SERIES B CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
January 14, 1999, by and among MICROVISION, INC., a Washington corporation (the
"Company"), and XXXXXXXX XXXXXX ("Purchaser").
W I T N E S S E T H
WHEREAS, the Company proposes to issue and sell, and Purchaser desires to
purchase from the Company, 5,000 shares of the Company's Series B Convertible
Preferred Stock, Class 1, no par value ("Series B-1 Stock"), and to grant
Purchaser an option to purchase 1,600 shares of the Company's Series B
Convertible Preferred Stock, Class 2, no par value ("Series B-2 Stock") and an
option to purchase 1,920 shares of the Company's Series B Convertible Preferred
Stock, Class 3, no par value ("Series B-3 Stock"), on the terms and subject to
the conditions set forth herein; and
WHEREAS, the Company and Purchaser desire to enter into an registration
rights agreement of even date herewith, pursuant to which Purchaser shall have
certain registration rights.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
SECTION 1.
Definitions
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1.1 Defined Terms. Except as otherwise defined herein, capitalized terms
uses in this Agreement shall have the following meanings:
"Common Stock" means the Company's Common Stock, no par value.
"Director Plan" means the Microvision, Inc. 1996 Independent Director Stock
Plan, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Knowledge" or derivations thereof shall mean the knowledge of the officers
of the Company.
"Lien" means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.
"Material Adverse Effect" means any materially adverse effect on the
business, assets, liabilities, condition (financial or otherwise), results of
operations or prospects of the Company.
"1996 Stock Plan" means the Microvision, Inc. 1996 Stock Option Plan, as
amended.
"Permits" means any approvals, authorizations, consents, licenses, permits
or certificates.
"Person" means an individual, partnership, limited liability company,
corporation, joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Preferred Stock" means any of the Series A Stock, Series B-1 Stock, Series
B-2 Stock or Series B-3 Stock.
"Prior Plans" means the Company's 1993 Stock Option Plan, 1994 Combined
Incentive and Nonqualified Stock Option Plan and 1995 Combined Incentive and
Nonqualified Stock Option Plan.
"Registration Rights Agreement" means the Registration Rights Agreement of
even date herewith by and between the Company and the Purchaser in the form
attached hereto as Exhibit A.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Stock" means the Series A Convertible Preferred Stock of the
Company, no par value.
"Series B-1 Stock" means the Series B Convertible Preferred Stock, Class 1
of the Company, no par value.
"Series B-2 Stock" means the Series B Convertible Preferred Stock, Class 2
of the Company, no par value.
"Series B-3 Stock" means the Series B Convertible Preferred Stock, Class 3
of the Company, no par value.
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SECTION 2.
Sale and Purchase; Grant of Purchase Options
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2.1 Sale and Purchase of Series B-1 Stock. In reliance on the
representations and warranties of the Company and of Purchaser contained herein
and subject to the terms and conditions hereof, Purchaser agrees to purchase
from the Company, and the Company agrees to sell and issue to Purchaser, 5,000
shares of Series B-1 Stock at a purchase price of One Thousand Dollars
($1,000.00) per share (the "Initial Purchase"), for an aggregate purchase price
of Five Million Dollars ($5,000,000).
2.2 Option to Purchase Series B-2 Stock. At any time prior to July 14,
1999, Purchaser shall have the option to purchase up to 1,600 shares of Series
B-2 Stock on the same terms as the Initial Purchase.
2.3 Option to Purchase Series B-3 Stock. At any time prior to October 14,
1999, Purchaser shall have the option to purchase up to 1,920 shares of Series
B-3 Stock on the same terms as the Initial Purchase.
SECTION 3.
Closings; Delivery
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3.1 Closing Dates. The first closing of the purchase and sale of the 5,000
shares of Series B Stock (the "First Closing") shall be held at the offices of
Stoel Rives LLP, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx 00000 on
January 14, 1999, or on such other date or at such other place as Purchaser and
the Company shall mutually agree. Any other closings that occur pursuant to the
terms hereof ("Additional Closings") shall be held at such dates and times as
the parties shall mutually agree. Any of the date of the First Closing and any
Additional Closing is referred to herein as the "Closing Date."
3.2 Delivery. At the closings the Company shall: (a) deliver to Purchaser a
certificate evidencing the Shares being purchased by her and (b) make such other
deliveries as may be required under the terms of this Agreement.
SECTION 4.
Representations and Warranties of the Company
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The Company hereby represents and warrants to, and agrees with, Purchaser
as follows:
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4.1 Organization, Good Standing and Qualification. The Company (i) is an
entity duly organized, validly existing and in good standing under the laws of
Washington, (ii) has all requisite power and authority to carry on its business,
(iii) is duly qualified to transact business and is in good standing in all
jurisdictions where its ownership, lease or operation of property or the conduct
of its business requires such qualification, except where the failure to do so
would not be material to the Company. The Company has the corporate power and
authority and is in possession of all material franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders (a) to own, lease and operate its properties and to carry on its
business as now being conducted and (b) to execute and deliver this Agreement
and the documents and instruments contemplated hereby and to consummate the
transactions contemplated hereby.
4.2 Capitalization.
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4.2.1 The authorized capital stock of the Company is 62,500,000
shares, consisting of 31,250,000 shares of common stock, no par value ("Common
Stock") of which 6,063,626 shares were issued and outstanding as of December 31,
1998, and 31,250,000 shares of Preferred Stock. Of the authorized shares of
Preferred Stock, 1,875,000 shares have been designated as Series A Stock, of
which no shares are issued and outstanding; 5,000 shares have been designated
Series B-1 Stock, of which no shares are issued and outstanding; 1,600 shares
have been designated Series B-2 Stock, of which no shares are issued and
outstanding; and 1,920 shares have been designated Series B-3 Stock, of which no
shares are issued and outstanding. The Company has duly and validly reserved for
issuance 3,000,000 shares of Common Stock upon exercise of options currently
outstanding or issued under the 1996 Plan; 75,000 shares of Common Stock for
issuance under the Director Plan; 1,288,938 shares of Common Stock upon exercise
of options issued under the Prior Plans; and 2,273,926 shares of Common Stock
for issuance upon exercise of publicly traded common stock purchase warrants
outstanding as of December 31, 1998.. All outstanding options, rights and
warrants have been duly and validly issued and are in full force and effect. All
shares of capital stock subject to issuance upon exercise of any options, rights
or warrants or otherwise, upon issuance pursuant to the instruments under which
they are issuable, shall be duly authorized, validly issued, fully paid for and
non-assessable and free of all preemptive rights.
4.2.2 The issued and outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and non-assessable. The
shares of Series B Stock to be issued pursuant to this Agreement, upon delivery
to Purchaser of certificates therefor against payment in accordance with the
terms of this Agreement, (i) will be validly issued, fully paid and
non-assessable, (ii) will be free and clear of all Liens, and (iii) assuming
that the representations of Purchaser in Section 5 hereof are true and correct,
will be issued in compliance with all applicable federal and state securities
laws.
4.3 Authorization. The Company has all requisite corporate power and
authority to execute and deliver this Agreement and each agreement, document or
instrument adopted, entered into or delivered by it as contemplated herein (the
"Transaction Documents") and to
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perform its obligations hereunder and thereunder. The execution, delivery, and
performance of the Agreement and the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company.
Each Transaction Document to which it is a party has been duly and validly
executed and delivered by the Company and constitutes the legal, valid, and
binding obligation of the Company, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
4.4 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 execution and delivery by the Company of
the Transaction Documents to which it is a party, or the consummation by the
Company of the transactions contemplated by the Transaction Documents to which
it is a party, except for (i) filings pursuant to federal or state securities
laws and (ii) the filing of registration statements with the SEC and any
applicable state securities commission.
4.5 Company SEC Reports and Financial Statements.
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4.5.1 The Company has made available to Purchaser true and complete
copies of all periodic reports, statements and other documents that the Company
has filed with the SEC under the Exchange Act since August 30, 1996
(collectively, the "Company SEC Reports"), each in the form (including exhibits
and any amendments thereto) required to be filed with the SEC. As of their
respective dates, each of the Company's SEC Reports (i) complied in all respects
with all applicable requirements of the Exchange Act, and the rules and
regulations promulgated thereunder, respectively, (ii) were filed in a timely
manner, and (iii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4.5.2 Each of the audited financial statements of the Company
(including any related notes and schedules thereto) included (or incorporated by
reference) in its Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997, is accurate and complete and fairly presents, in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be noted therein), and in
conformity with the SEC's Regulation S-X, the financial position of the Company
as of its date and the results of operations and changes in financial position
for the period then ended. Each of the unaudited financial statements of the
Company (including any related notes and schedules thereto) included (or
incorporated by reference) in its Quarterly Report on Form 10-QSB for the
quarter and nine-month period ended September 30, 1998, is accurate and complete
and fairly presents, in conformity with GAAP applied on a consistent basis
throughout the periods involved
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(except as may be noted therein), and in conformity with the SEC's Regulation
S-X, the financial position of the Company as of its date and the results of
operations and changes in financial position for the periods then ended.
4.5.3 Except as and to the extent set forth (or incorporated by
reference) in the Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1998 (the "Balance Sheet Date"), the Company has not
incurred any liability or obligation of any nature whatsoever (whether due or to
become due, accrued, fixed, contingent, liquidated, unliquidated or otherwise)
that would be required by GAAP to be accrued on, reflected on, or reserved
against it on, a balance sheet (the "Balance Sheet") (or in the applicable notes
thereto) of the Company prepared in accordance with GAAP consistently applied as
of the date and for the period required.
4.6 Changes. Since the Balance Sheet Date, there has not been:
4.6.1 any change in the assets, liabilities, financial condition or
operating results of the Company, except changes in the ordinary course of
business;
4.6.2 any damage, destruction or loss to real or personal property,
whether or not covered by insurance;
4.6.3 any waiver by the Company of a legal or contractual valuable
right or of a debt owed to it outside of the ordinary course of business;
4.6.4 any satisfaction or discharge of any Lien or payment of any
obligation by the Company;
4.6.5 any change or amendment to a contract or arrangement by which
the Company or any of its respective assets or properties is bound or subject;
4.6.6 other than in the ordinary course of business, any material
increase in excess of $5,000 annually in any compensation arrangement or
agreement with any employee of the Company receiving compensation;
4.6.7 any events or circumstances that otherwise could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
and
4.6.8 the Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock or equity interests, (ii) incurred any indebtedness for
money borrowed other than capital leases in the ordinary course of business,
(iii) made any loans or advances to any Person, other than ordinary advances for
travel expenses not exceeding $5,000, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights for consideration in excess of $35,000
in any one transaction or series of related transactions.
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SECTION 5.
Representations and Warranties of the Purchaser
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Purchaser hereby represents and warrants to and agrees with the Company, as
follows:
5.1 Accredited Investor; Experience; Risk.
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5.1.1 Purchaser is an accredited investor and has been advised and
understands that the Series B Stock has not been registered under the Securities
Act, on the basis that no distribution or public offering of the Series B Stock
is to be effected, except in compliance with the applicable securities laws and
regulations or pursuant to an exemption therefrom.
5.1.2 Purchaser is purchasing the Series B Stock for investment
purposes, for her own account and not with a view to, or for sale in connection
with, any distribution thereof in violation of federal or state securities laws.
5.1.3 Purchaser has such knowledge and experience in financial and
business matters that she is capable of evaluating the merits and risks of the
purchase of the Series B Stock pursuant to this Agreement.
5.1.4 The certificates representing the Series B Stock shall bear a
legend evidencing such restriction on transfer substantially in the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER
THE ACT OR AN EXEMPTION THEREFROM."
5.2 Authorization. Purchaser has all requisite power and authority to
execute and deliver this Agreement and each of the Transaction Documents and to
perform her obligations hereunder and thereunder. Each Transaction Document to
which she is a party has been duly and validly executed and delivered by
Purchaser and constitutes the legal, valid, and binding obligation of Purchaser,
enforceable against her in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
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5.3 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 Purchaser is
required in connection with the valid execution and delivery by Purchaser of the
Transaction Documents to which she is a party, or the consummation by such
Purchaser of the transactions contemplated by the Transaction Documents to which
she is a party, except for such filings as have been made prior to the Closing.
SECTION 6.
Miscellaneous
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6.1 Amendment; Waiver. Neither this Agreement nor any provision hereof may
be amended, modified, supplemented or waived, except by a written instrument
executed by the Company and the Purchaser.
6.2 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if in writing and delivered in Person,
transmitted by facsimile transmission (fax) or sent by registered or certified
mail (return receipt requested) or recognized overnight delivery service,
postage pre-paid, addressed as follows, or to such other address has such party
may notify to the other parties in writing:
6.2.1 if to the Company:
Microvision, Inc.
0000 Xxxxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Stoel Rives, LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxxxxx X. Xxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
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6.2.2 if to the Purchaser:
Xxxxxxxx Xxxxxx
0000 Xxx Xxxxx Xxxx. X.
Xxx Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Cohen, Johnson, Day & Xxxxxxx
0000 X. Xxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
A notice or communication will be effective (i) if delivered in Person or by
overnight courier, on the business day it is delivered, (ii) if transmitted by
telecopier or E-mail, on the business day of actual confirmed receipt by the
addressee thereof, and (iii) if sent by registered or certified mail, three (3)
business days after dispatch.
6.3 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
6.4 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto. No party hereto may
assign its rights or delegate its obligations under this Agreement without the
prior written consent of the other parties hereto.
6.5 Survival of Representations, Warranties and Covenants. All
representations and warranties made in, pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement, any
investigation at any time made by or on behalf of any Purchaser, and the sale
and purchase of the Series B Stock and payment therefor for a period of two (2)
years.
6.6 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof and thereof and
supersede and cancel all prior representations, alleged warranties, statements,
negotiations, undertakings, letters, acceptances, understandings,
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contracts and communications, whether verbal or written, among the parties
hereto and thereto or their respective agents with respect to or in connection
with the subject matter hereof.
6.7 Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Washington, without regard to
principles of conflict of laws.
6.8 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
6.9 Fees and Expenses. Each party shall bear its own fees and expenses in
connection with the negotiation and execution of this Agreement and the
Transaction Documents.
6.10 No Third-Party Beneficiaries. Nothing in this Agreement will confer
any third party beneficiary or other rights upon any Person or entity that is
not a party to this Agreement.
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STOCK PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Company and Purchaser have caused this Agreement to
be executed effective as of the date first above written.
MICROVISION, INC.
By: /s/ XXXXXXXX XXXXXXXX
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Its: Attorney-in-Fact/IP Counsel
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XXXXXXXX XXXXXX
/s/ XXXXXXXX XXXXXX
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