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SUBSCRIPTION AGREEMENT
PALOMAR MEDICAL TECHNOLOGIES, INC.
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE BECAUSE THEY
ARE BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER SECTIONS 4(2) AND 4(6) OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS SUBSCRIPTION AGREEMENT
SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
IN REACHING THE CONCLUSION THAT SUBSCRIBER DESIRES TO PURCHASE THE
DEBENTURES, SUBSCRIBER HAS CAREFULLY EVALUATED SUBSCRIBER'S FINANCIAL RESOURCES
AND INVESTMENT POSITION, AND THE RISKS ASSOCIATED WITH THIS INVESTMENT, AND
ACKNOWLEDGES THAT THE DEBENTURES INVOLVE A HIGH DEGREE OF RISK AND THAT
SUBSCRIBER COULD LOSE THE ENTIRE INVESTMENT.
This Subscription Agreement (the "Agreement") is executed by the
undersigned (the "Subscriber") in connection with the offer and subscription by
the undersigned to purchase 6% Convertible Debentures Due _____________, 2002 (5
years from Closing Date), with all interest due at maturity ("Debentures") of
Palomar Medical Technologies, Inc., a Delaware corporation (the "Company") in an
aggregate principal amount of $_________________ U.S. The terms on which the
Debentures may be converted into Common Stock (such Common Stock underlying the
Debentures being referred to herein as (the "Shares") and the other terms of the
Debentures are set forth therein and in Sections herein. This Subscription and,
if accepted by the Company, the offer and sale of Debentures and the Shares
(collectively, the "Securities"), are being made in reliance upon the provisions
of Sections 4(2) and 4(6) of the United States Securities Act of 1933, as
amended (the "Act"). The undersigned, in order to induce the Company will rely
thereon, represents, warrants and agrees as follows:
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1. OFFER TO SUBSCRIBE; PURCHASE PRICE
The Subscriber hereby offers to purchase and subscribes for the number of
Debentures set forth on the signature page hereto, at a price of 100%. The
Closing shall be deemed to occur when this Agreement has been executed by
both Subscriber and Company (the "Closing Date" or "Debenture Date"). The
Company agrees to deliver certificates representing the Debentures
subscribed within 10 days of Closing. On or prior to the Closing Date, the
Subscriber will deliver to the Company the full amount of the Purchase
Price by 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.
2. REPRESENTATIONS AND WARRANTIES BY SUBSCRIBER
Subscriber hereby represents and warrants as follows:
(a) Subscriber is an Accredited Investor as evidenced by the
Subscriber meeting at least one of the following standards:
(A) is an individual and had income in excess of $200,00 in the
two most recent tax years (or $300,000 income jointly with his spouse)
and reasonably expect to have income at the same level in the current
tax year; or
(B) is an individual and his net worth (i.e. excess of total
assets over total liabilities), either individually or together with
my spouse, is at least $1,000,000; or
(C) is a trust, corporation, partnership, or organization defined
in Section 501(c)(3) of the Code, not formed for the purpose or
purchasing the Debentures, with assets in excess of $5,000,000; or
(D) is a national bank; a state banking institution, the business
of which is substantially confined to banking and is supervised by
state banking officials; a savings and loan association; a broker or
dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934; an insurance company; an investment company registered
under the Investment Company Act of 1940; a business
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development company as defined in Section 2(a)(48) of that Act or a
private business development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940; a Small Business Investment
Company licensed by the Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act of 1958; or an
employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, a self-directed plan
where the investment decisions are made by accredited investors; or
(E) is an entity in which each of the equity owners meet the
standards set forth in any of the immediately preceding subparagraphs
(A), (B), (C), or (D). (IF YOU MEET THE STANDARDS IN THIS
SUBPARAGRAPH, PLEASE ALSO COMPLETE THE FOLLOWING:)
I certify that the following is a complete list of all owners of
equity or trustees, that each such owner or trustee has initialed
the space opposite his name and that each such owner or trustee
understands that by initialing that space he is representing that
he is an accredited investor satisfying either A, B, C or D
above.
Name of Owner of Type of
Equity or Trustee Accredited Investor Initials
----------------- ------------------ ----------
----------------- ------------------ ----------
---------------- ------------------ ----------
(b) The Subscriber and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Debentures and
the offer of the Shares which have been requested by the Subscriber. The
Subscriber and its advisors, if any, have been afforded the opportunity to
ask questions of the Company and have received complete and satisfactory
answers to any such inquiries. Without limiting the generality of the
foregoing, the Subscriber has had the opportunity to obtain and to review
the Company's (1) Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995 (as amended by Amendment No. 1 thereto on Form 10-KSB/A
filed with the Securities and Exchange Commission (the "SEC" on August 23,
1996), (2) Quarterly Reports on Form 10-QSB for the fiscal quarters ended
March 31, 1996 (as amended by Amendment No. 1 thereto on Form 10-QSB/A
filed with SEC on August 23, 1996), June 30, 1996 and September 30, 1996,
(3) Current Report on Form 8-K, dated May 3, 1996, as amended by Amendment
No. 1 thereto on Form 8-K/A dated May 3, 1996, (4) definitive Proxy
Statement for its 1996 Annual Meeting of Stockholders, and (5) Registration
Statement
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on Form S-3 (the "December Registration Statement") declared effective on
December 27, 1996 (Registration No. 333-18003), in each case as filed with
the SEC.
(c) Subscriber is acquiring the Debentures solely for Subscriber's own
account, for investment, and not with a view to the distribution thereof.
Subscriber's financial condition is such that he is not under any present
necessity or constraint to dispose of the Debentures to satisfy any
existing or contemplated debt or undertaking. If Subscriber is a
corporation, trust, association, partnership, or any other entity other
than an individual, the purchase of the Debentures by Subscriber has been
duly authorized as required by law or agreement to be taken, and the
Debentures constitute a legal investment for such entity.
(d) Subscriber is aware of the fact that the Debentures have not been
registered, nor is registration contemplated, under the Securities Act of
1933 (the "Act"), and, accordingly, no federal agency has recommended or
endorsed the purchase of the Debentures or passed on the adequacy or
accuracy of the information set forth in the Form 10-KSB. Subscriber
understands that since the Debentures have not been registered under the
Act, they must be held indefinitely unless they are subsequently registered
under the Act or unless, in the opinion of counsel for the Company, a sale
or transfer may be made without registration thereunder. Subscriber agrees
that the Debentures may bear a legend restricting the transfer thereof
consistent with the foregoing and that a notation may be made in the
records of the Company's transfer agent restricting the transfer of the
Debentures in manner consistent with the foregoing.
(e) Subscriber, in electing to subscribe for the Securities hereunder,
has relied upon an independent investigation made by it and its
representative, if any. Subscriber has been given no oral or written
representations or assurances from the Company or any representation of the
Company other than as set forth in this Agreement or in a document executed
by a duly authorized representative of the Company making reference to this
Agreement.
(f) If Subscriber desires to sell and distribute Registered Shares
over a period of time, or from time to time, at then prevailing market
prices, then Subscriber shall execute and deliver to the Company such
written undertakings as the Company and its Counsel may reasonably require
in order to assure full compliance with relevant provisions of the
Securities Act and the Exchange Act including, without limitation,
providing the Company with 48 hours' prior written notice of each such sale
and providing the Company with assurances, reasonably satisfactory to the
Company, that Subscriber will meet the prospectus delivery requirements
under the Security Act.
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3. REGISTRATION RIGHTS
The Company agrees to file and use reasonable efforts to make effective a
registration statement with the Securities and Exchange Commission (the "SEC")
(on Form X-0, Xxxx X-0, its successor form, or any other form under the
Securities Act of 1933 under which the Shares underlying the Debentures are
eligible to be registered), within 180 days of the Closing Date, covering the
Shares underlying the Debentures, at the Company's cost and expense (excluding
the costs of legal counsel to the holders of the Debentures). The subscriber
shall furnish the Company with such information as the Company may request in
writing and as shall be required in connection with any registration thereunder.
4. RESALES
Subscriber acknowledges and agrees that the Securities may only be resold
(a) pursuant to a Registration Statement under the Act; or (b) pursuant to an
exemption from registration.
5. SUBSEQUENT TRANSFER OF SECURITIES
Once a registration statement has been filed and declared effective as
contemplated in Section 3 above, the Company agrees, and shall instruct its
transfer agent, that the Securities may be transferred to any person or entity
who is not an affiliate of the Company without (a) any further restriction on
transfer or (b) the entry of a "stop transfer" order against such Securities,
provided that the person(s) or entity(ies) requesting transfer furnish the
appropriate representations to the Company's legal counsel.
6. RELEASE OF PROCEEDS TO THE COMPANY
The proceeds of the offering shall be released to the Company upon the
Closing of this offering, as defined in Section 1 of this Agreement.
7. TERMS OF CONVERSION
The Debentures shall contain the following provisions in Section 3 thereof
regarding the conversion of the Debentures:
The Holder of this Debenture is entitled, at its option, at any time after
180 days after the Debenture Date until maturity hereof, to convert the
principal amount of the Debenture or any portion of the principal amount
hereof which is at least One Hundred Thousand Dollars ($100,000 U.S.) or,
if at the time of such election to convert, the aggregate principal amount
of all Debentures registered to the Holder is less than One Hundred
Thousand Dollars ($100,000 U.S.), then the whole amount thereof, into
Shares of Common Stock of the Company at a conversion price for each share
of Common Stock equal to $11.00 U.S.; provided that in any 30 day period
the Holder of these Debentures (or its transferee) may convert no more than
33% (or 34% of the Debentures, in the last 30 day period available for
conversion of the Debentures) of the Debentures purchased by the Holder,
whether or not such Holder exercised its right to
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convert the Debenture after 180 days after the Debenture Date. Such
conversion shall be effectuated by surrendering the Debentures to be
converted to the Company with the form of conversion notice attached hereto
as Exhibit A, executed by the Holder of this Debenture evidencing such
Holder's intention to convert this Debenture or a specified portion (as
above provided) hereof, and accompanied, if required by the Company, by
proper assignment hereof in blank. The Company shall use its best efforts
to have the Shares of Common Stock issued and delivered to the Holder
thereof within ten business days of the receipt of the conversion form and
Debentures(s). If the Debenture is converted into Shares of Common Stock of
the Company within the twelve months following the Closing Date, all
accrued but unpaid interest shall be waived by the Holder. If, however, the
Debenture is converted into shares of Common Stock after twelve months from
the Closing Date, then the amount of all accrued but unpaid interest shall
be shall be subject to conversion. No fractions of shares or scrip
representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded down to the nearest whole share.
The date on which notice of conversion is given shall be deemed to be the
date on which the Holder has delivered the Debenture, with the conversion
notice duly executed, to the Company.
8. TERMS OF REDEMPTION
The Debentures shall contain the following provisions in Section 5 thereof
regarding the redemption of the Debentures:
The Company may, at any time the Debentures are outstanding, upon 20 days
written notice to the Holder, elect to redeem the full amount of the
Debentures then outstanding or a pro rata portion thereof. The Holder shall
have 10 days after receipt of written notice of redemption to submit a
Notice of Conversion to the Company if the Holder desires to convert. The
redemption price shall be calculated at 110% of the amount of the Debenture
being redeemed. All accrued but unpaid interest shall be waived at the time
of redemption. All accrued but unpaid interest will also be paid at the
time of redemption. Each Holder of the Debenture shall be entitled to
redeem a pro rata portion of the Debentures being redeemed by the Company.
9. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts except for matter arising under the
Act or the Securities Exchange Act of 1934 which matters shall be construed and
interpreted in accordance with such laws.
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10. NOTICES
All communications hereunder shall be in writing, and, if sent to the
Subscriber shall be sufficient in all respects if delivered, sent by registered
mail, or by telecopy and confirmed to the Subscriber at:
Name:
Address:
City:
Country:
Attention:
or, if sent to the Company, shall be delivered, sent by registered mail or by
telecopy and confirmed to the Company at:
Palomar Medical Technologies, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Director of Finance
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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The undersigned hereby subscribes for $______________ U.S. in principal
amount of Debentures and pays herewith funds in the same amount.
The undersigned acknowledges that this subscription shall not be effective
unless accepted by the Company as indicated below.
Dated this 12 day of February, 1997.
Soginvest Bank
(Printed Name)
/s/ /s/
---------------------------- ----------------------------------
X. Xxxx X. Xxxxxx
(Signature)
V. Stazione 9 X.X. 000 XX - 0000 Locarno-Muralto
(Mailing Address)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 13 DAY OF March, 1997.
PALOMAR MEDICAL TECHNOLOGIES, INC.
By: /s/
------------------------------
Printed Name/Title: Xxxxxx X. Xxxxxx
Chief Financial Officer
