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Exhibit 10.a
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
PLC SYSTEMS INC.
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April 23, 1998
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CONVERTIBLE DEBENTURE PURCHASE AGREEMENT, dated as of April 23, 1998
(this "AGREEMENT"), among PLC Systems Inc., a corporation organized and existing
under the laws of British Columbia, Canada (the "COMPANY"), Southbrook
International Investments, Ltd., a British Virgin Islands corporation
("SOUTHBROOK"), Xxxxx Xxxxxxx Strategic Growth Fund, L.P., a New York limited
partnership ("XXXXX XXXXXXX X.X."), and Xxxxx Xxxxxxx Strategic Growth Fund,
Ltd., a Cayman Islands exempt company ("XXXXX XXXXXXX LIMITED"). Southbrook,
Xxxxx Xxxxxxx Limited and Xxxxx Xxxxxxx XX are each sometimes referred to herein
as a "PURCHASER" and collectively as the "PURCHASERS."
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers and the
Purchasers desire, severally and not jointly, to purchase up to an aggregate
principal amount of $10,000,000 of the Company's to be created Convertible
Debentures, due April 23, 2003 (the "CONVERTIBLE DEBENTURES"), which are
convertible into shares of the Company's common stock, no par value (the "COMMON
STOCK").
IN CONSIDERATION of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF CONVERTIBLE DEBENTURES
1.1 PURCHASE AND SALE, Subject to the terms and conditions set forth
herein, the Company shall issue and sell to the Purchasers and the Purchasers
shall, severally and not jointly, purchase an aggregate principal amount of up
to $10,000,000 of Convertible Debentures, at the closings described below. All
references herein to "dollars" or "$" shall be to U.S. dollars (U.S.$) unless
otherwise specified.
1.2 THE CLOSINGS (a) THE TRANCHE CLOSINGS. (i) Subject to the terms and
conditions set forth in this Agreement, the Company shall issue and sell to the
Purchasers and the Purchasers shall, severally and not jointly, purchase an
aggregate principal amount of $5,000,000 of Convertible Debentures (the"TRANCHE
1 DEBENTURES") for an aggregate purchase price of $5,000,000, each Purchaser
being obligated to pay a purchase price equal to the principal amount of
Tranche 1 Debentures to be issued and sold to it at the Tranche 1 Closing
(as defined below). The closing of the purchase and sale of the Tranche 1
Debentures (the "TRANCHE 1 CLOSING") shall take place at the offices of
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP ("XXXXXXXX XXXXXXXXX"),
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, immediately following
the execution hereof or such later date as the parties shall agree. The date of
the Tranche 1 Closing
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is hereinafter referred to as the "TRANCHE 1 CLOSING DATE."
(ii) At the Tranche 1 Closing, (a) the Company
shall deliver (A) to Southbrook (1) $4,000,000 aggregate principal amount of
Tranche 1 Debentures and the Southbrook Tranche 1 Warrant (as defined in Section
3.17), each registered in the name of Southbrook, (2) the legal opinions of
Mintz, Levin, Cohen, Ferris, Glovsky and Popeo, P.C. and DuMoulin, Black,
substantially in the forms attached hereto as EXHIBIT E-1 and EXHIBIT E-2,
respectively (the "TRANCHE 1 OPINIONS"), and (3) all other documents,
instruments and writings required to have been delivered at or prior to the
Tranche 1 Closing by the Company to Southbrook pursuant to this Agreement; (B)
to Xxxxx Xxxxxxx Limited (1) $750,000 aggregate principal amount of Tranche 1
Debentures and the Tranche 1 Xxxxx Xxxxxxx Limited Warrant, each registered in
the name of Xxxxx Xxxxxxx Limited, (2) a Tranche 1 Opinion, and (3) all other
documents, instruments and writings required to have been delivered at or prior
to the Tranche 1 Closing by the Company to Xxxxx Xxxxxxx Limited pursuant to
this Agreement; and (C) to Xxxxx Xxxxxxx X.X. (1) $250,000 aggregate principal
amount of Tranche 1 Debentures and the Tranche 1 Xxxxx Xxxxxxx X.X. Warrant,
each registered in the name of Xxxxx Xxxxxxx X.X., (2) a Tranche 2 Opinion, and
(3) all other documents, instruments and writings required to have been
delivered at or prior to the Tranche 1 Closing by the Company to Xxxxx Xxxxxxx
X.X. pursuant to this Agreement; and (b) each Purchaser shall deliver to the
Company (1) the purchase price for the Tranche 1 Debentures being purchased by
it at the Tranche 1 Closing, determined in accordance with Section 1.2(a)(i), in
United States dollars in immediately available funds by wire transfer to an
account designated in writing by the Company for such purpose on or prior to the
Tranche 1 Closing Date, and (2) all documents, instruments and writings required
to have been delivered at or prior to the Tranche 1 Closing by such Purchaser
pursuant to this Agreement.
(b) THE TRANCHE 2 CLOSING. (i) Subject to the terms and conditions
set forth in this Agreement, the Company shall have the right by delivery of
written notice to the Purchasers (a "SUBSEQUENT TRANCHE NOTICE") to require the
Purchasers, severally and not jointly, to purchase Convertible Debentures in
such aggregate principal amount not to exceed $5,000,000 (subject to reduction
as hereinafter provided) as the Company may designate in such notice (the
"TRANCHE 2 DEBENTURES"), each Purchaser being obligated (subject to the terms
and conditions hereof) to purchase such portion of the aggregate principal
amount of such Convertible Debentures as equals such Purchaser's pro rata
portion of the aggregate principal amount of Tranche 1 Debentures issued and
sold at the Tranche 1 Closing. The Company may deliver a Subsequent Tranche
Notice no earlier than the expiration of the 30th Trading Day after the date
that a registration statement (an "UNDERLYING SECURITIES REGISTRATION
STATEMENT") contemplated by the Registration Rights Agreement, dated the date
hereof, among the Purchasers and the Company substantially in the form of
EXHIBIT B attached hereto (the "REGISTRATION RIGHTS AGREEMENT") covering, among
other things, the shares of Common Stock issuable upon conversion of the Tranche
1 Debentures and the shares of Common Stock issuable upon exercise of the
Tranche 1 Warrants has been declared effective by the Securities and Exchange
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Commission (the "COMMISSION") (provided, that Trading Days during which any
Purchaser (or its successors, permitted assigns or other successors in interest)
is unable to resell securities under such Underlying Securities Registration
Statement shall be added to such 30 Trading Day period), and no later than
December 31, 1998 (the "TRANCHE 2 CLOSING EXPIRATION DATE"). The closing of the
purchase and sale of the Tranche 2 Debentures (the "TRANCHE 2 CLOSING") shall
take place at the offices of Xxxxxxxx Xxxxxxxxx on such date (which may not be
prior to the fifteenth Trading Day after receipt by the Purchasers of the
Subsequent Tranche Notice); PROVIDED that in no case shall the Tranche 2 Closing
take place unless and until the conditions listed in Section 4.1 have been
satisfied or waived by the appropriate party. The date of the Tranche 2 Closing
is hereinafter referred to as the "TRANCHE 2 CLOSING DATE." Notwithstanding
anything to the contrary contained herein, the Company may, by written notice to
each Purchaser provided prior to the Tranche 2 Closing Date, revoke such
Subsequent Tranche Notice in the event that the closing sale price of the Common
Stock, as reported by the American Stock Exchange or any other exchange or
market on which the Common Stock is then traded, decreases by more than 20% from
the date of the delivery of the Subsequent Tranche Notice and prior to the
Tranche 2 Closing Date.
(ii) At the Tranche 2 Closing, (a) the Company
shall deliver (A) to each Purchaser (1) a pro rata portion of the principal
amount (determined by reference to the principal amount of Tranche 1 Debentures
issued and sold at the Tranche 1 Closing) of the Tranche 2 Debentures to be
issued and sold thereat (or such other principal amount upon which the parties
may agree) and the applicable Tranche 2 Warrant, each registered in the name of
the appropriate Purchaser, (2) the legal opinions referenced in Section 4.1(k),
substantially in the forms attached hereto as EXHIBIT E-1 and EXHIBIT E-2,
respectively, and (3) all other documents, instruments and writings required to
have been delivered at or prior to the Tranche 2 Closing by the Company to the
Purchasers pursuant to this Agreement; and (b) each Purchaser shall, severally
and not jointly, deliver to the Company (1) the purchase price for the Tranche 2
Debentures being purchased by it at the Tranche 2 Closing, determined in
accordance with Section 1.2(a)(i), in United States dollars in immediately
available funds by wire transfer to an account designated in writing by the
Company for such purpose on or prior to the Tranche 2 Closing Date and (2) all
documents, instruments and writings required to have been delivered at or prior
to the Tranche 2 Closing by such Purchaser pursuant to this Agreement. In the
event that a Purchaser ("DEFAULTING PURCHASER") fails to purchase Tranche 2
Debentures in accordance with this Section 1.2(b)(ii) despite the performance by
the Company of its obligations under this Section and the satisfaction by the
Company of the conditions set forth in Section 4.1, the Company shall notify the
non-Defaulting Purchaser or Purchasers of such failure whereby the
non-Defaulting Purchaser or Purchasers shall have the option to purchase all or
any portion of the remaining Tranche 2 Debentures within 5 Business Days from
the later of the date it receives notice of such option and the Tranche 2
Closing Date. If no non-Defaulting Purchaser elects to purchase the remaining
Tranche 2 Debentures, the Company may then assign the Defaulting Purchaser's
rights hereunder to a third party, which party shall be reasonably acceptable to
the non-Defaulting Purchaser or Purchasers, without further obligation to the
Defaulting Purchaser to
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purchase the Tranche 2 Debentures. Failure by any Purchaser to buy Tranche 2
Debentures shall not affect the Company's obligations with respect to the
Tranche 1 Debentures acquired by such Purchaser, which shall remain unaffected
thereby.
1.3 FORM OF DEBENTURES. The Tranche 1 Debentures shall be in the form of
EXHIBIT A attached hereto. The Tranche 2 Debentures shall be identical to the
Tranche 1 Debentures, mutatis mutandis, except that the Conversion Price (as
defined below) for the Tranche 2 Debentures shall be reset as of the Original
Issue Date (as defined below) for the Tranche 2 Debentures.
For purposes of this Agreement, "CONVERSION PRICE," "ORIGINAL ISSUE
DATE," "TRADING DAY" and "PER SHARE MARKET VALUE" shall have the meanings set
forth in EXHIBIT A.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchasers:
(a) ORGANIZATION AND QUALIFICATION. The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of British Columbia, Canada, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company has no subsidiaries other than as set forth
in SCHEDULE 2.1(A) (collectively, the "SUBSIDIARIES"). Each of the Subsidiaries
is a corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the full corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate reasonably be
expected to (x) adversely affect the legality, validity or enforceability of
this Agreement, the Convertible Debentures, the Warrants (as defined in Section
3.17), or the Registration Rights Agreement (collectively, the "TRANSACTION
DOCUMENTS"), (y) have or result in a material adverse effect on the results of
operations, assets, prospects, or financial condition of the Company and the
Subsidiaries, taken as a whole, or (z) adversely impair the Company's ability to
perform fully on a timely basis its obligations under the Transaction Documents
(any of the foregoing, a "MATERIAL ADVERSE EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by the
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Transaction Documents and otherwise to carry out its obligations thereunder. The
execution and delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company. Each of the
Transaction Documents has been duly executed by the Company and when delivered
in accordance with the terms hereof shall constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, articles, by-laws or other charter documents (or
their foreign equivalents).
(c) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is set forth in SCHEDULE 2.1(C). No shares of
Common Stock are entitled to preemptive or similar rights, nor is any holder of
the Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company by virtue of any of the Transaction
Documents. Except as disclosed in SCHEDULE 2.1(C), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or, except as a result of the purchase and
sale of the Convertible Debentures and Warrants hereunder, securities, rights or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock. To
the knowledge of the Company, except as specifically disclosed in the SEC
Documents (as defined below) or SCHEDULE 2.1(C), no Person (as defined below)
beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) or has the
right to acquire by agreement with or by obligation binding upon the Company
beneficial ownership of in excess of 5% of the Common Stock. A "Person" means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
(d) ISSUANCE OF CONVERTIBLE DEBENTURES AND WARRANTS. The
Convertible Debentures and the Warrants are duly authorized, and, when issued
and paid for in accordance with the terms hereof, shall be validly issued, fully
paid and nonassessable. The Company, as at the Tranche 1 Closing Date and
Tranche 2 Closing Date, as the case may be (each, a "CLOSING DATE" and,
collectively, the "CLOSING DATES"), has and at all times while the Convertible
Debentures and the Warrants are outstanding will maintain an adequate reserve of
duly authorized shares of Common Stock to enable it to perform its conversion,
exercise and other obligations under this Agreement, the Warrants and the
Convertible Debentures, and in no
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circumstances shall such reserved and available shares of Common Stock be less
than the sum of (i) 1,311,422 shares of Common Stock for issuance upon
conversion of the Tranche 1 Debentures and Tranche 2 Debentures and (ii) the
number of shares of Common Stock which would be issuable upon exercise in full
of the Tranche 1 Warrants and Tranche 2 Warrants. The Company and the Purchasers
agree that all liquidated damages and early redemption or repayment amounts
payable pursuant to any Transaction Documents shall be paid in cash unless
otherwise consented to by the Purchasers. The shares of Common Stock issuable
upon conversion of Convertible Debentures and upon exercise of the Warrants are
collectively referred to herein as the "Underlying Shares." When issued in
accordance with the terms of the Convertible Debentures and the Warrants, the
Underlying Shares will be duly authorized, validly issued, fully paid and
nonassessable. The Convertible Debentures, Warrants and Underlying Shares are
collectively referred to herein as the "SECURITIES."
(e) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its Certificate of Incorporation or Articles (each as
amended through the date hereof) or (ii) subject to obtaining the Required
Approvals (as defined below), conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, or (iii) to the knowledge of the Company, result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company is subject
(including Federal, state and foreign securities laws and regulations), or by
which any material property or asset of the Company is bound or affected, except
in the case of each of clauses (ii) and (iii), such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as could
not, individually or in the aggregate, have or result in a Material Adverse
Effect. Neither the business of the Company nor any Subsidiary is being
conducted in violation of any applicable law, ordinance or regulation of any
governmental authority which could, individually or in the aggregate, have a
Material Adverse Effect.
(f) CONSENTS AND APPROVALS. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
or make any filing or registration with, any court or other Federal, state,
local, foreign or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the Transaction
Documents other than (i) the filing of the Underlying Securities Registration
Statements with the Commission, which shall be filed in the time periods set
forth in the Registration Rights Agreement, (ii) the applications for the
listing of the Underlying Shares with the American Stock Exchange (and with any
other national securities exchange or market on which the Common Stock is then
listed), and (iii) other than, in all other cases, where the failure to obtain
such consent, waiver, authorization or order, or to give or make such notice or
filing, could not reasonably be expected to have or result in, individually or
in the aggregate, a Material
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Adverse Effect and to deliver to the Purchasers the Convertible Debentures or
the Warrant (and, upon conversion or exercise thereof, the Underlying Shares) in
the manner contemplated hereby and by the Registration Rights Agreement free and
clear of all liens and encumbrances of any nature whatsoever (the "REQUIRED
APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed
in the Disclosure Materials (as defined below), there is no action, suit, notice
of violation, proceeding or investigation pending or, to the best knowledge of
the Company, threatened against, or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (Federal, state,
local or foreign) which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the Securities
or (ii) could, individually or in the aggregate, have or result in a Material
Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any
Subsidiary (i) is in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, (ii) is in violation of any order
of any court, arbitrator or governmental body (Federal, state, local or
foreign), or (iii) is in violation of any statute, rule or regulation of any
governmental authority, except in each case as could not reasonably be expected
to individually or in the aggregate have or result in, individually or in the
aggregate, a Material Adverse Effect.
(i) PRIVATE OFFERING. Neither the Company nor any Person
acting on its behalf has taken or will take any action which might subject the
offering, issuance or sale of the Securities to the registration requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT").
(j) SEC DOCUMENTS. The Company has filed all reports required
to be filed by it under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials being
collectively referred to herein as the "SEC DOCUMENTS" and, together with the
Schedules to this Agreement and any other information furnished by or on behalf
of the Company in connection with the offer and sale of the Securities to the
Purchasers, the "DISCLOSURE MATERIALS") on a timely basis, or has received a
valid extension of such time of filing. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Documents, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply in all material respects with applicable accounting
requirements and the rules
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and regulations of the Commission with respect thereto. Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
involved, except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and the Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods shown, subject, in the
case of unaudited statements, to normal year-end audit adjustments. Since the
date of the financial statements included in the Company's last filed Quarterly
Report on Form 10-Q, there has been no event, occurrence or development that has
had or that could have or result in a Material Adverse Effect which has not been
specifically disclosed in writing to the Purchasers by the Company. The Company
last filed audited financial statements with the Commission on March 31, 1998
and has not received any comments from the Commission in respect thereof.
(k) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate of an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(l) CERTAIN FEES. Other than fees due and payable to Xxxxx
Xxxxxx, Inc. as set forth in the engagement letter previously furnished to the
Purchasers, no fees or commissions will be payable by the Company to any broker,
financial or investment advisor, placement agent finder, investment banker, bank
or any other Person acting in a similar capacity with respect to the
transactions contemplated by this Agreement. The Purchasers shall have no
obligation with respect to such fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement. The
Company shall indemnify and hold harmless each of the Purchasers, their
respective employees, officers, directors, agents, and partners, and their
respective Affiliates (as such term is defined under Rule 405 promulgated under
the Securities Act), from and against all claims, losses, damages, costs
(including the costs of preparation and reasonable attorney's fees) and expenses
suffered in respect of any such claimed or existing fees.
(m) SOLICITATION MATERIALS. The Company has not (i)
distributed any offering materials in connection with the offering and sale of
the Securities other than the Disclosure Materials or (ii) solicited any offer
to buy or sell the Securities by means of any form of general solicitation or
advertising.
(n) FORM S-3 ELIGIBILITY. The Company is, and at each Closing
Date will be, eligible to register securities for resale with the Commission
under Form S-3 promulgated under the Securities Act.
(o) EXCLUSIVITY. The Company shall not issue and sell the
Convertible Debentures to any Person other than the Purchasers and their
respective Affiliates and managed funds, if any, other than with the specific
prior written consent of the Purchasers.
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(p) LISTING MAINTENANCE REQUIREMENTS COMPLIANCE. The Company
has not in the two years preceding the date hereof received written notice from
any stock exchange or market on which the Common Stock is or has been listed (or
on which it has been quoted) to the effect that the Company is not in compliance
with the listing or maintenance requirements of such exchange or market.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
(a) ORGANIZATON; AUTHORITY. Such Purchaser is a corporation
duly incorporated or a limited partnership duly formed, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
formation with the requisite power and authority to enter into and to consummate
the transactions contemplated hereby and by the Registration Rights Agreement
and otherwise to carry out its obligations hereunder and thereunder. The
purchase by such Purchaser of the Securities to be purchased by it hereunder has
been duly authorized by all necessary action on the part of such Purchaser. Each
of this Agreement and the Registration Rights Agreement has been duly executed
and delivered by such Purchaser and constitutes the valid and legally binding
obligation of such Purchaser, enforceable against such Purchaser, in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity.
(b) INVESTMENT INTENT. Such Purchaser is acquiring the
Securities to be purchased by it hereunder for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Securities or any part thereof or interest therein, without prejudice, however,
to such Purchaser's right, subject to the provisions of this Agreement and the
Registration Rights Agreement, at all times to sell or otherwise dispose of all
or any part of such Securities pursuant to an effective registration statement
under the Securities Act and in compliance with applicable state securities laws
or under an exemption from such registration.
(c) PURCHASER STATUS. At the time such Purchaser was offered
the Convertible Debentures and the Tranche 1 Warrant to be purchased by it
hereunder, it was, and at the date hereof, it is, and at each Closing Date (and
on the Tranche 2 Closing Expiration Date, if applicable), it will be, an
"accredited investor" as defined in Rule 501(a) under the Securities Act.
(d) EXPERIENCE OF PURCHASER. Such Purchaser either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) ABILITY OF PURCHASER TO BEAR RISK OF INVESTMENT. Such
Purchaser is able to
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bear the economic risk of an investment in the Securities, and, at the present
time, is able to afford a complete loss of such investment.
(f) ACCESS TO INFORMATION. Each Purchaser acknowledges receipt
of the Disclosure Materials and further acknowledges that it has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Securities, and the merits and risks of
investing in the Securities; (ii) access to information about the Company and
the Company's financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that such
Purchaser believes is necessary to make an informed investment decision with
respect to the investment and to verify the accuracy and completeness of the
information contained in the Disclosure Materials.
(g) RELIANCE. Each Purchaser understands and acknowledges that
(i) the Convertible Debentures and the Warrants to be sold to it hereunder are
being offered and sold to it in a private placement that is exempt from the
registration requirements of the Securities Act and (ii) the availability of
such exemption depends in part on and the Company will rely upon the accuracy
and truthfulness of, the foregoing representations and such Purchaser hereby
consents to such reliance.
The Company acknowledges and agrees that the Purchasers make
no representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) If any Purchaser should decide to
dispose of any portion of the Securities held by it, each such Purchaser
understands and agrees that it may do so only pursuant to an effective
registration statement under the Securities Act, to the Company or pursuant to
an available exemption from or in a transaction not subject to, the registration
requirements thereof. In connection with any transfer of any portion of the
Securities other than pursuant to an effective registration statement or to the
Company, the transferor shall provide notice thereof to the Company who may
require the transferor thereof to provide to the Company an opinion of counsel
experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.
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(b) Each Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE AND/OR EXERCISABLE HAVE BEEN REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
[FOR CONVERTIBLE DEBENTURES ONLY] THIS CONVERTIBLE DEBENTURE IS SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN A CONVERTIBLE
DEBENTURE PURCHASE AGREEMENT, DATED AS OF APRIL 23, 1998, EXECUTED BY
THE ORIGINAL HOLDER HEREOF. A COPY OF THAT AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF PLC SYSTEMS INC.
The Underlying Shares shall not contain the legend set forth
above (or any other legend) if the conversion of Convertible Debentures or
exercise of Warrants, as the case may be, pursuant to which such Underlying
Shares are to be issued occurs at any time while the Underlying Securities
Registration Statement is effective under the Securities Act or in the event
there is not an effective Underlying Securities Registration Statement at such
time, if in the opinion of counsel to the Company experienced in the area of
United States securities laws such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company agrees that
it will provide the Purchaser, upon request, with a certificate or certificates
representing Underlying Shares, free from any legend at such time as such
legends are no longer required pursuant to this Section.
3.2 STOP TRANSFER INSTRUCTION. The Company may not make any notation on
its records or give instructions to any transfer agent of the Company which
enlarge the restrictions of transfer set forth in Section 3.1.
3.3 FURNISHING OF INFORMATION. As long as any Purchaser owns Underlying
Shares, the Company covenants to timely file (or obtain extensions in respect
thereof) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. If the Company is not at
the time required to file reports pursuant to such sections, it will prepare and
furnish to the Purchasers and make publicly available in accordance
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with Rule 144(c) promulgated under the Securities Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act.
3.4 COPIES AND USE OF DISCLOSURE MATERIALS. The Company consents to the
use of the Disclosure Materials, and any amendments and supplements thereto, by
the Purchasers in connection with resales of Securities other than pursuant to
an effective Underlying Securities Registration Statement.
3.5 BLUE SKY LAWS. In accordance with the Registration Rights
Agreement, the Company shall qualify the Underlying Shares under the securities
or Blue Sky laws of such jurisdictions as any Purchaser may reasonably request
and shall continue such qualification at all times through the third anniversary
of the last Closing Date; PROVIDED, HOWEVER, that neither the Company nor its
Subsidiaries shall be required in connection therewith to qualify as a foreign
corporation where they are not now so qualified or to take any action that would
subject the Company to general service of process in any such jurisdiction where
it is not then so subject.
3.6 INTEGRATION. The Company shall not and shall use its best efforts
to ensure that no Affiliate of the Company shall sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the issue or sale of any of the Securities to any Purchaser.
3.7 PURCHASER OWNERSHIP OF COMMON STOCK. Each of the Purchasers agrees
not to use its ability to convert Debentures and exercise Warrants to the extent
such conversion or exercise would result in it beneficially owning (as
determined in accordance with Section 13(d) of the Exchange Act and the rules
thereunder) in excess of 4.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon conversion of the Debentures and
exercise of the Warrants held by it after application of this Section. To the
extent that the limitation contained in this Section applies, the determination
of whether Debentures are convertible by a Purchaser (in relation to other
securities owned by it) and of what portion thereof are convertible shall be in
the sole discretion of such Purchaser, and the submission of Debentures for
conversion shall be deemed to be such Purchaser's determination of whether such
Debentures are convertible (in relation to other securities owned by it) and of
which portion of its Debentures are convertible, in each case subject to such
aggregate percentage limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. Nothing contained herein
shall be deemed to restrict the right of a Purchaser to convert Debentures at
such time as such conversion will not violate the provisions of this Section.
The provisions of this Section may be waived by a Purchaser (but only as to
itself) upon not less than
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75 days prior notice to the Company, and the provisions of this Section shall
continue to apply until such 75th day (or later, if stated in the notice of
waiver).
3.8 LISTING AND RESERVATION OF UNDERLYING SHARES. The Company shall (a)
not later than the fifth Business Day following the Tranche 1 Closing Date
prepare and file with the American Stock Exchange (as well as any other national
securities exchange or market on which the Common Stock is then listed or
traded) an additional shares listing application covering all of the Underlying
Shares that are issuable in respect of conversions of Debentures, and exercise
of Warrants which number shall initially not be less than the sum of 640,000
Underlying Shares reserved for issuance upon conversion of Tranche 1 Debentures
and 4,864 shares reserved for issuance upon exercise of Tranche 1 Warrants and
Tranche 2 Warrants); (b) take all steps necessary to cause such shares to be
approved for listing in the American Stock Exchange (as well as on any other
national securities exchange or market on which the Common Stock is then listed)
as soon as possible thereafter; and (c) provide to the Purchasers evidence of
such listing, and the Company shall maintain the listing of its Common Stock on
such exchange. If the Tranche 2 Warrants are issued and delivered on or after
the Tranche 2 Closing Expiration Date, the Company shall (not later than five
Business Days thereafter) prepare and file with the American Stock Exchange (as
well as any other national securities exchange or market on which the Common
Stock is then listed or traded) an additional shares listing application
covering the number of Underlying Shares issuable upon exercise in full of the
Tranche 2 Warrants, and take all steps necessary to cause such shares to be
approved for listing thereon as soon as possible thereafter.
(b) The Company shall reserve for issuance upon conversion of the
Convertible Debentures and upon exercise of the Warrants in accordance with
their terms the number of shares to be listed on the American Stock Exchange
(and such other national securities exchange or market on which the Common Stock
is then listed or traded) as set forth in Section 3.8(a). Shares of Common Stock
reserved for issuance upon the conversion of the Convertible Debentures as set
forth in Section 3.8(a)(i)(1) and Section 3.8(a)(ii)(1), as the case may be,
shall be allocated pro rata to each of the Purchasers in accordance with the
principal amount of Convertible Debentures issued and delivered to such
Purchaser at the Tranche 1 Closing or the Trance 2 Closing, as applicable.
3.9 CONVERSION PROCEEDURES. EXHIBIT D attached hereto sets forth the
procedures with respect to the conversion of the Convertible Debentures,
including the forms of conversion notice to be provided upon conversion,
instructions as to the procedures for conversion, the form of legal opinion, if
necessary, that shall be rendered by or on behalf of the Company to the
Company's transfer agent and such other information and instructions as may be
reasonably necessary to enable the Purchasers to exercise their right of
conversion smoothly and expeditiously.
3.10 PURCHASERS' RIGHTS IF TRADING IN COMMON STOCK IS SUSPENDED OR
DELISTED. If at
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any time while any Purchaser (or any assignee thereof) owns any Securities
trading in the shares of the Common Stock is suspended on or delisted from the
American Stock Exchange or any other principal market or exchange for such
shares (other than as a result of the suspension of trading in securities on
such market or exchange generally or temporary suspensions pending the release
of material information) for more than three Trading Days, at the option of any
Purchaser exercisable by written notice to the Company delivered within 60 days
of notice of such suspension or delisting, the Company shall repay in cash the
entire principal amount of then outstanding Convertible Debentures held by such
Purchaser and redeem all then outstanding Underlying Shares then held by such
Purchaser in cash, at an aggregate purchase price equal to the sum of (I) the
aggregate outstanding principal amount of Convertible Debentures then held by
such Purchaser multiplied by (1) the average Per Share Market Value for the five
(5) Trading Days immediately preceding (a) the day of such notice or (b) the
date of payment in full of the repurchase price calculated under this Section,
whichever is greater, divided by (2) the Conversion Price on the date of the
repurchase notice, (II) the aggregate of all non-principal amounts then payable
in respect of all Convertible Debentures to be repaid, (III) the number of
Underlying Shares then held by such Purchaser multiplied by the average Per
Share Market Value for the five (5) Trading Days immediately preceding (A) the
date of the notice or (B) the date of payment in full by the Company of the
repurchase price calculated under this Section, whichever is greater, and (IV)
interest on the amounts set forth in I - III above accruing from the 5th day
after such notice until the repurchase price under this Section is paid in full
at the rate of 15% per annum. The Company shall provide written notice of any
prepayment demand made pursuant to this Section to each other holder of
Securities within 24 hours of its receipt thereof.
3.11 NO VIOLATION OF APPLICABLE LAW. Notwithstanding any provision of
this Agreement to the contrary, if the repurchase of Convertible Debentures
and/or redemption of Underlying Shares otherwise required under this Agreement
would be prohibited by applicable law, such repurchase shall be effected as soon
as it is permitted under such law; PROVIDED, HOWEVER, that interest payable by
the Company with respect to any such repurchase and/or redemption shall continue
to accrue in accordance with Section 3.10.
3.12 USE OF PROCEEDS. The Company shall use all of the net proceeds
from the placement of the Securities for working capital purposes, which may
include the acquisition of complementary businesses or products, and not for the
satisfaction of any portion of Company or Subsidiary debt, or to redeem Company
equity or equity-equivalent securities in excess of, in the aggregate (for all
such satisfactions and redemptions) $1,000,000. Pending application of the
proceeds of this placement in the manner permitted hereby the Company will
invest such proceeds in interest bearing accounts and short-term, investment
grade interest bearing securities.
3.13 NOTICE OF BREACHES. (a) Each of the Company and each Purchaser
shall give prompt written notice to the other of any breach of any
representation, warranty or other agreement contained in this Agreement or in
the Registration Rights Agreement, as well as any events or occurrences arising
after the date hereof and prior to, with respect to the Xxxxxxx 0
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Xxxxxxx, xxx Xxxxxxx 0 Closing Date, with respect to the Tranche 2 Closing, the
Tranche 2 Closing Date which would reasonably be likely to cause any
representation or warranty or other agreement of such party, as the case may be,
contained herein to be incorrect or breached as of such Closing Date. The
Company shall give such notice to each Purchaser. However, no disclosure by
either party pursuant to this Section shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Registration Rights Agreement, and no such disclosure by any Purchaser shall
affect the rights of and obligations owing to the nondisclosing Purchasers under
the Transaction Documents.
(b) Notwithstanding the generality of Section 3.14(a), the Company
shall promptly notify each Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated hereby and by the Registration
Rights Agreement violates or would violate any written agreement or
understanding between such lender and the Company, and the Company shall
promptly furnish by facsimile to the holders of the Convertible Debentures a
copy of any written statement in support of or relating to such claim or notice.
(c) The default by any Purchaser of any of its obligations,
representations or warranties under any Transaction Document shall not be
imputed to, and shall have no effect upon, any other Purchaser or affect the
Company's obligations under the Transaction Documents to any non-defaulting
Purchaser.
3.14 CONVERSION OBLIGATIONS OF THE COMPANY. The Company covenants to
honor conversions of Convertible Debentures and exercise of Warrants and to
deliver Underlying Shares in accordance with the terms and conditions and time
period set forth in the respective Convertible Debentures and Warrants.
3.15 RIGHT OF FIRST REFUSAL; SUBSEQUENT REGISTRATIONS; CERTAIN COMPANY
ACTIONS. (a) The Company shall not, directly or indirectly, without the prior
written consent of Southbrook and, on behalf of Xxxxx Xxxxxxx Limited and Xxxxx
Xxxxxxx XX, Xxxxx Xxxxxxx Asset Management, LLC ("XXXXX XXXXXXX MANAGEMENT"),
offer, sell, grant any option to purchase, or otherwise dispose (or announce any
offer, sale, grant or any option to purchase or other disposition) of any of its
or its Affiliates equity or equity-equivalent securities at a price which is on
the face thereof or implied therein, less than either the market price or fair
market value for such securities (a "SUBSEQUENT FINANCING") for a period of 100
days after the last to occur of the Tranche 1 Closing Date or the Tranche 2
Closing Date (or, if later, the Tranche 2 Closing Expiration Date), except (i)
the granting of options to employees, officers and directors, and the issuance
of shares upon exercise of options granted, under any stock option plan
heretofore or hereinafter duly adopted by the Company, (ii) shares issued upon
exercise of any currently outstanding options and to the extent disclosed in
SCHEDULE 2.1(A), (iii) shares of Common Stock issued upon conversion of
Convertible Debentures and exercise of Warrants, (iv) shares issued or issuable
in connection with any registered primary public offering of the Company's
securities or
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in any private financing under which gross proceeds to the Company is at least
$25,000,000 (provided, that Southbrook and Xxxxx Xxxxxxx Management shall have
the option to purchase up to 33% of any such private financing), (v) any
securities issued or issuable to any entity (or its stockholders) acquired by
the Company in a merger, stock or asset acquisition or similar transaction, or
(vi) any securities issued by the Company in connection with any technology
transfer or license agreement or marketing or similar joint venture agreement,
unless (A) the Company delivers to each of Southbrook and Xxxxx Xxxxxxx
Management a written notice (the "SUBSEQUENT FINANCING NOTICE") of its intention
to effect such Subsequent Financing, which Subsequent Financing Notice shall
describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder, the Person with whom
such Subsequent Financing shall be affected, and a term sheet or similar
document relating thereto (which shall be attached to such Subsequent Financing
Notice) and (B) neither Southbrook nor Xxxxx Xxxxxxx Management shall have
notified the Company by 5:00 p.m. (Eastern Time) on the fifth Business Day after
its receipt of the Subsequent Financing Notice of its willingness to provide (or
to cause its sole designee to provide) such Subsequent Financing, subject to
completion and negotiation of definitive documentation therefor, on
substantially the terms set forth in the Subsequent Financing Notice. If neither
Southbrook nor Xxxxx Xxxxxxx Management notifies the Company of its intention to
provide such Subsequent Financing within such time period, the Company may
effect the Subsequent Financing substantially upon the terms and to the Persons
(or Affiliates of such Persons) set forth in the Subsequent Financing Notice;
PROVIDED, that the Company shall provide each of Southbrook and Xxxxx Xxxxxxx
Management with a second Subsequent Financing Notice, and each of Southbrook and
Xxxxx Xxxxxxx Management shall again have the right of first refusal set forth
above in this Section 3.15(a), if the Subsequent Financing subject to the
initial Subsequent Financing Notice shall not have been consummated for any
reason on the terms set forth in such Subsequent Financing Notice within 60
Business Days after the date of the initial Subsequent Financing Notice with the
Person (or an Affiliate of such Person) identified in the Subsequent Financing
Notice. If Southbrook and Xxxxx Xxxxxxx Management indicate a willingness to
provide Subsequent Financing in an amount that, in the aggregate, exceeds the
amount indicated in the Subsequent Financing Notice, then Southbrook (or its
designee) shall have the right to provide up to 80% and Xxxxx Xxxxxxx (or its
designee) shall have the right to provide up to 20% of such Subsequent
Financing.
(b) Other than Underlying Shares and other "Registrable
Securities" (as defined in the Registration Rights Agreement) to be registered
in accordance with the Registration Rights Agreement, the Company shall, for a
period of not less than 90 Trading Days after the date that the Underlying
Shares Registration Statement relating to the securities issued at the last to
occur of the Tranche 1 Closing Date or Tranche 2 Closing Date (or, if later, the
Tranche 2 Closing Expiration Date) is declared effective by the Commission, not,
without the prior written consent of Purchasers, (i) issue or sell any of its or
any of its Affiliates' equity or equity-equivalent securities pursuant to
Regulation S promulgated under the Securities Act, or (ii) register for resale
any securities of the Company. Any days that any Purchaser is unable to
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sell Underlying Shares under an Underlying Securities Registration Statement
shall be added to such 90 Trading Day period for the purposes of (i) and (ii)
above.
(c) As long as there are Convertible Debentures outstanding,
the Company shall not and shall cause the Subsidiaries not to, without the
consent of Purchasers, (i) amend its certificate of incorporation, bylaws or
other charter documents so as to adversely affect any rights of the Purchasers;
(ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares
of its Common Stock (except Underlying Shares and shares repurchased from
employees of the Company upon their termination of employment with the Company
not in excess of $1,000,000 in aggregate); or (iii) enter into any agreement
with respect to any of the foregoing. Any repurchase of Convertible Debentures
or Underlying Shares must be offered pro rata among the Purchasers in accordance
with their then held respective principal amount of Convertible Debentures.
3.16 THE WARRANTS. (a) At the Tranche 1 Closing the Company shall issue
and deliver (i) to Southbrook, a Common Stock purchase warrant (the "TRANCHE 1
SOUTHBROOK WARRANT") entitling Southbrook to purchase, on the terms and
conditions set forth therein, 3,891 shares of Common Stock at a price per share
equal to the Tranche 1 Warrant Exercise Price (as defined below); (ii) to Xxxxx
Xxxxxxx XX, a Common Stock purchase warrant (the "TRANCHE 1 XXXXX XXXXXXX XX
WARRANT") entitling Xxxxx Xxxxxxx XX to purchase, on the terms and conditions
set forth therein, 243 shares of Common Stock at a price per share equal to the
Tranche 1 Warrant Exercise Price; and (iii) to Xxxxx Xxxxxxx Limited, a Common
Stock purchase warrant (the "TRANCHE 1 XXXXX XXXXXXX LIMITED WARRANT," and
together with the Southbrook Tranche 1 Warrant and the Xxxxx Xxxxxxx XX Tranche
1 Warrant, the "TRANCHE 1 Warrants") entitling Xxxxx Xxxxxxx Limited to
purchase, on the terms and conditions set forth therein, 730 shares of Common
Stock at an exercise price per share equal to the Tranche 1 Warrant Exercise
Price. The "TRANCHE 1 WARRANT EXERCISE PRICE" shall be equal to 125% of the
average Per Share Market Value for the five (5) Trading Days immediately
preceding the Tranche 1 Closing Date.
(b) At the earlier to occur of the Tranche 2 Closing Date or
the Tranche 2 Closing Expiration Date, the Company shall issue and deliver (i)
to Southbrook, a Common Stock purchase warrant entitling Southbrook to purchase,
on the terms and conditions set forth therein, a number of shares of Common
Stock equal to (A) if the Tranche 2 Warrants are issued on the Tranche 2 Closing
Date, 1% of the purchase price to be paid by Southbrook for the Tranche 2
Debentures to be issued and sold to it at the Tranche 2 Closing or (B) if the
Tranche 2 Warrants are to be issued and delivered on the Tranche 2 Closing
Expiration Date, the number of shares to which the Xxxxxxx 0 Xxxxxxxxxx Xxxxxxx
entitled Southbrook to purchase, at a price per share equal to the Tranche 2
Warrant Exercise Price (as defined below); (ii) to Xxxxx Xxxxxxx XX, a Common
Stock purchase warrant entitling Xxxxx Xxxxxxx XX to purchase, on the terms and
conditions set forth therein, a number of shares of Common Stock equal to (A) if
the Tranche 2 Warrants are issued and delivered on the Tranche 2 Closing Date,
1% of the purchase price to be paid by Xxxxx Xxxxxxx XX for the Tranche 2
Debentures to be issued and sold to it at
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the Tranche 2 Closing or (B) if the Tranche 2 Warrants are to be issued and
delivered on the Tranche 2 Closing Expiration Date, the number of Shares to
which the Tranche 1 Xxxxx Xxxxxxx XX Warrant entitled Xxxxx Xxxxxxx XX to
purchase, at a price per share equal to the Tranche 2 Warrant Exercise Price;
and (iii) to Xxxxx Xxxxxxx Limited, a Common Stock purchase warrant entitling
Xxxxx Xxxxxxx Limited to purchase, on the terms and conditions set forth
therein, a number of shares of Common Stock equal to (A) if the Tranche 2
Warrants are issued on the Tranche 2 Closing Date, 1% of the purchase price to
be paid by Xxxxx Xxxxxxx Limited for the Tranche 2 Debentures to be issued and
sold to it at the Tranche 2 Closing or (B) if the Tranche 2 Warrants are to be
issued and delivered on the Tranche 2 Closing Expiration Date, the number to
which the Tranche 1 Xxxxx Xxxxxxx Limited Warrant entitled Xxxxx Xxxxxxx Limited
to purchase, at a price per share equal to the Tranche 2 Warrant Exercise Price.
The "TRANCHE 2 WARRANT EXERCISE PRICE" shall equal (a) if the Tranche 2 Warrants
are issued and delivered on the Tranche 2 Closing Date, 125% of the average Per
Share Market Value for the five (5) Trading Days immediately preceding such date
or (b) if the Tranche 2 Warrants are to be issued and delivered on the Tranche 2
Closing Expiration Date, 125% of the average Per Share Market Value for the five
(5) Trading Days immediately preceding such date. The Common stock purchase
Warrants described in this paragraph are collectively referred to herein as the
"TRANCHE 2 WARRANTS, and the Tranche 1 Warrants and the Tranche 2 Warrants are
collectively referred to herein as the "WARRANTS." In each case of determining
the number of shares issuable on exercise of the Tranche 2 Warrants if such
warrants are issued on the Tranche 2 Closing Date, such number shall be
determined by Xxxxx Xxxxxx, Inc. using the Black-Scholes pricing model.
(c) The Warrants shall be substantially in the form of EXHIBIT
C. The failure of a Tranche 2 Closing with respect to any Purchaser due to a
failure by the Company to timely deliver a Subsequent Tranche Notice or to
satisfy all of the conditions set forth in section 4.1 shall not affect the
Company's obligation to issue and deliver Tranche 2 Warrants on the Tranche 2
Closing Expiration Date.
3.17 TRANSACTIONS IN THE COMMON STOCK. The Purchasers will not
establish a short position in the Common Stock during the fifteen (15) Trading
Days after receipt of a Subsequent Funding Notice and prior to the Tranche 2
Closing Date. Any existing short position may be maintained.
3.18 LIMITING AGREEMENTS. So long as Convertible Debentures are
outstanding, the Company will not enter into a contract, agreement or
understanding that would restrict the Company's ability to pay principal,
liquidated damages or penalty interest pursuant to any Transaction Documents.
3.19 LIMITATION ON AMOUNT OF TRANCHE 2 FINANCING. Notwithstanding
anything to the contrary contained herein, if the Company shall not have
previously obtained Stockholder Approval as contemplated under Section 4(a)(ii)
of EXHIBIT A, then the Company may not require the Purchasers to acquire, and
the amount of financing indicated on any Subsequent Tranche
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Notice shall be reduced as necessary so that the Purchasers shall be required to
acquire a principal amount of Tranche 2 Debentures equal to no more than the
Maximum Amount. The Maximum Amount shall be a principal amount of Tranche 2
Debentures that, if converted in full in accordance with their terms as at the
Tranche 2 Closing Date, would result in the issuance to the Purchasers of a
number of Underlying Shares equal to one half of the amount by which (i) the
Issuable Maximum (as defined in Section 4(a)(ii) of EXHIBIT A), exceeds (ii) the
sum of (A) any Underlying Shares theretofore issued on conversion of the Tranche
1 Debentures, plus (B) 200% of the number of Underlying Shares as would be
issuable upon conversion in full of any principal amount of Tranche 1 Debentures
then outstanding (assuming such conversions occurred in full on the Tranche 2
Closing Date), plus (C) 1,979,572 shares of Common Stock.
ARTICLE IV
CONDITIONS
4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASERS
TO PURCHASE THE TRANCHE 2 DEBENTURES. The obligation of each Purchaser hereunder
to acquire and pay for Tranche 2 Debentures is subject to the satisfaction or
waiver by such Purchaser at or before the Tranche 2 Closing of each of the
following conditions:
(a) TRANCHE 1 CLOSING. The Tranche 1 Closing shall have
occurred;
(b) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained herein shall be true
and correct in all material respects as of the date when made and as of the
Tranche 2 Closing Date as though made on and as of such date;
(c) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Tranche 2 Closing
Date;
(d) UNDERLYING SECURITIES REGISTRATION STATEMENTS. The
Underlying Securities Registration Statement with respect to the Underlying
Shares issuable on conversion and exercise of all outstanding Tranche 1
Debentures and Tranche 1 Warrants shall have been declared effective under the
Securities Act by the Commission and such Underlying Registration Statement
shall have remained effective and shall not be subject to any stop order and no
stop order shall be pending or threatened as at the Tranche 2 Closing Date;
(e) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority which prohibits
the consummation of any of the transactions
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contemplated by this Agreement or the Registration Rights Agreement relating to
the issuance or conversion of any of the Securities;
(f) MANAGEMENT. Neither Xx. Xxxxxx X. Xxxxx nor Xxxxxxx X. Xxx
shall have left the Company or suffered a voluntary or involuntary material
lessening of responsibility as Chairman or Chief Executive Officer (as the case
may be) and, if the Company shall deliver a Subsequent Tranche Notice after
October 23, 1998, the Company shall have previously hired a Chief Financial
Officer;
(g) NO SUSPENSIONS OF TRADING IN COMMON STOCK. The trading in
the Common Stock shall not have been suspended by the Commission or on the
American Stock Exchange (except for any suspension of trading of limited
duration solely to permit dissemination of material information regarding the
Company and except if, at the time there is any suspension on the American Stock
Exchange, the Common Stock is then listed and approved for trading on the New
York Stock Exchange, Nasdaq National Market or Nasdaq SmallCap Market within one
(1) Trading Day thereof);
(h) LISTING OF COMMON STOCK. The Common Stock shall have been
at all times between the Tranche 1 Closing Date and the Tranche 2 Closing Date,
and on the Tranche 2 Closing Date shall be, listed for trading on the American
Stock Exchange, New York Stock Exchange, Nasdaq National Market or Nasdaq
SmallCap Market;
(i) CHANGE OF CONTROL. No Change of Control in the Company
shall have occurred since the Tranche 1 Closing Date. "Change of Control" means
the occurrence of any of (i) an acquisition after the date hereof by an
individual, group (as defined in Rule 13d-1 promulgated under the Exchange Act),
or legal entity of in excess of 30% of the voting securities of the Company,
(ii) a replacement of more than one-half of the members of the Company's board
of directors which is not approved by those individuals who are members of the
board of directors on the date hereof in one or a series of related
transactions, (iii) the merger of the Company with or into another entity,
consolidation or sale of all or substantially all of the assets of the Company
in one or a series of related transactions or (iv) the execution by the Company
of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii) or (iii);
(j) LEGAL OPINIONS. The Company shall have delivered to such
Purchaser opinions of outside legal counsel to the Company in substantially the
forms attached hereto as EXHIBIT E-1 and EXHIBIT E-2, and dated the Tranche 2
Closing Date;
(k) REQUIRED APPROVALS. All Required Approvals shall have
been obtained;
(l) SHARES OF COMMON STOCK. On the Tranche 2 Closing Date the
Company shall have reserved for issuance to the Purchasers the number of shares
of Common
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Stock specified in Section 3.8(a)(ii);
(m) DELIVERY OF SECURITIES. The Company shall have delivered
to Xxxxxxxx Xxxxxxxxx (or such other Person acceptable to such Purchaser and the
Company) in escrow pending the Tranche 2 Closing the Tranche 2 Convertible
Debentures and Tranche 2 Warrants being purchased at the Tranche 2 Closing by
such Purchaser, registered in the name of such Purchaser, each in form
satisfactory to Xxxxxxxx Xxxxxxxxx (or such other Person);
(n) PERFORMANCE OF CONVERSION/EXERCISE OBLIGATIONS. The
Company shall have (a) delivered Underlying Shares upon conversion of Tranche 1
Convertible Debentures and exercise of Tranche 1 Warrants and otherwise
performed its obligations in accordance with the terms, conditions and timing
requirements of the Tranche 1 Convertible Debentures and Tranche 1 Warrants; and
(o) MARKET PRICE OF COMMON STOCK. The closing sale price of
the Common Stock as reported by the American Stock Exchange or any other
exchange or market on which the Common Stock is then listed shall be the greater
of at least $8.00 per share for each of the fifteen (15) Trading Days
immediately preceding each of the date of Subsequent Tranche Notice and the
Tranche 2 Closing Date, provided that, in either case, all material information
regarding the Company has been publicly disseminated on a timely basis, whether
or not the Company has a duty under federal securities laws to disclose such
information.
ARTICLE V
MISCELLANEOUS
5.1 FEES AND EXPENSES. Each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, except as set forth in
the Registration Rights Agreement PROVIDED, that the Company shall pay the fees
due and payable to Xxxxx Xxxxxxx as set forth in the engagement letter
previously furnished to Purchasers. The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the Shares pursuant
hereto.
5.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the
Exhibits and Schedules hereto, the Registration Rights Agreement, the
Convertible Debentures and the Warrants contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
5.3 NOTICES. Any and all notices or other communications or deliveries
required or
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permitted to be provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 8:00 p.m. (New York City time) on a Business
Day, (ii) the Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in the Purchase Agreement later than 8:00 p.m. (New York City time) on
any date and earlier than 11:59 p.m. (New York City time) on such date, (iii)
the Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as follows:
If to the Company: PLC Systems Inc.
00 Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxx, Chief Executive Officer
Facsimile No.: (000) 000-0000
With copies to: Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
If to Southbrook: Southbrook International Investments, Ltd
c/o Trippoak Advisors, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile No.: (212) 32-3256
Attn: Xxxxxx X. Xxxxxx
If to Xxxxx Xxxxxxx XX: Xxxxx Xxxxxxx Strategic Growth Fund, L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx Xxxx
If to Xxxxx Xxxxxxx
Limited: Xxxxx Xxxxxxx Strategic Growth Fund, Ltd.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx Xxxx
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With copies
in the case of any
Purchasers to: Xxxxxxxx Xxxxxxxxx Xxxxxx
Aronsohn & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and each of the Purchasers; or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
5.5 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each of the Purchasers. No Purchaser may
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Company, except that any Purchaser may assign its rights
hereunder and under the Transaction Documents without the consent of the Company
as long as such assignee demonstrates to the reasonable satisfaction of the
Company its satisfaction of the representations and warranties set forth in
Section 2.2. This provision shall not limit a Purchaser's right to transfer
securities or transfer or assign rights hereunder or under the Registration
Rights Agreement.
5.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and, other than with respect to Section 3.15, which is intended in part
for the benefit of and which may be enforced by Xxxxx Xxxxxxx Management, and
with respect to permitted assignees under Section 5.6, is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.
5.8 GOVERNING. This Agreement shall be governed by and construed and
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enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof.
5.9 SURVIVAL. The agreements and covenants contained in ARTICLE III, IV
and this ARTICLE V shall survive the delivery and conversion of the Convertible
Debentures pursuant to this Agreement and the representations and warranties of
the Company and the Purchasers contained in ARTICLE II shall survive until a
date that is three years after the last Closing Date.
5.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
5.11 PUBLICITY. The Company shall consult with each Purchaser and each
Purchaser shall consult with the Company prior to issuing any press releases or
otherwise making public statements with respect to the transactions contemplated
hereby and the Company shall not issue any such press release or otherwise make
any such public statement without the prior written consent of each Purchaser
and the Purchasers shall not issue any such press release or otherwise make any
public statement without the prior written consent of the Company, which consent
shall not be unreasonably withheld or delayed, except that no prior consent
shall be required if such disclosure is required by law, in which such case the
disclosing parties shall provide the other parties with prior notice of such
public statement.
5.12 SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
5.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchasers
will be entitled to specific performance of the obligations of the Company under
the Transaction Documents. Each of the Company and the Purchasers (severally and
not jointly) agree that monetary damages would not be adequate compensation for
any loss incurred by reason of any breach of its obligations described in the
foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
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IN WITNESS WHEREOF, the parties hereto have caused this
Convertible Debenture Purchase Agreement to be duly executed as of the date
first indicated above.
Company:
PLC SYSTEMS INC.
By:/s/ Xxxxxxxx X. Xxxxxx
----------------------
Xxxxxxxx X. Xxxxxx
Chief Financial Officer
Purchasers:
SOUTHBROOK INTERNATIONAL INVESTMENTS, LTD.
By:/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxxx
Attorney-in-Fact
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, LTD.
By:/s/ Xxxxxxxx Xxxx
-----------------
Xxxxxxxx Xxxx
Principal
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, L.P.
By:/s/ Xxxxxxxx Xxxx
-----------------
Xxxxxxxx Xxxx
Principal
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SCHEDULE 2.1(A)
SUBSIDIARIES
---------------------------------------------------- ------------------------------ ================================
NAME Jurisdiction Percentage
of of Equity
ORGANIZATION Securities Owned
BY THE COMPANY
---------------------------------------------------- ------------------------------ ================================
PLC Medical Systems, Inc. Delaware 100%
---------------------------------------------------- ------------------------------ ================================
PLC Sistemas Medicos Internacionais, Lda Portugal 100%
---------------------------------------------------- ------------------------------ ================================
PLC Sistemas Medicos GmbH Germany 100%
---------------------------------------------------- ------------------------------ ================================
PLC Medical Systems AG Switzerland 100%
---------------------------------------------------- ------------------------------ ================================
PLC Medical Systems Asia/Pacific Pte Ltd. Singapore 100%
---------------------------------------------------- ------------------------------ ================================
PLC Medical Systems France France 100%
---------------------------------------------------- ------------------------------ ================================
PLC Medical Systems Australia Pty. Ltd. Australia 100%
---------------------------------------------------- ------------------------------ ================================
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EXHIBIT 2.1(c)
PLC SYSTEMS CAPITALIZATION TABLE
Shares Authorized 25,000,000
Shares O/S @ 04/22/98 (18,980,081)
Shares reserved for options outstanding (2,804,983)
Shares reserved for warrants outstanding (150,000)
------------
Balance Remaining 3,064,936
