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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of March 27,
1997 by and among PALOMAR MEDICAL TECHNOLOGIES, INC., a corporation organized
under the laws of the State of Delaware, with headquarters located at 00 Xxxxxx
Xxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "COMPANY"), and the undersigned
purchasers of Preferred Shares under the Securities Purchase Agreement (together
with affiliates, the "INITIAL INVESTORS").
WHEREAS:
A. In connection with the Securities Purchase Agreement of even date
herewith by and between the Company and the Initial Investors (the "SECURITIES
PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Initial Investors shares
of its Series H Convertible Preferred Stock (the "PREFERRED STOCK") that is
convertible into shares (the "CONVERSION SHARES") of the Company's common stock,
par value $.01 per share (the "COMMON STOCK"), upon the terms and subject to the
limitations and conditions set forth in the Certificate of Designations, Rights
and Preferences with respect to such Preferred Stock (the "CERTIFICATE OF
DESIGNATIONS"); and
B. To induce the Initial Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investors hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "INVESTORS" means the Initial Investors and any transferees
or assignees who agree to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement
or Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for
offering securities on a continuous basis ("RULE 415"), and the
declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange
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Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means the Conversion Shares
(including any Conversion Shares issuable with respect to Conversion
Default Payments under the Certificate of Designations or in
redemption of any Preferred Stock) issued or issuable with respect to
the Preferred Stock and any shares of capital stock issued or
issuable, from time to time (with any adjustments), on or in exchange
for or otherwise with respect to any of the foregoing.
(iv) "REGISTRATION STATEMENT" means a registration statement of
the Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, and, on or prior
to the sixtieth (60th) day after the Closing Date (the "FILING DATE"), file
with the SEC a Registration Statement on Form S-3 (or, if Form S-3 is not
then available, on such form of Registration Statement as is then available
to effect a registration of all of the Registrable Securities, subject to
the consent of the Initial Investors (as determined pursuant to Section
11(j) hereof)) covering the resale of at least 4,500,000 shares of
Registrable Securities (provided that such number may be proportionally
reduced if fewer than 20,000 shares are issued under the Securities
Purchase Agreement), which Registration Statement, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including
Rule 416), shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become
issuable upon conversion of the Preferred Stock to prevent dilution
resulting from stock splits, stock dividends or similar transactions. The
Registrable Securities included on the Registration Statement shall be
allocated to the Investors as set forth in Section 11(k) hereof. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to
(and subject to the approval of) the Initial Investors and their counsel
prior to its filing or other submission.
b. Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of the
Initial Investors, shall have the right to select a total of one legal
counsel to represent the Investors and an investment banker or bankers and
manager or managers to administer the offering, which investment banker or
bankers or manager or managers shall be reasonably satisfactory to the
Company.
c. Payments by the Company. The Company shall cause the registration
statement to become effective as soon as practicable after filing, but in
no event later than the one hundred twentieth (120th) day following the
Closing Date (the "REGISTRATION DEADLINE"). If (i) the registration
statement(s) covering the Registrable Securities required to be filed by
the Company pursuant to Section 2(a) hereof is not declared effective by
the SEC on or before the Registration Deadline or if, after the
registration statement has been declared effective by the SEC, sales of all
the Registrable Securities (including any Registrable Securities required
to be registered pursuant to Section 3(b) hereof) cannot be made pursuant
to the registration statement
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(by reason of a stop order or the Company's failure to update the
registration statement or any other reason outside the control of the
Investors) or (ii) the Common Stock is not listed or included for quotation
on the NASDAQ Small Cap Market ("NASDAQ"), the NASDAQ National Market (the
"NNM"), the New York Stock Exchange (the "NYSE") or the American Stock
Exchange (the "AMEX") at any time after the Registration Deadline, then the
Company will make payments to the Investors in such amounts and at such
times as shall be determined pursuant to this Section 2(c) as partial
relief for the damages to the Investors by reason of any such delay in or
reduction of their ability to sell the Registrable Securities (which remedy
shall not be exclusive of any other remedies available at law or in
equity). The Company shall pay to each Investor an amount equal to the sum
of (i) the aggregate Purchase Price of the Preferred Stock held by such
Investor (including, without limitation, Preferred Stock that has been
converted into Conversion Shares then held by such Investor) (the
"AGGREGATE SHARE PRICE") multiplied by two hundredths (.02) if the
Registration Statement filed pursuant to Section 2(a) is not declared
effective on or prior to the Registration Deadline plus (ii) an amount
equal to the Aggregate Share Price multiplied by two hundredths (.02) for
each thirty (30) days thereafter that the Registration Statement has not
been declared effective or that sales cannot be made pursuant to the
Registration Statement after it has been declared effective or that the
Common Stock is not listed or included for quotation on NASDAQ, the NYSE or
AMEX; PROVIDED, HOWEVER that there shall be excluded from each such period
any delays which are solely attributable to changes (other than corrections
of Company mistakes with respect to information previously provided by the
Investors) required by the Investors in the Registration Statement with
respect to information relating to the Investors, including, without
limitation, changes to the plan of distribution and PROVIDED, FURTHER, that
the aggregate amount payable to any Investor under this Section 2(c) shall
not exceed ten percent (10%) of such Investor's Aggregate Share Price. (For
example, if the Registration Statement is not effective by the Registration
Deadline, the Company would pay $20,000 for each $1,000,000 of Aggregate
Share Price and the Company would pay an additional $20,000 for each
$1,000,000 of Aggregate Share Price thereafter for each additional thirty
(30) days the Registration Statement is not effective (up to a maximum of
$100,000 for each $1,000,000 Aggregate Share Price)). Such amounts shall be
paid in cash or, at each Investor's option, may be convertible into Common
Stock at the "CONVERSION PRICE" (as defined in the Certificate of
Designations). Any shares of Common Stock issued upon conversion of such
amounts shall be Registrable Securities. If the Investor desires to convert
the amounts due hereunder into Registrable Securities it shall so notify
the Company in writing within two (2) business days of the date on which
such amounts are first payable in cash and such amounts shall be so
convertible (pursuant to the mechanics set forth under Article IV of the
Certificate of Designations), beginning on the last day upon which the cash
amount would otherwise be due in accordance with the following sentence.
Payments of cash pursuant hereto shall be made within five (5) days after
the end of each period that gives rise to such obligation.
d. [Intentionally Omitted]
e. Eligibility for Form S-3. The Company represents and warrants that
it meets the requirements for the use of Form S-3 for registration of the
sale by the Initial Investors and any other Investor of the Registrable
Securities and the Company shall file all reports required to be filed by
the Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have
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the following obligations:
a. The Company shall prepare promptly and file with the SEC the
Registration Statement required by Section 2(a), and cause such
Registration Statement relating to Registrable Securities to become
effective as soon as practicable after such filing, but in no event later
than the Registration Deadline, and keep the Registration Statement
effective pursuant to Rule 415 at all times until such date as is the
earlier of (i) the date on which all of the Registrable Securities have
been sold and (ii) the date on which all Registrable Securities (in the
reasonable opinion of counsel to the Initial Investors) may be immediately
sold by the Investors to the public without registration (including in
accordance with Rule 144(k) promulgated under the Securities Act) (the
"Registration Period"), which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein and
all documents incorporated by reference therein) shall not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein
not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement effective
at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statement. In the event an Investor notifies the Company that
the number of shares available under a Registration Statement filed
pursuant to this Agreement was, for any three (3) consecutive trading days
(the date the Investor notifies the Company of such occurrence being the
"REGISTRATION TRIGGER DATE"), is insufficient to cover a number of shares
equal to the applicable Registration Percentage (as defined below)
multiplied by all of the Registrable Securities issued or issuable upon
conversion of the Preferred Stock held by such Investor (without giving
effect to any limitations on conversion contained in Article IV.C of the
Certificate of Designations), the Company shall amend the Registration
Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover one hundred
fifty percent (150%) of the Registrable Securities issued or issuable to
such Investor (without giving effect to any limitations on conversion
contained in Article IV.C of the Certificate of Designations), in each
case, as soon as practicable, but in any event within fifteen (15) days
after the Registration Trigger Date (based on the market price of the
Common Stock and other relevant factors on which the Company reasonably
elects to rely). The Company shall cause such amendment and/or new
Registration Statement to become effective as soon as practicable following
the filing thereof. In the event the Company fails to obtain the
effectiveness of any such Registration Statement within ninety (90) days
after a Registration Trigger Date, each Investor shall thereafter have the
option, exercisable in whole or in part at any time and from time to time
by delivery of a written notice to the Company (a "REDEMPTION NOTICE"), to
require the Company to purchase for cash, at an amount per share equal to
the Redemption Amount (as defined in Article VIII.C of the Certificate of
Designations), a portion of the Investor's Preferred Stock such that the
total number of shares of Common Stock issuable to such Investor upon
conversion of its Preferred Stock (without giving effect to any limitations
on conversion contained in Article IV.C of the Certificate of Designations)
does not exceed 135% of the Registrable Securities issued or issuable upon
conversion of such Investor's Preferred Stock (without giving effect to any
limitations on conversion contained in Article IV.C of the Certificate of
Designations). If the
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Corporation fails to redeem any of such shares within five (5) business
days after its receipt of a Redemption Notice, then such Investor shall be
entitled to the remedies provided in Article VIII.D of the Certificate of
Designations. As used herein, "REGISTRATION PERCENTAGE" means one hundred
percent (100%) for the period ending on the 150th day following the Closing
Date and means one hundred and thirty-five percent (135%) thereafter.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel
(i) promptly after the same is prepared and publicly distributed, filed
with the SEC, or received by the Company, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and
prospectus and each amendment or supplement thereto, and, in the case of
the Registration Statement referred to in Section 2(a), each letter written
by or on behalf of the Company to the SEC or the staff of the SEC, and each
item of correspondence from the SEC or the staff of the SEC, in each case
relating to such Registration Statement (other than any portion, if any,
thereof which contains information for which the Company has sought
confidential treatment), and (ii) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements
thereto and such other documents as such Investor may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by
such Investor.
d. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as each Investor who holds Registrable Securities being
offered reasonably requests, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify
the Registrable Securities for sale in such jurisdictions; PROVIDED,
HOWEVER, that the Company shall not be required in connection therewith or
as a condition thereto to (a) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(d), (b) subject itself to general taxation in any such jurisdiction, (c)
file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or
(e) make any change in its charter or bylaws, which in each case the Board
of Directors of the Company determines to be contrary to the best interests
of the Company and its stockholders.
e. In the event the Investors who hold a majority in interest of the
Registrable Securities being offered in an offering select underwriters for
the offering, the Company shall enter into and perform its obligations
under an underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution obligations,
with the underwriters of such offering.
f. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of the happening of any event, of which
the Company has knowledge, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement
of a material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and use its best efforts promptly to prepare a supplement or amendment to
the Registration Statement to correct such untrue statement or omission,
and deliver such number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request.
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g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of
such order at the earliest practicable moment and to notify each Investor
who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such
order and the resolution thereof.
h. The Company shall permit a single firm of counsel designated by the
Initial Investors to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time (and in no event less
than three (3) business days) prior to their filing with the SEC, and not
file any document in a form to which such counsel reasonably objects. In
the event such counsel fails to convey to the Company all of its comments
(or that it has no comments) to such Registration Statement prior to the
scheduled filing date of such Registration Statement (which date shall
comply with the requirements set forth in this Section 3(h), the sixty (60)
and the one hundred and twenty (120) day periods referred to in Section
2(a) and 2(c) shall be extended by such number of business days after such
scheduled filing date that such counsel so conveys such comments (or that
it has no comments).
i. The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration
Statement.
j. At the request of any Investor, the Company shall furnish, on the
date of effectiveness of the Registration Statement (i) an opinion, dated
as of such date, from counsel representing the Company addressed to the
Investors and in form, scope and substance as is customarily given in an
underwritten public offering and (ii) in the case of an underwriting, a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and the Investors.
k. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to
the Registration Statement, (iii) one firm of attorneys and one firm of
accountants or other agents retained by the Investors, and (iv) one firm of
attorneys retained by all such underwriters (collectively, the
"INSPECTORS") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the
"RECORDS"), as shall be reasonably deemed necessary by each Inspector to
enable each Inspector to exercise its due diligence responsibility, and
cause the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for purposes of such
due diligence; PROVIDED, HOWEVER, that each Inspector shall hold in
confidence and shall not make any disclosure (except to an Investor) of any
Record or other information which the Company determines in good faith to
be confidential, and of which determination the Inspectors are so notified,
unless (a) the disclosure of such Records is necessary to avoid or correct
a misstatement or omission in any Registration Statement, (b) the release
of such Records is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction, or (c) the information
in such Records has been made generally available to the public other than
by disclosure in violation of this or any other agreement. The Company
shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered
into confidentiality
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agreements (in form and substance satisfactory to the Company) with the
Company with respect thereto, substantially in the form of this Section
3(k). Each Investor agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein shall be deemed to limit the Investor's
ability to sell Registrable Securities in a manner which is otherwise
consistent with applicable laws and regulations.
l. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction,
(iv) such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement, or (v) such
Investor consents to the form and content of any such disclosure. The
Company agrees that it shall, upon learning that disclosure of such
information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt notice to such Investor prior to making such disclosure, and allow
the Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
m. The Company shall use its best efforts to promptly either (i) cause
all the Registrable Securities covered by the Registration Statement to be
listed on the NYSE or the AMEX or another national securities exchange and
on each additional national securities exchange on which securities of the
same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of
such exchange, or (ii) secure the designation and quotation, of all the
Registrable Securities covered by the Registration Statement on the NASDAQ
Small Cap Market or the NNM and, without limiting the generality of the
foregoing, to arrange for or maintain at least two market makers to
register with the National Association of Securities Dealers, Inc. ("NASD")
as such with respect to such Registrable Securities.
n. The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
o. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates
to be in such denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) an opinion of such
counsel in the form attached hereto as EXHIBIT 1.
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p. At the request of any Investor, the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in
connection with the Registration Statement as may be necessary in order to
change the plan of distribution set forth in such Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect
the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may
reasonably request. At least ten (10) business days prior to the first
anticipated filing date of the Registration Statement, the Company shall
notify each Investor in writing of the information the Company requires
from each such Investor and each such Investor shall provide such
information no later than five (5) business days prior to such anticipated
filing date.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement.
c. Each Investor whose Registrable Securities are included in a
Registration Statement understands that the Securities Act may require
delivery of a prospectus relating thereto in connection with any sale
thereof pursuant to such Registration Statement and each such Investor
shall deliver a prospectus in connection with any such sale.
d. Each Investor agrees to notify the Company promptly, but in any
event within 72 hours after the date on which all Registrable Securities
and Preferred Shares owned by such Investor have been sold by such
Investor, if such date is prior to the expiration of the Registration
Period, so that the Company may comply with its obligation to terminate the
Registration Statement in accordance with Item 512 of Regulation S-K or
Regulation S-B, as the case may be.
e. In the event Investors holding a majority in interest of the
Registrable Securities being offered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such
other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities, unless such Investor has
notified the Company in writing of such Investor's election to exclude all
of such Investor's Registrable Securities from the Registration Statement.
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f. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f)
or 3(g), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g)
and, if so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Investor's
possession, of the prospectus covering such Registrable Securities current
at the time of receipt of such notice.
g. No Investor may participate in any underwritten offering of
Registrable Securities hereunder unless such Investor (i) agrees to sell
such Investor's Registrable Securities on the basis provided in any
underwriting arrangements in usual and customary form entered into by the
Company, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and
(iii) agrees to pay its pro rata share of all underwriting discounts and
commissions and any expenses in excess of those payable by the Company
pursuant to Section 5 below.
5. EXPENSES OF REGISTRATION.
All expenses incurred by the Company in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, the fees and disbursements of counsel for the Company and the
fees and disbursements contemplated by Section 3(j) hereof shall be borne by the
Company. The Company shall also reimburse the Investors for the reasonable fees
and disbursements of one counsel selected by the Investors pursuant to Section
2(b) hereof. The Investors shall be responsible for any underwriting discounts
and commissions attributable to the Registrable Securities to be sold by them.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable
Securities, and (ii) the directors, officers, partners, members, employees,
agents and each person who controls any Investor within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), if any, (each, an
"INDEMNIFIED PERSON"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "CLAIMS") to which any
of them may become subject insofar as such Claims arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to
state therein a material fact required to be stated or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus
if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact
necessary to make the statements
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made therein, in light of the circumstances under which the statements
therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other
law, including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). Subject to the restrictions set forth in
Section 6(c) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out
of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by such
Indemnified Person expressly for use in the Registration Statement or any
such amendment thereof or supplement thereto; (ii) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not
be unreasonably withheld; and (iii) with respect to any preliminary
prospectus, shall not inure to the benefit of any Indemnified Person if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then
amended or supplemented, if such corrected prospectus was timely made
available by the Company pursuant to Section 3(c) hereof, and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, its employees, agents
and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and any
other stockholder selling securities pursuant to the Registration Statement
or any of its directors or officers or any person who controls such
stockholder or underwriter within the meaning of the Securities Act or the
Exchange Act (collectively and together with an Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by
such Investor expressly for use in connection with such Registration
Statement; and subject to Section 6(c) such Investor will reimburse any
legal or other expenses (promptly as such expenses are incurred and are due
and payable) reasonably incurred by them in connection with investigating
or defending any such Claim; PROVIDED, HOWEVER, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; PROVIDED, FURTHER, HOWEVER, that the Investor shall be liable
under this Agreement (including this Section 6(b) and Section 7) for only
that amount as does not exceed the net proceeds actually received by such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable
355
Securities by the Investors pursuant to Section 9. Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained
in this Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or
supplemented, and the Indemnified Party failed to utilize such corrected
prospectus.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; PROVIDED, HOWEVER, that such
indemnifying party shall not be entitled to assume such defense and an
Indemnified Person or Indemnified Party shall have the right to retain its
own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by
such counsel in such proceeding or the actual or potential defendants in,
or targets of, any such action include both the Indemnified Person or the
Indemnified Party and the indemnifying party and any such Indemnified
Person or Indemnified Party reasonably determines that there may be legal
defenses available to such Indemnified Person or Indemnified Party which
are different from or in addition to those available to such indemnifying
party. The indemnifying party shall pay for only one separate legal counsel
for the Indemnified Persons or the Indemnified Parties, as applicable, and
such legal counsel shall be selected by Investors holding a
majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the
Initial Investors if it holds Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
PROVIDED, HOWEVER, that (i) no contribution shall be made under
circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6, (ii) no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution
356
(together with any indemnification or other obligations under this
Agreement) by any seller of Registrable Securities shall be limited in
amount to the net amount of proceeds received by such seller from the sale
of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
a. file with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject
to such requirements (it being understood that nothing herein shall limit
the Company's obligations under Section 4(c) of the Securities Purchase
Agreement) and the filing and availability of such reports and other
documents is required for the applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns shares of
Preferred Stock or Registrable Securities, promptly upon request, (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a
copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell
such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any transferee of all or any
portion of the shares of Preferred Stock or the Registrable Securities if: (i)
the Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein, and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, the Initial
Investors (to the extent the Initial Investors still own shares of Preferred
Stock or Registrable Securities) and Investors who hold a majority interest of
the Registrable Securities. Any amendment or waiver effected in accordance with
this Section
357
10 shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
b. Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail,
if mailed, or upon receipt or refusal of receipt, if delivered personally
or by courier or confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
Palomar Medical Technologies, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx, Director of Finance
with a copy to each of the Company's General Counsel at the
same address and to:
Xxxxx, Xxxx & Xxxxx, LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
If to RGC International Investors, LDC:
RGC International Investors, LDC
x/x Xxxx Xxxx Xxxxxxx Xxxxxxxxxx, X.X.
000 X. Xxxxxxxxxx Xxxx
Xxxxx 0000
Xxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxx
and if to any other Investor, at such address as such Investor shall have
provided in writing to the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 11(b).
c. Failure of any party to exercise any right or remedy under this
Agreement
358
or otherwise, or delay by a party in exercising such right or remedy, shall
not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to
be performed in the State of Delaware. The Company irrevocably consents to
the jurisdiction of the United States federal courts located in the County
of Kent in the State of Delaware in any suit or proceeding based on or
arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. The
Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The Company further agrees that
service of process upon the Company, mailed by first class mail shall be
deemed in every respect effective service of process upon the Company in
any such suit or proceeding. Nothing herein shall affect the Investors'
right to serve process in any other manner permitted by law. The Company
agrees that a final non-appealable judgment in any such suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on
such judgment or in any other lawful manner.
e. This Agreement and the Securities Purchase Agreement (including all
schedules and exhibits thereto) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein and therein. This Agreement and the
Securities Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. All consents and other determinations to be made by the Investors
or the Initial Investors pursuant to this Agreement shall be made by the
Investors or the Initial Investors holding a majority of the Registrable
Securities (determined as if all shares of Preferred Stock then outstanding
had been converted into or exercised for Registrable Securities) held by
all Investors or Initial Investors, as the case may be.
k. The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable
Securities included thereon shall be
359
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time of such establishment or
increase, as the case may be. In the event an Investor shall sell or
otherwise transfer any of such holder's Registrable Securities, each
transferee shall be allocated a pro rata portion of the number of
Registrable Securities included on a Registration Statement for such
transferor. Any shares of Common Stock included on a Registration Statement
and which remain allocated to any person or entity which does not hold any
Registrable Securities shall be allocated to the remaining Investors, pro
rata based on the number of shares of Registrable Securities then held by
such Investors.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
360
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
PALOMAR MEDICAL TECHNOLOGIES, INC.
By:
-----------------------------
Name:
-----------------------------
Its:
-----------------------------
Initial Investors:
RGC International Investors, LDC
By:
--------------------------
Name:
--------------------------
Its:
--------------------------
361
EXHIBIT 1
TO
REGISTRATION
RIGHTS
AGREEMENT
[Date]
VIA FACSILIME
Xxxxxxx Xxxxxx, Esq.
AMERICAN STOCK TRANSFER & TRUST COMPANY
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile (000) 000-0000
RE: PALOMAR MEDICAL TECHNOLOGIES, INC.
Dear Xx. Xxxxxx:
We are counsel to PALOMAR MEDICAL TECHNOLOGIES, INC., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), and we
understand that [Name of Investor] (the "HOLDER") has purchased from the Company
shares of the Company's Series H Convertible Preferred Stock (the "PREFERRED
STOCK") that are convertible into shares of the Company's Common Stock, par
value $.01 per share (the "COMMON STOCK"). The Preferred Stock were purchased by
the Holder pursuant to a Securities Purchase Agreement, dated as of March 27,
1997, by and among the Company and the signatories thereto (the "AGREEMENT").
Pursuant to a Registration Rights Agreement, dated as of March 27, 1997, by and
among the Company and the signatories thereto (the "REGISTRATION RIGHTS
AGREEMENT"), the Company agreed with the Holder, among other things, to register
the Registrable Securities (as that term is defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
upon the terms provided in the Registration Rights Agreement. In connection with
the Company's obligations under the Registration Rights Agreement, on ________,
1997, the Company filed a Registration Statement on Form S-___ (File No. 333-
_____________) (the "REGISTRATION STATEMENT") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder.
[Customary introductory and scope of examination language to be inserted]
Based on the foregoing, we are of the opinion that the Registrable
Securities have been registered under the Securities Act.
[Other customary language to be included.]
Very truly yours,
cc: [Name of Investor]
