REPURCHASE AGREEMENT
THIS REPURCHASE AGREEMENT, dated as of April 6, 1999, by and between
PALOMAR MEDICAL TECHNOLOGIES, INC., a Delaware corporation (the "Company"), with
offices located at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000-0000, and
ADVANTAGE FUND LIMITED, a British Virgin Islands corporation ("Advantage").
W I T N E S S E T H:
WHEREAS, Advantage owns (i) 403 shares (the "Shares") of Series G
Convertible Preferred Stock, $.01 par value, of the Company (the "Series G
Preferred Stock") and (ii) the promissory note of the Company payable to
Advantage due January 8, 2000 in the aggregate principal amount of $1,619,808.31
(the "Note"); and
WHEREAS, Upon the terms and subject to the conditions set forth herein,
the Company has agreed to repurchase the Shares and the Note (the "Repurchase");
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 parties agree as
follows:
1. DEFINITIONS.
The following terms used in this Agreement shall have the following
meanings:
"Certificate of Designations" means the Certificate of Designations for
the Series G Preferred Stock.
"Exchange Agreement" means the Exchange Agreement, dated as of December
31, 1997, between the Company and Advantage.
"Note Repurchase Price" means the net present value as of the day
preceding the Repurchase Date of the $1,619,808.31 amount due under the Note
using a 5% discount rate from the January 8, 2000 maturity date.
"Principal Agreements" means the Note, the Certificate of Designations,
the Exchange Agreement, the Registration Rights Agreement, dated as of September
26, 1996, between the Company and Advantage, and the other agreements and
instruments contemplated thereby.
"Repurchase Date" means the date the Shares and the Note are
repurchased by the Company pursuant to this Agreement.
"Repurchase Period" means the period from the date of this Agreement
until the earlier of (i) May 20, 1999 or (ii) the date of the Star Sale
Cancellation.
"Repurchase Price" means the sum of the Share Repurchase Price and the
Note Repurchase Price.
"Share Repurchase Price" means the number of shares multiplied by the
per share Redemption Price as such term is defined in Section 8 of the
Certificate of Designations.
"Star Sale" means the closing of the sale by the Company to Coherent,
Inc. of all of the Company's ownership interest in Star Medical Technologies,
Inc., a subsidiary of the Company, as described in the Company's proxy statement
dated March 12, 1999 or pursuant to a substantially similar transaction.
"Star Sale Cancellation" means the first time the Company's gives to or
receives written notice from any party involved in the proposed Star Sale that
the transactions contemplated by the proposed Star Sale have been cancelled,
terminated or suspended (including the failure to seek or obtain approval of the
Company's Stockholders.)
2. THE REPURCHASE.
(a) Repurchase Obligation. If the Star Sale occurs on or before May 15,
1999, the Company shall, within five days after the occurrence of the Star Sale,
repurchase from Advantage (i) all of the Shares for the Share Repurchase Price
and (ii) the Note for the Note Repurchase Price. Within one business day after
the occurrence of the Star Sale, the Company shall give Advantage written notice
of such occurrence, the Repurchase Date, the Share Repurchase Price and the Note
Repurchase Price.
(b) Method of Payment. Payment of the Repurchase Price shall be made by
wire transfer of immediately available funds to an account of Advantage
specified by Advantage by written notice to the Company at least one business
day prior to the Repurchase Date.
(c) Late Payment Fee. If for any reason (other than the fault of
Advantage) the Repurchase Price is not paid when due within five days after the
occurrence of the Star Sale, the Company shall pay Advantage a late payment fee
equal to one-half of one percent of the Repurchase Price per day for each day
after such fifth day until the Repurchase Date.
3. ADVANTAGE REPRESENTATIONS, WARRANTIES, ETC.
Advantage represents and warrants to, and covenants and agrees with,
the Company as follows:
(a) Repurchase Agreement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of Advantage and is a valid and
binding agreement of Advantage enforceable in accordance with its terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditorsAE rights generally.
(b) Title to the Shares and the Note. Advantage is the beneficial owner
of the Shares and the Note and, if the Repurchase is consummated, the Shares and
the Note will be transferred to the Company free and clear of all claims, liens,
security interests, pledges, charges, and other encumbrances.
4. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and agrees with,
Advantage that:
(a) Repurchase Agreement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Company and is a valid and
binding agreement of the Company enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditorsAE rights generally.
(b) Non-contravention. The execution and delivery by the Company of
this Agreement do not and the consummation by the Company of the transactions
contemplated hereby, including without limitation the Repurchase, will not, with
or without the giving of notice or the lapse of time, or both, (i) result in any
violation of any terms of the Certificate of Incorporation or By-laws of the
Company, (ii) conflict with or result in a breach by the Company of any of the
material terms or provisions of, or constitute a material default under, or
result in or give to others
any rights of termination, amendment, modification, acceleration or cancellation
of, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company
pursuant to, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which the Company or its
properties or assets is bound or affected, (iii) violate or contravene any
applicable law (including without limitation Section 160(a) of the Delaware
General Corporation Law), rule or regulation or any applicable decree, judgment
or order of any court, United States federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any of its properties or assets.
(c) Approvals. No authorization, approval or consent of, or filing
with, any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders of the Company is
required to be obtained or made by the Company for the execution or delivery by
the Company of this Agreement or the consummation of the transactions
contemplated hereby, including, without limitation, the Repurchase.
(d) Solvency. Prior to and after giving effect to the Repurchase the
Company will be Solvent. "Solvent" at any time shall mean that, at such time,
the aggregate fair saleable value of the CompanyAEs assets is in excess of the
total amount of its probable liabilities on its then existing debts as they
become absolute and matured, the Company has not then incurred debts beyond its
foreseeable ability to pay such debts as they mature, and the Company then has
capital adequate to conduct the business it is then engaged in or is then about
to engage in.
5. CERTAIN COVENANTS.
(a) Restriction on Exchange. During the Repurchase Period if the
Company is then in compliance with its obligations under the Principal
Agreements in all material respects, Advantage agrees that it will not exercise
its right to exchange or convert any of the Shares into shares of Common Stock,
$.01 par value, of the Company. After the Repurchase Period, there shall be no
restrictions on the number of Shares which may be exchanged or converted into
Common Stock and the limitations on exchanges in Section 4(b) of the Exchange
Agreement shall terminate and have no further force or effect.
(b) Restriction on Transfer. During the Repurchase Period if the
Company is then in compliance with its obligations under the Principal
Agreements in all material respects, Advantage agrees that it will not sell,
encumber, or otherwise transfer any interest in the Shares or the Note to any
third party.
(c) Certain Expenses. Whether or not the Repurchase occurs, the Company
shall promptly pay or reimburse Advantage for all reasonable fees and expenses,
including attorneys' fees and expenses, incurred by Advantage in connection with
this Agreement and the transactions contemplated hereby.
(d) Notice of Star Sale Cancellation. The Company shall give Advantage
notice of the Star Sale Cancellation on the date thereof. The parties
acknowledge that, if the Repurchase does not occur during the Repurchase Period,
the restrictions on Advantage set forth in Sections 4(a) and 4(b) above shall
terminate and Advantage shall be entitled to all of its rights and remedies
under the Principal Agreements and any other agreements and instruments relating
to the Shares and the Notes.
6. INDEMNIFICATION.
(a) Indemnity Obligation. To the extent permitted by law, the Company
will indemnify and hold harmless Advantage and its directors, officers, agents,
representatives, and controlling persons (each, an "Indemnified Person") from
and against all losses, claims, damages, liabilities, and expenses (including
reasonable legal fees and expenses) (collectively, "Claims") incurred by any of
them arising out of or in connection with Claims pertaining to this Agreement,
the Repurchase, or the circumstances giving rise to this Agreement which are
brought or asserted by third parties which are not affiliated with Advantage
(collectively, "Third Party Claims"). This Section 6 shall be Advantage's sole
remedy against the Company for Claims which constitute Third Party Claims.
(b) Indemnity Procedure. Promptly after receipt by an Indemnified
Person of notice of the commencement of any action (including any governmental
action), such Indemnified Person shall, if a Claim in respect thereof is to be
made against the Company under this Section 5, deliver to the Company a written
notice of the commencement thereof and the Company shall have the right to
participate in, and, to the extent the Company so desires, to assume control of
the defense thereof with counsel selected by the Company but reasonably
acceptable to the Indemnified Person; provided, however, that an Indemnified
Person shall have the right to retain its own counsel with the fees and expenses
to be paid by the Company if, in the reasonable opinion of counsel retained by
the Company, the representation by such counsel of the Indemnified Person and
the Company would be inappropriate due to actual or potential differing
interests between such Indemnified Person and any other party represented by
such counsel in such proceeding. In such event, the Company shall pay for only
one separate legal counsel in the aggregate for all Indemnified Persons and all
indemnified persons pursuant to similar indemnification obligations of the
Company relating to the repurchase of other shares of Preferred Stock; such
legal counsel shall be selected by the holders of a majority in interest of the
Preferred Stock on the date hereof. The failure to deliver written notice to the
Company within a reasonable time of the commencement of any such action shall
not relieve the Company of any liability to the Indemnified Person under this
Section 6, except to the extent that the Company is 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. No Indemnified Party shall, without the written consent
of the Company, settle, compromise or pay any Claim or consent to the entry of
judgment with respect thereto.
7. MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Massachusetts applicable to
agreements made and to be performed entirely within such Commonwealth.
(b) Counterparts. This Agreement may be executed in counterparts and by
the parties hereto on separate counterparts, all of which together shall
constitute one and the same instrument. A facsimile transmission of this
Agreement bearing a signature on behalf of a party hereto shall be legal and
binding on such party.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
(e) Amendments. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Advantage or the Company therefrom shall in any event be effective unless
the same shall be in writing and signed by the party to be charged with
enforcement, and then shall be effective only in the specific instance and for
the purpose for which given. No course of dealing between the parties hereto
shall operate as an amendment of this Agreement.
(f) Waivers. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, or any course of dealings between the parties, shall not operate as a
waiver thereof or an amendment hereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or exercise of any other right or
power.
(g) Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be delivered personally (which shall include
telephone line facsimile transmission with answer back confirmation) or by
courier and shall be effective upon receipt, in the case of the Company
addressed to the Company at its address shown in the introductory paragraph of
this Agreement, Attention: Director of Finance (telephone line facsimile
transmission number (000) 000-0000 or, in the case of Advantage, at its address
or telephone line facsimile transmission number shown on the signature page of
this Agreement, with a copy to Genesee International, Inc., 00000 X.X. 0xx
Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxxxx 00000-0000 (telephone line facsimile
transmission number (000) 000-0000) or such other address or telephone line
facsimile transmission number as a party shall have provided by notice to the
other party in accordance with this provision.
(h) Assignment. Neither party may sell, assign, transfer, or otherwise
convey any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other party and this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors.
(i) Survival of Representations and Warranties. The respective
representations, warranties, covenants and agreements of Advantage and the
Company contained in this Agreement or made by them, respectively, pursuant to
this Agreement shall survive the delivery of payment for the Shares and the Note
and shall remain in full force and effect regardless of any investigation made
by or on behalf of them or any person controlling or advising any of them.
(j) Entire Agreement. This Agreement sets forth the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, whether written or oral,
with respect thereto. Notwithstanding the foregoing, the parties agree and
acknowledge that, except as expressly provided herein, nothing contained in this
Agreement shall constitute an amendment to any of the Principal Agreements, each
of which remains unamended and in full force and effect.
(k) Further Assurances. Each party to this Agreement will perform any
and all acts and execute any and all documents as may be necessary and proper
under the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
(l) Press Releases. The Company and Advantage shall have the right to
review before issuance any press releases with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of Advantage, to make any press release or other
public disclosure with respect to such transactions as is required by applicable
law and regulations (although Advantage shall be consulted by the Company in
connection with any such press release prior to its release and shall be
provided with a copy thereof).
(m) Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Advantage and the Company by their respective officers or other representatives
thereunto duly authorized as of the date first set forth above.
ADVANTAGE FUND LIMITED
By: /s/
-------------------------------------
Name: Inter Caribbean Services, Ltd.
Title: Secretary
Address: x/x XXXXX
Xxxx Xxxxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx Antilles
Facsimile No.: 011-599-9732-2008
PALOMAR MEDICAL TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
