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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is by and between
Palomar Electronics Corporation (the "Company"), a Delaware corporation, Palomar
Medical Technologies, Inc., a Delaware corporation ("Palomar"), each with an
office at 00 Xxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 U.S.A., and
Clearwater Fund IV, LLC (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement and
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:
SECTION 1. Authorization of Shares. The Company has authorized the sale of
200,000 shares (the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of Nexar Technologies, Inc., a Delaware corporation ("Nexar"),
owned by the Company.
SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as
defined below), the Company will sell to the Purchaser, and the Purchaser will
buy from the Company, upon the terms and conditions hereinafter set forth, the
Shares for an aggregate purchase price to be calculated at $10 per share
totalling $2,000,000 (the "Purchase Price").
SECTION 3. Payment of Purchase Price. On or prior to the Closing Date, as
defined below, the Purchaser will deliver to the Company the full amount of the
Purchase Price by check or wire transfer to the account set forth below.
Citibank
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA 000000000
Account Number: 00000000
Account Name: Xxxx Xxxxxx Xxxxxxxx, Inc.
For Further Credit to:
Account Number 593109782
Account Name: Palomar Medical Technologies, Inc.
SECTION 4. The Closing. The consummation of the transactions contemplated
by this Agreement (the "Closing") shall occur on December 31, 1996 (the "Closing
Date") at the offices of the Company or at such other time and place as shall be
agreed by the Company and the Purchaser. At the Closing, the Company shall
deliver to the Purchaser one or more certificates for the Shares registered in
the name of the Purchaser or its nominee.
SECTION 5. Representations, Warranties and Covenants of the Company. The
Company and Palomar hereby jointly and severally represent and warrant to, and
covenant with, the Purchaser as follows:
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SECTION 5.1. Organization. Nexar is duly organized, validly existing
and in good standing under the laws of the State of Delaware. Nexar has full
power and authority to own and operate its properties and to conduct its
business as currently conducted and is registered or qualified to do business
and is in good standing in each jurisdiction in which it owns or leases property
or transacts business and where the failure to be so qualified would have a
material adverse effect upon the business, financial condition, properties or
operations of Nexar.
SECTION 5.2. Due Authorization. The Company has all requisite power
and authority to execute, deliver and perform its obligations under this
Agreement, and this Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes the valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, usury, fraudulent conveyance or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 5.3. Ownership of the Shares. The Company is the record and
beneficial owner of the Shares free and clear of any adverse claim of any
person. At the Closing, Purchaser will acquire good and valid title to the
Shares free and clear of any adverse claim of any person.
SECTION 5.4. Non-Contravention. The execution and delivery of this
Agreement, the sale of the Shares to be sold by the Company hereunder, and the
consummation of the transactions contemplated hereby will not conflict with or
constitute a violation of, or default (with the passage of time or otherwise)
under, any material agreement or instrument to which the Company or Nexar is a
party or by which either is bound or the Certificate of Incorporation (the
"Charter") or the By-Laws of the Company or Nexar nor result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or Nexar
or an acceleration of indebtedness pursuant to any obligation, agreement or
condition contained in any material bond, debenture, note or any other evidence
of indebtedness or any material indenture, mortgage, deed of trust or any other
agreement or instrument to which the Company or Nexar is a party or by which the
Company or Nexar is bound or to which any of the property or assets of the
Company or Nexar is subject, nor conflict with, or result in a violation of, any
law, administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or Nexar. No
consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or
other governmental body in the United States, other than with respect to "blue
sky" laws, is required for the valid issuance and sale of the Shares to be sold
pursuant to this Agreement (other than such as have been made or obtained).
SECTION 5.5. Capitalization. The authorized and outstanding capital
stock of Nexar and rights to acquire capital stock of Nexar are as set forth on
Schedule 5.5 hereto. Except as
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set forth in Schedule 5.5, there are no outstanding shares of, or rights to
acquire shares of, capital stock of Nexar. The Shares have been duly authorized,
validly issued and are fully paid and nonassessable.
SECTION 5.6. Legal Proceedings. There is no material legal or
governmental proceeding pending or, to the knowledge of the Company, threatened
or contemplated to which Nexar is or may be a party or of which the business or
property of Nexar is or may be subject.
SECTION 5.7. No Violations. Nexar is not in violation of its Charter
or By-Laws, in violation of any law, administrative regulation, ordinance or
order of any court or governmental agency, arbitration panel or authority
applicable to Nexar, which violation, individually or in the aggregate, would
have a material adverse effect on the business or financial condition of Nexar,
or in default in any material respect in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness in any indenture, mortgage, deed of trust or any other
agreement or instrument to which Nexar is a party or by which Nexar is bound or
by which the properties of Nexar are bound or affected, and there exists no
condition which, with the passage of time or the giving of notice or both, would
constitute a material default under any such document or instrument or result in
the imposition of any material penalty or the acceleration of any indebtedness.
SECTION 5.8. Governmental Permits, Etc. Nexar has all necessary
franchises, licenses, certificates and other authorizations from any foreign,
federal, state or local government or governmental agency, department, or body
that are currently necessary for the operation of the business of Nexar as
currently conducted, the absence of which would have a material adverse effect
on the business or operations of Nexar.
SECTION 5.9. Financial Statements. The Company has made available to
Purchaser certain internally generated financial statements of Nexar (the
"Financial Statements"). The Financial Statements and the related notes present
fairly the financial position of Nexar as of the dates indicated therein and its
results of operations and cash flows for the periods therein specified. Such
Financial Statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified.
SECTION 5.10. No Material Adverse Change. Since the date of the most
recent balance sheet included in the Financial Statements, Nexar has not
incurred any material liabilities or obligations, direct or contingent, other
than in the ordinary course of business, and there has not been any material
adverse change in its business, financial condition or results of operations.
SECTION 5.11. Intellectual Property. Nexar has the right to use all
intellectual property (the "Intellectual Property") now used by it in its
business. Nexar owns all right, title and interest in and to, all of the
intellectual property it owns, free and clear of any liens or encumbrances. In
any case in which Nexar does not own the Intellectual Property, it has good and
valid licenses for the same which are in full force and effect. No claims have
been asserted
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with respect to the use of any such Intellectual Property or
challenging or questioning the validity or effectiveness of any such license or
agreement.
SECTION 5.12. Title to Properties and Assets. Nexar has good and
marketable title to its properties and assets, and has good title to its
leasehold interests, in each case, free and clear of any liens, except (i) the
lien of current taxes not yet due and payable and (ii) minor liens arising in
the ordinary course of business which do not in any case materially detract from
the value of the property subject thereto or impair Nexar's operations.
SECTION 6. Representations, Warranties and Covenants of the Purchaser.
(a) The Purchaser represents and warrants to, and covenants with, the
Company, as of the date hereof and as of the Closing Date, that: (i) the
Purchaser is an "accredited investor" as defined in Rule 501 of Regulation D
promulgated under the Securities Act; (ii) the Purchaser is acquiring the Shares
for its own account for investment and with no present intention of distributing
any of such Shares other than to any affiliate of the Purchaser; (iii) the
Purchaser will not, directly or indirectly, voluntarily offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares, except in compliance
with the Securities Act and the rules and regulations promulgated thereunder;
(iv) the Purchaser is an "institutional buyer" within the meaning of Section
36b-21(b)(8) of the Connecticut Uniform Securities Act, (v) the Purchaser has
had an opportunity to ask questions and receive answers from the management of
the Company and Nexar regarding Nexar, its business and the offering of the
Shares; and (vi) the Purchaser has, in connection with its decision to purchase
Shares, relied solely upon the representations and warranties of the Company
contained herein.
(b) The Purchaser agrees not to make any sale of the Shares except
pursuant to an effective registration statement under the Securities Act or an
exemption from the registration requirements thereof.
(c) The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, usury, fraudulent conveyance or similar
laws affecting creditors' and contracting parties' rights generally and except
as enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(d) The Purchaser represents that it understands and agrees that,
until registered under the Securities Act or transferred pursuant to the
provisions of Rule 144
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promulgated thereunder, all certificates evidencing the Shares shall bear a
legend, prominently stamped or printed therein, reading substantially as
follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state. These securities have been acquired for
investment and not with a view toward distribution or resale. Such
securities may not be offered for sale, sold, delivered after sale,
transferred, pledged or hypothecated in the absence of an effective
registration statement covering such securities under the Act and any
applicable state securities laws, unless the holder shall have
obtained an opinion of counsel satisfactory to the corporation that
such registration is not required."
SECTION 7. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein shall survive the Closing.
SECTION 8. Lock-up Agreements with Underwriters; Registration. In the event
of an initial underwritten public offering of Nexar's equity securities, the
Purchaser agrees to enter into an agreement with the Underwriter or
Underwriters' Representative for such offering restricting the sale, transfer or
other disposition of the Shares for a period not to exceed 180 days to the
extent that such agreement is required to be executed by members of senior
management of Nexar.
SECTION 9. Legal Fees. The Company agrees to pay the reasonable fees and
expenses of the Purchaser's counsel in connection with the purchase and sale of
the Shares up to a maximum of $5,000.
SECTION 10. Conditions to Closing.
(a) The obligations of the Purchaser to consummate the transactions
contemplated hereby shall be subject to the satisfaction by the Company of each
of the following conditions on or before the Closing Date, any one or more of
which may be waived by the Purchaser:
(i) The representations and warranties of the Company set
forth in this Agreement delivered to the Purchaser by or on behalf of
the Company shall be true and correct as if made on the Closing Date.
(ii) Each of the covenants, agreements and conditions to be
performed and satisfied by the Company pursuant to this Agreement at
or prior to Closing shall have been duly performed and satisfied.
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(b) The obligations of the Company to consummate the transactions
contemplated hereby shall be subject to the satisfaction by the Purchaser of
each of the following conditions on or before the Closing Date, any one or more
of which may be waived by the Company:
(i) The representations and warranties of the Purchaser set
forth in this Agreement shall be true and correct as if made on the
Closing Date.
(ii) Each of the covenants, agreements and conditions to be
performed and satisfied by the Purchaser pursuant to this Agreement at
or prior to Closing shall have been duly performed and satisfied.
(iii) The Purchaser shall have paid the Purchase Price in
accordance with Section 3.
SECTION 11. No Brokers. The parties hereto hereby represent that there are
no brokers or finders entitled to compensation in connection with the
transactions contemplated hereby.
SECTION 12. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified mail, postage prepaid, and shall be deemed given when so
mailed:
(a) if to the Company to:
General Counsel
Palomar Medical Technologies, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
(b) if to the Purchaser, at its address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
SECTION 13. Termination. Either party to this Agreement may terminate this
Agreement upon written notice to the other at any time prior to the Closing.
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SECTION 14. Changes. Any term of the Agreements may be amended or
compliance therewith waived with the written consent of the Company and the
holders of a majority of the Shares purchased pursuant to the Agreement.
SECTION 15. Tag Along Rights. In the event the Company should decide to
sell from time to time any shares of Common Stock or other common stock
equivalent to any third party, Purchaser shall have the right to sell its pro
rata portion of the Shares to such third party on the same terms and conditions.
The Company shall give prompt written notice to Purchaser of the terms of any
such offer. Notwithstanding the foregoing, if Purchaser should own less than
2.5% of the outstanding Common Stock, it shall be entitled to sell the greater
of (x) the remaining Shares or (y) its pro rata portion.
SECTION 16. Confidentiality. No press release or public announcement may be
made naming Purchaser or its affiliates without the prior consent of Purchaser;
provided that Nexar may disclose Purchaser's stockholdings in the prospectus for
Nexar's initial public offering or as may be required by law.
SECTION 17. No Impairment. Each of Palomar, the Company and Nexar agree
that until such time as the Shares have been registered pursuant to the terms of
the Registration Rights Agreement and sold by Purchaser, they will not take any
action, directly or indirectly, that could reasonably be expected to adversely
affect or otherwise impair (i) the value of the Shares or (ii) the rights of
Purchaser under this Agreement, the Registration Rights Agreement or otherwise
under law.
SECTION 18. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 19. Severability. If any provision contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
SECTION 20. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of The Commonwealth of
Massachusetts and United States federal law.
SECTION 21. Counterparts. This Agreement may be executed in two
counterparts, each of which shall constitute an original, but both of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be executed by their duly authorized representatives as of the
following date.
Dated: December 31, 1996 PALOMAR ELECTRONICS CORPORATION
By: /s/
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
PALOMAR MEDICAL TECHNOLOGIES, INC.
By: /s/
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
[Purchaser Signature Page Continues on the Following Page]
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PURCHASER SIGNATURE PAGE AND QUESTIONNAIRE
The undersigned Purchaser hereby executes the Securities Purchase
Agreement with Palomar Electronics Corporation and Palomar Medical Technologies,
Inc. (the "Company") and hereby authorizes this signature page to be attached to
a counterpart of such document executed by a duly authorized officer of the
Company.
CLEARWATER FUND IV LLC
By: /s/
--------------------------------
Name: Hans. X. Xxxx
Title: President/Managing Member
Name in which Shares are to be registered: Clearwater Fund IV LLC
Address of registered holder: 000 Xxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Social Security or Tax ID Number: 00 0000000
Contact name and telephone number
regarding settlement and Name registration: Xxxx X. Xxxx
Telephone Number: 000-000-0000
