FORM OF SUBSCRIPTION AGREEMENT
This agreement (the "Agreement"), dated October 16, 1996, is between
---------------------------- (the "Subscriber") and Palomar Medical
Technologies, Inc., a Delaware corporation (the "Company"). Capitalized terms
used and not otherwise defined herein have the meanings ascribed to them it the
Notes, as defined in Section 1.
In consideration of the mutual premises contained herein, the parties
hereto agree as follows:
1. Subscription. (a) The Subscriber hereby subscribes to purchase from the
Company a $2,500,000 4.5% Convertible Subordinated Promissory Note in the form
attached hereto (the "Note") for a price of $2,500,000. In addition, if mutually
agreed by the parties, within 40 days from the date hereof, the Subscriber may
purchase an additional $2,500,000 4.5% Convertible Subordinated Promissory Note
(the "Additional Note") in the same form as the Note for a price of $2,500,000.
(b) The Subscriber shall make payments by wire transfer to BlueStone
Capital Partners, L.P., ("BlueStone") as agent for Palomar Medical
Technologies, Inc., at The Chase Manhattan Bank, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, X.X. ABA Number 000000000, Account Number 127078377865, reference:
Palomar Medical Technologies, Inc. BlueStone shall promptly remit such
funds, minus its fees and expenses, to the Company following its delivery
of a countersigned subscription agreement and executed Note to Subscriber.
2. Subscriber's Representations and Warranties. The Subscriber hereby
represents and warrants to, and covenants with, the Company as follows:
(a) The Subscriber is an "Accredited Investor" as that term is defined
in Section 2(15) of the Securities Act of 1933 (the "Act"), and Rule 501 of
Regulation D promulgated thereunder. Specifically, the Subscriber is (CHECK
APPROPRIATE ITEMS):
(i) A bank defined in Section 3(a)(2) of the Act, or a savings
and loan association or other institution as defined in Section
3(a)(5)(A) of the Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; an insurance company as defined in
Section 2(13) of the Act; an investment company registered under the
Investment Company Act of 1940 (the "Investment Company Act") or a
business development company as defined in Section 2(a)(48) of the
Investment Company Act; a Small Business Investment Company licensed
by the U.S. Small Business Administration under Section 301(3) or (d)
of the Small Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions or any agency or
instrumentality of a state or its political subdivisions for the
benefit of its employees, if such plan has total assets greater than
$5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 ("ERISA"), if the
investment decision is made by a plan fiduciary, as defined in Section
3(21) of ERISA, which is either a bank, savings and loan association,
insurance company, or a registered investment advisor, or if the
employee benefit plan has total assets greater than $5,000,000 or, if
a self-directed plan, with investment decisions made solely by persons
that are accredited investors.
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(ii) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(iii) An organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets greater than
5,000,000.
(iv) A natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his or her purchase
exceeds $1,000,000.
(v) A natural person who had an individual income greater than
$200,000 in each of the two most recent years or joint income with
that person's spouse greater than $300,0000 in each of those years and
has a reasonable expectation of reaching the same income level in the
current year.
(vi) A trust, with total assets greater than $5,000,000 not
formed for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) (i.e., a person who has such knowledge and
experience in financial and business matters that he is capable of
evaluating the merits and risks of the prospective investment.)
(vii) An entity in which all of the equity owners are accredited
investors. (If this alternative is checked, the Subscriber must
identify each equity owner and provide statements signed by each
demonstrating how each is qualified as an accredited investor.)
(b) The Subscriber has received all materials which have been
requested by the Subscriber, has had a reasonable opportunity to ask
questions of the Company and its representatives and the Company has
answered all inquiries that the Subscriber has put to it with respect to
the Company, its business, plans and financial condition.
(c) The Subscriber has such knowledge and experience in finance,
securities, investments and other business matters so as to be able to
protect the interests of the Subscriber concerning this transaction, and
the Subscriber's investment in the Company hereunder is not material when
compared to the Subscriber's total financial capacity.
(d) The Subscriber understands the various risks of an investment in
the Company as proposed herein and can afford to bear such risks,
including, without limitation, the risks of losing its entire investment.
(e) The Subscriber is acquiring the Notes for the Subscriber's own
account for investment and not with a view to the sale or distribution
thereof or the granting of any participation therein, and has no present
intention of distributing or selling to others any of such interest or
granting participations therein.
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(f) The Subscriber understands that the Notes and the Shares issuable
upon conversion thereof have not been registered under the Act or any state
securities laws, and have been, and may be, with respect to the Shares,
issued in reliance upon Section 4(2) of the Act;
(g) The Subscriber was not formed principally for the purpose of
acquiring the Notes or other securities not registered under the Act;
(h) The Subscriber is not subscribing for the Notes as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented any seminar or meeting, or any
solicitation of a subscription by a person other than BlueStone;
(i) The Subscriber is not relying on the Company with respect to the
tax and other economic consideration of an investment in the Notes, and the
Subscriber has relied on the advice of or consulted with, only its own
advisers;
(j) The Subscriber understands that, except as set forth in the Note,
the Company is under no obligations to register the Shares under the Act;
(k) The Subscriber acknowledges that the representations, warranties
and agreements made by the Subscriber herein shall survive the execution
and delivery of this Subscription Agreement and the purchase of the Note,
and that the Company is relying upon such representations, warranties and
agreements in determining whether an exemption from the registration
requirements of the Act is available for this transaction.
3. Representations and Warranties of the Company. (a) The representations
and warranties made by the Company and contained in the Note are hereby
incorporated herein by reference. No statement made in this Subscription
Agreement contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
made therein not misleading in light of the circumstances under which they were
made.
(b) The proceeds from the Notes shall be used by the Company to fund
potential acquisitions, expand the Company's sales and marketing efforts,
support increases in the Company's levels or inventory and receivables, and
for general corporate purposes.
(c) The Company has registered its Common Stock pursuant to Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the Common Stock is listed and trades on The Nasdaq Small-Cap Stock Market.
The Company has timely filed all material required to be filed pursuant to
all reporting obligations under either Section 13(a) or 15(d) of the
Exchange Act for a period of at least twelve (12) months immediately
preceding the offer or sale of the Note.
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(d) This Agreement has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding agreement
enforceable against the Company in accordance with its terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally.
(e) There is no fact known to the Company (other than general economic
conditions known to the public generally) that has not been disclosed in
writing to the Subscriber that (x) could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise) or in the
earnings, business affairs, business prospects, properties or assets of the
Company or (y) could reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations pursuant to
this Agreement.
4. Closing. The closing with respect to the Note shall be held as promptly
as possible after delivery of this Subscription Agreement and payment for the
Note as provided in Section 1(b). The closing, if any, with respect to the
Additional Note shall be held as promptly as possible following agreement of the
parties pursuant to Section 1(a) hereof, delivery of a certificate of Subscriber
confirming its representations and warranties made herein and payment for the
Additional Note as provided in Section 1(b). At any closing with respect to the
Notes, the Company shall (a) issue to the Subscriber the Note or the Additional
Notes, as the case may be, dated the closing date, (b) deliver to the Subscriber
a fully executed copy of this Subscription Agreement, (c) deliver to the
Subscriber a certificate, signed by two officers of the Company, as to the
accuracy of the Company's representations in Section 3(b); and (d) deliver to
the Subscriber an opinion of Company counsel substantially in the form attached
hereto.
5. Covenants of the Company. For so long as the Note held by the Subscriber
remains outstanding, the Company covenants and agrees with the Subscriber that:
(a) The Company will take all necessary action to cause the Common
Stock issuable upon conversion of the Note to be duly approved for listing
on The Nasdaq Stock Market on or before the 75th day from the date hereof;
and
(b) It will use its best efforts to maintain the listing of its Common
Stock, including Common Stock issuable upon conversion of the Note on The
Nasdaq Stock Market, for a seventy two (72) month period commencing on or
before the 75th day from the date hereof.
6. Transferability. Neither this Subscription Agreement, nor any interest
of the Subscriber herein, shall be assignable or transferable by the Subscriber
in whole or in part, except by operation of law.
7. Miscellaneous. (a) Except as otherwise specifically provided herein, any
notice or other communication required or permitted to be given hereunder shall
be in writing and shall be mailed by certified mail, return receipt requested,
or by Federal Express, Express Mail or similar overnight delivery or courier
service or delivered (in person or by telecopy, telex or similar
telecommunications equipment) against receipt to the party to whom it is to be
given (i) if to the Company, at the address set forth on the first page hereof,
(ii) if to the Subscriber, at the address set forth on the signature page
hereof, or (iii) in either case, to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 6(a). Any
notice or other communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a party address
which shall be deemed given at the time of receipt thereof. Any notice given by
other means permitted by this Section 6(a) shall be deemed given at the time of
receipt thereof. Copies of all notices shall be sent simultaneously as follows:
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if to the Company, to:
Xxxxx Xxxxxxxx, Esq.
Xxxxx Xxxx & Xxxxx, LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
if to the Holder, to:
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(b) This Subscription Agreement shall be binding upon and inure to the
benefit of the parties hereto, the successors and assigns of the Company,
and the permitted successors, assigns, heirs and personal representatives
of the Subscriber (including permitted transferees of the Securities).
(c) The headings in this Subscription Agreement are solely for
convenience of reference and shall be given no effect in the construction
or interpretation of this Subscription Agreement.
(d) This Subscription Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without
regard to its principles of conflicts of law.
(e) The parties hereto irrevocably consent to the jurisdiction of the
courts of the Commonwealth of Massachusetts and of any Federal court
located in such state in connection with any action or proceeding arising
out of or relating to this Subscription Agreement, any document or
instrument delivered pursuant to, in connection with or simultaneously with
this Subscription Agreement, or a breach of this Subscription Agreement or
any such document or instrument. In any such action or proceeding, each
party hereto waives personal service of any summons, complaint or other
process and agrees that service thereof may be made in accordance with
Section 6(a). Within 30 days after such service, or such other time as may
be mutually agreed upon in writing by the attorneys for the parties to such
action or proceeding, the party so served shall appear or answer such
summons, complaint or other process. Should the party so served fail to
appear or answer within such 30-day period or such extended period, as the
case may be, such party shall be deemed in default and judgment may be
entered against such party for the amount as demanded in any summons,
complaint or other process so served.
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(f) This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year this subscription has been accepted by the Company as set
forth below.
By:
Accepted by:
PALOMAR MEDICAL TECHNOLOGIES, INC.
BY:
Name: Xxxxxx Xxxxxxxx
Title: Chairman of the Board
Date: October __, 1996
Agreed as to Section 1(b) only:
BLUESTONE CAPITAL PARTNERS, LP
By: BlueStone Management Company, Inc.
By:
Name: Xxxxx X. Xxxxx
Title: President
Date: October __, 1996
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