EXHIBIT 4.9
AMENDMENT AND WAIVER OF
CONVERTIBLE NOTE AND WARRANT
PURCHASE AGREEMENT DATED AS OF MAY 13, 1992
This Agreement, dated as of August 1, 1996, is made and entered into
by and between Photoelectron Corporation, a Massachusetts corporation
("Company") and ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇").
The following sets forth the factual background to this Agreement:
A. The parties hereto entered into a certain Convertible Note and
Warrant Purchase Agreement, dated as of May 13, 1992 (the "1992 Agreement"), a
copy of which is attached hereto as Exhibit A, pursuant to which the Company
issued an 8% Subordinated Note Due on Demand to Nomikos in a principal amounts
of up to $4,500,000 (collectively, the "1992 Note").
B. On or about December 31, 1993, Nomikos converted the outstanding
principal balance of the 1992 Note and all interest accrued thereon to Common
Stock. Since that time, Nomikos has advanced the Company an additional
principal amount of $705,000 pursuant to the terms of the 1992 Agreement which
remains outstanding as of the date of this Agreement.
C. The Company is contemplating an Initial Public Offering (as
defined below) and the parties desire to amend certain provisions of the 1992
Agreement to be effective in the event of an Initial Public Offering. The
parties also desire to set forth in writing waivers of Nomikos' rights regarding
the Company's non-compliance with certain provisions of the 1992 Agreement.
D. The parties desire to agree on a form of Amended and Restated Note
to reflect the presently outstanding principal balance loaned by Nomikos to the
Company under the 1992 Agreement.
E. The parties acknowledge that the amendments and waivers set forth
in this Agreement are in the best interests of the Company and of Nomikos as a
stockholder of the Company.
Now, therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. In replacement of any prior Note issued under the 1992 Agreement,
and to accurately reflect the current principal balance outstanding under the
1992 Agreement, the Company agrees to issue to Nomikos, and Nomikos agrees to
accept, the Amended and Restated 8% Subordinated Note in the form attached
hereto as Exhibit B, as a replacement for any and all Notes previously issued
under the 1992 Agreement. The
parties agree that, upon issuance of the replacement Note, any and all Notes
previously issued under the 1992 Agreement shall be deemed cancelled and of no
further force and effect.
2. Effective upon the consummation of an Initial Public Offering (as
defined below), the parties hereto amend the 1992 Agreement as follows:
(a) by deleting the first sentence of Section 2.01(g);
(b) by deleting Section 2.02 entitled Negative Covenants Of The
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Company in its entirety;
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(c) by deleting Section 2.03 entitled Reporting Requirements in its
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entirety; and
(d) by deleting Article IV entitled RIGHT OF FIRST REFUSAL
in its entirety.
3. Nomikos also waives any rights that he may have under the 1992
Agreement arising from the Company's non-compliance with the terms of Article IV
in connection with 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.
4. "Initial Public Offering" means 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.
5. Nomikos hereby waives any and all defaults which may have occurred
under the following provisions of the 1992 Agreement prior to the date hereof:
(i) the obligation to pay interest the Note issued under the 1992
Agreement at the times and place and in the manner provided in the
Note and in the 1992 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) in connection with transactions with ▇▇▇▇▇
▇▇▇▇▇▇▇
("Nomikos"), or affiliates of Nomikos, 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) in
connection with 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; and
(vi) the reporting requirements set forth in Section 2.03.
6. Except as herein waived or amended, the 1992 Agreement is hereby
confirmed in its entirety.
7. This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto, and their successors and assigns, and shall be
governed by, and construed in accordance with, the laws of the Commonwealth of
Massachusetts without regard to its law relating to conflicts of law.
8. 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.
This Agreement is effective as a sealed instrument, except where
specifically stated otherwise, as of the date first set forth above.
PHOTOELECTRON CORPORATION, a
Massachusetts corporation
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President and Chief Operating
Officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PHOTOELECTRON CORPORATION
CONVERTIBLE NOTE AND WARRANT
PURCHASE AGREEMENT
Dated as of May 13, 1992
This Agreement i.e. Nomikos is dated as of the 13th day of May, 1992 by and
between ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual residing in London, England (the
"Purchaser"), and Photoelectron Corporation, a Massachusetts corporation (the
"Company").
ARTICLE I
PURCHASE AND SALE OF THE SECURITIES
1.01 The Securities. The Company has authorized the issuance and sale of
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up to $4,500,000 principal amount of the Company's 8% Convertible Note (the
"Note") and Common Stock Purchase Warrants (the "Warrants") for the purchase of
up to 3,000,000 shares of the Common Stock, $.01 par value per share ("Common
Stock") of the Company. The Note shall be in the principal amount set forth in
the preceding sentence and shall otherwise be substantially in the form set
forth in Exhibit A hereto. The term "Note" shall also include any note or notes
delivered in exchange or replacement for the Note. The Warrants shall be
substantially in the form set forth in Exhibit B hereto. The terms "Warrant" or
"Warrants" shall also include any Warrant or Warrants delivered in exchange or
replacement for the Warrants. Any shares of Common Stock issuable upon exercise
of the Warrants, and such shares when issued, are herein referred to as the
"Warrant Shares."
1.02 The Closing.
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The Company agrees to issue and sell to the Purchaser, and, subject to and
in reliance upon the terms and conditions of this Agreement, the Purchaser
agrees to purchase the principal amount of the Note, at par, set forth in
Section 1.01 at the times set forth below.
Subject to all of the terms and conditions hereof and so long as there
shall exist no Default (as defined herein) on such dates as the Company shall
from time to time request by not fewer than three business days prior telephone
notice to the Purchaser, the Purchaser shall advance the amount of such sum
requested to the Company at its principal office in Waltham, Massachusetts (such
sum advanced from time to time in the aggregate referred to as the "Advances"),
provided that the aggregate principal amount of all Advances outstanding shall
not at any time exceed an amount equal to Four Million Five Hundred Thousand
Dollars ($4,500,000). Upon each advance, the Purchaser shall set forth the
amount and date of the Advance on Schedule A to the Note and shall provide a
copy of the revised Schedule A to the Company. At the time of each Advance, the
Company will also issue a Warrant in the name of the Purchaser providing for the
purchase of Warrant Shares equal to the principal amount of the Advance divided
by the Applicable Conversion Value (as defined herein), in exchange for a
warrant purchase
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price equal to $.10 per Warrant Share issued, payable by the Purchaser within 60
days after the date of the Advance.
1.04 Transfer and Exchange of the Note. The registered holder of the Note
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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
its 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 Notes. Upon receipt of evidence satisfactory to the
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Company of the loss, theft, destruction or mutilation of any 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, his nominees or any of his 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.
1.06 Subordination. The Company, for itself, its successors and assigns,
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covenants and agrees, and the Purchaser and each successor holder of the Note by
his or its 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
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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 his or its agents and attorneys-in-fact to
demand, ▇▇▇ 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
(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.
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(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 Notes.
(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, 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,
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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 Representations by the Purchaser. The Purchaser represents that it is
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his present intention to acquire the Note and Warrants for his own account and
that the Notes and Warrants are 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 and Warrants shall constitute a
confirmation by him of this representation.
ARTICLE II
COVENANTS OF THE COMPANY
2.01 Affirmative Covenants of the Company Other Than Reporting
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Requirements. Without limiting any other covenants and provisions hereof, the
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Company covenants and agrees that, so long as any of the Notes are 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.
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(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 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
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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
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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
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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 Notes 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 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
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(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
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the provisions of this Article III, at the option of the holder, all or any part
of the principal amount outstanding on any Note issued pursuant to this
Agreement 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 any Note issued
pursuant to this Agreement 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 of all or any part of the
principal amount of any 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
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price at which the outstanding principal of any Note issued under this Agreement
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 two
dollars ($2.00). (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
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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 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
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Principal Conversion Value. Except for the issuance of up to 120,000 shares of
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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 are any
Notes 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.
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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 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,
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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 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
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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 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 each holder of a 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 its 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, each holder of a 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
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have been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such holder had so converted its 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 holders 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.
(c) Continuation of Terms: Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3.08, each 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 any 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.
-14-
3.11 Exercise of Conversion Privilege. (a) Principal: To exercise its
---------------------------------
principal conversion privilege, a holder of a 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 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 a
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
its interest conversion privilege, a holder of a 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 any 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).
-15-
3.13. Partial Conversion. In the event some but not all of the principal
------------------
amount represented by a 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 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.
-16-
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 of the Offered Securities so that the aggregate number of
shares of Common Stock and Warrant 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
-17-
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 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.
-18-
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
(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
-19-
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
(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 the 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
-20-
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.
"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
MISCELLANEOUS
7.01 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.
-21-
7.02 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.
7.03 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
▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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
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.
7.04 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 7.02 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.
-22-
7.05 Prior Agreements. This Agreement constitutes the entire agreement
-----------------
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.
7.06 Severability. The invalidity or unenforceability of any provision
-------------
hereof shall in no way affect the validity or enforceability of any other
provision.
7.07 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.
7.08 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.
7.09 Sealed Instrument. This Agreement is deemed to be executed as an
-----------------
instrument under seal.
7.10 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.
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- -------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and
Chief Operating Officer
-23-
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% Convertible Note Due On Demand
No. Waltham, Massachusetts
May 13, 1992
For value received, PHOTOELECTRON CORPORATION, a Massachusetts corporation
(the "Company"), hereby promises to pay to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (hereinafter
referred to as the "Payee"), or registered assigns, on demand, as described
below, the principal sum of up to Four Million Five Hundred Five Thousand
Dollars ($4,500,000.00) in consideration of advances made by the Payee under the
Convertible Note and Warrant Purchase Agreement hereinafter referred to, or such
part thereof as then remains unpaid. The dates and amounts of the advances are
reflected in Schedule A to this Note. The Company further agrees
----------
to pay interest from the date of each such advance 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%). The outstanding
----
principal amount and all accrued but unpaid interest shall be repaid on demand.
Subject to the holder's option (referenced below) to convert all or part of the
outstanding principal balance, and all accrued but unpaid interest, to Common
Stock, 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 and Warrant Purchase Agreement dated as of
May 13, 1992, between the Company and the Payee (as the same may be amended from
time to
time, the "1992 Agreement"), and each holder of this Note, by his or its
acceptance hereof, agrees to be bound by the provisions of the 1992 Agreement, a
copy of which may be inspected by the legal holder hereof at the principal
office of the Company. As provided in the 1992 Agreement, (i) this Note is
subject to prepayment as specified in the 1992 Agreement, (ii) the principal of
and interest on this Note is subordinated to Senior Debt, as defined in the 1992
Agreement, and (iii) all or any portion of the outstanding principal balance
under the Note, and all then accrued but unpaid interest on such principal
balance, is convertible into Common Stock of the Company in the manner set forth
in the 1992 Agreement.
As further provided in the 1992 Agreement, upon surrender of this Note for
transfer or exchange, a new Note or new Notes 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.
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:
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President and Chief Operating Officer
Attest:
--------------------------------
-2-
Schedule A
----------
Date of Advance Amount of Advance Interest Conversion Date
--------------- ----------------- -------- ---------------
-3-
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or registered or qualified under any state
securities laws, and such securities may not be sold, transferred or otherwise
disposed of in the absence of an effective registration statement under such Act
and registration and qualification under all applicable state securities laws or
pursuant to exemptions therefrom.
Photoelectron Corporation
▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
STOCK PURCHASE WARRANT
Date of Issuance: Right to Purchase
Shares of Common Stock
(subject to adjustment)
Warrant #
For value received, Photoelectron Corporation, a Massachusetts corporation
(the "Company"), hereby grants to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or his registered
assigns (the "Registered Holder"), the right to purchase from the Company
shares of the Company's Common Stock (subject to adjustment pursuant to Section
4 hereof) at a price of $1.50 per share (as adjusted pursuant to Section 3
hereof, the "Exercise Price"). The amount and kind of securities purchasable
pursuant to the rights granted under this Warrant and the purchase price for
such securities are subject to adjustment pursuant to the provisions contained
in this Warrant.
This Warrant is subject to the following provisions:
1. Definitions. As used in this Warrant, the following terms have the
------------
meanings set forth below:
"Common Stock" means the Company's Common Stock, $.01 par value per
------------
share.
"Date of Issuance" shall have the meaning specified in Section 10 of
----------------
this Warrant.
"Market Price" is defined as the average of the daily closing prices
------------
for the 20 consecutive trading days, immediately preceding the date of
computation. The closing price for each day shall be (i) if the shares of Common
Stock are listed or admitted to trading on a principal national securities
exchange or the National Market System of NASDAQ, the last
2
principal national securities exchange or the National Market System of NASDAQ,
the last reported sales price on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or on the
National Market System of NASDAQ or (ii) if the shares of Common Stock are not
listed or admitted to trading on any such exchange, the average of the highest
bid and lower asked prices, as reported on the Automated Quotation System of the
National Quotations Bureau, Incorporated or an equivalent, generally accepted
reporting service. If at any time such security is not listed on any domestic
securities exchange or quoted in the NASDAQ System or the domestic over-the-
counter market, the "Market Price" will be the fair value thereof determined by
the Board of Directors in good faith.
"NASDAQ System" means the NASDAQ Inter-Dealer Quotation System
-------------
or such other similar inter-dealer quotation system as may in the future be used
generally by members of the National Association of Securities Dealers, Inc. for
the over-the-counter transactions in securities.
"Person" means an individual, a partnership, a corporation, a
--------
trust, a joint venture, an unincorporated organization and a government or any
department or agency thereof.
"Warrant" or "Warrants" means the Warrant and all stock purchase
--------- ----------
warrants issued in exchange therefor pursuant to the terms thereof.
"Warrant Stock" means shares of the Company's authorized but
---------------
unissued Common Stock; provided that if there is a change such that the
securities issuable upon exercise of the Warrant are issued by an entity other
than the Company or there is a change in the class of securities so issuable,
then the term "Warrant Stock" will mean one share of the security issuable upon
exercise of the Warrant if such security is issuable in shares, or will mean the
smallest unit in which such security is issuable if such security is not
issuable in shares.
2. Exercise of Warrant.
--------------------
2.1 Exercise Period. The Registered Holder may exercise this
----------------
Warrant, in whole or in part (but not as to a fractional share of Warrant
Stock), at any time and from time to time prior to the seventh anniversary of
the Date of Issuance of the Warrant ("Exercise Period").
2.2 Exercise Procedure.
-------------------
(a) This Warrant will be deemed to have been exercised
at such time as the Company has received all of the following items (the
"Exercise Date"):
(i) a completed Exercise Agreement, as
described below, executed by the Person exercising all or part
of the purchase right represented by this Warrant (the
"Purchaser");
(ii) this Warrant;
3
(iii) if this Warrant is not registered in the name of
the Purchaser, an Assignment or Assignments in the form set forth in
Exhibit II hereto, evidencing the assignment of this Warrant to the
Purchaser; and
(iv) a check payable to the Company in an amount
equal to the product of the Exercise Price multiplied by the number of
shares of Warrant Stock being purchased upon such exercise.
(b) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant will be delivered by the Company to the Purchaser
within ten days after the Exercise Date. Unless this Warrant has expired or all
of the purchase rights represented hereby have been exercised, the Company will
prepare a new Warrant, substantially identical hereto, representing the rights
formerly represented by this Warrant which have not expired or been exercised.
The Company will, within such ten-day period, deliver such new Warrant to the
Person designated for delivery in the Exercise Agreement.
(c) The Warrant Stock issuable upon the exercise of this
Warrant will be deemed to have been issued to the Purchaser on the Exercise
Date, and the Purchaser will be deemed for all purposes to have been the record
holder of such Warrant Stock on the Exercise Date.
(d) The issuance of certificates for shares of Warrant Stock
upon exercise of this Warrant will be made without charge to the Registered
Holder or the Purchaser for any issuance tax in respect thereof or any other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Warrant Stock. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer, in
whole or in part, of this Warrant (including the issuance of new Warrants in
connection therewith or the delivery of stock certificates in a name other than
that of the Registered Holder of this Warrant presented for exercise, and any
such tax shall be paid by such Registered Holder at the time of presentation.
(e) The Company will not close its books for the transfer of
this Warrant or of any share of Warrant Stock issued or issuable upon the
exercise on this Warrant in any manner which interferes with the timely exercise
of this Warrant.
2.3 Exercise Agreement. The Exercise Agreement will be substantially
-------------------
in the form set forth in Exhibit I hereto, except that if the shares of Warrant
Stock are not to be issued in the name of the Registered Holder of this Warrant,
the Exercise Agreement will also state the name of the Person to whom the
certificates for the shares of Warrant Stock are to be issued, and if the number
of shares of Warrant Stock to be issued does not include all the shares of
Warrant Stock purchasable hereunder, it will also state the name of the Person
to whom a new Warrant for the unexercised portion of the rights hereunder is to
be delivered.
2.4 Fractional Shares. If a fractional share of Warrant Stock would,
------------------
but for the provisions of Subsection 2.1, be issuable upon exercise of the
rights represented by this
4
Warrant, the Company will, within ten days after the Exercise Date, deliver to
the Purchaser a check payable to the Purchaser in lieu of such fractional share,
in an amount equal to the Market Price of such fractional share as of the close
of business on the Exercise Date.
3. Exercise Price
--------------
3.1 General. The initial Exercise Price will be $1.50. In order to
-------
prevent dilution of the rights granted under this Warrant, the Exercise Price
will be subject to adjustment from time to time pursuant to this Section 3.
3.2 Subdivision or Combination of Common Stock and Stock Dividends. In
--------------------------------------------------------------
case the Company shall at any time after the date hereof (a) issue any shares of
Common Stock as a dividend upon Common Stock, or (b) issue any shares of Common
Stock by reclassification or otherwise, or (c) combine outstanding shares of
Common Stock, by reclassification or otherwise, the Exercise Price which would
apply if purchase rights hereunder were being exercised immediately prior to
such action by the Company shall be adjusted by multiplying it by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such dividend, subdivision or combination and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such dividend, subdivision or combination.
3.3 Certain Dividends. In case the Company shall declare a dividend
-----------------
upon the Common Stock payable otherwise than out of earnings or retained
earnings and otherwise than in Common Stock, the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
declaration of such dividend by a fraction, the numerator of which shall be the
current Market Price per share of Common Stock, on such date, less the fair
market value, as determined by the Board of Directors of the Company, whose
determination shall be conclusive, of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights, options or
warrants applicable to one share of Common Stock, and of which the denominator
shall be such current Market Price per share of Common Stock. For the purposes
of the foregoing, a dividend other than in cash shall be considered payable out
of earnings or retained earnings only to the extent that such earnings or
retained earnings are charged an amount equal to the value of such dividend as
determined by the Board of Directors of the Company. Such reductions shall take
effect as of the date on which a record is taken for the purpose of such
dividend, or, if a record is not taken, the date as of which the holders of
Common Stock or record entitled to such dividend are to be determined.
3.4 No Adjustment. No adjustment of the Exercise Price shall be made
-------------
if the amount of such adjustment shall be less than one cent per share, but in
such case any adjustment that would otherwise be required then to be made shall
be carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to not less than one cent per share.
4. Adjustment of Number of Shares Issuable upon Exercise. In the event of
-----------------------------------------------------
a stock dividend, stock split, combination or other event described in Section
3.2 and 3.3 hereof, the
5
Registered Holder of this Warrant shall thereafter (until another such
adjustment) be entitled to purchase the number of shares of Warrant Stock,
calculated to the nearest full share, determined by (a) multiplying the number
of shares of Warrant Stock purchasable hereunder immediately prior to the
adjustment of the Exercise Price by the Exercise Price in effect immediately
prior to such adjustment, and (b) dividing the product so obtained by the
adjusted Exercise Price in effect immediately after such adjustment.
5. Effect of Reorganization, Reclassification, Consolidation, Merger
-----------------------------------------------------------------
or Sale. If at any time while this Warrant is outstanding there shall be any
--------
reorganization or reclassification of the capital stock of the Company (other
than a subdivision or combination of shares provided for in Subsection 3.3
hereof) or any consolidation or merger of the Company with another corporation
(other than a consolidation or merger in which the Company is the surviving
entity and which does not result in any change in the Common Stock), or any sale
or other disposition by the Company of all or substantially all of its assets to
any other corporation, the holder of this Warrant shall thereafter upon exercise
of this Warrant be entitled to receive the number of shares of stock or other
securities or property of the Company, or of the successor corporation resulting
from such consolidation or merger, as the case may be, to which the Warrant
Common Stock (and any other securities and property) of the Company, deliverable
upon the exercise of this Warrant, would have been entitled upon such
reorganization, reclassification of capital stock, consolidation, merger, sale
or other disposition if this Warrant had been exercised immediately prior to
such reorganization, reclassification of capital stock, consolidation, merger,
sale or other disposition. In any such case, appropriate adjustment (as
determined by the Board of Directors of the Company) shall be made in the
application of the provisions set forth in this Warrant with respect to the
rights and interests thereafter of the holder of this Warrant to the end that
the provisions set forth in this Warrant (including those relating to
adjustments of the Exercise Price and the number of shares issuable upon the
exercise of this Warrant) shall thereafter be applicable, as near as reasonably
may be, in relation to any shares or other property thereafter deliverable upon
the exercise hereof as if this Warrant had been exercised immediately prior to
such reorganization, reclassification of capital stock, consolidation, merger,
sale or other disposition and the holder hereof had carried out the terms of the
exchange as provided for by such reorganization, reclassification of capital
stock, consolidation or merger. Notwithstanding any other provisions of this
Warrant, in the event of sale or other disposition of all or substantially all
of the assets of the Company as a part of a plan for liquidation of the Company,
all rights to exercise the Warrant shall terminate 30 days after the Company
gives written notice to the Registered Holder of this Warrant that such sale or
other disposition has been consummated.
6. Notice of Adjustments. Immediately upon any adjustment of the
----------------------
Exercise Price or increase or decrease in the number of shares of Common Stock
purchasable upon exercise of this Warrant, the Company will send written notice
thereof to all Registered Holders, stating the adjusted Exercise Price and the
increased or decreased number of shares purchasable upon exercise of this
Warrant and setting forth in reasonable detail the method of calculation for
such adjustment or decrease.
6
7. Reservation of Common Stock. The company will at all times
---------------------------
reserve and keep available for issuance upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants, and upon
such issuance such shares of Common Stock will be validly issued, fully paid and
nonassessable.
8. No Voting Rights; Limitations of Liability. This Warrant will
------------------------------------------
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the Registered Holder to purchase Warrant Stock, and no
enumeration in this Warrant of the rights or privileges of the Registered
Holder, will give rise to any liability of such Holder for the Exercise Price of
Warrant Stock acquirable by exercise hereof or as a stockholder of the Company.
9. Warrant Transferable.
--------------------
(a) Subject to the transfer conditions referred to in paragraph
(b), below, this Warrant and all rights hereunder are transferable, in whole or
in part, without charge to the Registered Holder, upon surrender of this Warrant
with a properly executed Assignment (in the form of Exhibit II hereto) at the
principal office of the Company.
(b) Each Registered Holder of this Warrant acknowledges that
this Warrant has not been registered under the Securities Act of 1933, as
amended (the "Act"), and agrees not to sell, pledge, distribute, offer for sale,
transfer of otherwise dispose of this Warrant or any Warrant Stock issued upon
its exercise in the absence of (i) an effective registration statement as to
this Warrant or such Warrant Stock under the Act (or any similar statute then in
effect), or (ii), an opinion of counsel for the company to the effect that such
registration is not, under the circumstances, required.
10. Warrant Exchangeable for Different Denominations. This Warrant
------------------------------------------------
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants will
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant will be deemed to be the "Date of Issuance" of this Warrant regardless
of the number of times new certificates representing the unexpired and
unexercised rights formerly represented by this Warrant are issued.
11. Representations, Warranties and Covenants of the Registered
-----------------------------------------------------------
Holder. (a) The Registered Holder represents and warrants to, and covenants
------
with, the Company that: (i) the Registered Holder, taking into account the
personnel and resources it can practically bring to bear on the purchase of the
Warrant, is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in shares presenting an
investment decision like that involved in the purchase of the Warrant, including
investments in securities issued by the Company, and has requested, received
reviewed and considered all information it deems relevant in making an informed
decision to purchase the Warrant; (ii) the Registered
7
Holder is acquiring the Warrant for investment and with no present intention of
distributing the Warrant (this representation and warranty not limiting the
Registered Holder's right to transfer all or any part of the Warrant pursuant to
Section 9); and (iii) the Registered Holder will not, directly or indirectly,
voluntarily offer, sell, pledge, purchase or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) the
Warrant except in compliance with the Securities Act, and the rules and
regulations promulgated thereunder, or an exception thereto.
(b) The Registered Holder further represents and warrants to, and
covenants with, the Company that (i) the Registered Holder has full right,
power, authority and capacity to enter into this Warrant and to consummate the
transactions contemplated hereby, and (ii) upon the execution and delivery of
this Warrant (for the limited purpose of this Section 11), this Warrant shall
constitute a valid and binding obligation to the Registered Holder enforceable
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
12. Miscellaneous.
-------------
12.1 Amendment and Waiver. The provisions of the Warrants
--------------------
may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the Registered Holders of Warrants representing
at least 50% of the shares of Warrant Stock obtainable upon the exercise of the
Warrants outstanding at the time of such consent.
12.2 Notices. Any notices required to be sent to a
-------
Registered Holder will be delivered to the address of such Registered Holder
shown on the books of the Company. All notices referred to herein will be
delivered in person or sent by first class mail, postage prepaid, and will be
deemed to have been given when so delivered or sent.
12.3 Descriptive Headings; Governing Law. The descriptive
-----------------------------------
headings of the paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. The construction, validity and
interpretation of this Warrant will be governed by the laws of the Commonwealth
of Massachusetts.
8
IN WITNESS WHEREOF, the Company and the Registered Holder (for the
limited purpose of Section 11 hereof) have caused this Warrant to be signed and
attested by their duly authorized officers, and in the case of the Company,
under its corporate seal.
PHOTOELECTRON CORPORATION
By:
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President and Chief
Operating Officer
[CORPORATE SEAL]
Attest:
-----------------------------
Clerk
Accepted and agreed to by the Registered
Holder for the limited purpose of Section 11
hereof:
By:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
10
EXHIBIT II
----------
ASSIGNMENT
----------
FOR VALUE RECEIVED, hereby sells, assigns and transfers all of
--------------
the rights of the undersigned under the within Warrant with respect to the
number of shares of the Warrant Stock covered thereby set forth below, unto:
Names of Assignees Address No. of Shares
Date: Signature
----------------------------- -------------------------------
----------------------------------------
Witness
---------------------------------
This Assignment must be completed and sent to:
Photoelectron Corporation
▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Controller
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
Amended and Restated
8% Subordinated Convertible Note Due on Demand
No. R1-1992-1 Lexington, Massachusetts
As of August 1, 1996
For value received, PHOTOELECTRON CORPORATION, a Massachusetts
corporation (the "Company"), hereby promises to pay to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(hereinafter referred to as the "Payee"), or registered assigns, on demand, as
described below, the principal sum of Seven Hundred Five Thousand Dollars
($705,000.00) in consideration of advances made by the Payee under the
Convertible Note and Warrant Purchase Agreement hereinafter referred to, or such
part thereof as then remains unpaid. The dates and amounts of the advances are
reflected in Schedule A to this Note. The Company further agrees to pay
----------
interest from the date of each such advance 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%). The outstanding
----
principal amount and all accrued but unpaid interest shall be repaid on demand.
Subject to the holder's option (referenced below) to convert all or part of the
outstanding principal balance, and all accrued but unpaid interest, to Common
Stock, 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 Convertible Note and Purchase Agreement dated as of May 13, 1992,
between the Company and Payee identified therein (as the same may be amended
from time to time, the "1992 Agreement"), and each holder of this Note, by its
acceptance hereof, agrees to be bound by the provisions of the 1992 Agreement, a
copy of which may be inspected by
the legal holder hereof at the principal office of the Company. As provided in
the 1992 Agreement, (i) this Note is subject to prepayment as specified in the
1992 Agreement, (ii) the principal of and interest on this Note is subordinated
to Senior Debt, as defined in the 1992 Agreement, and (iii) all or any 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 1992 Agreement.
As further provided in the 1992 Agreement, upon surrender of this Note
for transfer or exchange, a new Note or new Notes 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 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:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President and Chief Operating
Officer
Attest:
-------------------------
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Schedule A
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Date of Advance Amount
--------------- ------
January 18, 1994 $ 90,000
January 28, 1994 90,000
February 15, 1994 90,000
February 24, 1994 75,000
February 26, 1994 90,000
March 21, 1994 90,000
March 30, 1994 90,000
April 11, 1994 90,000
Total $705,000
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