EXHIBIT 10.25
KERAVISION, INC.
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
June 12, 1998
TABLE OF CONTENTS
Page
1. Purchase and Sale of Preferred Stock 1
1.1 Sale and Issuance of Series A Preferred Stock 1
1.2 Closing; Delivery 1
2. Representations and Warranties of the Company 1
2.1 Organization, Good Standing and Qualification 2
2.2 Capitalization 2
2.3 Subsidiaries 3
2.4 Authorization 3
2.5 Valid Issuance of Securities 4
2.6 Governmental Consents 4
2.7 Litigation 4
2.8 SEC Documents; Financial Statements 4
2.9 Changes 5
2.10 Title to Properties 6
2.11 Tax Matters 7
2.12 No Material Defaults 8
2.13 Patents and Trademarks 8
2.14 No Conflict 8
2.15 Securities Laws 8
2.16 Business 9
2.17 Certain Regulatory Matters 9
2.18 Registration Rights 9
2.19 Disclosure 9
2.20 Solvency; No Default 9
2.21 Solvency; No Default 9
3. Representations and Warranties of the Purchasers 10
3.1 Authorization 10
3.2 Purchase Entirely for Own Account 10
3.3 Disclosure of Information 10
3.4 Restricted Securities 10
3.5 No Public Market 11
3.6 Legends 11
3.7 Accredited Investor 11
3.8 Foreign Investors 11
4. Conditions of the Purchasers' Obligations at Closing 11
4.1 Representations and Warranties 12
4.2 Performance 12
4.3 Compliance Certificate 12
4.4 Qualifications 12
4.5 Opinion of Company Counsel 12
4.6 Board of Directors 12
4.7 Investors' Rights Agreement 12
4.8 Certificate of Designation 12
5. Conditions of the Company's Obligations at Closing 12
5.1 Representations and Warranties 13
5.2 Performance 13
5.3 Qualifications 13
6. Miscellaneous 13
6.1 Survival of Warranties 13
6.2 Transfer; Successors and Assigns 13
6.3 Governing Law 13
6.4 Counterparts 13
6.5 Titles and Subtitles 13
6.6 Notices 13
6.7 Finder's Fee 14
6.8 Attorney's Fees 14
6.9 Amendments and Waivers 14
6.10 Severability 14
6.11 Delays or Omissions 15
6.12 Entire Agreement 15
6.13 Corporate Securities Law 15
6.14 Confidentiality 15
6.15 Exculpation Among Purchasers 15
6.16 Waiver of Conflicts 16
6.17 Publicity 16
6.18 Expenses; Transfer Taxes 16
KERAVISION, INC.
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Series B Convertible Preferred Stock Purchase Agreement (the
"Agreement") is made as of the 12th day of June, 1998 by and between
KeraVision, Inc., a Delaware corporation (the "Company") and the
investors listed on Exhibit A attached hereto (each a "Purchaser" and
together the "Purchasers").
The parties hereby agree as follows:
1. Purchase and Sale of Preferred Stock.
1.1 Sale and Issuance of Series B Convertible Preferred
Stock.
(a) The Company shall adopt and file with the
Secretary of State of the State of Delaware on or before the Closing (as
defined below) the Certificate of Designation of Rights, Preferences and
Privileges of Series B Convertible Preferred Stock in the form attached
hereto as Exhibit B (the "Certificate of Designation").
(b) Subject to the terms and conditions of this
Agreement, each Purchaser agrees to purchase at the Closing and the
Company agrees to sell and issue to each Purchaser at the Closing that
number of shares of Series B Convertible Preferred Stock set forth
opposite each such Purchaser's name on Exhibit A attached hereto at a
purchase price of $32.00 per share. The shares of Series B Convertible
Preferred Stock issued to the Purchaser pursuant to this Agreement shall
be hereinafter referred to as the "Stock."
1.2 Closing; Delivery.
(a) The purchase and sale of the Stock shall take
place at the offices of Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx
Xxxx, Xxxxxxxxxx, at 10:00 a.m., on June 12, 1998, or at such other time
and place as the Company and the Purchasers mutually agree upon, orally
or in writing (which time and place are designated as the "Closing").
(b) At the Closing, the Company shall deliver to
each Purchaser a certificate, registered in such Purchaser's name,
representing the Stock being purchased thereby against payment of the
purchase price therefor by wire transfer to the Company's designated
account or certified or cashier's check drawn on a United States bank
made payable to the order of KeraVision, Inc.
2. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Purchaser that, except as
expressly indicated on a Schedule of Exceptions attached hereto as
Exhibit C (the "Schedule of Exceptions"), which exceptions shall be
deemed to be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. Each of the
Company and its subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own
its property and assets and to carry on its business. The Company and
its subsidiary are duly qualified to transact business and are in good
standing in all jurisdictions where such qualification is required,
except for such failures to be so qualified or in good standing as would
not, individually or in the aggregate, have a Material Adverse Effect on
the Company or its subsidiary. For purposes of this Agreement, a
"Material Adverse Effect" or a "Material Adverse Change" shall mean (i)
any change in, or effect on, a specified entity that is, or is
reasonably likely to be, materially adverse to the condition (financial
or other), business, results of operations, prospects, assets,
liabilities or operations of the entity or on the ability of the entity
to consummate any of the transactions contemplated hereby, or (ii) any
event or condition that would, with or without the passage of time,
constitute a "Material Adverse Effect" or a "Material Adverse Change" as
defined in clause (i) above. The copies of the Certificate of
Incorporation and Bylaws of the Company, as amended to date, have been
furnished to each Purchaser by the Company and are correct and complete
as so furnished.
2.2 Capitalization. The authorized capital of the Company
will consist, immediately prior to the Closing (unless another time
period is specified below), of:
(a) 2,000,000 shares of Preferred Stock, 30,000
shares of which have been designated Series A Preferred Stock and
662,500 shares of which have been designated Series B Convertible
Preferred Stock, none of which are issued and outstanding immediately
prior to the Closing, and 100,000 of which are reserved for the payment
of dividends to holders of the Stock. The rights, privileges and
preferences of the Series B Convertible Preferred Stock are as stated in
the Certificate of Designation.
(b) 30,000,000 shares of Common Stock, 12,672,950
shares of which are issued and outstanding as of May 31, 1998. All of
the outstanding shares of Common Stock have been duly authorized, fully
paid and are nonassessable and issued in compliance with all applicable
federal and state securities laws.
(c) The Company has reserved 2,650,000 shares of
Common Stock for issuance upon conversion of the Series B Convertible
Preferred Stock. The Company has reserved (i) 1,290,000 shares of
Common Stock for issuance to employees and consultants of the Company
pursuant to its 1995 Stock Plan duly adopted by the Board of Directors
and approved by the Company stockholders (the "1995 Stock Plan"), (ii)
200,000 shares of Common Stock for issuance to employees of the Company
pursuant to its 1995 Employee Stock Purchase Plan duly adopted by the
Board of Directors and approved by the Company stockholders (the
"ESPP"), (iii) 150,000 shares of Common Stock for issuance to employees
of the Company pursuant to its 1995 Directors Stock Option Plan duly
adopted by the Board of Directors and approved by the Company
stockholders (the "Directors' Plan") and (iv) 300,000 shares of Common
Stock for issuance to employees and consultants pursuant to its 1997
Stock Plan duly adopted by the Board of Directors (the "1997 Stock
Plan"). Of such reserved shares of Common Stock, as of May 31, 1998,
(i) 895,377 options to purchase shares have been granted under the 1995
Stock Plan and 504,225 shares of Common Stock remain available for
issuance pursuant to the 1995 Stock Plan, (ii) 41,202 shares have been
issued under the ESPP and 158,798 shares of Common Stock remain
available for issuance pursuant to the ESPP, (iii) 84,500 options to
purchase shares have been granted under the Directors' Plan and 85,500
shares of Common Stock remain available for issuance pursuant to the
Directors' Plan, and (iv) 141,215 options to purchase shares have been
granted under the 1997 Stock Plan and 184,430 shares of Common Stock
remain available for issuance pursuant to the 1997 Stock Plan. No
shares of Common Stock or Preferred Stock are held in the Company's
treasury.
(d) Except for outstanding options issued pursuant
to the 1995 Stock Plan, the 1997 Stock Plan, and the Director's Plan and
outstanding rights to purchase shares of Common Stock pursuant to the
ESPP, there are no outstanding securities, options, warrants, rights
(including conversion or preemptive rights and rights of first refusal
or similar rights) or agreements, orally or in writing, to purchase or
acquire, or exchangeable for or convertible into, any shares of the
Company's capital stock. To the Company's knowledge, there are no
outstanding stockholder agreements, voting trusts, proxies or other
arrangements or understandings among the stockholders of the Company
relating to the voting of their respective shares.
2.3 Subsidiaries. The Company does not currently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity. The Company is not a participant
in any joint venture or partnership.
2.4 Authorization. The Company has full power to execute,
deliver and perform this Agreement and the Investors' Rights Agreement,
in the form attached hereto as Exhibit D (the "Investors' Rights
Agreement" and collectively with this Agreement, the "Agreements"). All
corporate action on the part of the Company, its officers and directors
necessary for the authorization, execution and delivery of this
Agreement and the Investors' Rights Agreement, the performance of all
obligations of the Company hereunder and thereunder and the
authorization, sale, issuance and delivery of the Stock and the Common
Stock issuable upon conversion of the Stock (together, the "Securities")
has been taken or will be taken prior to the Closing, and the
Agreements, when executed and delivered by the Company, shall constitute
valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies or (ii) to the extent the indemnification provisions
contained in the Investors' Rights Agreement may be limited by
applicable federal or state securities laws.
2.5 Valid Issuance of Securities. The Stock that is being
issued to the Purchasers hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein,
will be duly and validly issued and outstanding, fully paid and
nonassessable, free of any liens, encumbrances, preemptive rights or
rights of first refusal, and free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Investors' Rights
Agreement and applicable state and federal securities laws. Based in
part upon the representations of the Purchasers in this Agreement and
subject to the provisions of Section 2.6 below, the Stock will be issued
in compliance with all applicable federal and state securities laws.
The Common Stock issuable upon conversion of the Stock has been duly and
validly reserved for issuance, and upon issuance in accordance with the
terms of the Certificate of Designation, shall be duly and validly
issued, fully paid and nonassessable, free of any liens, encumbrances,
preemptive rights or rights of first refusal, and free of restrictions
on transfer other than restrictions on transfer under this Agreement,
the Investors' Rights Agreement and applicable federal and state
securities laws and will be issued in compliance with all applicable
federal and state securities laws. The Common Stock issuable upon
conversion of the Stock will be subject to the rights provided in the
Company's Preferred Shares Rights Agreement dated August 18, 1997, to
the extent applicable, as described therein.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental
authority on the part of the Company is required in connection with the
valid and lawful authorization, execution and delivery by the Company of
this Agreement or the Investors' Rights Agreement, and the consummation
of the transactions contemplated hereby or thereby, or for or in
connection with the valid and lawful authorization, issuance, sale and
delivery of the Stock and the Common Stock issuable upon conversion of
the Stock in accordance with this Agreement, other than filings pursuant
to Regulation D of the Securities Act of 1933, as amended (the
"Securities Act"), and the qualification (or taking of such action as
may be necessary to secure an exemption from qualification if available)
of the offer and sale of the Stock under all applicable state securities
laws, which filings and qualifications, if required, will be
accomplished in a timely manner so as to comply with such qualification
or exemption from qualification requirements.
2.7 Litigation. There is no action, suit, proceeding or
investigation pending or, to the knowledge of the Company and its
subsidiary, currently threatened against or affecting the Company or its
subsidiary, its business or its assets, nor is the Company or its
subsidiary aware that there is any basis for the foregoing. Neither the
Company nor its subsidiary is a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company or its subsidiary currently
pending or which the Company or its subsidiary intends to initiate.
2.8 SEC Documents; Financial Statements. Each complete or
partial statement, report, prospectus filed under the Securities Act of
1933, as amended ("Securities Act"), is a true and complete copy of or
excerpt from such document as filed by the Company with the Securities
and Exchange Commission ("SEC") (the "Security Act Documents"). The
Company has timely filed all the documents that it was required to file
with the SEC under the Securities Exchange Act of 1934, as amended
("Exchange Act") (the "Exchange Act Documents" and together with the
Securities Act Documents, the "SEC Documents"), since the date on which
its Quarterly Report on Form 10-Q for the quarter ended March 31, 1998
was filed. As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Exchange
Act or the Securities Act, as applicable, and were duly and timely filed
with the SEC. None of the SEC Documents as of their respective dates
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements of the
Company included in the SEC Documents (the "Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto. Except as may be indicated in the notes to the
Financial Statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC, the Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial position of the
Company and its subsidiary at the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end adjustments).
2.9 Changes Since March 31, 1998, there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company or its subsidiary from
that reflected in the Financial Statements, except changes in the
ordinary course of business that have not been, in the aggregate, a
Material Adverse Change for the Company or its subsidiary;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the business,
properties, prospects, or financial condition of the Company or its
subsidiary;
(c) any waiver or compromise by the Company or its
subsidiary of a valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien,
claim, or encumbrance or payment of any obligation by the Company or its
subsidiary, except in the ordinary course of business and that is not
material to the business, properties, prospects or financial condition
of the Company;
(e) any material change to a material contract or
agreement by which the Company or its subsidiary or any of their assets
is bound or subject;
(f) any material change in any compensation
arrangement or agreement with any employee, officer, director or
stockholder;
(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of
any officer or key employee of the Company or its subsidiary; and
neither the Company nor its subsidiary is aware of any impending
resignation or termination of employment of any such officer or key
employee;
(i) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company or its subsidiary, with
respect to any of its material properties or assets, except liens for
taxes not yet due or payable;
(j) any loans or guarantees made by the Company or
its subsidiary to or for the benefit of its employees, officers or
directors, or any members of their immediate families, other than travel
advances and other advances made in the ordinary course of its business;
(k) any declaration, setting aside or payment or
other distribution in respect to any of the capital stock of the Company
or its subsidiary, or any direct or indirect redemption, purchase, or
other acquisition of any of such stock by the Company or its subsidiary;
(l) to the Company's knowledge, any other event or
condition of any character that might have a Material Adverse Effect on
the Company or its subsidiary;
(m) any borrowing of or agreement to borrow any
funds or any material liability (contingent or otherwise) incurred by
the Company or its subsidiary, other than obligations incurred in the
ordinary course of business and consistent with past practice;
(n) any issuance of any stock, bonds or other
securities of the Company or its subsidiary or options, warrants or
rights or agreements or commitments to purchase or issue such securities
or to grant such options, warrants or rights, except for the granting of
options to employees, directors and consultants in the ordinary course
of business and consistent with past practice;
(o) any change in the accounting methods or
practices followed by the Company or its subsidiary; or
(p) any arrangement or commitment (contingent or
otherwise) by the Company or its subsidiary to do any of the things
described in this Section 2.9.
Since March 31, 1998, neither the Company nor its subsidiary has
entered into any transaction or arrangement except in the ordinary
course of business and consistent with past practice, or entered into
any agreement (contingent or otherwise) to do so.
2.10 Title to Properties. Except as disclosed in the
Financial Statements, the Company or its subsidiary has good and
marketable title to, or has a valid leasehold interest in, or a valid
license for, all of the properties and assets reflected in the Financial
Statements, free and clear of all mortgages, security interests, liens,
restrictions or encumbrances (collectively, "Liens") other than (i)
liens for taxes not yet due and payable and (ii) Liens which,
individually or in the aggregate, do not materially detract from the
value of the property subject thereto or materially impair the
operations of the Company or its subsidiary, would not result in the
occurrence of a Material Adverse Change, and which have not arisen
otherwise than in the ordinary course of business.
2.11 Tax Matters.
(a) All taxes, including, without limitation,
income, excise, property, sales, transfer, use, franchise, payroll,
employees' income withholding and social security taxes imposed or
assessed by the United States or by any foreign country or by any state,
municipality, subdivision or instrumentality of the United States or of
any foreign country, or by any other taxing authority, which are due and
payable by the Company or its subsidiary, and all interest, penalties
and additions thereon, whether disputed or not, have been paid in full
or are adequately reserved for in the Financial Statements; all tax
returns or other documents required to be filed in connection therewith
have been accurately prepared and duly and timely filed, except for tax
returns the non-filing of which in the aggregate would not have a
Material Adverse Effect on the Company or its subsidiary; and neither
the Company nor its subsidiary is the beneficiary of any extension of
time within which to file any such returns. Neither the Company nor its
subsidiary has been delinquent in the payment of any foreign or domestic
tax, assessment or governmental charge or deposit and has no tax
deficiency or claim outstanding, assessed or, to its knowledge, proposed
against it, and there is no basis for any such deficiency or claim. No
issues have been raised (or are currently pending) by the Internal
Revenue Service or any other taxing authority in connection with any of
the returns and reports referred to above, and no waivers of statutes of
limitations have been given or requested with respect to the Company or
its subsidiary in connection therewith. The provisions for taxes in the
Financial Statements are sufficient for the payment of all accrued and
unpaid federal, state, county and local taxes of the Company or its
subsidiary.
(b) The Company is not now and has never been a
"United States real property holding corporation," as defined in Section
897(c)(2) of the Internal Revenue Code of 1986, as amended (the "Code"),
and Section 1.897-2(b) of the Regulations promulgated by the Internal
Revenue Service, and the Company has filed with the Internal Revenue
Service all statements, if any, with its United States income tax
returns which are required under Section 1.897-2(h) of such Regulations.
(c) Neither the Company nor its subsidiary is a
party to or bound by any tax indemnity, tax sharing or tax allocation
agreement.
(d) The Company is not presently a member of an
affiliated group of corporations within the meaning of Section 1504 of
the Code. The Company was formerly a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code. As a
former member of such group, the Company did not assume any tax
liability or asset under a tax sharing arrangement for its share of a
consolidated tax liability or a consolidated tax loss, nor was there a
tax liability or asset assumed upon leaving the affiliated group.
2.12 No Material Defaults. Each of the Company and its
subsidiary is not in violation of or default under any provision of (a)
its Certificate of Incorporation or Bylaws or (b) any mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise or license to which it is a party or by which it is bound or
(c) any federal or state judgment, order, decree, statue, law,
ordinance, rule or regulation applicable to the Company, except with
respect to clauses (b) and (c) above, such violations or defaults as
would not have a Material Adverse Effect on the Company.
2.13 Patents and Trademarks. To its knowledge, and except
as disclosed in the SEC Documents, the Company and its subsidiary owns
or possesses sufficient legal rights to all patents, trademarks, service
marks, tradenames, copyrights, trade secrets, licenses, information and
proprietary rights and processes necessary for its business as now
conducted and as proposed to be conducted, without infringement of any
rights of a third party. Neither the Company nor its subsidiary has
received any communications alleging that it has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets or
other proprietary rights or processes of any other person or entity,
which violation would have a Material Adverse Effect on the Company or
its subsidiary. Except as disclosed in the SEC Documents, neither the
Company nor its subsidiary has granted (nor has the Company or its
subsidiary licensed from a third party) any material rights to or
licenses to its patents, trademarks, service marks, tradenames,
copyrights, trade secrets or other proprietary rights or processes.
2.14 No Conflict. The execution and delivery of this
Agreement and the Investors' Rights Agreement do not, and the
consummation of the transactions contemplated hereby and thereby will
not, (i) conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss
of a material benefit, under, any provision of the Certificate of
Incorporation or Bylaws of the Company or any mortgage, indenture, lease
or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statue, law, ordinance, rule or
regulation applicable to the Company, its properties or assets, which
conflict, violation, default or right would have a Material Adverse
Effect on the Company or (ii) result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or
assets of the Company or the Securities.
2.15 Securities Laws. Assuming that the Purchasers'
representations and warranties contained in Section 3 of this Agreement
are true and correct, the offer, issuance and sale of the Securities are
and will be exempt from the registration and prospectus delivery
requirements of the Securities Act and have been registered or qualified
(or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable
state securities laws.
2.16 Business. The Company and its subsidiary have
complied in all respects with all federal, state, local and foreign
laws, ordinances, regulations and orders applicable to the business of
the Company and its subsidiary as presently or previously conducted and
as proposed to be conducted, except where the noncompliance of which in
the aggregate would not have a Material Adverse Effect on the Company or
its subsidiary. The Company and its subsidiary have all federal, state,
local and foreign governmental licenses and permits that are required
for the conduct of its business as presently or previously conducted by
the Company or its subsidiary, except where the noncompliance of which
in the aggregate would not have a Material Adverse Effect on the Company
or its subsidiary, which licenses and permits are in full force and
effect, and no violations are outstanding or uncured with respect to any
such licenses or permits and no proceeding is pending or, to the
knowledge of the Company or its subsidiary, threatened to revoke or
limit any thereof.
2.17 Certain Regulatory Matters. There are no unfulfilled
outstanding agreements with or commitments to the United States
Department of Health, Food and Drug Administration (the "FDA") or any
other regulatory body (domestic or foreign) of any kind or character
with respect to any product sold or contemplated to be sold by the
Company or its subsidiary (the "Products"); there are no adverse
regulatory actions by the FDA or any other foreign or domestic
regulatory body pending with respect to any Product; and neither the
Company nor its subsidiary has any knowledge or information with respect
to the initiation, pendency or threat by the FDA or other such
regulatory body of any adverse regulatory action that could affect any
of the Products.
2.18 Registration Rights. The Company is not presently
under any obligation and has not granted any rights to register its
securities under the Securities Act with respect to any of its presently
outstanding securities or any of its securities that may hereafter be
issued, which rights would be implicated with respect to the
registration contemplated by the Investors' Rights Agreement and which
rights have not been waived by the holders thereof.
2.19 Disclosure. Neither this Agreement, nor any other
written document, certificate, instrument or statement furnished or made
available in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact known to the Company or
its subsidiary materially affecting the Company, its subsidiary or its
business or the existence of which could have a Material Adverse Effect
on the Company or its subsidiary, which has not been set forth in this
Agreement or in the other documents, certificates, instruments or
statements furnished to each Purchaser by or on behalf of the Company or
its subsidiary.
2.20 Solvency; No Default. As of this date the Company and
its subsidiary have sufficient funds and cash flow to pay their debts
and other liabilities as they become due, and neither the Company nor
its subsidiary is in default with respect to any material debt or
liability.
3. Representations and Warranties of the Purchasers. Each
Purchaser hereby represents and warrants to the Company that:
3.1 Authorization. Such Purchaser has full power and
authority to enter into this Agreement. The Agreements, when executed
and delivered by the Purchaser, will constitute valid and legally
binding obligations of the Purchaser, enforceable in accordance with
their terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of
general application affecting enforcement of creditors' rights
generally, and as limited by laws relating to the availability of a
specific performance, injunctive relief, or other equitable remedies or
(ii) to the extent the indemnification provisions contained in the
Investors' Rights Agreement may be limited by applicable federal or
state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is
made with the Purchaser in reliance upon the Purchaser's representation
to the Company, which by the Purchaser's execution of this Agreement,
the Purchaser hereby confirms, that the Securities to be acquired by the
Purchaser will be acquired for investment for the Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof.
3.3 Disclosure of Information. The Purchaser has had an
opportunity to discuss the Company's business, management, financial
affairs and the terms and conditions of the offering of the Stock with
the Company's management and has had an opportunity to review the
Company's facilities. The Purchaser understands that such discussions,
as well as the Business Plan and any other written information delivered
by the Company to the Purchaser, were intended to describe the aspects
of the Company's business which it believes to be material. The
foregoing, however, does not limit or modify the representations and
warranties of the Company in Section 2 of this Agreement or the right of
the Purchasers to rely thereon.
3.4 Restricted Securities. The Purchaser understands that
the Securities have not been, and will not be, registered under the
Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things,
the bona fide nature of the investment intent and the accuracy of the
Purchaser's representations as expressed herein. The Purchaser
understands that the Securities are "restricted securities" under
applicable U.S. federal and state securities laws and that, pursuant to
these laws, the Purchaser must hold the Securities indefinitely unless
they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration
and qualification requirements is available. The Purchaser acknowledges
that the Company has no obligation to register or qualify the Securities
for resale except as set forth in the Investors' Rights Agreement. The
Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale,
the holding period for the Securities, and on requirements relating to
the Company which are outside of the Purchaser's control, and, subject
to the Company's obligations under the Investors' Rights Agreement,
which the Company is under no obligation and may not be able to satisfy.
3.5 No Public Market. The Purchaser understands that no
public market now exists for the Stock, and that the Company has made no
assurances that a public market will ever exist for the Stock.
3.6 Legends. The Purchaser understands that the
Securities and any securities issued in respect of or exchange for the
Securities, may bear one or all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend set forth in the Investors' Rights
Agreement.
(c) Any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented
by the certificate so legended.
3.7 Accredited Investor. The Purchaser is an accredited
investor as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
3.8 Foreign Investors. If the Purchaser is not a United
States person (as defined by Section 7701(a)(30) of the Internal Revenue
Code of 1986, as amended), such Purchaser hereby represents that it has
satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the
Stock or any use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the Stock, (ii) any foreign
exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and
(iv) the income tax and other tax consequences, if any, that may be
relevant to the purchase, holding, redemption, sale, or transfer of the
Stock. Such Purchaser's subscription and payment for and continued
beneficial ownership of the Stock, will not violate any applicable
securities or other laws of the Purchaser's jurisdiction.
4. Conditions of the Purchasers' Obligations at Closing. The
obligations of each Purchaser to the Company under this Agreement are
subject to the fulfillment, on or before the Closing, of each of the
following conditions, unless otherwise waived in writing by each
Purchaser:
4.1 Representations and Warranties. The representations
and warranties of the Company contained in Section 2 shall be true and
correct in all material respects (disregarding for this purpose any
qualifications with respect to materiality), on and as of the Closing
with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.
4.2 Performance. The Company shall have performed and
complied with all covenants, agreements, obligations and conditions
contained in this Agreement that are required to be performed or
complied with by it on or before the Closing.
4.3 Compliance Certificate. The Vice President, Finance
and Administration and Chief Financial Officer of the Company shall
deliver to the Purchasers at the Closing a certificate certifying that
the conditions specified in Sections 4.1, 4.2 and 4.4 have been
fulfilled.
4.4 Qualifications. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the
lawful issuance and sale of the Stock pursuant to this Agreement shall
be obtained and effective as of the Closing.
4.5 Opinion of Company Counsel. The Purchasers shall have
received from Venture Law Group, counsel for the Company, an opinion,
dated as of the Closing, in substantially the form of Exhibit E.
4.6 Board of Directors. As of the Closing, the number of
authorized directors shall be eight (8) members, and the Board shall be
comprised of Xxxxxxx Xxxxxxx, Xxxx X. Xxxxxxx, Xxxxxxxx Xx Xxxxx,
Xxxxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxx
and Xxxxxx X. Xxxxx.
4.7 Investors' Rights Agreement. The Company and each
Purchaser shall have executed and delivered the Investors' Rights
Agreement in substantially the form attached as Exhibit D.
4.8 Certificate of Designation. The Company shall have
filed the Certificate of Designation in substantially the form attached
as Exhibit B with the Secretary of State of Delaware on or prior to the
Closing Date, which shall continue to be in full force and effect as of
the Closing Date.
5. Conditions of the Company's Obligations at Closing. The
obligations of the Company to each Purchaser under this Agreement are
subject to the fulfillment, on or before the Closing, of each of the
following conditions, unless otherwise waived in writing:
5.1 Representations and Warranties. The representations
and warranties of each Purchaser contained in Section 3 shall be true
and correct in all material respects on and as of the Closing with the
same effect as though such representations and warranties had been made
on and as of the Closing.
5.2 Performance. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchasers on or
prior to the Closing shall have been performed or complied with in all
material respects.
5.3 Qualifications. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the
lawful issuance and sale of the Stock pursuant to this Agreement shall
be obtained and effective as of the Closing.
6. Miscellaneous.
6.1 Survival of Warranties. Unless otherwise set forth in
this Agreement, the warranties, representations and covenants of the
Company and the Purchasers contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement for
a period of two (2) years following the Closing and shall in no way be
affected by an investigation of the subject matter thereof made by or on
behalf of the Company or any such Purchaser.
6.2 Transfer; Successors and Assigns. The terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties.
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.
6.3 Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the
parties 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 law.
6.4 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and all
of which together shall constitute one instrument.
6.5 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.
6.6 Notices. 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,
addressed to the party to be notified at such party's address as set
forth on the signature page or Exhibit A hereto, or as subsequently
modified by written notice, and (a) if to the Company, with a copy to
Xxxxxx X. Xxxxxx, Xx., Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx
Xxxx, XX 00000 or (b) if to the Purchasers, with a copy to Xxxxx
Xxxxxxx, Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, 000
Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 and to Office of the
General Counsel, Xxxxxxx & Xxxxxxx, Xxx Xxxxxxx & Xxxxxxx Xxxxx, Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000.
6.7 Finder's Fee. Except for the fees and expenses owed
by the Company to Xxxxx & Company, each party represents that it neither
is nor will be obligated for any finder's fee or commission in
connection with this transaction. Each Purchaser agrees to indemnify
and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finder's fee (and the costs and
expenses of defending against such liability or asserted liability) for
which each Purchaser or any of its officers, employees, or
representatives is responsible. The Company agrees to indemnify and
hold harmless each Purchaser from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses
of defending against such liability or asserted liability) for which the
Company or any of its officers, employees or representatives
is responsible.
6.8 Attorney's Fees. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms
of any of the Agreements, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
6.9 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 shares of Common Stock
issuable or issued upon conversion of the Stock and each Purchaser
adversely affected in a manner different than the other Purchasers 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 Section 6.9 shall be binding
upon the Purchasers and each transferee of the Stock (or the Common
Stock issuable upon conversion thereof), each future holder of all such
securities, and the Company.
6.10 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.
6.11 Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any party under this Agreement,
upon any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such non-breaching or
non-defaulting party nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of
any breach or default under this Agreement, or any waiver on the part of
any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not
alternative.
6.12 Entire Agreement. This Agreement, and the documents
referred to herein constitute the entire agreement between the parties
hereto pertaining to the subject matter hereof, and any and all other
written or oral agreements relating to the subject matter hereof
existing between the parties hereto are expressly canceled.
6.13 Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE
OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS
THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION
25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS
OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE
QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
6.14 Confidentiality. Each party hereto agrees that,
except with the prior written permission of the other party, and except
as any Purchaser may be required to disclose under ERISA, it shall at
all times keep confidential and not divulge, furnish or make accessible
to anyone any confidential information, knowledge or data concerning or
relating to the business or financial affairs of the other parties to
which such party has been or shall become privy by reason of this
Agreement, discussions or negotiations relating to this Agreement, the
performance of its obligations hereunder or the ownership of Stock
purchased hereunder. The provisions of this Section 6.14 shall be in
addition to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.
6.15 Exculpation Among Purchasers. Each Purchaser
acknowledges that it is not relying upon any person, firm or
corporation, other than the Company and its officers and directors, in
making its investment or decision to invest in the Company. Each
Purchaser agrees that no Purchaser nor the respective controlling
persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action
heretofore or hereafter taken or omitted to be taken by any of them in
connection with the purchase of the Securities, except as provided in
the Investors' Rights Agreement.
6.16 Waiver of Conflicts. Each party to this Agreement
acknowledges that Venture Law Group, counsel for the Company, has in the
past performed and may continue to perform legal services for certain of
the Purchasers in matters unrelated to the transactions described in
this Agreement, including the representation of such Purchasers in
venture capital financings and other matters. Accordingly, each party
to this Agreement hereby (a) acknowledges that they have had an
opportunity to ask for information relevant to this disclosure; and
(b) gives its informed consent to Venture Law Group's representation of
certain of the Purchasers in such unrelated matters and to Venture Law
Group's representation of the Company in connection with this Agreement
and the transactions contemplated hereby.
6.17 Publicity. No party shall originate any publicity,
news release or other public announcement, written or oral (a
"Release"), whether relating to the performance under this Agreement or
the existence of any arrangement between the parties, without the prior
written consent of the other parties, except where such Release is
required by law (in which event, the Purchasers shall be consulted by
the Company in connection with any such Release prior to its release and
shall be provided with a copy thereof); provided that the parties hereby
agree that a Release substantially in the form attached hereto as
Exhibit F shall be released by the Company as promptly as practicable
following the execution of this Agreement.
6.18 Expenses; Transfer Taxes. Upon closing, the Company
shall reimburse the reasonable fees and expenses of Xxxxxxxxx Xxxxxxx
Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, L.L.P., not to exceed $20,000,
incurred in connection with all transactions leading up to and including
the Closing. Except as provided in the foregoing sentence, each party
shall pay its own fees and expenses (including the fees of any
attorneys, accountants, investment bankers or others engaged by such
party) in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby
are consummated. Notwithstanding the foregoing, the Company shall pay,
and shall indemnify and hold harmless the Purchasers from and against,
all sales, use, transfer or similar taxes imposed as a result of the
transactions contemplated by this Agreement.
[Signature Page Follows]
The parties have executed this Series B Convertible Preferred
Stock Purchase Agreement as of the date first written above.
COMPANY:
KeraVision, Inc.
By: /s/Xxxx Xxxxxxx-Colbrie
Name: Xxxx Xxxxxxx-Colbrie
(print)
Title: VP Finance/Admin; CFO
PURCHASERS:
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
