of the
date hereof, including the authorized capital stock, the number of
shares issued and outstanding, the number of shares reserved for
issuance pursuant to the Company's stock option plans, the number of
shares reserved for issuance pursuant to securities (other than the
Debentures) exercisable for, or convertible into or exchangeable for any
shares of Common Stock and the number of shares to be reserved for
issuance upon conversion of the Debentures is set forth on Schedule
3(c). All of such outstanding shares of capital stock have been, or upon
issuance will be, validly issued, fully paid and nonassessable. No
shares of capital stock of the Company (including the Debentures, the
Common Shares and the Conversion Shares) are subject to preemptive
rights or any other similar rights of the stockholders of the Company or
any liens or encumbrances. Except as disclosed in Schedule 3(c) or as
contemplated herein, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exercisable or exchangeable for, any shares
of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries is or may
become bound to issue additional shares of capital stock of the Company
or any of its subsidiaries, and (ii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of the Company's securities under
the Securities Act (except the Registration Rights Agreement). The
Company has made available to each Purchaser true and correct copies of
the Company's Certificate of Incorporation as in effect on the date
hereof ("CERTIFICATE OF INCORPORATION"), the Company's By-laws as in
effect on the date hereof (the "BY-LAWS"), and all other instruments and
agreements governing securities convertible into or exercisable or
exchangeable for Common Stock of the Company. The Company shall provide
each Purchaser with a written update of this representation signed by
the Company's Chief Executive Officer or Chief Financial Officer on
behalf of the Company as of the Closing Date.
d. Issuance of Securities. The Debentures are duly authorized
and, upon issuance in accordance with the terms of this Agreement, will
be validly issued and free from all taxes, liens, claims and
encumbrances and will not be subject to preemptive rights or other
similar rights of stockholders of the Company. The Common Shares are
duly authorized and, upon issuance in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and
free from all taxes, liens, claims and encumbrances and will not be
subject to preemptive rights or other similar rights of stockholders of
the Company. The Conversion Shares are duly authorized and reserved for
issuance, and, upon conversion of the Debentures in accordance with the
terms thereof, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances and will not be
subject to preemptive rights or other similar rights of stockholders of
the Company.
e. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Debentures by the
Company, the performance by the Company of its obligations hereunder and
thereunder, and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
issuance and reservation for issuance, as applicable, of the Debentures
and Common Shares and the Conversion Shares) will not (i) result in a
violation of the Certificate of Incorporation or By-laws or (ii)
conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of
its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including U.S. federal and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of
its subsidiaries is bound or affected (except for such conflicts,
57
defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect). Neither
the Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation or other organizational documents and
neither the Company nor any of its subsidiaries is in default (and no
event has occurred which, with notice or lapse of time or both, would
put the Company or any of its subsidiaries in default) under, nor has
there occurred any event giving others (with notice or lapse of time or
both) any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any
of its subsidiaries is a party, except for possible defaults or rights
as would not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. The businesses of the
Company and its subsidiaries are not being conducted, and shall not be
conducted so long as a Purchaser owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental
entity, except for possible violations the sanctions for which either
singly or in the aggregate would not have or reasonably be expected to
result in a Material Adverse Effect. Except as specifically contemplated
by this Agreement and except for the filing of a Form D with the
Securities and Exchange Commission, the filing of the registration
statement contemplated by the Registration Rights Agreement under the
Securities Act, any filings required by applicable state securities laws
and the filing of an application with NASDAQ (as defined below) to list
or approve for quotation the Conversion Shares and the Common Shares,
the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement, the Registration Rights Agreement or the Debentures, in each
case in accordance with the terms hereof or thereof. The Company is not
in violation of the listing requirements of the NASDAQ SmallCap Market
("NASDAQ") and does not reasonably anticipate (nor has it received any
notices to such effect from NASDAQ) that the Common Stock will be
delisted by NASDAQ in the foreseeable future.
f. SEC Documents, Financial Statements. Since December 31, 1993,
the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to
the reporting requirements of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") (all of the foregoing, filed prior to the
date hereof and after December 31, 1993, and all exhibits included
therein and financial statements and schedules thereto and documents
(other than exhibits) incorporated by reference therein together with
any registration statements or other documents filed by the Company
pursuant to the Securities Act prior to the date hereof and those
certain news releases attached hereto as Schedule 3(f), being
hereinafter referred to herein as the "SEC DOCUMENTS"). The Company has
made available to each Purchaser true and complete copies of the SEC
Documents, except for such exhibits, schedules and incorporated
documents. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act or the
Securities Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC, contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with U.S.
generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may include footnotes
or may not be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has
no liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of
the most recent financial statements included in the SEC Documents and
(ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements,
which, individually or in the aggregate, are not material to the
financial condition or operating results of the Company.
g. Absence of Litigation. Except as disclosed in the SEC
Documents or in Schedule 3(g), there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to
the knowledge of the Company or any of its subsidiaries, threatened
against or affecting the Company, any of its subsidiaries, or any of
their respective directors or officers in their capacities as such,
wherein an unfavorable decision, ruling or finding would or could
reasonably be expected to result in a Material Adverse Effect.
58
h. Disclosure. All information relating to or concerning the
Company set forth in this Agreement or provided to the Purchasers
pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material
respects and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein, in
light of the circumstances under which they were made, not misleading.
No event or circumstance has occurred or exists with respect to the
Company or its subsidiaries or their respective businesses, properties,
prospects, operations or financial conditions, which, under applicable
law, rule or regulation, requires public disclosure or announcement by
the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company's Exchange Act Reports are
being incorporated into an effective registration statement filed by the
Company under the Securities Act).
i. Current Public Information. The Company is currently eligible
to register the resale of its Common Stock on a registration statement
on Form S-3 under the Securities Act.
j. No General Solicitation. Neither the Company nor any person
acting for the Company has conducted any "GENERAL SOLICITATION," as such
term is defined in Regulation D, with respect to any of the Securities
being offered hereby.
k. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would require
registration of the Securities being offered hereby under the Securities
Act.
l. No Brokers. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees
or similar payments by any Purchaser relating to this Agreement or the
transactions contemplated hereby, except for dealings with Xxxxxxx
Arnouse whose commissions and fees will be paid for by the Company.
m. Acknowledgment of Dilution. The number of Conversion Shares
issuable upon conversion of the Debentures may increase substantially in
certain circumstances, including the circumstance wherein the trading
price of the Common Stock declines. The Company acknowledges that its
obligation to issue Conversion Shares upon conversion of the Debentures
in accordance with their terms is absolute and unconditional, regardless
of the dilution that such issuance may have on the ownership interests
of other stockholders.
n. Intellectual Property. Each of the Company and its
subsidiaries owns or possesses adequate and enforceable rights to use
all patents, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications,
licenses, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) and other similar rights and proprietary knowledge
(collectively, "INTANGIBLES") necessary for the conduct of its business
as now being conducted and as described in the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1996, as amended.
Neither the Company nor any subsidiary of the Company infringes or is in
conflict with any right of any other person with respect to any
Intangibles which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have or could
reasonably be expected to result in a Material Adverse Effect.
o. Foreign Corrupt Practices. Neither the Company, nor any of
its subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any subsidiary has, in the
course of acting for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official
or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
59
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts timely
to satisfy each of the conditions described in Section 6 and 7 of this
Agreement.
b. Blue Sky Laws. The Company shall take such action as the
Company or the Purchasers shall reasonably determine is necessary to
qualify the Securities for sale to the Purchasers pursuant to this
Agreement under applicable securities or "blue sky" laws of the states
of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to the Purchasers.
c. Reporting Status. So long as any Purchaser beneficially owns
any of the Securities, the Company shall timely file all reports
required to be filed with the SEC pursuant to the Exchange Act.
d. Use of Proceeds. The Company shall use the proceeds from the
sale of the Debentures and Common Shares for internal working capital
purposes, mergers and acquisitions, investments and general corporate
purposes.
e. Financial Information. Upon the written request of any
Purchaser holding any Securities, the Company shall send the following
reports to such Purchaser: a copy of its Annual Report on Form 10-KSB,
its Quarterly Reports on Form 10-QSB, any proxy statements, any Current
Reports on Form 8-K and any press releases issued by the Company or any
of its subsidiaries.
f. Reservation of Shares. The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient number
of shares of Common Stock to provide for the full conversion of the
outstanding Debentures and issuance of the Conversion Shares in
connection therewith and as otherwise required by the Debentures.
g. Listing. Promptly (and in no event more than ten (10) days)
following the Closing Date, the Company shall secure the listing or
approval for quotation of all of the Common Shares and 3,500,000 shares
of Common Stock issuable upon conversion of the Debentures upon each
national securities exchange or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice
of issuance) and thereafter shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all Common Shares
and all Conversion Shares from time to time issuable upon conversion of
the Debentures. The Company shall also file such additional listing
applications as may be necessary to cover the issuance of all of the
Common Shares and the Conversion Shares as provided in the immediately
preceding sentence. The Company will take all action necessary to
continue the listing and trading of its Common Stock on the NASDAQ, the
NASDAQ National Market ("NNM"), the New York Stock Exchange ("NYSE") or
the American Stock Exchange ("AMEX") and will comply in all respects
with the Company's reporting, filing and other obligations under the
bylaws or rules of the National Association of Securities Dealers
("NASD") and such exchanges, as applicable.
h. Corporate Existence. So long as a Purchaser beneficially owns
any Debentures, the Company shall maintain its corporate existence,
except in the event of a merger, consolidation or sale of all or
substantially all of the Company's assets, as long as the surviving or
successor entity in such transaction (i) assumes the Company's
obligations hereunder and under the agreements and instruments entered
into in connection herewith regardless of whether or not the Company
would have had a sufficient number of shares of Common Stock authorized
and available for issuance in order to effect the conversion of all
Debentures outstanding as of the date of such transaction and (ii) is a
publicly traded corporation whose common stock is listed for trading on
the NASDAQ, NNM, NYSE or AMEX.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall instruct its transfer agent to issue certificates,
registered in the name of each Purchaser or its nominee, for the Conversion
Shares in such amounts as specified from time to time by such Purchaser to the
Company upon conversion of the Debentures. Prior to registration of the
Conversion Shares under the Securities Act or resale of such Securities under
Rule 144, all such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company warrants that no instruction other
than such instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof in the case of the Conversion
Shares prior to registration of the Conversion Shares under the Securities Act,
will be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement, the Registration Rights Agreement and
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the Debentures. Nothing in this Section shall affect in any way each Purchaser's
obligations and agreement set forth in Section 2(f) hereof not to resell the
Securities except pursuant to an effective registration statement (and to
deliver a prospectus in connection with such a sale) or in compliance with an
exemption from the registration requirements of applicable securities law. If a
Purchaser provides the Company with an opinion of counsel, which opinion of
counsel shall be in form, substance and scope customary for opinions of counsel
in comparable transactions, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from
registration, the Company shall permit the transfer, and, in the case of the
Conversion Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by a Purchaser.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to a Purchaser by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that a Purchaser shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Debentures
and the Common Shares to a Purchaser at the closing is subject to the
satisfaction, at or before the Closing Date, of each of the following conditions
thereto, provided that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion.
(a) The applicable Purchaser shall have executed the Execution
Page to this Agreement and the Registration Rights Agreement, and
delivered the same to the Company.
(b) The applicable Purchaser shall have delivered the Purchase
Price for the Debentures and the Common Shares purchased in accordance
with Section 1(b) above and the aggregate purchase price for the
Debentures and Common Shares purchased by all Purchasers hereunder shall
not be less than $5,000,000.
(c) The representations and warranties of the applicable
Purchaser shall be true and correct as of the date when made and as of
the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the applicable
Purchaser shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the applicable
Purchaser at or prior to the Closing Date.
(d) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any
of the transactions contemplated by this Agreement.
7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of each Purchaser hereunder to purchase the Debentures
and the Common Shares to be purchased by it on the Closing Date is subject to
the satisfaction of each of the following conditions, provided that these
conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in the Purchaser's sole discretion:
(a) The Company shall have executed the signature page to this
Agreement and the Registration Rights Agreement, and delivered the same
to such Purchaser.
(b) The Company shall have delivered to such Purchaser a duly
executed Debenture in the principal amount being purchased by such
Purchaser in accordance with Section 1(b) above.
(c) The aggregate purchase price for the Debentures and Common
Shares purchased by all Purchasers hereunder shall be $5,000,000.
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(d) The Common Stock shall be authorized for quotation on NASDAQ
and trading in the Common Stock (or NASDAQ generally) shall not have
been suspended by the SEC or NASD.
(e) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing
date. Such Purchaser shall have received a certificate, executed by the
chief executive officer of the Company, dated as of the Closing Date to
the foregoing effect and as to such other matters as may be reasonably
requested by such Purchaser.
(f) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any
of the transactions contemplated by this Agreement.
(g) Such Purchaser shall have received the officer's certificate
described in Section 3(c) above, dated as of the Closing Date.
(h) Such Purchaser shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to the Purchaser and in substantially
the form of Exhibit C attached hereto.
(i) The Company shall have executed, and shall have delivered
evidence reasonably satisfactory to the Purchasers that the Company's
transfer agent has agreed to act in accordance with the irrevocable
instructions in the form attached hereto as Exhibit D; PROVIDED,
HOWEVER, if such evidence is not delivered on or prior to the Closing
Date, the Company shall use its best efforts to deliver such evidence as
soon as practicable thereafter.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in the State of
Delaware. The Company irrevocably consents to the jurisdiction of the
United States federal courts located in the County of Kent in the State
of Delaware in any suit or proceeding based on or arising under this
Agreement and irrevocably agrees that all claims in respect of such suit
or proceeding may be determined in such courts. The Company irrevocably
waives the defense of an inconvenient forum to the maintenance of such
suit or proceeding. The Company further agrees that service of process
upon the Company mailed by first class mail shall be deemed in every
respect effective service of process upon the Company in any suit or
proceeding arising hereunder. Nothing herein shall affect a Purchaser's
right to serve process in any other manner permitted by law. The Company
agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party.
c. Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation
of, this Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company
nor the Purchasers make any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement
may be waived other than by an instrument in writing signed by the party
to be charged with enforcement and no provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and
the Purchasers.
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f. Notices. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered
mail (return receipt requested) or delivered personally or by courier,
overnight delivery service or by confirmed telecopy, and shall be
effective five days after being placed in the mail, if mailed, or upon
receipt or refusal of receipt, if delivered personally or by courier,
overnight delivery service or confirmed telecopy, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company:
Palomar Medical Technologies, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx, Director of Finance
with a copy to each of the Company's General Counsel at the same address
and to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
If to any Purchaser, to such address set forth under such Purchaser's
name on the signature page hereto executed by such Purchaser.
Each party shall provide notice to the other parties of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and
assigns. Neither the Company nor any Purchaser shall assign this
Agreement or any rights or obligations hereunder without the prior
written consent of the other. This provision shall not limit a
Purchaser's right to transfer the Securities pursuant to the terms of
the Debentures, the Registration Rights Agreement and this Agreement or
to assign such Purchaser's rights hereunder to any such transferee, nor
shall this provision limit the right of a Purchaser to transfer or
assign its rights under such agreements and instruments to an affiliate
(provided that each Purchaser makes no more than two (2) such transfers)
or a managed account, provided that the representations and warranties
set forth in Section 2 are true and correct with respect to such
affiliate or managed account.
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof
be enforced by, any other person.
i. Survival. The representations and warranties of the Company
and the agreements and covenants set forth in Sections 3, 4, 5 and 8
shall survive the closing hereunder and any conversion of the
Debentures, notwithstanding any due diligence investigation conducted by
or on behalf of any Purchasers. The Company agrees to indemnify and hold
harmless each Purchaser and each of such Purchaser's officers,
directors, employees, partners, agents and affiliates for loss or damage
arising as a result of or related to any breach or alleged breach by the
Company of any of its representations, warranties or covenants set forth
herein, including advancement of expenses as they are incurred.
j. Publicity. The Company and each Purchaser shall have the
right to approve before issuance any press releases, SEC, NASDAQ or NASD
filings, or any other public statements with respect to the transactions
contemplated hereby; PROVIDED, HOWEVER, that the Company shall be
entitled, without the prior approval of the Purchasers, to describe the
transactions contemplated hereby in any Form 10-Q or Form 10-K filed by
it.
63
k. Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments
and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.
l. Termination. In the event that the closing shall not have
occurred on or before September 30, 1997, unless the parties agree
otherwise, this Agreement shall terminate at the close of business on
such date.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
PURCHASER:
Name: JNC OPPORTUNITY FUND LTD..
OLYMPIA CAPITAL (CAYMAN) LTD.
c/o Olympia Capital (Bermuda) Ltd.
Xxxxxxxx House
00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Fax: 000-000-0000
Attn: Xxxxxx Xxxxx
By:
Name:
Title:
AGGREGATE SUBSCRIPTION AMOUNT
Principal Amount of Debenture: _________
Purchase Price: $________
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
Name:
Title:
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
PURCHASER:
Name: DIVERSIFIED STRATEGIES FUND, L.P.
c/o Encore Capital Management, L.L.C.
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: 000-000-0000
By:
Name:
Title:
AGGREGATE SUBSCRIPTION AMOUNT
Principal Amount of Debenture: _________
Purchase Price: $________
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
Name:
Title:
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
PURCHASER:
Name: SOUTHBROOK INTERNATIONAL INVESTMENTS, LTD.
c/o Trippoak Advisors, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attn: Xxxxxx X. Xxxxxx
By:
Name:
Title:
AGGREGATE SUBSCRIPTION AMOUNT
Principal Amount of Debenture: _________
Purchase Price: $________
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
Name:
Title:
64
