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 January 13, 2002 (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
------------------- --------------------- ---------
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(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 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. 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 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 Debentures during the (30) thirty days following the Notice from
the Holder. If such conversion price on the date of conversion would be 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 ,1997.
(Printed Name)
(Signature)
(Mailing Address)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE DAY OF
, 1997.
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
Printed Name/Title:
