EXHIBIT 10.9
PHOTOELECTRON CORPORATION
SUBSCRIPTION AGREEMENT
----------------------
TO: Photoelectron Corporation
000-0 Xxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
You have advised the undersigned (the "Investor") that Photoelectron
Corporation, a Massachusetts corporation (the "Company"), is offering for sale
up to 1,777,778 shares (subject to the Overallotment Right) of its Series C
Convertible Preferred Stock, $.01 par value (the "Series C Preferred Stock"),
at a price of $4.50 per share ($4.05 per share to qualified Series B Preferred
shareholders), which offering is more fully set forth and described in the
Confidential Private Placement Memorandum dated as of July 1, 1995 (the
"Memorandum"), which has been furnished to the Investor.
1. Subscription
------------
a. Subject to the terms and conditions of this Agreement, the Investor
hereby agrees to subscribe for and purchase from the Company and hereby tenders
this Subscription for that number of shares of Series C Preferred Stock as is
set forth beneath its name and address on the signature page of this
Subscription Agreement (the "Shares") together with payment of the subscription
price therefor. The subscription price is hereinafter referred to as the
"Funds."
b. Tender of the Funds shall be made by delivery of a bank, certified or
cashiers check payable to the Company, or by wire transfer to such account as
may be designated by the Company, together with executed copies of this
Subscription Agreement and the Investor Questionnaire. The Company shall hold
the same for the benefit of the Investor until the acceptance thereof by the
Company. In the event that the Company's offering is withdrawn pursuant to
Section 3 hereof, the Funds, together with any interest accrued thereon, shall
be returned to the Investor. In the event that this Subscription is accepted,
the Funds, including all interest accrued thereon, shall be turned over to the
Company and the Shares subscribed for will be issued to the Investor.
c. The Company may accept subscriptions for less than all of the Series C
Preferred Stock offered pursuant to the Memorandum.
2. Acceptance of Agreement
-----------------------
It is understood and agreed that this Subscription is made subject to the
following terms and conditions:
a. The Company shall have the right to accept or reject this Subscription,
in whole or in part, for any reason, including the inability of a subscriber to
meet the standards for the private offering of securities exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the ineligibility of a subscriber under applicable state or
foreign securities laws, for any other reason or for no reason. If this
Subscription is rejected, the Funds previously delivered to the Company will be
returned to the Investor together with interest accrued thereon.
b. Two complete copies of this Agreement will be executed by the Investor.
If this Subscription is accepted, one copy of this Subscription Agreement as
accepted by the Company shall be delivered to the Investor.
c. If this Subscription is accepted in part and rejected in part, the
Investor will be so notified, at which time the excess Funds previously
delivered to the Company will be returned to the Investor with interest accrued
thereon.
3. Amendment or Withdrawal of Offering
-----------------------------------
The Company reserves the right, in its sole and absolute discretion, to
amend or withdraw this offering at any time for any reason or for no reason. If
the offering is withdrawn, the Investor will receive a full refund of the Funds
previously delivered by it to the Company, together with interest thereon, and
the Company will have no further liability to the Investor.
4. Representations and Warranties of the Investor
----------------------------------------------
a. For offers to, or purchases by, an Investor within the United States
of America:
The Investor hereby represents and warrants to the Company that the
Investor is a person or entity which falls within one of the categories of
accredited investors set forth in Rule 501(a) of Regulation D ("Regulation D")
under the Securities Act, including without limitation either: (A) a natural
person whose net worth, or joint net worth with the Investor's spouse, exceeds
$1,000,000; (B) a natural person who had income in excess of $200,000, or joint
income with the Investor's spouse in excess of $300,000, in each of the two most
recent years and reasonably expects to have income at that level in the current
year; or (C) any other person or entity meeting the standards set forth in
Regulation D and as summarized under "Suitability Standards" in the Memorandum.
b. For offers to, or purchases by, an Investor outside of the United
States of America:
2
The Investor hereby represents and warrants to the Company that it is
not a U.S. Person (as defined in Rule 230.903 of Regulation S of the Securities
Act ("Regulation S")), and is not acquiring the Shares for the account or
benefit of any U.S. person and that it will resell such Shares only in
accordance with the provisions of Regulation S pursuant to registration under
the Securities Act or pursuant to an available exemption from registration.
c. The Investor hereby represents and warrants that it was not formed for
the specific purpose of investing in the Company.
d. THE INVESTOR HAS READ CAREFULLY AND UNDERSTANDS THE MEMORANDUM AND
THIS AGREEMENT AND HAS CONSULTED THE INVESTOR'S OWN ATTORNEY, ACCOUNTANT OR
INVESTMENT ADVISER WITH RESPECT TO THE INVESTMENT CONTEMPLATED HEREBY AND ITS
SUITABILITY FOR THE INVESTOR. THE INVESTOR HAS HAD AN OPPORTUNITY TO ASK
QUESTIONS OF AND RECEIVED ANSWERS FROM THE COMPANY, OR A PERSON OR PERSONS
ACTING ON THE COMPANY'S BEHALF, CONCERNING THE TERMS AND CONDITIONS OF THIS
INVESTMENT AND THE BUSINESS OF THE COMPANY, AND HAS RECEIVED AND REVIEWED ALL
ADDITIONAL DOCUMENTATION REGARDING THE BUSINESS AND OPERATIONS OF THE COMPANY
THAT IT HAS REASONABLY REQUESTED. THE INVESTOR HAS READ CAREFULLY AND
UNDERSTANDS THE SECTION OF THE MEMORANDUM ENTITLED "RISK FACTORS."
e. The Investor is a sophisticated investor and has such knowledge and
experience in financial and business matters that the Investor is capable of
evaluating the information set forth in the Memorandum and the merits and risks
of the investment in the Shares.
f. The Investor (i) has no need for liquidity in the investment in the
Shares, (ii) is able to bear the substantial economic risks of an investment in
the Shares for an indefinite period, and (iii) at the present time, could afford
the complete loss of such investment in the Shares.
g. The address set forth at the end of this Agreement is the Investor's
true and correct residence or principal place of business, and the Investor has
no present intention of changing such residence or principal place of business
to any other state or jurisdiction.
h. The Investor has received and read and is familiar with the Memorandum
and this Agreement and confirms that all documents, records and books pertaining
to the investment in the Company and requested by the Investor have been made
available to the Investor.
i. The Investor understands that the Shares have not been registered
under the Securities Act, nor pursuant to the provisions of the securities laws
or other laws of any other applicable jurisdictions, in reliance on exemptions
for private offerings or off-shore offerings contained in the Securities Act
and in the laws of such jurisdictions. The Investor is fully aware that the
Shares subscribed to by it are to be sold in reliance upon such exemptions based
upon its
3
representations, warranties and agreements set forth herein. The Investor is
fully aware that it must bear the economic risk of its investment in the Company
for an indefinite period of time because the Shares have not been registered
under the Securities Act, and therefore, cannot be offered or sold unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. The Investor further understands that the Company has
no intention and is under no obligation to register its Shares under the
Securities Act (except to the extent set forth in the Registration Rights
Agreement to be executed at the closing) or to comply with the requirements for
any exemption that might otherwise be available, or to supply it with any
information necessary to enable it to make routine sales of the Shares under
Rule 144 under the Securities Act (which it understands is not now, and will not
likely be, available) or any rule of the Securities and Exchange Commission or
any successor thereto.
j. The Investor understands that the certificate(s) representing the
Shares will bear the following legend restricting its transfer and that a
notation restricting such transfer will be made on the stock transfer books of
the Company:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended. These shares have been
acquired for investment and not with a view to distribution or resale
and may not be sold, mortgaged, pledged, hypothecated or otherwise
transferred without an effective registration statement for such sales
under the Securities Act of 1933, or an opinion of counsel for the
corporation that registration is not required under such Act. The
shares represented by this certificate are also subject to the
provisions of a certain Subscription Agreement dated ___________ and
may not be transferred except in accordance with the provisions of
that agreement."
Further, if the Investor is not a U.S. person (as defined in the Act),
the certificate representing the Shares will bear the following additional
legend restricting its transfer and the Investor understands that a notation
restricting such transfer will be made on the stock transfer books of the
Company:
"The shares represented by this certificate may not be transferred
except in accordance with Regulation S of the Securities Act of 1933,
as amended."
As required by Regulation S, the Company hereby agrees that it will not and the
Investor acknowledges that the Company can not register any transfer of the
Shares not in compliance with Regulation S.
k. The Shares for which the Investor hereby subscribes are being acquired
solely for the Investor's own account, for investment and are not being
purchased with a view to or for the resale, distribution, subdivision or
fractionalization thereof; and the Investor has no present plans to enter into
any contract, undertaking, agreement or arrangement relating thereto.
4
l. The Investor acknowledges and is aware of the following:
(i) that the Series C Preferred Stock is a speculative investment and
involves a high degree of risk of loss by the Investor of the Investor's entire
investment in the Company;
(ii) that there is no guarantee that the investor will realize any
gain from its investment in the Company and that it may lose its entire
investment;
(iii) that the Company has no current plan or intention to issue
dividends;
(iv) that there has never been any representation, guarantee or
warranty made to the Investor by any broker, the Company, its agents or
employees or any other person, expressly or by implication, as to:
(A) the approximate or exact length of time that the Investor
will be required to remain as owner of the Shares; or
(B) the past performance or experience on the part of the
officers or directors of the Company, or of any other person, that
will in any way indicate the predictable results of the ownership of
the Shares or any such other securities, or of the overall business of
the Company;
(v) that the Company may in the future issue additional shares of
capital stock in the Company, and that the Investor's interest in the Company
may thereby become diluted.
The foregoing representations and warranties are true and accurate as of
the date hereof and shall be true and accurate as of the date of delivery of the
Funds to the Company and shall survive such delivery. If in any respect such
representations and warranties shall not be true and accurate prior to
acceptance of this Agreement pursuant to Section 2 hereof, the Investor shall
give written notice of such fact to the Company, specifying which
representations and warranties are not true and accurate and the reasons
therefor.
5. Indemnification The Investor acknowledges that it understands the
---------------
meaning and legal consequences of the representations and warranties contained
in Section 4 hereof, and hereby agrees to indemnify and hold harmless the
Company and each officer, director, promoter and agent thereof and any person or
entity controlling the Company from and against any and all loss, cost, damage
or liability (including reasonable attorneys' fees) due to or arising out of a
breach of any representation or warranty of the Investor contained in this
Agreement.
6. Restrictions on Transfer
------------------------
a. The Investor covenants and agrees that the Investor shall not transfer
any of the Shares except as expressly permitted by this Agreement. For purposes
of this Agreement, "trans-
5
fer" shall be construed as broadly as the law shall allow, and shall include any
change of legal or beneficial ownership with respect to the Shares or the
creation of a security interest by any means. Any transfer made in connection
with the foreclosure of a security interest shall constitute a separate
transfer.
b. In the event the Investor desires to transfer any Shares, the Shares
shall first be offered to the Company in accordance with the following terms and
conditions:
(i) The Investor shall deliver a written notice ("Notice") to the
Company stating (A) the Investor's bona fide intention to sell or transfer all
---------
or part of the Shares, (B) the number of Shares to be sold or transferred, (C)
the price for which the Investor proposes to sell or transfer the Shares, and
(D) the name of the proposed purchaser or transferee.
(ii) Within thirty (30) days after receipt of the Notice, the Company
or its assignee may elect to purchase any or all of the Shares to which the
Notice refers, at the price per share specified in the Notice.
(iii) If all of the Shares to which the Notice refers are not elected
to be purchased as provided in subsection 6(b)(ii) hereof, and if the Board of
Directors of the Company approves of the proposed purchaser (which approval
shall not be unreasonably withheld), the Investor may sell the remaining Shares
as provided in the Notice, within thirty (30) days of the Board's decision, and
only upon the terms set forth in the Notice. If such sale is not consummated
within said thirty (30) days, the Investor shall again comply with this
Section 6. Any such purchaser shall receive and hold such Shares subject to the
provisions of this Agreement and there shall be no further transfer of such
shares except in accordance herewith. No such purchaser shall receive the
Shares and no such Shares will be transferred of record to any such purchaser
until such purchaser becomes a party to this Agreement and such purchaser
shall be bound by this Agreement to the same extent that the original Investor
is so bound.
The provisions of this Section 6 shall not apply to a transfer of any
Shares, either during the Investor's lifetime or on death, by will or intestacy
to the Investor's ancestors, descendants or spouse, or any custodian or trustee
for the account of the Investor or the Investor's ancestors, descendants or
spouse, provided, in each such case, a transferee shall receive and hold such
Shares subject to the provisions of this Agreement and there shall be no further
transfer of such Shares except in accordance herewith. No such transferee shall
receive the Shares and no Shares will be transferred of record to any such
transferee until such transferee becomes a party to this Agreement, and such
transferee shall be bound by this Agreement to the same extent that the original
Investor was so bound.
The Company shall not be required (i) to transfer on its books any Shares
which shall have been sold or transferred in violation of any of the provisions
set forth in this Agreement, or (ii) to treat as owner of Shares or to accord
the right to vote as such owner or to pay dividends to any purchaser or
transferee to whom such Shares shall have been so transferred or sold.
6
The provisions of this Section 6 shall terminate upon the effective date of
an initial public offering of shares of the Common Stock, $.0l par value, of the
Company at a price of at least $5.00 per share of Common Stock with gross
proceeds to the Company of at least $5,000,000. The Board of Directors of the
Company shall also have the power to terminate or waive the provisions of this
Section 6.
7. No Waiver Notwithstanding any of the representations, warranties,
---------
acknowledgments or agreements made herein by the Investor, the Investor does not
thereby or in any other manner waive any rights granted to it under federal and
state securities law.
8. Transferability The Investor agrees not to transfer or assign this
---------------
Agreement, or any of the Investor's interest herein, and further agrees that any
assignment or transfer of the Shares shall be made only in accordance with
applicable securities laws and that an appropriate legend(s) with respect
thereto may be placed by the Company on any certificate evidencing such Shares.
9. Revocation The Investor agrees that it shall not cancel, terminate or
----------
revoke this Agreement or any agreement of the Investor made hereunder.
10. Termination of Agreement If this offering is withdrawn pursuant to
------------------------
Section 3 hereof, or if any representation or warranty of the Investor contained
in Section 4 hereof shall not be true prior to acceptance of this Agreement
pursuant to Section 2 hereof, and written notice of such fact has been given by
the Investor to the Company, then and in any such event this Agreement shall be
null and void and of no further force and effect, and no party shall have any
rights against any other party thereunder, and the Company shall promptly return
to the Investor the Funds, together with interest thereon, and all agreements
executed by the Investor.
11. Miscellaneous
-------------
a. All notices or other communications given or made hereunder shall be
in writing and shall be delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the Investor at its address set
forth below and to the Company at its address set forth at the outset of this
Agreement.
b. Failure of the Company to exercise any right or remedy under this
Subscription Agreement or any other agreement between the Company and the
Investor, or otherwise, or delay by the Company in exercising the same, will not
operate as a waiver thereof. No waiver by the Company will be effective unless
and until it is in writing and signed on behalf of the Company.
c. This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Massachusetts (without giving effect to
provisions regarding the conflict of laws).
7
d. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and may be amended only by a
writing executed by all parties.
IN WITNESS WHEREOF, the Investor has executed this Agreement as an
instrument under seal as of the date set forth below.
INVESTOR
By:
-------------------------------------
Title (if applicable):
------------------
Date:
-------------------
Name:
-------------------
Address:
-------------------
-------------------
-------------------
Aggregate Number of Shares:
-------------------
Total Amount Enclosed: $
-------------------
Accepted and Agreed to:
Photoelectron Corporation
By:
---------------------
Title:
Date:
-------------------
8
