EXHIBIT 10.26
KERAVISION, INC.
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (the "Agreement") is made as of
the 12th day of June, 1998, by and among KeraVision, Inc., a Delaware
corporation (the "Company"), the investors listed on Exhibit A hereto,
each of which is herein referred to as an "Investor."
RECITALS
The Company and the Investors have entered into a Series B
Convertible Preferred Stock Purchase Agreement (the "Purchase
Agreement") of even date herewith pursuant to which the Company desires
to sell to the Investors and the Investors desire to purchase from the
Company shares of the Company's Series B Convertible Preferred Stock. A
condition to the Investors' obligations under the Purchase Agreement is
that the Company and the Investors enter into this Agreement in order to
provide the Investors with (i) certain rights to register shares of the
Company's Common Stock issuable upon conversion of the Series B
Convertible Preferred Stock held by the Investors and (ii) a right of
first offer with respect to certain issuances by the Company of its
securities. The Company and the Investors each desire to induce the
Investors to purchase shares of Series B Convertible Preferred Stock
pursuant to the Purchase Agreement by agreeing to the terms and
conditions set forth herein.
AGREEMENT
The parties hereby agree as follows:
1. Registration Rights. The Company and the Investors covenant
and agree as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing
a registration statement or similar document in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and the
declaration or ordering of effectiveness of such registration statement
or document;
(b) The term "Registrable Securities" means (i) the
shares of Common Stock issuable or issued upon conversion of the
Series B Convertible Preferred Stock and (ii) any other shares of Common
Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) or
by way of a dividend, a stock split or other distribution with respect
to, or in exchange for or in replacement of, the shares listed in (i) or
the Series B Convertible Preferred Stock or any shares of Common Stock
of the Company issued in connection with a combination of shares,
reclassification, recapitalization, merger, consolidation or
reorganization with respect to the shares listed in (i) or the Series B
Convertible Preferred Stock; provided, however, that the foregoing
definition shall exclude in all cases any Registrable Securities sold by
a person in a transaction in which his or her rights under this
Agreement are not assigned. Notwithstanding the foregoing, Common Stock
or other securities shall only be treated as Registrable Securities if
and so long as they have not been (A) sold to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive
legends with respect thereto, if any, are removed upon the consummation
of such sale;
(c) The number of shares of "Registrable Securities
then outstanding" shall be determined by the number of shares of Common
Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which
are, Registrable Securities;
(d) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee
thereof in accordance with Section 1.11 of this Agreement;
(e) The term "Form S-1" means such form under the
Securities Act as in effect on the date hereof or any successor form
under the Securities Act;
(f) The term "Form S-3" means such form under the
Securities Act as in effect on the date hereof or any successor form
under the Securities Act; and
(g) The term "SEC" means the Securities and Exchange
Commission.
1.2 Form S-3 and Form S-1 Registration.
(a) Within thirty (30) days after the date hereof,
the Company shall file with the SEC a registration statement on Form S-3
covering all of the Registrable Securities and use its best efforts
thereafter to effect such registration and all such qualifications and
compliances as may be necessary and as would permit or facilitate the
sale and distribution of all of the Registrable Securities; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this
Section 1.2(a): (i) if Form S-3 is not available for such offering by
the Holders; or (ii) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance.
(b) In the event that a registration on Form S-3 is
not available to the Company or if the effectiveness of the Form S-3 is
suspended or terminated at any time within the two (2) year period
following the date hereof, then the Company shall give written notice to
all Holders and shall use its best efforts to effect as soon as
practicable the registration on Form S-1 of all Registrable Securities
which the Holders request to be registered pursuant to such request and
all such qualifications and compliances as may be necessary and as would
permit or facilitate the sale and distribution of all of the Registrable
Securities requested to be registered; provided, however, that the
Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 1.2(b): (i) if
Form S-1 is not available for such offering by the Holders; (ii) after
the Company has effected two (2) registrations pursuant to this
Section 1.2(b) and such registrations have been declared or ordered
effective; (iii) if one registration pursuant to this Section 1.2(b) has
been filed within the previous six (6) months of the date upon which a
demand pursuant to this Section 1.2(b) has been made and has been
declared or ordered effective; (iv) after the second anniversary of the
date hereof; or (v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance.
1.3 Company Registration. If (but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the
Holders) any of its stock under the Securities Act in connection with
the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants
in a Company stock plan or a transaction covered by Rule 145 under the
Securities Act, a registration in which the only stock being registered
is Common Stock issuable upon conversion of debt securities which are
also being registered, or any registration on any form which does not
include substantially the same information as would be required to be
included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give
each Holder written notice of such registration. Upon the written
request of each Holder given within twenty (20) days after mailing of
such notice by the Company in accordance with Section 3.3, the Company
shall, subject to the provisions of Section 1.7, cause to be registered
under the Securities Act all of the Registrable Securities that each
such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under
this Section 1 to effect the registration of any Registrable Securities,
the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective and
keep such registration statement effective until two (2) years after the
date hereof.
(b) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used
in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
until two (2) years after the date hereof.
(c) Furnish to the Holders (and to each underwriter,
if any) such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act,
and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any
such states or jurisdictions.
(e) Before filing the registration statement or
prospectus, or amendments or supplements thereto, furnish to counsel
selected by the participating Holders copies of such documents proposed
to be filed which shall be subject to the reasonable approval of such
counsel.
(f) In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of
such offering. Each Holder participating in such underwriting shall
also enter into and perform its obligations under such an agreement.
(g) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of
the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and promptly
file such amendments and supplements as may be necessary so that, as
thereafter delivered to such Holders of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made,
not misleading and use its best efforts to cause each such amendment and
supplement to become effective.
(h) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
(i) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number
for all such Registrable Securities, in each case not later than the
effective date of such registration.
(j) Use its best efforts to furnish, at the request
of any Holder requesting registration of Registrable Securities pursuant
to this Section 1, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration
pursuant to this Section 1, if such securities are being sold through
underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date,
of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the
independent certified public accountants of the Company, 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 to the Holders requesting
registration of Registrable Securities.
1.5 Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant
to this Section 1 with respect to the Registrable Securities of any
selling Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable
Securities.
1.6 Expenses of Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications of Registrable Securities
pursuant to Sections 1.2 or 1.3 for each Holder (which right may be
assigned as provided in Section 1.11), including (without limitation)
all registration, filing, and qualification fees, printers' and
accounting fees and fees and disbursements of counsel for the Company
shall be borne by the Company.
1.7 Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the Company's capital
stock, the Company shall not be required under Section 1.3 to include
any of the Holders' securities in such underwriting unless they accept
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters
determine in good faith will not jeopardize the success of the offering
by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in good faith is compatible with the
success of the offering, then the Company shall be required to include
in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in good faith
will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders
according to the total amount of securities entitled to be included
therein owned by each selling stockholder or in such other proportions
as shall mutually be agreed to by such selling stockholders) but in no
event shall the amount of securities of the selling Holders included in
the offering be reduced below twenty-five percent (25%) of the total
amount of securities included in such offering. For purposes of the
preceding parenthetical concerning apportionment, for any selling
stockholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and
stockholders of such holder, or the estates and family members of any
such partners and retired partners and any trusts for the benefit of any
of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in
such "selling stockholder," as defined in this sentence.
1.8 Delay of Registration. No Holder shall have any right
to obtain or seek an injunction restraining or otherwise delaying any
such registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Section 1.
1.9 Indemnification. In the event any Registrable
Securities are included in a registration statement under this
Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in
the Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities
Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and each officer, director, employee or agent thereof, against
any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange
Act or any state securities law; and the Company will pay to each such
Holder, underwriter or controlling person and each officer, director,
employee or agent thereof, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this
subsection 1.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable to any Holder,
underwriter or controlling person for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling
Holder will severally (and not jointly) indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any
of the foregoing persons may become subject, under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise
out of or are 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 by such Holder expressly
for use in connection with such registration; and each such Holder will
pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 1.9(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided, that in no event shall any
indemnity under this subsection 1.9(b) exceed the net proceeds from the
offering received by such Holder, except in the case of willful fraud by
such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 1.9 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party
under this Section 1.9, 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 the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party (together with all
other indemnified parties which may be represented without conflict by
one counsel) shall have the right to retain one separate counsel, with
the reasonable fees and expenses to be paid by the indemnifying party,
if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 1.9, but the omission so to
deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than
under this Section 1.9.
(d) If the indemnification provided for in this
Section 1.9 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, liability,
claim, damage or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the
other in connection with the statements or omissions that resulted in
such loss, liability, claim, damage or expense as well as any other
relevant equitable considerations; provided, that in no event shall any
contribution by a Holder under this subsection 1.9(d) exceed the net
proceeds from the offering received by such Holder, except in the case
of willful fraud by such Holder. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or
omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten
public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.
(f) The obligations of the Company and Holders under
this Section 1.9 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1,
and otherwise (and, to the extent permitted by law, any investigation
made by or on behalf of the indemnified party or any officer, director
or controlling person of such indemnified party).
1.10 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of
the SEC that may at any time permit a Holder to sell securities of the
Company to the public without registration or pursuant to a registration
on Form S-3, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144 at all times;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act,
as is necessary to enable the Holders to utilize Form S-3 for the sale
of their Registrable Securities;
(c) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and
the Exchange Act; and
(d) furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting
requirements of SEC Rule 144, the Securities Act and the Exchange Act or
that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3, (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 in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
1.11 Assignment of Registration Rights. The rights to
cause the Company to register Registrable Securities pursuant to this
Section 1 may be assigned (but only with all related obligations) by a
Holder to a transferee or assignee of at least 100,000 shares or all of
such securities, provided the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which
such registration rights are being assigned; and provided, further, that
such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act. For the purposes of
determining the number of shares of Registrable Securities held by a
transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership
(including spouses and ancestors, lineal descendants and siblings of
such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession) shall be aggregated together and with the
partnership; provided that all assignees and transferees who would not
qualify individually for assignment of registration rights shall have a
single attorney-in-fact for the purpose of exercising any rights,
receiving notices or taking any action under Section 1.
1.12 Termination of Registration Rights. No Holder shall
be entitled to exercise any right provided for in this Section 1 after
the earlier of (i) two (2) years after the date hereof or (ii) such time
as Rule 144 or another similar exemption under the Securities Act is
available for the sale of all of such Holder's shares during a three (3)
month period without registration.
1.13 Restrictions on and Procedure for Sales. Each
Investor shall comply with following procedures:
(a) If any Investor shall propose to sell any
Registrable Securities pursuant to a registration statement filed by the
Company pursuant to Section 1.2 or 1.3, the Investor shall notify the
Company of its intent to do so at least three (3) full business days
prior to such sale (the "Notice of Sale"), and the provision of the
Notice of Sale to the Company shall conclusively be deemed to establish
an agreement by such Investor to comply with the registration provisions
herein described. The Notice of Sale shall be deemed to constitute a
representation that any information previously supplied by such Investor
is accurate as of the date of such Notice of Sale.
(b) The Notice of Sale in substantially the form
attached as Exhibit B shall be delivered to the Company at the address
shown on Exhibit A in writing in accordance with Section 3.3. However,
the Investor may give the Notice of Sale orally by telephoning Xxxx
Xxxxxxx-Colbrie or the then current Chief Financial Officer of the
Company at (000) 000-0000. An oral Notice of Sale shall be deemed to
have been received only at such time as the selling Investor speaks
directly with Xx. Xxxxxxx-Colbrie (or such then current Chief Financial
Officer). In addition, an oral Notice of Sale shall only be deemed
effective if it is followed by a written Notice of Sale received by the
Company by personal delivery or facsimile within twenty-four (24) hours
after giving the oral Notice of Sale.
(c) Unless the Company has notified the selling
Investor in writing that the Company will not refuse the sale of
Registrable Securities identified in a Notice of Sale pursuant to this
Section 1.13(c), at any time within such three (3) business-day period,
the Company may refuse to permit the Investor to sell any Restricted
Securities; provided, however, that in order to exercise this right, the
Company must deliver a certificate in writing from an officer of the
Company to the Investor to the effect that a delay in such sale is
necessary because a sale pursuant to the Registration Statement in its
then current form could constitute a violation of the federal securities
laws. In no event shall such delay exceed ten (10) trading days;
provided, however, that if, prior to the expiration of such ten (10)
trading day period, the Company delivers a certificate in writing from
an officer of the Company to the Investor to the effect that the Board
of Directors of the Company has determined in reasonable good faith that
a further delay in such sale beyond such ten (10) trading day period is
necessary because a sale pursuant to such Registration Statement in its
then current form could constitute a violation of the federal securities
laws, the Company may refuse to permit such Investor to resell any
Shares for an additional period not to exceed ten (10) trading days.
The Company shall not exercise this right of delay for more than twenty
(20) consecutive trading days or for more than thirty (30) trading days
in any six (6) month period, provided, however, that in the event the
ability of the Investors to sell Registrable Securities under the Form
S-3 or Form S-1 is delayed or suspended for any reason during the two-
year period following the date hereof, the aggregate thirty (30) trading
day limitation shall be reduced by the number of trading days the
Investors are restricted from selling the Registrable Securities.
(d) Unless the Company delivers a certificate in
writing to the selling Investor pursuant to Section 1.13(c), the selling
Investor shall have thirty (30) trading days after the Notice of Sale in
which to complete the transaction identified in the Notice of Sale (the
"Trading Window"). Any period of delay pursuant to Section 1.13(c)
shall extend the Trading Window on a day by day basis.
2. Right of First Offer. Subject to the terms and conditions
specified in this Section 2, the Company hereby grants to each Investor
(as hereinafter defined) a right of first offer with respect to future
sales by the Company of its Shares (as hereinafter defined). An
Investor who chooses to exercise the right of first offer may designate
as purchasers under such right itself or its partners or affiliates in
such proportions as it deems appropriate. Each time the Company
proposes to offer any shares of, or securities convertible into or
exercisable for any shares of, any class of its capital stock
("Shares"), the Company shall first make an offering of such Shares to
each Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified
mail ("Notice") to the Investors stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and
(iii) the price and terms, if any, upon which it proposes to offer such
Shares.
(b) Within 15 calendar days after delivery of the
Notice, the Investor may elect to purchase or obtain, at the price and
on the terms specified in the Notice, up to that portion of such Shares
which equals the proportion that the number of shares of Common Stock
issued and held, or issuable upon conversion and exercise of all
convertible or exercisable securities then held, by such Investor bears
to the total number of shares of Common Stock then outstanding (assuming
full conversion and exercise of all convertible or exercisable
securities). The Company shall promptly, in writing, inform each
Investor that purchases all the shares available to it (each, a
"Fully-Exercising Investor") of any other Investor's failure to do
likewise. During the ten (10)-day period commencing after receipt of
such information, each Fully-Exercising Investor shall be entitled to
obtain that portion of the Shares for which Investors were entitled to
subscribe but which were not subscribed for by the Investors that is
equal to the proportion that the number of shares of Common Stock issued
and held, or issuable upon conversion and exercise of all convertible or
exercisable securities then held, by such Fully-Exercising Investor
bears to the total number of shares of Common Stock then outstanding
(assuming full conversion and exercise of all convertible or exercisable
securities).
(c) The Company may, during the 45-day period
following the expiration of the period provided in subsection 2(b)
hereof, offer and sell the remaining unsubscribed portion of the Shares
to any person or persons at a price not less than, and upon terms no
more favorable to the offeree than those specified in the Notice. If
the Company does not enter into an agreement for the sale of the Shares
within such period and if such agreement is not consummated within such
period, the right provided hereunder shall be deemed to be revived and
such Shares shall not be offered unless first reoffered to the Investors
in accordance herewith.
(d) The right of first offer in this paragraph 2
shall not be applicable (i) to the issuance or sale of shares of Common
Stock (or options therefor) to employees, consultants and directors,
pursuant to plans or agreements approved by the Board of Directors, (ii)
to the issuance of securities pursuant to the conversion or exercise of
convertible or exercisable securities, (iii) to the issuance of
securities in connection with a bona fide business acquisition of or by
the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, (iv) to the issuance of securities to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings, or similar transactions or (v) to
the issuance of the Series A Participating Preferred Stock.
(e) Notwithstanding the foregoing, the right of
first offer in this Section 2 shall terminate (i) with respect to any
Investor whose shares of Series B Convertible Preferred Stock are
converted into shares of Common Stock of the Company, or (ii) when the
Company shall sell, convey, or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned
subsidiary corporation) or effect any other transaction or series of
related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided
in this Agreement, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties (including transferees of any of
the Series B Convertible Preferred Stock or any Common Stock issued upon
conversion thereof). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
3.2 Amendments and Waivers. Any term of this Agreement
may be amended or waived only with the written consent of (i) the
Company, (ii) the holders of a majority of the Registrable Securities
then outstanding, and (iii) Xxxxxxx & Xxxxxxx Development Corporation if
its obligations hereunder are materially increased by such amendment.
Any amendment or waiver effected in accordance with this paragraph shall
be binding upon each future holder of all such Registrable Securities
and the Company.
3.3 Notices. Unless otherwise provided, any notice
required or permitted by this Agreement shall be in writing and shall be
deemed sufficient upon delivery, when delivered personally or by
overnight courier or sent by telegram or fax, or forty-eight (48) hours
after being deposited in the U.S. mail, as certified or registered mail,
with postage prepaid, and addressed to the party to be notified at such
party's address or fax number as set forth on the signature page on
Exhibit A hereto or as subsequently modified by written notice.
3.4 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties
agree to renegotiate such provision in good faith. In the event that
the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (a) such provision shall be
excluded from this Agreement, (b) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (c) the balance of
the Agreement shall be enforceable in accordance with its terms.
3.5 Governing Law. This Agreement and all acts and
transactions pursuant hereto shall be governed, construed and
interpreted in accordance with the laws of the State of California,
without giving effect to principles of conflicts of laws.
3.6 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
3.7 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
3.8 Aggregation of Stock. All shares of the Preferred
Stock held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of
any rights under this Agreement.
[Signature Page Follows]
The parties have executed this Investors' Rights Agreement as of
the date first above written.
COMPANY:
KeraVision, Inc.
By: /s/Xxxx Xxxxxxx-Colbrie
Name: Xxxx Xxxxxxx-Colbrie
(print)
Title: VP Finance/Admin; CFO
INVESTORS:
DLJ Capital Corp.
By: /s/Xxxxxxxx X. XxXxxxx
Name: Xxxxxxxx X. XxXxxxx
Title: General Partner and
Attorney in Fact
DLJ ESC II, L.P.
By: DLJ LBO Plans Management
Corporation
Its: Manager
By: /s/Xxxxxxxx X. XxXxxxx
Name: Xxxxxxxx X. XxXxxxx
Title: Attorney In Fact
Sprout Capital VIII, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
By: /s/Xxxxxxxx X. XxXxxxx
Name: Xxxxxxxx X. XxXxxxx
Title: General Partner and
Attorney in Fact
Sprout Venture Capital, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
By: /s/Xxxxxxxx X. XxXxxxx
Name: Xxxxxxxx X. XxXxxxx
Title: General Partner and
Attorney in Fact
The Sprout CEO Fund, L.P.
By: DLJ Capital Corp.
Its: General Partner
By: /s/Xxxxxxxx X. XxXxxxx
Name: Xxxxxxxx X. XxXxxxx
Title: General Partner and
Attorney in Fact
Xxxxxxx & Xxxxxxx Development
Corporation
By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
GMI/DRI INVESTMENT TRUST
By: /s/Xxxxx X. Xxx Xxxxxxxxxx
Name: Xxxxx X. Xxx
Xxxxxxxxxx
Title: Executive Secretary -
Benefit
Finance Committee
of General Xxxxx,
Inc. as Named
Financial Fiduciary
Special Situations Private
Equity Fund, LP
By: /s/Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Managing Director
Special Situations Fund III, LP
By: /s/Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Managing Director
Special Situations Cayman Fund,
LP
By: /s/Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Managing Director
