EXHIBIT 10.3
VISTA MEDICAL TECHNOLOGIES, INC.
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SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
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JULY 27, 1995
TABLE OF CONTENTS
PAGE
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SECTION 1 SALE OF STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Sale of Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . . 2
2.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . . 2
2.2 Corporate Power. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Contracts and Other Commitments. . . . . . . . . . . . . . . . . . 3
2.7 Compliance with Other Instruments, etc . . . . . . . . . . . . . . 4
2.8 Related-Party Transactions . . . . . . . . . . . . . . . . . . . . 4
2.9 Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 Governmental Consent, etc. . . . . . . . . . . . . . . . . . . . . 5
2.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.16 Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.17 Title to Properties and Assets; Liens, Leases, etc . . . . . . . . 7
2.18 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . 7
2.19 Manufacturing and Marketing Rights . . . . . . . . . . . . . . . . 8
2.20 Tax Returns; Taxes . . . . . . . . . . . . . . . . . . . . . . . . 8
2.21 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.22 Proprietary Information Agreement. . . . . . . . . . . . . . . . . 9
2.23 No Defaults or Bankruptcy. . . . . . . . . . . . . . . . . . . . . 9
2.24 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.25 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . 10
2.26 Environmental and Safety Laws. . . . . . . . . . . . . . . . . . . 10
2.27 Real Property Holding Corporation. . . . . . . . . . . . . . . . . 10
2.28 No Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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2.29 Employee Benefit Plan Obligations. . . . . . . . . . . . . . . . . 10
2.30 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 10
2.31 Size Standard. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3 INVESTMENT REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . 11
3.1 Power and Authority. . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Due Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 No Public Market . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Disclosure of Information. . . . . . . . . . . . . . . . . . . . . 12
SECTION 4 CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING . . . . . . . 12
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . 12
4.2 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . 12
4.4 Securities Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . 12
4.6 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 12
4.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Investors Rights Agreement . . . . . . . . . . . . . . . . . . . . 13
4.9 Proceedings and Documents. . . . . . . . . . . . . . . . . . . . . 13
4.10 Restated Articles. . . . . . . . . . . . . . . . . . . . . . . . . 13
4.11 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.12 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.13 Small Business Investment Company Forms. . . . . . . . . . . . . . 13
SECTION 5 CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING . . . . . . . . 13
5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . 13
5.2 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Securities Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Restated Articles. . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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6.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Notices, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.9 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 California Corporate Securities Law. . . . . . . . . . . . . . . . 15
6.11 Approval of Amendments and Waivers . . . . . . . . . . . . . . . . 15
6.12 Qualification as a Qualified Small Business. . . . . . . . . . . . 16
6.13 Use of Proceeds; Access to Records . . . . . . . . . . . . . . . . 16
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EXHIBITS
A - Schedule of Purchasers
B - Amended and Restated Articles of Incorporation
C - Schedule of Exceptions
D - Investors Rights Agreement
E - Proprietary Information Agreement
F - Form of Legal Opinion of Company Counsel
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VISTA MEDICAL TECHNOLOGIES, INC.
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of July 27, 1995 between Vista Medical
Technologies, Inc., a California corporation (the "COMPANY"), with its principal
office at 0000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx 00000, and the Purchasers
(the "PURCHASERS") listed on the Schedule of Purchasers attached hereto as
Exhibit A (the "SCHEDULE OF PURCHASERS").
WHEREAS, the Company has authorized the issuance and sale of up to
8,094,340 shares of its Series A-1 Preferred Stock (the "SHARES") having the
rights, preferences, privileges and restrictions set forth in the Amended and
Restated of Articles of Incorporation of the Company in the form attached to
this Agreement as Exhibit B (the "RESTATED ARTICLES").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows:
SECTION 1
SALE OF STOCK
1.1 SALE OF STOCK. Subject to the terms and conditions hereof, at the
First Closing (as hereinafter defined) and the Subsequent Closing (as
hereinafter defined), each Purchaser agrees, severally, to purchase from the
Company and the Company agrees to sell and issue to each Purchaser, severally
and not jointly, the number of Shares set forth opposite such Purchaser's name
on the Schedule of Purchasers with respect to such Closing at a price of $1.325
per Share.
1.2 CLOSING DATES.
(a) The first closing (the "First Closing") of the purchase and sale
of an aggregate of 5,943,397 Shares hereunder shall take place at the law
offices of Cooley God - xxxx Xxxxxx Xxxxxxxxx & Xxxxx, 0000 Xxxxxxxxx Xxxxx,
Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx, at 10:00 a.m., on July 27, 1995, or at such
other time and place as the Company and the Purchasers shall agree provided that
the closing up to 1,056,604 of the Shares to be purchased at the First Closing
may be delayed and held at an additional closing to be held within ten (10) days
of the First Closing at the option of the Company and the Purchasers.
(b) The second closing (the "Subsequent Closing") of the purchase and
sale of 1,886,792 Shares hereunder shall take place at the law offices of Xxxxxx
Godward Xxxxxx Xxxxxxxxx & Xxxxx, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx,
Xxxxxxxxxx, at such date and time as the Company and SBIC Partners, L.P. shall
agree; PROVIDED, that the Subsequent Closing
1
occur must occur on or prior to August 31, 1995. SBIC Partners, L.P. agrees
that by execution of this Agreement, it is legally bound, as of the date hereof,
to purchase 1,886,792 Shares hereunder at the Subsequent Closing. As used
herein, the terms "CLOSING" and "CLOSINGS" shall refer individually, and
collectively, to the First Closing and the Subsequent Closings, as appropriate.
1.3 DELIVERY. At the Closings, the Company will deliver to each Purchaser
a certificate representing the Shares being purchased against payment of the
aggregate purchase price therefore by (i) check payable to the order of the
Company, (ii) wire transfer of immediately available funds made payable to the
order of the company, (iii) cancellation of indebtedness, or (iv) delivery to
the Company of other property acceptable to the Company.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Schedule of Exceptions attached hereto as
Exhibit C, the Company hereby represents and warrants to each Purchaser as
follows:
2.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
California and is in good standing under such laws. The Company has all
requisite corporate power to own an operate its assets and to carry on its
business as presently conducted and as proposed to be conducted. The Company is
qualified to do business as a foreign corporation, and is in good standing,
under the laws of all jurisdictions where the nature of its business requires
such qualification and where the failure to so qualify would have a material
adverse effect on the Company's business as presently conducted or planned to be
conducted (a "MATERIAL ADVERSE EFFECT").
2.2 CORPORATE POWER. The Company has, and at the time of the First
Closing will have, all requisite legal and corporate power to execute and
deliver this Agreement and the Investors Rights Agreement in substantially the
form attached hereto as Exhibit D (the "INVESTORS RIGHTS AGREEMENT") (this
Agreement and the Investors Rights Agreement are hereinafter collectively
referred to as the "AGREEMENTS"), to sell and issue the Shares under this
Agreement, to issue the Common Stock issuable upon conversion of the Shares and
to carry out and perform its obligations under the terms of the Agreements,
including all exhibits and schedules hereto and thereto.
2.3 SUBSIDIARIES. The Company does not own (of record or beneficially) or
control, directly or indirectly, any interest in any other corporation,
association or business entity.
2.4 CAPITALIZATION. The authorized capital stock of the Company consists
of 25,000,000 shares of Common Stock, of which 264,151 shares will be issued and
outstanding
2
immediately prior to the First Closing, and 18,000,000 shares of Preferred
Stock, of which 8,300,000 are designated Series A-1 Preferred Stock, none of
which will be issued and outstanding immediately prior to the First Closing, and
of which 8,300,000 are designated Series A-2 Preferred Stock, none of which will
be issued and outstanding immediately prior to the First Closing. No other
shares of capital stock or other securities of the Company are outstanding. All
such issued and outstanding shares have been duly authorized and validly issued
and are fully paid and nonassessable and have been offered, issued, sold and
delivered by the Company in compliance with applicable federal and state
securities laws. The Shares have the rights, preferences and privileges set
forth in the Restated Articles. The Company has reserved 896,208 shares of its
Common Stock (the "RESERVED SHARES") for issuance pursuant to the Company's 1995
Stock Plan, 469,513 shares of which are subject to outstanding options and
426,695 shares of which are available for future grants under such Plan as of
the First Closing. Except for the transactions contemplated in the Agreements
and the conversion privileges of the Company's Series A-1 Preferred Stock and
Series A-2 Preferred Stock specified in the Restated Articles and except with
respect to the Reserved Shares, there are no options, warrants, conversion
privileges or other rights or agreements presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of the Company's capital
stock or other securities of the Company.
2.5 AUTHORIZATION. All corporate action on the part of the Company,
its directors and shareholders necessary for the authorization, execution,
delivery and performance of the Agreements by the Company, the authorization,
sale, issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares) and the performance of the Company's obligations
under the Agreements has been taken or will be taken prior to the First
Closing. The Agreements, when executed and delivered by the Company, will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms, subject to laws of general application relating
to bankruptcy, insolvency, the relief of debtors, general equity principles,
and limitations upon rights to indemnity. The Shares, when issued in
compliance with the provisions of this Agreement, will be duly and validly
issued, fully paid and nonassessable. The Common Stock issuable upon
conversion of the Shares has been duly and validly reserved and, when issued
in compliance with the provisions of this Agreement, will be duly and validly
issued, fully paid and nonassessable; PROVIDED, HOWEVER, that the Shares (and
the Common Stock issuable upon conversion of the Shares) may be subject to
restrictions on transfer under state and/or federal securities laws as set
forth herein. The issuance of the Shares is not subject to any preemptive
rights, rights of first refusal or similar rights that have not been waived.
2.6 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment, or proposed transaction, written or
oral, absolute or contingent, other than contracts for the purchase of supplies
and services that were entered into in the ordinary course of business and that
do not involve more than $25,000 individually or $100,000 in the aggregate. For
the purpose of this paragraph, written employment and consulting contracts,
license agreements and any other agreements relating to the acquisition or
disposition of the Company's technology (other than agreements between the
Company and employees in substantially the form of the Proprietary Information
and Inventions Agreement attached hereto
3
as Exhibit E (the "PROPRIETARY INFORMATION AGREEMENT") shall not be considered
to be contracts entered into in the ordinary course of business.
2.7 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not, and will
not by virtue of entering into and performing the Agreements and the
transactions contemplated thereunder be, in violation of any term of the
Restated Articles or Bylaws or any term or provision of any material mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, and is not, and will not by virtue of entering
into and performing the Agreements and the transactions contemplated thereunder
be, in violation of any order addressed specifically to the Company nor, to the
best of the Company's knowledge, any material order, statute, rule or regulation
applicable to the Company, other than any of the foregoing such violations that
do not, either individually or in the aggregate, have a Material Adverse Effect.
2.8 RELATED-PARTY TRANSACTIONS. No employee, officer or director of the
Company, or affiliate or relative of any of the foregoing, is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them (other than with respect to accrued salary and
vacation and subject to normal expense reimbursements in the ordinary course of
business). To the best of the Company's knowledge, none of such persons has any
direct or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a material business
relationship, or any firm or corporation that competes with the Company, except
shares owned by such persons in publicly traded companies that may compete with
the Company. To the best of the Company's knowledge, no officer or director of
the Company is, directly or indirectly, interested in any material contract to
which the Company is a party.
2.9 LITIGATION, ETC. There is neither pending nor, to the Company's
knowledge and belief, threatened any action, suit, proceeding or claim, or any
basis therefor or threat thereof, whether or not purportedly on behalf of the
Company, to which the Company is or may be named as a party or its property is
or may be subject or, to the Company's knowledge, to which any officer, key
employee or principal shareholder of the Company is subject, and in which an
unfavorable outcome, ruling or finding in any such matter or for all such
matters taken as a whole would have a Material Adverse Effect; and the Company
has no knowledge (i) of any unasserted claim, the assertion of which is likely
and which, if asserted, will seek damages, an injunction or other legal,
equitable, monetary or non-monetary relief, which claim individually or
collectively with other such unasserted claims if granted would have a Material
Adverse Effect, or (ii) that there exists, or there is pending or planned, any
patent, trademark, tradename, invention, device, application or principle, or
any statute, rule, law, regulation, standard or code which would result in a
Material Adverse Effect. There is no pending, or to the Company's knowledge and
belief, threatened claim or litigation against or affecting the Company
contesting its right to produce, manufacture, sell or use any product, process,
method, substance, part or other material presently produced, manufactured, sold
or used or planned to be produced, manufactured, sold or used by the Company in
connection with the operations of the Company, and in which an unfavorable
4
outcome, ruling or finding in any such matter or for all such matters taken as a
whole would have a Material Adverse Effect.
2.10 REGISTRATION RIGHTS. Except as set forth in the Investors Rights
Agreement, the Company is not under any obligation to register (as defined in
the Investors Rights Agreement) any of its presently outstanding securities or
any of its securities that may hereafter be issued.
2.11 PERMITS. The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which would have a Material Adverse Effect. The
Company is not in default or violation in any material respect under any of such
franchises, permits, licenses, or other similar authority, and the execution and
delivery of the Agreements will not result in any such default or violation,
with or without the passage of time or giving of notice or both.
2.12 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Shares (and
the Common Stock issuable upon conversion of the Shares) or the consummation of
any other transaction contemplated thereby, except the filing of the Restated
Articles in the Office of the Secretary of State of the State of California and
the qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) of the offer and sale of the Shares
(and the Common Stock issuable upon conversion of the Shares) under the
California Corporate Securities Law, which filing and qualification, if
required, will be accomplished in a timely manner prior to or promptly upon
completion of the Closing.
2.13 DISCLOSURE. The Company has provided the Purchasers with all the
information reasonably available to it without undue expense that the Purchasers
have requested for deciding whether to purchase the Shares. The Agreements and
the Exhibits thereto as well as any other document, certificate, schedule,
financial, business or other statement furnished to any Purchaser by or on
behalf of the Company in connection with the transactions contemplated hereby,
do not contain any untrue statement of a material fact and do not omit to state
a material fact necessary in order to make the statements contained herein or
therein not misleading.
2.14 OFFERING. Subject to the accuracy of the representations set forth in
Section 3 hereof, the offer, sale and issuance of the Shares pursuant to this
Agreement and the issuance of the Common Stock to be issued upon conversion of
the Shares constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933 as amended (the "SECURITIES ACT") and
neither the Company nor any authorized agent acting on its behalf will take any
action hereafter that would cause the loss of such exemption.
2.15 LIABILITIES. The Company has no indebtedness for borrowed money that
the Company has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which the Company has otherwise become directly
or indirectly liable, other than obligations not
5
in excess of $25,000 individually or $100,000 in the aggregate.
2.16 CHANGES. Since July 1, 1995, there has not been:
(a) any change in the assets, liabilities, financial condition, or
operating results of the Company from that reflected in the Financial Statements
(defined below), except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
(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 (as such business is presently
conducted and as it is proposed to be conducted);
(c) any waiver or compromise by the Company 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, except in the ordinary course of
business and that is not material to the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(e) to the best of the Company's knowledge, any material change to a
material contract or arrangement by which the Company or any of its assets is
bound or subject;
(f) any material change in any compensation arrangement or agreement
with any employee, officer, director or shareholder;
(g) any sale, assignment, license or transfer of any patents,
trademarks, copyrights, trade secrets, Proprietary Information (as defined
herein) or other intangible assets;
(h) any resignation or termination of employment of any key officer
of the Company; and the Company, to the best of its knowledge, does not know of
the impending resignation or termination of employment of any such officer;
(i) receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;
(j) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for the benefit
of its employees, officers, or directors, or any members of their immediate
families, other than travel
6
advances and other advances made in the ordinary course of its business;
(l) to the best of the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
business, properties, prospects, or financial condition of the Company (as such
business is presently conducted and as it is proposed to be conducted); or
(m) any agreement or commitment by the Company to do any of the
things described in this paragraph 2.16.
2.17 TITLE TO PROPERTIES AND ASSETS; LIENS, LEASES, ETC. The Company has
good and marketable title to its properties and assets and has good title to all
of its leasehold interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) the lien of current taxes not yet
due and payable, and (ii) possible minor liens and encumbrances that do not in
any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company and which have not arisen
otherwise than in the ordinary course of business.
Set forth on Schedule 2.17 is a correct and complete list (including the
amount of rents called for and a description of the leased property) of all
material leases (involving more than $25,000 either individually or in the
aggregate if such leases are of a similar nature or with the same lessor) under
which the Company is a lessee. The Company enjoys peaceful and undisturbed
possession under all such leases, all of such leases are valid and subsisting
and, except as would not result in a Material Adverse Effect, the Company is not
in default thereunder.
2.18 PATENTS AND TRADEMARKS. The Company has sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes (collectively
"PROPRIETARY INFORMATION"), or believes that it has the ability to acquire valid
licenses to such Proprietary Information on reasonable terms, as necessary for
its business as now conducted and as proposed to be conducted without any
conflict with or infringement of the rights of others. The Schedule of
Exceptions contains a complete list of patents and pending patent applications
of the Company. There are no outstanding options, licenses, or agreements of
any kind relating to the foregoing, nor is the Company bound by or a party to
any options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity.
The Company is not aware of any impropriety with regard to the granting of any
licenses of Proprietary Information to or from the Company. Neither the Company
nor, to the Company's knowledge, any of its employees has received any written
communications alleging, nor does the Company know of any grounds for any claims
or allegations now or in the future, that the Company or its employees have
violated or infringed or that the Company would, by conducting its business as
proposed, violate or infringe any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any
other person or entity. The Company is not aware that any of its employees is
7
obligated under any contract (including licenses, covenants, or commitments of
any nature) or other agreement, or subject to any judgment, decree, or order of
any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interests of the Company or that would
conflict with the Company's business as proposed to be conducted. The former
employers of the Company's employees have not asserted any rights or claims to
the Company's Proprietary Information and the Company does not believe that such
former employers have a right to assert any such rights or claims. Except
pursuant to the terms of the Proprietary Information Agreements, there are no
agreements, understandings, instruments, or contracts to which the Company is a
party or by which it is bound that involve the license of any patent, copyright,
trade secret or other similar proprietary right to or from the Company.
2.19 MANUFACTURING AND MARKETING RIGHTS. The Company has not granted
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market, or sell
its products.
2.20 TAX RETURNS; TAXES. The Company has accurately prepared and timely
filed all federal, state and other tax returns which are required to be filed
and has timely paid all taxes covered by such returns which have become due and
payable. The Company has not been advised that any of its returns, federal,
state or other, have been or are being audited as of the date hereof. The
Company is not delinquent in taxes or assessments and has no tax deficiency
proposed or assessed and no waiver of the statute of limitations and assessment
or collections. All taxes, if any, imposed by law in connection with the
issuance, sale and delivery of the Shares shall have been paid, and all laws
imposing such taxes shall have been fully complied with, prior to the Closing.
2.21 EMPLOYEES. None of the Company's employees belongs to any union or
collective bargaining unit. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
opportunity and other laws related to employment. To the best of the Company's
knowledge, no employee of the Company is or will be in violation of any
judgment, decree, or order, or any term of any employment contract, patent
disclosure agreement, proprietary information and inventions agreement, or any
restrictive covenant, or any other common law obligation to a former employer,
or other contract or agreement relating to the relationship of any such employee
with the Company, or any other party, because of the nature of the business
conducted or to be conducted by the Company, or to the use of trade secrets or
proprietary information of others, or to the use by the employee of his best
efforts with respect to such business. The Company is not a party to or bound
by any currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, profit sharing plan, retirement agreement, or other
employee compensation agreement, other than with respect to the Company's 1995
Stock Plan, a true and correct copy of which has been provided to counsel for
the Purchasers. The Company is not aware that any officer or key employee, or
that any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. Subject
8
to general principles related to wrongful termination of employees, the
employment of each officer and employee of the Company is terminable at the will
of the Company.
2.22 PROPRIETARY INFORMATION AGREEMENT. Each employee of the Company has
executed a Proprietary Information Agreement in the form attached hereto as
Exhibit E.
2.23 NO DEFAULTS OR BANKRUPTCY. The Company has, in all material respects,
performed all material obligations required to be performed by it to date and is
not in default under any of the contracts, loans, notes, mortgages, indentures,
licenses, security agreements, agreements, leases, documents, commitments or
other arrangements to which it is a party or by which it is otherwise bound,
except for such defaults which in the aggregate would not have a Material
Adverse Effect, and no event or condition has occurred which, with the lapse of
time or the giving of notice, or both, would constitute such a default.
The Company has not admitted in writing its inability to pay its debts
generally as they become due, filed or consented to the filing against it of a
petition in bankruptcy or a petition to take advantage of any insolvency act,
made an assignment for the benefit of creditors, consented to the appointment of
a receiver for itself or for the whole or any substantial part of its property,
or had a petition in bankruptcy filed against it, been adjudicated in a
bankruptcy or filed a petition or answer seeking reorganization or arrangement
under the Federal bankruptcy laws or any other similar law or statute of the
United States of America or any other jurisdiction.
2.24 INSURANCE. The Company maintains adequate insurance on its properties
of a character and in such amounts and on such terms usually insured by
corporations engaged in the same or a similar business against loss or damage
resulting from fire or other risks insured against by such corporations, and
maintains in full force and effect public liability insurance against claims for
personal injury, death or property damage occurring upon, in, about or in
connection with the use of any of its properties, and maintains such other
insurance as may be required by law or other agreement to which the Company is a
party.
2.25 BROKERS OR FINDERS. The Company has not incurred, and will not incur,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with the Agreements.
2.26 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
2.27 REAL PROPERTY HOLDING CORPORATION. The Company is not a real property
holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
9
2.28 NO DIVIDENDS. The Company has never made any declaration, setting
aside for payment or other distribution in respect of any of the Company's
capital stock or any direct or indirect redemption, repurchase or other
acquisition of any of such stock.
2.29 EMPLOYEE BENEFIT PLAN OBLIGATIONS. The Company does not maintain or
have any obligations with respect to any employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")). The Company is not, nor was it at any time, obligated to contribute
to any employee pension benefit plan which is or was a multi-employer plan
within the meaning of Section 3(37) of ERISA.
2.30 FINANCIAL STATEMENTS. The Company has delivered to each Purchaser its
financial statements as of and for the year ended December 31, 1994, and the six
months ended July 1, 1995 (the "FINANCIAL STATEMENTS"). The Financial
Statements are complete and correct in all material respects, have been prepared
in accordance with generally accepted accounting principles and accurately set
out and describe the financial condition and operating results of the Company as
of the dates, and during the periods, indicated therein; PROVIDED, HOWEVER, that
the unaudited financial statements are subject to normal year-end audit
adjustments, which are not expected to be material in amount or effect, and do
not contain all footnotes required under generally accepted accounting
principles. Since July 1, 1995, there has not been any change in the assets,
liabilities, financial condition or operations of the Company from that
reflected in the Financial Statements, except changes in the ordinary course of
business which would not, either in any case or in the aggregate, have a
Material Adverse Effect.
2.31 SIZE STANDARD. The Company (a) is, and at the Closing will be, a
"small concern," as such term is defined in 13 C. F. R. Section 107.3, and (b)
complies with all applicable size standards set forth in 13 C.F.R. Section
121.802.
SECTION 3
INVESTMENT REPRESENTATIONS
Each Purchaser hereby represents and warrants to the Company as follows:
3.1 POWER AND AUTHORITY. Such Purchaser has the requisite power and
authority to enter into this Agreement, to purchase the Shares hereunder, to
convert the Shares into Common Stock, and to carry out and perform its
obligations under the terms of this Agreement.
3.2 DUE EXECUTION. This Agreement has been duly authorized, executed and
delivered by such Purchaser, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding agreement of such Purchaser.
3.3 EXPERIENCE. Such Purchaser has, from time to time, evaluated
investments in start-
10
up companies and has, either individually or through the personal experience of
one or more of its current officers or partners, experience in evaluating and
investing in start-up companies.
3.4 INVESTMENT. Such Purchaser is acquiring the Shares (and any Common
Stock issuable upon conversion of the Shares) for investment for its own account
and not with the view to, or for resale in connection with, any distribution
thereof. Such Purchaser understands that the Shares (and any Common Stock
issuable upon conversion of the Shares) to be purchased have not been 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 as expressed herein.
3.5 RULE 144. Such Purchaser acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Such Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than two years
after a party has purchased and paid for the securities to be sold, the sale
being through a "BROKER'S TRANSACTION" or in transactions directly with a
"MARKET MAKER" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations. Such
Purchaser is aware that the conditions for resale set forth in Rule 144 have not
been satisfied and that the Company has no plan to satisfy these conditions in
the foreseeable future.
3.6 NO PUBLIC MARKET. Such Purchaser understands that no public market
now exists for the Shares and that it is unlikely that a public market will ever
exist for the Shares.
3.7 DISCLOSURE OF INFORMATION. Such Purchaser believes it has received
all the information it considers necessary or appropriate for deciding
whether to purchase the Shares. Such Purchaser further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Shares. 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
Purchaser thereon.
SECTION 4
CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING
The Purchasers' obligation to purchase the Shares at the First Closing and
the Subsequent Closing is subject to the fulfillment on or prior to the First
Closing of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the
11
Company contained in Section 2 shall be true when made and 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 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing shall have
been performed or complied with in all material respects.
4.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the Company's business or financial condition or affairs between the
date of this Agreement and the date of the Closing, if different.
4.4 SECURITIES LAWS. The Company shall have obtained all necessary
permits and qualifications, or secured exemptions therefrom, required under the
Securities Act or by any state for the offer and sale of the Shares and Common
Stock issuable upon conversion of the Shares.
4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered on the date
of such Closing a certificate signed by an officer of the Company certifying
that the conditions specified in Sections 4.1, 4.2 and 4.3 have been fulfilled,
and such other matters as the Purchasers may reasonably request.
4.6 BOARD OF DIRECTORS. The Board of Directors of the Company immediately
following the Closing shall consist of Xxxxx Xxxxx, Xxxx Xxxxxxx, Xxx Xxxx, Xxx
Xxxxxxx, Xxxx Xxxx and Xxxxx Xxxxxxxx, with one vacancy to be filled by the
above directors.
4.7 OPINION OF COUNSEL. The Purchasers shall have received from Xxxxxxx
Phleger & Xxxxxxxx, counsel for the Company, an opinion dated as of the First
Closing in substantially the form attached hereto as Exhibit F.
4.8 INVESTORS RIGHTS AGREEMENT. The Company shall have executed and
delivered the Investors Rights Agreement.
4.9 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Purchasers' counsel, which shall have received all such counterpart original and
certified or other copies of such documents as it may reasonably request.
4.10 RESTATED ARTICLES. The Restated Articles shall have been filed with
and accepted by the California Secretary of State.
4.11 DUE DILIGENCE. The Purchasers shall have completed to its reasonable
satisfaction its review of the Company's business and operations.
12
4.12 CONSIDERATION. The Purchasers who are delivering their purchase price
for the Shares other than pursuant to clauses (i) or (ii) of Section 1.3 hereof,
shall have delivered such other documents or agreements as the Company and the
other Purchasers shall have reasonably requested.
4.13 SMALL BUSINESS INVESTMENT COMPANY FORMS. On or prior to the Closing,
the Company shall have delivered (a) an executed copy of SBA Form 480 - Size
Status Declaration, (b) an executed copy of SBA Form 652 - Assurance of
Compliance for Nondiscrimination and (c) the information needed to complete Part
A of SBA Form 1031 -Portfolio Financing Report, to the Purchasers requesting
such information.
SECTION 5
CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The Company's obligation to issue and sell the Shares at the First Closing
is subject to the fulfillment on or prior to the Closing of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Purchasers contained in Section 3 shall be true when made and 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.
5.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by Purchasers on or prior to the date of the Closing
shall have been performed or complied with in all respects.
5.3 SECURITIES LAWS. The Company shall have obtained all necessary
permits and qualifications, or secured exemptions therefrom, required under
the Securities Act or by any state for the offer and sale of the Shares and
Common Stock issuable upon conversion of the Shares.
5.4 RESTATED ARTICLES. The Restated Articles shall have been filed with
and accepted by the California Secretary of State.
5.5 CONSIDERATION. The Purchasers who are delivering their purchase price
for the Shares other than pursuant to clauses (i) or (ii) of Section 1.3 hereof,
shall have delivered such other documents or agreements as the Company and the
other Purchasers shall have reasonably requested.
SECTION 6
13
MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California.
6.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchasers and the
closing of the transactions contemplated hereby.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto;
PROVIDED, HOWEVER, that the rights of Purchasers to purchase the Shares shall
not be assignable without the consent of the Company, and the Company's
obligations hereunder shall not be assignable without the consent of the
Purchasers.
6.4 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 subjects hereof and thereof.
6.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or mailed
by registered or certified mail, postage prepaid, or otherwise delivered by hand
or by messenger, addressed (a) if to the Purchasers, one to each Purchaser at
the address set forth on the Schedule of Purchasers, or at such other address as
shall have been furnished to the Company in writing by the Purchasers, and one
copy to Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx, 0000 Xxxxxxxxx Xxxxx, Xxxxx
0000, Xxx Xxxxx, XX 00000, Attn: Xxxxx X. Xxxxxx, Esq. or (b) if to the Company,
one copy to its address set forth above and addressed to the attention of the
President, or at such other address or addresses as the Company shall have
furnished in writing to the Purchasers, and one copy to Xxxxxxx Xxxxxxx &
Xxxxxxxx, 0000 Xxxx Xxxx, Xxxx Xxxx, XX 00000, Attn: Xxxx Xxxxxxx, Esq. All
notices and other communications pursuant to the provisions of this Section 6.5
shall be deemed delivered when mailed or sent by facsimile or delivered by hand
or messenger.
6.6 EXPENSES. The Company will pay legal fees for one special counsel for
the Purchasers, as well as the out-of-pocket expenses for technical, patent and
market consultants, in an aggregate amount not to exceed $50,000. Except as set
forth above, each party to this Agreement shall bear its own expenses and legal
fees incurred by it with respect to this Agreement and all related transactions
outside of or in excess of these covered costs.
6.7 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
14
6.8 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
6.9 SEPARABILITY. Any invalidity, illegality, or limitation of the
enforceability with respect to any Purchaser of any one or more of the
provisions of this Agreement, or any part thereof, whether arising by reason of
the law of any such Purchaser's domicile or otherwise, shall in no way affect or
impair the validity, legality, or enforceability of this Agreement with respect
to other Purchasers. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.
6.10 CALIFORNIA 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 such securities
or the payment or receipt of any part of the consideration therefor prior to
such qualification, if required by law, is unlawful. The rights of all parties
to this agreement are expressly conditioned upon such qualification being
obtained, if required by law.
6.11 APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and the holders of a
majority of the outstanding Shares purchased and sold hereunder (including the
Common Stock issued upon conversion of the Shares), excluding from the
determination of such a majority (both in determining the total number of such
shares outstanding and the number of such shares consenting or not consenting)
all shares previously disposed of by the Purchasers or their transferees
pursuant to one or more registration statements under the Securities Act or
pursuant to Rule 144 thereunder. Any amendment, termination or waiver effected
in accordance with this section shall be binding upon each holder of any
securities issued pursuant to this Agreement (including securities into which
such securities have been converted or exchanged), each future holder of any or
all such securities and the Company.
6.12 QUALIFICATION AS A QUALIFIED SMALL BUSINESS. The Company agrees to
deliver to the Purchasers, from time to time, such forms, documents, schedules
and other instruments reasonably requested by the Purchasers to cause the Series
A-1 Stock to qualify as a qualified small business stock, as such term is
defined in Section 1202(b) of the Internal Revenue Code of 1986, as amended.
6.13 USE OF PROCEEDS; ACCESS TO RECORDS. The Company covenants and agrees
that it will use the proceeds from the sale of the Shares hereunder for research
and development, product marketing and general working capital purposes, and
otherwise as duly authorized by the Board of Directors of the Company for the
growth, expansion and modernization of the Company. The
15
company will provide all Purchasers requesting such information with reasonable
access to the Company's financial records so as to allow such Purchasers to
confirm that such proceeds were used in the manner contemplated by this
Agreement, such access to include a review by Purchasers of the use of proceeds
within ninety (90) days after the Closing. The Company acknowledges and agrees
that, if the proceeds are not used in the manner contemplated hereby, the
Purchasers shall have the right to demand the immediate repayment thereof.
16
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxx
----------------------
Title:
-------------------
THE PURCHASERS:
--------------------
[NAME]
By:
----------------------
Title:
-------------------
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
----------------------
Title:
-------------------
THE PURCHASERS:
KAISER AEROSPACE & ELECTRONICS
-------------------------
[NAME]
By: /s/ X. X. Xxxxx
----------------------
Title: President
-------------------
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
----------------------
Title:
-------------------
THE PURCHASERS:
/s/ Xxx Xxxx
-------------------------
Xxx Xxxx
By:
----------------------
Title:
-------------------
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
----------------------
Title:
-------------------
THE PURCHASERS:
ONE LIBERTY FUND III, L.P.
By: /s/ Xxx Xxxxxxx
----------------------
Title: General Partner of One Liberty
Partners III. L.P., General
Partner of One Liberty
Fund III, L.P.
-------------------------------
GILDE INTERNATIONAL B.V.
By: /s/ Xxx Xxxxxxx
----------------------
Title: Attorney-in-Fact
-------------------
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
-----------------
Title:
--------------
THE PURCHASERS:
B.U.N.P.
By: /s/ Xxxx X. Xxxxxxx, Xx.
--------------------------
Title:
-----------------------
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
-----------------
Title:
--------------
THE PURCHASERS:
DOMAIN PARTNERS III, L.P.
By: One Xxxxxx Square Associates III, L.P.
its General Partner
By: /s/ Xxxxx X. Xxxxx
----------------------
General Partner
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
-----------------
Title:
--------------
THE PURCHASERS:
Biotechnology Investments Limited
By: OLD COURT LIMITED
By: /s/ Xxxxx X. Xxxxx
----------------------
Attorney-in-Fact
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
-----------------
Title:
--------------
THE PURCHASERS:
DP III ASSOCIATES, L.P.
By: One Xxxxxx Square Associates III, L.P.
its General Partner
By: /s/ Xxxxx X. Xxxxx
----------------------
General Partner
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
-----------------
Title:
--------------
THE PURCHASERS:
SBIC PARTNERS, L.P.
By: Xxxxxxx Xxxxxxx & Xxxxx X.X.
General Partner
By: Xxxxxxx Xxxxxxx & Xxxxx Venture Co.,
General Partner
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxxx X. Xxxxxxx
Office of the President
By: SL-SBIC Partners, L.P.,
General Partner
By: FW-SBIC, Inc.
General Partner
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
17
The foregoing Series A-1 Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By:
----------------------
Title:
-------------------
THE PURCHASERS:
SBIC PARTNERS, L.P.
By: Xxxxxxx Xxxxxxx & Xxxxx X.X. By:
General Partner -------------------------------------
Title:
----------------------------------
Address:
--------------------------------
By: Xxxxxxx Xxxxxxx & Xxxxx Venture Co.,
General Partner
By:
----------------------------------
Xxxxxxxx X. Xxxxxxx
Office of the President
By: SL-SBIC Partners, L.P.,
General Partner
By: FW-SBIC, Inc.
General Partner
By: /s/ illegible
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
17
Exhibit A
SCHEDULE OF PURCHASERS
PURCHASERS PURCHASE PRICE NUMBER OF SHARES
FIRST CLOSING:
KAISER AEROSPACE AND ELECTRONICS $2,375,000.23 1,792,453
000 Xxxxx Xxxx, Xxx. 000
Xxxxxx Xxxx, XX 00000
Attention: Xx. X.X. Xxxxx
XXX XXXX $350,000.08 264,151
c/o Oktas
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
ONE LIBERTY FUND III $990,000.25 747,170
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxx Xxxxxxx
XXXXX INTERNATIONAL B.V. $9,999.78 7,547
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxx Xxxxxxx
B.U.N.P. $300,001.20 226,416
c/o Community Technology Fund
Boston University Ventures
000 Xxx Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Xx.
DOMAIN PARTNERS III, L.P. $2,705,313.45 2,041,746
Xxx Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Ph.D.
OLD COURT LIMITED $1,400,000.30 1,056,604
St. Julian's Court
St. Xxxxx Port
Guernsey, Channel Islands
with copy to: c/o Domain Associates
Xxx Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Ph.D.
DP III ASSOCIATES, L.P. $94,685.83 71,461
Xxx Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Ph.D
SUBSEQUENT CLOSING:
SBIC PARTNERS, L.P. $2,499,999.40 1,886,792
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx
TOTAL
-------------- --------------
$10,725,000.52 8,094,340
Exhibit B
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
VISTA MEDICAL TECHNOLOGIES, INC.
The undersigned, Xxxx Xxxx and Xxxxx Xxxxxxxx, hereby certify that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of Vista Medical Technologies, Inc., a California corporation.
TWO: The articles of incorporation of this corporation are amended and
restated to read as follows:
I.
The name of the corporation is Vista Medical Technologies, Inc.
II.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
A. CLASSES OF STOCK. This corporation is authorized to issue two (2)
classes of shares, to be designated "Common" and "Preferred" and referred to
herein as the "Common Shares" or the "Preferred Shares" respectively. The total
number of Common Shares the corporation is authorized to issue is twenty-five
million (25,000,000). The par value is $0.01 per share. The total number of
Preferred Shares the corporation is authorized to issue is eighteen million
(18,000,000). The par value is $0.01 per share.
The board of directors of the corporation may divide the Preferred
Shares into any number of series. The board of directors shall fix the
designation and number of shares of each such series. The board of directors
may determine and alter the rights, preferences, privileges and restrictions
granted to and imposed upon any wholly unissued series of the Preferred Shares.
The board of directors (within the limits and restrictions of any resolution
adopted by it, originally fixing the number of shares of any series) may
increase or decrease the number of shares of any such series after the issue of
shares of that series, but not below the number of then outstanding
shares of such series.
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF THE SERIES A-1
PREFERRED STOCK AND SERIES A-2 PREFERRED STOCK.
1. DESIGNATION OF SERIES A-1 PREFERRED STOCK AND SERIES A-2
PREFERRED STOCK. Eight Million Three Hundred Thousand (8,300,000) shares of
Preferred Stock are designated Series A-1 Preferred Stock (the "Series A-1
Preferred") with the rights, preferences and privileges specified herein. Eight
Million Three Hundred Thousand (8,300,000) shares of Preferred Stock are
designated Series A-2 Preferred Stock (the "Series A-2 Preferred") with the
rights, preferences and privileges specified herein. As used in this Article
III, Section B., the term "Series A Preferred" shall refer to the Series A-1
Preferred and the Series A-2 Preferred, respectively.
2. DIVIDEND RIGHTS OF SERIES A PREFERRED. The holders of the then
outstanding shares of Series A Preferred shall be entitled to receive dividends,
in preference to any dividend on the Common Stock of this corporation
("Common"), at the rate of eight percent (8%) of the Original Purchase Price per
share (as defined below) per annum, whenever funds are legally available and
when and as declared by the Board of Directors. The dividends shall be
non-cumulative. The original purchase price of the Series A Preferred shall be
$1.325 per share (the "Original Purchase Price").
3. LIQUIDATION PREFERENCE.
a. In the event of any liquidation event, either voluntary or
involuntary, the holders of the Series A Preferred shall be entitled to receive,
prior and in preference to any distribution of any of the assets or surplus
funds of the corporation to the holders of the Common by reason of their
ownership thereof, the sum of (i) $1.325 per share for each share of Series A
Preferred then held by them and (ii) an amount equal to all declared but unpaid
dividends on the Series A Preferred then held by them. If, upon the occurrence
of such event, the assets and funds thus distributed among the holders of the
Series A Preferred shall be insufficient to permit the payment to such holders
of the full aforesaid preferential amounts, then the entire assets and funds of
the corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred in proportion to the preferential
amount each such holder would have been entitled to receive pursuant to this
Section 3 if such distribution had been sufficient to permit the full payment of
such preferential amount.
b. After payment has been made to the holders of the Series A
Preferred of the full amounts to which they shall be entitled pursuant to
Section 3.a. above, the holders of the Common and Series A Preferred shall be
entitled to receive the remaining assets of the corporation in proportion to the
shares of Common Stock then held by them and the shares of Common Stock which
they have the right to acquire upon conversion of Series A Preferred until such
time as the distributions made to the holders of the Series A Preferred (taken
together with all payments made pursuant to Section 3.a. above) equal $3.975 per
share for each share of Series A Preferred then held by them. If, upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then the
entire remaining assets and funds of the corporation legally available for
distribution after payment has been made to the holders of the Series A
Preferred of the full amounts to which they shall be entitled pursuant to
Section 3.a. above shall be distributed ratably among the holders of the Common
and Series A Preferred in proportion to the preferential amount each such holder
would have been entitled to receive pursuant to this Section 3 if such
distribution had been sufficient to permit the full payment of the preferential
amounts to the holders of the Series A Preferred.
c. After payment has been made to the holders of the Series A
Preferred of the full amounts to which they shall be entitled pursuant to
Sections 3.a. and 3.b. above, the holders of the Common shall be entitled to
receive all remaining assets of the corporation in proportion to the shares of
Common Stock then held by them.
d. For purposes of this Section 3, a liquidation, dissolution
or winding up of the corporation shall be deemed to be occasioned by, or to
include, the corporation's sale of all or substantially all of its assets or the
acquisition of this corporation by another entity by means of merger or
consolidation resulting in the exchange of the outstanding shares of this
corporation for securities or consideration issued, or caused to be issued, by
the acquiring corporation or its subsidiary in which the shareholders of the
corporation are holders of less than 50% of voting power of the surviving
corporation.
e. Each holder of any outstanding shares of Series A Preferred
shall be deemed to have consented, for purposes of Sections 502, 503 and 506 of
the California Corporations Code, to distributions made by the corporation in
connection with the repurchase of shares of Common issued to or held by
employees, directors or consultants of or to the corporation or any of its
subsidiaries upon termination of their employment or services pursuant to
agreements providing for the right of such repurchase between the corporation
and such persons.
4. CONVERSION. The holders of the Series A Preferred shall have
conversion rights as follows (the "Conversion Rights"):
a. OPTIONAL AND AUTOMATIC CONVERSION. Each share of Series A
Preferred shall be convertible at the option of the holder thereof, without
payment of additional consideration, at any time after the date of issuance of
such share, at the office of the corporation or any transfer agent for the
Series A Preferred, into such number of fully paid and nonassessable shares of
Common as is determined by dividing $1.325 by the Conversion Price, determined
as hereinafter provided, in effect at the time of conversion. The price at
which shares of Common shall be deliverable upon conversion of the Series A-1
Preferred (the "Series A-1 Conversion Price") shall initially be $1.325 per
share of Common. The price at which shares of Common shall be deliverable upon
conversion of the Series A-2 Preferred (the "Series A-2 Conversion Price") shall
initially be $1.325 per share of Common. As used in this Section 4., the term
"Conversion Price" shall refer to the Series A-1 Conversion Price and the Series
A-2 Conversion Price, respectively. The initial Series A-1 Conversion Price and
Series A-2 Conversion Price shall be subject to adjustment as hereinafter
provided.
Each share of Series A Preferred shall automatically be converted into
shares of Common at the then effective Conversion Price in the event of either
(i) the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Act"), covering the offer and sale of Common (whether for the account of
the corporation or for the account of one or more shareholders of the
corporation) of the corporation to the public in which the aggregate gross cash
proceeds to the corporation (prior to underwriters' discounts and expenses) are
equal to or exceed $15,000,000 and the public offering price is equal to or
exceeds $5.00 per share of Common (as adjusted for any stock dividends,
combinations or splits with respect to such shares) (a "Qualified Public
Offering") or (ii) the written consent of holders of more than fifty percent
(50%) of the then outstanding shares of Series A Preferred voting as a class (a
"Qualifying Consent"). In the event of the automatic conversion of the Series A
Preferred upon a Qualified Public Offering, the conversion of Series A Preferred
shall be deemed to have occurred automatically at the closing of such Qualified
Public Offering. In the event of the automatic conversion of the shares of
Series A Preferred upon a Qualifying Consent, the conversion of Series A
Preferred shall be deemed to have occurred on the date specified in such
Qualifying Consent.
b. MECHANICS OF CONVERSION. No fractional shares of Common
shall be issued upon conversion of Series A Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Series A Preferred shall be
entitled to convert the same into full shares of Common, it shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
corporation or of any transfer agent for the Series A Preferred, and shall give
written notice to the corporation at such office that it elects to convert the
same (except that no such written notice of election to convert shall be
necessary in the event of an automatic conversion pursuant to Section 4.a.).
The corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Series A Preferred a certificate or certificates,
registered in such names as specified by the holder, for the number of shares of
Common to which he shall be entitled as aforesaid and a check payable to the
holder in the amount of any cash amounts payable as the result of a conversion
into fractional shares of Common, and any accrued and unpaid dividends on the
converted Series A Preferred. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series A Preferred to be converted, and the person or persons entitled
to receive the shares of Common issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such shares of Common on
such date (except that in the event of an automatic conversion (i) upon a
Qualified Public Offering pursuant to Section 4.a. such conversion shall be
deemed to have been made immediately prior to the closing of the Qualified
Public Offering and (ii) upon a Qualifying Consent pursuant to Section 4.a. such
conversion shall be deemed to have been made on the date specified in such
Qualifying Consent). If the conversion is in connection with an underwritten
offering of securities registered pursuant to the Act, the conversion may, at
the option of any holder tendering Series A Preferred for conversion, be
conditioned upon the closing with the underwriter of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive the
Common issuable upon such conversion of the Series A Preferred shall not be
deemed to have converted such Series A Preferred until immediately prior to the
closing of such sale of securities.
c. ADJUSTMENTS TO SERIES A-1 CONVERSION PRICE FOR DILUTIVE
ISSUES.
(1) SPECIAL DEFINITIONS. For purposes of this Section 4.c.
and Section 5, the following definitions shall apply:
(a) "OPTION" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(b) "ORIGINAL ISSUE DATE" shall mean the date on which
a share of Series A-1 Preferred was first issued.
(c) "CONVERTIBLE SECURITIES" shall mean any evidences
of indebtedness, shares (other than Common and Series A Preferred) or other
securities directly or indirectly convertible into or exchangeable for Common.
(d) "ADDITIONAL SHARES OF COMMON" shall mean all
shares of Common issued (or, pursuant to Section 4.c.(3), deemed to be issued)
by the corporation after the Original Issue Date, other than shares of Common
issued or issuable:
i) upon conversion of shares of Series A
Preferred authorized herein;
ii) to officers, directors or employees of, or
consultants to, the corporation pursuant to any plan or agreement approved by
the Board of Directors;
iii) as a dividend or distribution on the Series A
Preferred or any event for which adjustment is made pursuant to Sections 4.d. or
4.e. hereof;
iv) by way of dividend or other distribution on
shares excluded from the definition of Additional Shares of Common by the
foregoing clauses i) through iii) or this clause iv) or on shares of Common so
excluded.
(2) NO ADJUSTMENT OF SERIES A-1 CONVERSION PRICE. No
adjustment in the Series A-1 Conversion Price of a particular share of Series
A-1 Preferred shall be made in respect of the issuance of Additional Shares of
Common unless the consideration per share for an Additional Share of Common
issued or deemed to be issued by the corporation is less than the Series A-1
Conversion Price in effect on the date of, and immediately prior to, the issue
of such Additional Share. No adjustment in the Series A-2 Conversion Price of a
particular share of Series A-2 Preferred shall be made in respect of the
issuance of Additional Shares of Common.
(3) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES
OF COMMON -- OPTIONS AND CONVERTIBLE SECURITIES. In the event the corporation
at any time or from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date, provided that in any such case in which Additional
Shares of Common are deemed to be issued:
(a) no further adjustment in the Series A-1 Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common upon the exercise of such Options or conversion or exchange of
such Convertible Securities;
(b) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the corporation, or decreases in the number of shares
of Common issuable, upon the exercise, conversion or exchange thereof, the
Series A-1 Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(c) no readjustment pursuant to clause (b) above shall
have the effect of increasing the Series A-1 Conversion Price to an amount which
exceeds the lower of (i) such Series A-1 Conversion Price on the original
adjustment date with respect to such deemed issuance of Additional Shares of
Common, or (ii) such Series A-1 Conversion Price that would have resulted from
any issuance of Additional Shares of Common between such original adjustment
date and such readjustment date; and
(d) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any decrease in the
consideration payable to the corporation upon the exercise, conversion or
exchange thereof, the Series A-1 Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such decrease
becoming effective, be recomputed to reflect such decrease insofar as it affects
such Options or the rights of conversion or exchange under such Convertible
Securities.
(4) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON. In the event this corporation shall issue
Additional Shares of Common (including Additional Shares of Common deemed to be
issued pursuant to Section 4.c.(3)) without consideration or for a consideration
per share less than the Series A-1 Conversion Price in effect on the date of and
immediately prior to such issue, then and in such event, such Series A-1
Conversion Price shall be reduced, concurrently with such issue, to a price
(calculated to the nearest cent) determined by multiplying such Series A-1
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common outstanding immediately prior to such issue plus the number of
shares of Common which the aggregate consideration received by the corporation
for the total number of Additional Shares of Common so issued would purchase at
such Series A-1 Conversion Price in effect immediately prior to such issue; and
the denominator of which shall be the number of shares of Common outstanding
immediately prior to
such issue plus the number of such Additional Shares of Common so issued; and
provided further that, for the purposes of this Section 4.c.(4): (i) no shares
of Common issued or issuable upon conversion of Series A Preferred shall be
deemed to be outstanding and all such shares shall be excluded from such
calculation, (ii) all shares of Common issuable upon conversion of outstanding
Options and Convertible Securities (excluding outstanding Series A Preferred)
shall be deemed to be outstanding and all such shares shall be included in such
calculation, and (iii) except as provided in the foregoing clauses (i) and (ii)
above, immediately after any Additional Shares of Common are deemed issued
pursuant to Section 4.c.(3), such Additional Shares of Common shall be deemed to
be outstanding. The Series A-1 Conversion Price shall not be increased except
as set forth in Section 4.c.(3)(b) and in Section 4.d.
(5) DETERMINATION OF CONSIDERATION. For purposes of this
Section 4.c., the consideration received by the corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(a) CASH AND PROPERTY. Such consideration shall:
i) insofar as it consists of cash, be computed
at the aggregate amount of cash received by the corporation excluding amounts
paid or payable for accrued interest or accrued dividends;
ii) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
iii) in the event Additional Shares of Common are
issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses i) and ii) above, as
reasonably determined in good faith by the Board of Directors.
(b) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 4.c.(3), relating to
Options and Convertible Securities, shall be determined by dividing:
i) the total amount, if any, received or
receivable by the corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by
ii) the maximum number of shares of Common (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
d. ADJUSTMENT FOR STOCK SPLITS, DIVIDENDS AND COMBINATIONS. If
the corporation shall at any time or from time to time effect a subdivision of
the outstanding Common, or shall issue a dividend of Common on its outstanding
Common, the Series A-1 Conversion Price and Series A-2 Conversion Price then in
effect immediately before that subdivision or dividend shall be proportionately
decreased, and conversely, if the corporation shall combine the outstanding
shares of Common, the Series A-1 Conversion Price and Series A-2 Conversion
Price then in effect immediately before the combination shall be proportionately
increased. Any adjustment under this Section 4.d. shall become effective at the
close of business on the date the subdivision or combination becomes effective
or on the date on which the dividend is declared.
e. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event the corporation at any time or from time to time shall make or issue, or
fix a record date for the determination of holders of Common entitled to receive
a dividend or other distribution payable in securities of the corporation other
than shares of Common, then and in each such event provision shall be made so
that the holders of Series A-1 Preferred and Series A-2 Preferred shall receive
upon conversion thereof, in addition to the number of shares of Common
receivable thereupon, the amount of securities of the corporation that they
would have received had their Series A-1 Preferred and Series A-2 Preferred been
converted into Common on the date of such event, giving effect to all
adjustments called for with respect to such securities during the period from
the date of such event to and including the conversion date.
f. ADJUSTMENT FOR MERGER OR REORGANIZATION. In case of any
consolidation or merger of the corporation with or into another corporation or
the conveyance of all or substantially all of the assets of the corporation to
another corporation, each share of Series A-1 Preferred and Series A-2 Preferred
shall thereafter be convertible into the number of shares of stock or other
securities or property to which a holder of the number of shares of Common of
the corporation deliverable upon conversion of such Series A-1 Preferred and
Series A-2 Preferred would have been entitled upon such consolidation, merger or
conveyance; and, in any case, appropriate adjustment (as reasonably determined
in good faith by the Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and interest thereafter
of the holders of the Series A-1 Preferred and Series A-2 Preferred, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock
or other property thereafter deliverable upon the conversion of the Series A-1
Preferred and Series A-2 Preferred.
g. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If the Common issuable upon the conversion of the Series A-1 Preferred and
Series A-2 Preferred shall be changed into the same or different number of
shares of any class or series of stock, whether by capital reorganization,
reclassification or otherwise (other than as set forth above in this Section 4),
then and in each such event the holder of each share of Series A-1 Preferred and
Series A-2 Preferred shall have the right thereafter to convert such share into
the kind and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other change by holders
of the number of shares of Common into which such shares of Series A-1 Preferred
or Series A-2 Preferred might have been converted immediately prior to such
reorganization, reclassification or change, all subject to further adjustment as
provided herein.
h. AUTOMATIC CONVERSION OF SERIES A-1 PREFERRED INTO SERIES A-2
PREFERRED.
(1) SPECIAL DEFINITIONS. For purposes of this Section
4(h), the following definitions shall apply:
(a) "PRO RATA SHARE" shall mean the portion determined
by the ratio of the number of shares of Common issuable upon the conversion of
Series A-1 Preferred then held by a holder of Series A-1 Preferred (a "Series
A-1 Holder") to the total number of shares of Common Stock issuable upon
conversion of the Series A Preferred then outstanding.
(b) "DILUTIVE ISSUANCE" shall mean the issuance of
Additional Shares of Common (as defined in subsection 4.c.(1)(d) above), without
consideration or for a consideration per share less than the Series A-1
Conversion Price in effect on the date of and immediately prior to such
issuance; provided, however, that for purposes of this definition, (i) "Dilutive
Issuance" shall not include any Additional Shares of Common to be sold to an
investor who is neither a holder of the corporation's Series A-1 Preferred at
the time of such issuance or an affiliate of such holder and (ii) "Dilutive
Issuance" shall not include any issuance of Additional Shares of Common
following the closing of the first sale and issuance of Additional Shares of
Common in which the cumulative Aggregate Proposed Proceeds (as defined in
subsection 4.h.(2) below) of all Dilutive Issuances during the period from the
Original Issue Date up to and including such closing equals or exceeds
$10,375,000.
(c) "DILUTED STOCK" shall mean shares of Series A-1
Preferred that have a Series A-1 Conversion Price per share greater than the
consideration per share to be received in a Dilutive Issuance.
(d) "DILUTED HOLDER" shall mean any Series A-1 Holder
that holds shares of Diluted Stock.
(e) "PARTICIPATING INVESTOR" shall mean any Diluted
Holder that agrees to purchase at least its Pro Rata Share of a Dilutive
Issuance pursuant to Section
4.h.(2) hereof.
(f) "NON-PARTICIPATING INVESTOR" shall mean any
Diluted Holder that is not a Participating Investor.
(2) NOTICE OF DILUTIVE ISSUANCE. In the event the
corporation proposes to undertake a Dilutive Issuance, it shall give each
Diluted Holder a written notice (the "Issuance Notice") of its intention,
describing the type of Additional Shares of Common, the price, the aggregate
dollar amount of the proposed Dilutive Issuance (the "Aggregate Proposed
Proceeds") and the general terms upon which the corporation proposes to issue
the same. Each Diluted Holder shall, within thirty (30) days from the date of
the Issuance Notice, provide written notice to the corporation that (i) such
Diluted Holder agrees to become a Participating Investor for the price and upon
the terms specified in the Issuance Notice or (ii) such Diluted Holder shall be
a Non-participating Investor. Any Diluted Holder who shall fail to provide such
written notice within such thirty (30) day period shall be deemed to be a
Non-participating Investor. Any Non-participating Investor may become a
Participating Investor if it provides written notice to the corporation, at
least thirty (30) days prior to the closing of a Dilutive Issuance, that it
agrees to become a Participating Investor.
(3) AUTOMATIC CONVERSION. Each share of Diluted Stock held
by each and every Non-participating Investor shall be automatically converted
immediately prior to the closing of the applicable Dilutive Issuance into one
(1) share of Series A-2 Preferred. In no event shall any share of Series A-1
Preferred be automatically converted into a share of Series A-2 Preferred
pursuant to this subsection 4.h.(3) unless such share of Series A-1 Preferred
constitutes Diluted Stock as defined in subsection 4.h.(1) hereof.
(4) STATUS OF DILUTED STOCK. Upon the conversion of
Diluted Stock held by a Non-participating Investor as set forth in subsection
4.h.(3) above, such shares of Diluted Stock shall no longer be outstanding on
the books of the corporation and the Non-participating Investor shall be treated
for all purposes as the record holder of such shares of Series A-2 Preferred on
the date of closing of the applicable Dilutive Issuance.
i. NO IMPAIRMENT. The corporation will not, by amendment of
this Amended and Restated Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A-1 Preferred or Series A-2
Preferred against impairment.
j. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Series A-1 Conversion Price or Series A-2
Conversion Price pursuant to this Section 4, the corporation at its expense
shall promptly compute such adjustments or readjustments in accordance with the
terms hereof and furnish to each holder of Series A-1
Preferred and Series A-2 Preferred a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Series A-1 Preferred or Series A-2 Preferred, furnish or
cause to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Series A-1 Conversion Price and/or
Series A-2 Conversion Price at the time in effect, and (iii) the number of
shares of Common and the amount, if any, of other property which at the time
would be received upon the conversion of such holder's shares.
k. NOTICES OF RECORD DATE. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the corporation shall mail to each
holder of Series A-1 Preferred and Series A-2 Preferred at least ten (10) days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.
Each such written notice shall be given by first class mail, postage prepaid,
addressed to the holders of Series A-1 Preferred and Series A-2 Preferred at the
address for each such holder as shown on the books of this corporation.
l. COMMON STOCK RESERVED. The corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common,
solely for the purpose of effecting the conversion of the shares of Series A
Preferred, such number of shares of Common as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series A
Preferred, and if at any time the number of authorized but unissued shares of
Common shall not be sufficient to effect the conversion of all then outstanding
shares of Series A Preferred, the corporation shall take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common to such number of shares as shall be sufficient
for such purpose.
5. VOTING RIGHTS. Each holder of shares of Series A Preferred shall
be entitled to the number of votes equal to the number of shares of Common into
which such shares of Series A Preferred could be converted on the record date
for the vote or the date of the solicitation of any written consent of
shareholders and shall have voting rights and powers equal to the voting rights
and powers of the Common. Each holder of Common shall be entitled to one vote
per share of Common held by such holder. The holder of each share of Series A
Preferred shall be entitled to notice of any shareholders' meeting in accordance
with the Bylaws of the corporation and shall vote with holders of the Common
upon all matters submitted to a vote of shareholders, except those matters
required by law to be submitted to a class vote and except as provided in
Section 6 below. Fractional votes by the holders of Series A Preferred shall
not, however, be permitted and any fractional voting rights resulting from the
above formula (after aggregating all shares into which shares of Series A
Preferred held by each holder could be converted) shall be rounded to the
nearest whole number.
6. RESTRICTIONS AND LIMITS.
a. So long as fifty percent (50%) or more of the originally
issued shares
of Series A Preferred shall be outstanding, the corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of not
less than sixty-six and two-thirds percent (66-2/3%) of the then outstanding
shares of Series A Preferred, voting as a class:
(1) amend or repeal any provision of, or add any provision
to, the corporation's Amended and Restated Articles of Incorporation or Bylaws
if such action would adversely alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of the
Series A Preferred;
(2) create any new series or class of stock having any
rights, preferences or privileges senior to or on a parity with any such rights,
preferences or privileges of the Series A Preferred;
(3) increase or decrease the authorized number of shares of
Series A Preferred or Preferred;
(4) pay any dividend on, or redeem, repurchase or otherwise
acquire any shares of, the Common or Preferred (other than (i) any repurchases
of shares of Common held by an employee of the corporation upon termination of
employment, (ii) as approved by the Board of Directors);
(5) merge into or consolidate with any other corporation or
entity (other than any transaction in which the
corporation's shareholders own a majority of the securities of the surviving
corporation) or sell all or substantially all of the assets of the corporation;
(6) amend, or take any action intended to circumvent, the
provisions of this Section 6.
7. SERIES A PREFERRED ACQUIRED BY THE CORPORATION. No share or
shares of Series A Preferred acquired by the corporation by reason of purchase,
conversion or otherwise, shall be reissued as Series A Preferred, and all such
shares shall be restored to the status of authorized but unissued shares of
undesignated Preferred Stock.
8. RESIDUAL RIGHTS. All rights accruing to the outstanding shares
of the corporation not otherwise expressly provided for in this Amended and
Restated Articles of Incorporation shall be vested in the Common.
IV.
A. The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
B. This corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the California Corporations Code) for breach of
duty to the corporation and its shareholders through bylaw provisions or through
agreements with agents, or both, in excess of the indemnification otherwise
permitted by Section 317 of the California Corporations Code, subject to the
limits on such excess indemnification set forth in Section 204 of the California
Corporations Code.
C. Any repeal or modification of the provisions of this Article shall not
adversely affect the rights under this Article in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
* * * * *
THREE: The foregoing amendment and restatement of articles of
incorporation has been duly approved by the board of directors.
FOUR: The foregoing amendment and restatement of the articles of
incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 of the Corporations Code. The total number of
outstanding shares of the corporation is 1,000 shares of Common Stock and no
shares of Preferred Stock. The number of shares voting in favor of the
amendment equaled or exceeded the vote required. The percentage vote required
was more than 50%.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.
Dated: July 21, 1995 /s/ Xxxx Xxxx
------------------ ------------------------
Xxxx Xxxx
President
/s/ Xxxxx X. Xxxxxxxx
------------------------
Xxxxx Xxxxxxxx
Secretary
Exhibit C
SCHEDULE OF EXCEPTIONS
TO THE SERIES A-1 PREFERRED
STOCK PURCHASE AGREEMENT OF
VISTA MEDICAL TECHNOLOGIES INC.
The following are exceptions to the representations and warranties set
forth in the Series A Preferred Stock Purchase Agreement of Vista Medical
Technologies, Inc. (the "Company"), dated July 25, 1995 (the "Agreement"), and
are an integral part of the Agreement. Any terms defined in the Agreement shall
have the same meaning when used in this Schedule as when used in the Agreement,
unless the context indicates otherwise. The paragraph numbers of this Schedule
correspond to the first or principal section of the Agreement to which the
disclosures relate; however, all information disclosed herein shall be deemed
disclosed under and incorporated into any other section of the Agreement where
such disclosure would be appropriate.
2.1 The Company will qualify to do business in Massachusetts shortly after
the Closing.
2.3 The Company has one wholly-owned subsidiary, Oktas, Inc., a
Massachusetts corporation, which does not have any operating activities and no
liabilities. The Company is also the sole partner of Oktas, a Massachusetts
General Partnership. A copy of such partnership agreement has been provided to
counsel to the Investors.
2.6 Attached as Exhibit 2.6 hereto is a list of the Company's agreements
that may involve more than $25,000, copies of which are attached to such
Exhibit.
2.8 Pursuant to a License Agreement with Xxxxx Xxxxxx, Xx. Xxxxxx
currently is indebted to the Company in the amount of $37,500, as an advance
payment against royalties due under the License Agreement. A copy of such
agreement has been provided to counsel to the Investors.
2.15 The Company is indebted to Kaiser Aerospace and Electronics, Inc.
("Kaiser") in the amount of $3,003,999.77, all of which shall be repaid
immediately following the Closing out of the proceeds of this financing.
2.16 The Company anticipates that shortly after the Closing and subject to
Board approval, it will acquire the assets of American Surgical Technologies
Corporation on substantially the terms attached hereto as Exhibit 2.16.
2.17 The Oktas General Partnership currently has a lease for space in
Massachusetts that the Company will use reasonable commercial efforts to have
assigned to the Company.
2.18 Attached as Exhibit 2.18 hereto is a list of all of the Company's
patents and pending patent applications. The Company also has a License
Agreement with Xxxxx Xxxxxx dated September 2, 1994 and a Patent License
Agreement with Kaiser Aerospace and Electronics, Inc. dated July _, 1995, both
of which have been provided to counsel to the Investors.
2.19 The Company has a Manufacturing Supply Agreement with Kaiser
Electro-Optics, a copy of which is attached to Exhibit 2.6 hereto.
2.20 The Company has to date operated as a subsidiary of Kaiser. Kaiser
has filed corporate tax returns that included the Company, and therefore the
Company has no tax loss carry forwards.
2.21 Attached as Exhibit 2.21 hereto is a memorandum regarding certain
employees participation in the Kaiser bonus program.
2.29 The Company has standard fringe benefit plans in the ordinary course
of business, including, but not limited to, medical plans and vacation policies.
EXHIBIT 2.6
1. Supply Agreement between the Company and Matsushita, currently in draft form
only.
2. Manufacturing Supply Agreement with Kaiser Electro-Optics.
3. License Agreement with Xxxxx Xxxxxx dated September 2, 1994.
4. Memorandum of Understanding regarding Technology Alliance
between the Company, Cogent Light and Xxxxx Xxxx Xxxx dated May 3, 1995.
5. Technology Strategic Alliance with Kaiser Electro-Optics.
6. Purchase Orders with Precision Interconnect, Xxxxxx Precision
Machine and Matsushita Communication, copies of which are attached hereto.
7. Purchase Order to Explorent Surgical Instruments, GMBH placed with the
Company, a copy of which is attached hereto.
8. Form of Consulting Agreement entered into with the following
individuals:
a. X. Xxxxxxxxxxx & Co. (advertising agency), currently active at $2,800
per month plus project specific xxxxxxxx.
b. Xxxxx Briefs, Endocardiac Business Plan, currently active, contract for
$14,000.
c. Xxxx Xxxxxxxx, product management services, currently active at $8,000
per month.
d. Xxxxx Xxxxx, sales services, currently active at $4,000 per month for
4-6 months.
e. Xxxx Xxxxxxxxx, European consultant, currently active at $2,000 per
month.
f. Xxxxx Xxxxxxxx, product design services, currently active at $5-6,000
per month on a month to month basis.
g. Xxxxxx Xxxxxxxx, regulatory consultant, currently active and may reach
up to $4-5,000 per month in the next 2-6 months.
h. Xxxx Xxxxxxxx, optical engineering services for Oktas, currently active
at $8,000 per month.
i. Xx XxXxxx, manufacturing services for oktas, currently active at $5,000
per month.
j. Xxxx Xxxxxxxx, mechanical design services for Oktas, currently inactive,
but used
3
regularly on a project basis.
k. Xxxx Xxxxxx, purchasing services for Oktas, currently active at 3,000
per month, effective through 8/31/95.
4
EXHIBIT 2.18
1. Patent No 5,349,941 Cleanable Endoscope (issued September 27, 1994).
2. Application Serial No 08/067,140 Zoom Endoscope (filed May 25, 1993).
3. Application Serial No 08/400,503 Zoom Endoscope (filed October 7, 1994).
4. Application Serial No 08/286,543 Endoscope with Light Element (filed August
5, 1994).
5. Application Serial No 07/967,996 Electronic Endoscope (filed October 28,
1992).
6. Application Serial No 08/06,140 Asymmetric Endoscope (filed May 7, 1995).
7. Application Serial No 08/108,980 Optical Surgical Device (filed August 18,
1993).
5
TECHNOLOGY STRATEGIC ALLIANCE: MEMORANDUM OF UNDERSTANDING
1. This Memorandum defines the intent of Kaiser Electro-Optics (KEO) and Vista
Medical Technologies (VMT) to co-operate in advancing the technology and
application of medical head mounted displays (MHMD).
2. KEO and VMT will co-operate in joint development programs as appropriate,
both for the existing MHMD and future iterations. Such co-operation will
be determined by managements on a project by project basis. Development
programs undertaken by KEO will be paid for according to a fee structure
mutually agreed in advance of the program commencing.
3. KEO will grant VMT right of first refusal for exclusive medical application
of independently developed new technology or devices, exercisable provided
that VMT contracts with KEO for a mutually agreed proportion of the
development work and eventual production of the resulting medical device.
4. Technology independently developed by VMT or developed by KEO under
contract to VMT (provided that the technology, idea or product
specification was an original contribution of VMT and not the result of the
exercise of the right of first refusal) remains the exclusive property of
VMT. KEO will have reciprocal right of first refusal to apply such
technology in fields other than medicine in return for compensation to VMT
to be mutually agreed.
5. KEO recognizes that VMT will gradually build an independent technical
capability, although it will be only sensible to minimize duplication of
technological resources. For example, VMT is likely to concentrate on the
communication (Infomatix-TM-) aspects of MHMDs. However, VMT acknowledges
KEO'S investment in its technical personnel and agrees not to recruit them
for a period of three years, unless both managements agree otherwise.
6. KEO and VMT acknowledge that this memorandum represents a statement of
intent by both parties and that all resulting co-operation will be managed
on an arms length basis and on terms mutually agreed for each project.
Common sense and common interest should be the prevailing principles.
For Vista Medical Technologies: For Xxxxxx Electro-Optics:
/s/ Xxxx Xxxx /s/ Xxxxx Xxxxxxx
------------------------------ ----------------------------
Xxxx Xxxx, President Xxxxx Xxxxxxx, President
July 19, 1995 July 19, 1995
--------------------- ------------------
Date Date
KAISER
AEROSPACE &
ELECTRONICS
July 18, 1995 Executive Xxxxxx
000 Xxxxx Xxxx - Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
(000) 000-0000 - Fax (000) 000-0000
Xx. Xxxx X. Xxxx
President
Vista Medical Technologies, inc.
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Xxxx:
This letter amends the Secured Master Promissory Note between Kaiser Aerospace &
Electronics Corporation and Vista Medical Technologies, Inc. dated April 11,
1995, as amended; by increasing the maximum amount of advances available to
Borrower to Five Million Five Hundred Thousand Dollars ($5,500,000.00).
All other terms and conditions remain unchanged.
Please indicate your acceptance by signing and returning a copy of this letter.
Very truly yours,
KAISER AEROSPACE & ELECTRONICS CORPORATION
By: /s/ X. X. Xxxxxx
------------------------------
X. X. Xxxxxx, Vice President
Agreed and Accepted:
VISTA MEDICAL TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxx
------------------------------
Xxxx X. Xxxx, President
Date: July 18, 1995
-------------------------
KAISER AEROSPACE & ELECTRONICS CORPORATION
KAISER
AEROSPACE &
ELECTRONICS
VIA FAX # (000) 000-0000
July 18, 1995 Executive Xxxxxx
000 Xxxxx Xxxx - Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
(000) 000-0000 - Fax (000) 000-0000
Mr. Xxxx Xxxx
Vista Medical Technologies, inc.
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Xxxx:
This letter will confirm our understanding with respect to the purchase of
Series A-1 Preferred Stock of Vista Medical Technologies. Inc. ("Vista").
Pursuant to the Series A-1 Preferred Stock Purchase Agreement between Vista and
certain investors dated of even date herewith (the "Agreement"), Kaiser agrees
to cancel, effective at the First Closing (as such term is defined in the
Agreement), $2,375,000.23 of indebtedness and apply such indebtedness to the
purchase of Series A-1 Preferred Stock of Vista. Vista hereby agrees that as
soon as practicable after Vista has access to funds from the other investors
received at the First Closing, Vista will repay indebtedness to Kaiser in the
amount of $3,003,999.77.
The parties hereto agree to exchange such other documentation as soon as
practicable after the closing as the parties deem necessary to effect the
foregoing agreements, including, but not limited to, the cancellation of
promissory notes between Kaiser and Vista, and the release of all securityy
interests in the assets of Vista which are held by Kaiser.
If the foregoing meets with your understanding, please sign and return a copy of
this letter to my attention via FAX.
Very truly yours,
Kaiser Aerospace & Electronics Corporation
By: /s/ X. X. Xxxxxx
------------------------------------------
X. X. Xxxxxx, Vice President & Controller
Accepted and Agreed to:
VISTA MEDICAL TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxx
---------------------
KAISER AEROSPACE & ELECTRONICS CORPORATION
MANUFACTURING SUPPLY AGREEMENT
This MANUFACTURING SUPPLY AGREEMENT (the "Agreement"), dated this ____ day
of ____________, 1995, is made by and between Vista Medical Technologies
("Vista"), a California Corporation, located at 0000 Xxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxx 00000 and XXXXXX ELECTRO-OPTICS, INC. ('KEO"), a California
Corporation, located at 0000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx 00000.
RECITALS
WHEREAS, Vista has developed and owns exclusive rights to a proprietary
Medical Head Mounted Display ("MHMD"); and
WHEREAS, KEO has developed Head Mounted Displays ("HMD") for nonmedical
markets, provided development services for Vista's MHMD and possesses certain
know-how and manufacturing technology related to HMDs; and
WHEREAS, Vista desires to have KEO manufacture the display optical
subassembly of its MHMD and any reasonable functional derivative thereof, such
subassemblies hereinafter referred to as "Product"; and
WHEREAS, KEO desires to manufacture Product and to meet Vista's reasonable
requirements as to competitive price, delivery, and quality;
NOW, THEREFORE, in consideration of the above matters and of the covenants
contained herein, Vista and KEO agree as follows:
AGREEMENT
1. PREFERRED SUPPLIER RELATIONSHIP: During the term of this Agreement,
KEO shall be Vista's preferred supplier of Product, and Vista shall contract
with KEO to supply up to 100%, but not less than 75%, of its requirements for
Product. Similarly, KEO shall not supply HMDs to any direct competitor of Vista
in the medical marketplace.
2. PRODUCT SPECIFICATIONS: KEO will supply Product to Vista consisting
of the head-mounted display optical subassembly of the MHMD, in accordance with
specifications defined
prior to placing of a purchase order by Vista and acceptance by KEO. All
modifications of the Product must be mutually agreed upon in writing by Vista
and KEO and documented by Vista according to current GMP (Good Management
Practices) then in effect.
3. PRODUCT CONFORMITY: In the event of test results which show a lack of
Product conformity to quality or specifications provided and mutually agreed to,
KEO will repair or replace the Product within a reasonable time. Failure to
repair or replace non-conforming products, as defined in the purchase orders and
agreed upon specifications, within eight (8) weeks shall be considered a failure
to supply.
4. PURCHASE ORDERS: KEO will accept each purchase order submitted by
Vista hereunder that conforms with the terms of this Agreement. In the event
that pre-printed terms on Vista's purchase order are in conflict with this
Agreement, the terms of this Agreement shall prevail.
5. VISTA'S FORECAST: Vista will provide KEO with monthly non-binding
rolling forecasts of its anticipated requirements for Product for the following
twelve (12) months. However, the first (3) months of this rolling forecast, as
well as the mutually agreed to purchase of long-lead items of significant value
required to meet the forecast beyond the first (3) months, will be binding to
both parties. KEO agrees to meet Vista's reasonable schedule requirements; once
agreed, repeated failure to meet delivery schedules shall be considered a
failure to supply.
6. COMPETITIVE PRICING: For the first year, the price of the Product
sold by KEO to Vista will be that price agreed to be mutually acceptable prior
to the start of production. KEO's pricing for Vista's Product will remain
competitive over time to that generally charged for similar OEM products of the
same performance level in the medical marketplace. Failure to remain
competitive, according to evidence documented by Vista, shall be considered a
failure to supply.
7. REGULATORY APPROVAL: Vista shall be solely responsible for obtaining
any regulatory approvals it requires to market and sell its products. KEO
agrees to provide Vista with all
2
specified information and materials required for the purpose of obtaining any
regulatory approvals. Vista will require KEO to manufacture Product in
accordance with Vista's specified GMP requirements for suppliers. Failure to
conform shall be considered a failure to supply.
8. INSURANCE: KEO shall maintain product liability insurance in effect
to cover any manufacturing deficiencies in its Product caused by non-conformance
to the product specification. KEO agrees to indemnify, protect, and save Vista
including Vista's dealers and agents harmless from and against all claims,
demands, proceedings, lawsuits, and actions and any liabilities, expenses, or
costs due directly to any product malfunction caused by non-conformance to the
Product specification. KEO will not be liable for any failures of the MHMD
caused by manufacturing or design defects in anything other than its own
manufacturing of Product.
9. INDEMNIFICATION: For and in consideration of Vista's purchase of
Product under this Agreement, KEO will indemnify, hold harmless and defend
Vista, including Vista's dealers and agents, from and against any claim, demand,
liability, loss, damage, suit, or judgment resulting from operational
deficiencies caused by non-conformance to the Product specification.
10. KEO WARRANTIES: KEO warrants that title to all Product delivered to
Vista will be free and clear of all liens, encumbrances and security interests;
and that all Product sold under this Agreement will conform to the
specifications accepted by KEO, and shall be free from defects in material and
workmanship under normal use and service. Any Product which exhibits such
defects in material and workmanship within 12 months from date of shipment to
the final customer but not more than 15 months from date of shipment to Vista
shall be repaired or replaced, at KEO's option, without charge, under terms of
this Agreement.
VISTA WARRANTIES: Vista agrees to be solely responsible for any warranty
that it extends or allows to be extended to its customers, whether express or
implied, with respect to the Product.
11. TERM OF AGREEMENT: The duration of this Agreement is three (3) years
from the date of execution provided that it is not terminated sooner pursuant to
paragraph 12 below. After termination, the following provisions will survive
and remain in force: paragraphs 8 (Insurance), 9 (Indemnification), 10
(Warranties), 12 (Termination), 13 (Obligations on Termination), 16 (Applicable
Law), 17 (Relationship of Parties), 20 (Tradenames/Trademarks), 21 (Non-
Disclosure), and 23 (Statute of Limitations).
3
12. TERMINATION: The following provisions shall govern the termination of
this Agreement:
(a) If either party has defaulted or failed to perform any obligation
arising under this Agreement and fails to remedy such default or non-performance
after written notice by the other party within thirty (30) days for payment of
monies due and sixty (60) days for all other defaults (including KEO's failure
to supply), the other party has the right to terminate this Agreement
immediately upon further written notice.
(b) Either party, at its election, may treat this Agreement as
breached and, without prejudice to any other of its rights, may forthwith
terminate this Agreement by written notice to the other party on occurrence of
any of the following events:
(i) The other party shall make a general assignment for the
benefit of creditors;
(ii) A receiver of all or substantially all of the property of
the other party shall be appointed and not removed within thirty (30) days;
(iii) The other party shall file a petition for reorganization
under the provisions of federal bankruptcy laws;
(iv) The other party shall file a petition for an arrangement
under federal bankruptcy laws;
(v) The other party shall become or be declared insolvent;
and/or
(vi) The other party shall file a petition in bankruptcy or
shall be adjudged a bankrupt.
(c) The two parties may elect to terminate the Agreement by mutual
written consent at any time.
4
13. OBLIGATIONS ON TERMINATION: Upon termination of this Agreement:
(a) All amounts owing by Vista or KEO shall remain due and payable as
provided herein;
(b) All unshipped orders due to be shipped after the effective date of
termination for breach shall be canceled without liability of either party to
the other;
(c) All unshipped orders (and mutually agreed in advance long-lead
items) due to be shipped after the effective date of termination if such
termination is for reasons other than a breach, shall be binding, unless
otherwise mutually agreed by the parties; and
(d) Neither party shall be liable to the other because of such
termination for compensation, reimbursement, or damages on account of the loss
of prospective profits or anticipated sales, or on account of expenditures,
investments, leases, or commitments in connection with the business or goodwill
of Vista or KEO or for any other reason whatsoever growing out of such
termination.
14. ASSIGNMENT: Neither party may assign or otherwise dispose of this
Agreement and any right or obligation arising under this Agreement without the
prior written approval given by the other party. However, the Agreement shall
survive a transfer of control or sale of either Vista or KEO to a 3rd party.
15. WAIVER: The waiver by either party of one breach or default hereunder
shall not constitute the waiver of any subsequent breach or default.
16. APPLICABLE LAW: This Agreement shall be governed by and construed in
accordance with the laws of the state of California, without reference to the
rules of conflict of laws.
17. RELATIONSHIP OF THE PARTIES: Parties: Each party shall act solely as
an independent contractor, and nothing in this Agreement shall be construed to
give either party the power or authority to act for or bind the other party.
18. HEADINGS: Headings are inserted in this Agreement only for
convenience and shall not be used to construe its terms.
5
19. NOTICES: All notices required or permitted by this Agreement, or
given in connection with this Agreement, shall be in writing and may be by
personal delivery by Federal Express or by depositing the written notice with
the United States Postal Service, postage pre-paid, first-class, Certified Mail,
return receipt requested, addressed to the party to receive the same as follows:
------------------------------ -----------------------------------
President President
Vista Medical Technologies, Inc. Xxxxxx Electro-Optics, Inc.
0000 Xxxxx Xxxxxx Xxxx 0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
or to any other address or addresses as shall be designated in writing in the
same manner.
20. TRADENAMES/TRADEMARKS: Each party acknowledges the validity of each
other's tradenames and trademarks and that neither party shall have any right to
or interest in any tradenames or trademarks owned, used, or claimed now or in
the future by Vista or KEO as a result of this Agreement.
21. NON-DISCLOSURE: Because the parties have and will continue to
exchange confidential, sensitive, and/or unique data relating to product,
markets and/or projects, the attached Non-Disclosure Agreement is incorporated
herein as Exhibit "A".
22. REGULATORY REQUIREMENTS: Vista is responsible for complying with
regulatory requirements including, but not limited to, all costs related to UL,
FDA, and resale of the product. KEO will provide Vista with all specified
information and materials required by Vista for the purpose of obtaining any
regulatory approvals. All regulatory data is the sole property of Vista.
23. STATUTE OF LIMITATIONS: Any action for breach of this Agreement must
be commenced within one (1) year after the cause of action has accrued.
24. ENTIRE AGREEMENT/SEVERABILITY: This Agreement, with its exhibits,
constitutes the entire Agreement between the parties with respect to the
manufacture and sale of products and supersedes any prior agreements or
understandings. The provisions of this Agreement may be
6
waived, altered, amended, or repealed in whole or in part only upon the written
consent of both parties. In case any provision(s) shall, insofar as possible,
be construed or applied in such manner as will permit enforcement; otherwise
this Agreement shall be construed as though such provision had never been made a
part thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the respective duly authorized representatives as of the date first
set forth above.
VISTA MEDICAL TECHNOLOGIES, INC. XXXXXX ELECTRO-OPTICS, INC.
By:/s/ Xxxx Xxxx By:/s/ Xxxxx Xxxxxxx
--------------------------- --------------------------------
Xxxx Xxxx Xxxxx Xxxxxxx
President President
7
EXHIBIT "A"
Non-Disclosure Agreement
NON-DISCLOSURE AGREEMENT
FOR
PROPRIETARY OR BUSINESS CONFIDENTIAL INFORMATION
THIS AGREEMENT was made this 21 day of July, 1995, by and between Vista
Medical Technologies, Inc., located at 0000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, and Kaiser Electro Optics (KEO), 0000 Xxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxx 00000. Vista Medical Technologies and KEO are parties to
this Agreement.
WHEREAS, the parties wish to disclose and exchange certain proprietary or
business confidential information or data concerning their respective products
in order to evaluate these products and related technical, engineering,
manufacturing and business information; and
WHEREAS, the parties will furnish this information to each other at their
own expense and without obligation as to any future contractual relationship
unless otherwise agreed.
NOW THEREFORE, in consideration of the following mutual promises, the
parties hereby agree:
1. Vista Medical Technologies will disclose proprietary information concerning
its technologies, products, markets and business plan.
2. KEO will disclose proprietary information concerning its technologies,
products, markets and business plans.
3. The parties agree that the subject of this Agreement involves confidential
business of the respective parties.
4. Any information received by either party or from the other which is
designated by the disclosing party as proprietary or business confidential
(or any proprietary information which, if disclosed orally or visually, is
reduced to writing within thirty (30) days and designated as proprietary or
confidential as provided in this Agreement) shall be kept in confidence by
the receiving party and used only for the purposes described in this
Agreement.
5. All proprietary or business confidential information or data to be
protected by this Agreement must be in writing and clearly identified or
marked as proprietary or confidential on each page or portion thereof with
a suitable restrictive legend. Neither party may reproduce or make copies
of this material without the prior written approval of the other party.
6. Except as provided herein, the proprietary or business confidential
information or data exchanged or disclosed between the parties shall not be
used by either party in their own business or in association with others or
disclosed to any third parties without the prior
written consent of the other party.
7. The receiving party is authorized (i) to examine and evaluate the
information; and (ii) to incorporate the information in a proposal or other
report to the other party.
8. Each party shall take reasonable precautions to prevent disclosure to the
public, competitors of the parties, or any other unauthorized use of the
proprietary or confidential information received. The obligation to retain
such information in confidence will be satisfied if the party receiving
such information uses the same degree of care it employs to avoid
disclosure, publication or dissemination of its own proprietary or
confidential information. The receiving party shall not be liable for
inadvertent or accidental disclosure if such disclosure occurs after a
period of one year from receipt in spite of the exercise of the foregoing
precautions and care.
9. The obligations concerning proprietary or confidential information are not
applicable to information which:
(a) was in the receiving party's possession or knowledge prior to the time
of disclosure, which fact of prior possession shall be provable only
by documents prepared prior to the date thereof; or
(b) was in the public domain at the time of disclosure; or
(c) subsequently becomes a part of the public domain by publication or
otherwise without any wrongful act by the receiving party; or
(d) lawfully comes into either party's possession or knowledge through
lawful disclosures from third parties; or
(e) can be proven by written records to have been independently developed;
or
(f) becomes available by inspection or analysis of other products or
techniques in the market; or
(g) occurs three years after the receipt of the information.
2
10. Pursuant to Item 4, each party designates the following individual(s)
within its organization as the only person(s) authorized to receive
proprietary or confidential information exchanged or disclosed between the
parties pursuant to this Agreement.
Vista Medical Technologies, Inc. KEO
0000 Xxxxx Xxxxxx Xxxx 0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Name(s): Xxxx Xxxx Name(s): Xxxxx Xxxxxxx
Title(s): President Title(s): President
11. The parties shall, upon the written request by the other party, return all
written documents containing proprietary information covered by this
Agreement, together with any copies thereof, including any subsidiary,
derivative or equivalent documents or translations thereof containing such
proprietary or business confidential information. The foregoing applies
also upon termination or cancellation of this Agreement.
12. This Agreement shall not be construed as an obligation to enter into a
subcontract or contract or result in a claim by either party for
reimbursement of any costs from the other party, or be construed as
granting, whether expressly or by implication, estoppel or otherwise, any
license under any invention or patent now or hereafter owned or controlled
by the party furnishing the information.
13. Neither party shall make any news releases, public announcements,
advertisements, or publicity regarding this Agreement or the proprietary or
confidential information without the prior written approval of the other
party.
14. Information exchanged under this Agreement shall not be disclosed to other
divisions or subsidiaries of the respective parties for any use adverse to
the interest of the respective parties without the prior written approval
of the disclosing party.
15. This Agreement is governed by and shall be construed according to the law
of the State of California, without regard to conflict of laws provisions.
16. This Agreement contains the sole and entire disclosure agreement between
the parties and supersedes all other Disclosure Agreements entered into
prior to this Agreement.
17. This Agreement may be terminated by either party giving thirty (30) days'
notice and, unless sooner terminated, shall expire on 21, July, 1998. Such
termination does not affect the parties' respective rights and obligations
outlined in paragraphs 6 and 11 with regard to proprietary or business
confidential information or data disclosed to the receiving party
3
prior to the termination of this Agreement.
IN WITNESS WHEREOF, the Parties have signed this Agreement as of the date first
written above.
VISTA MEDICAL TECHNOLOGIES KEO
By: /s/ Xxxx Xxxx By: /s/ Xxxxx Xxxxxxx
------------------------- ------------------------------
Title: President Title: President
----------------------- ----------------------------
Witness: /s/ illegible Witness: /s/ illegible
--------------------- --------------------------
4
LEASE AGREEMENT BETWEEN MEDICAL OPTICS, INC.,
AND VISTA MEDICAL TECHNOLOGIES
1. PARTIES: This Lease dated July 21, 1995 is made by and between Medical
Optics, Inc. (Lessor) and VISTA Medical Technologies (Lessee)
2. PREMISES: Approximately 1,200 square feet of improved office space located
in a larger building at 0000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, XX 00000
(Premises).
3. TERM: Beginning on the effective date of this Lease (see Paragraph 1), the
Lease term shall be month to month. Lessor or Lessee may terminate the
Lease by providing the other party with 60 days written notice of its
intent to terminate the Lease.
4. RENT: Lessee shall pay rent to Lessor, as the same may be adjusted from
time to time, on the first day of each month. Rent for any period during
the term hereof which is for less than one (1) full calendar month shall be
prorated based upon the actual number of days Lessee occupies the Premises.
Rent for the initial term shall be $207.00 per month. If Lessor's rent
increases for any reason during the term hereof, Lessee's rent shall
increase on a prorated basis.
5. OPERATING EXPENSES: Lessee shall pay its pro-rata share of operating
expenses for the Premises. Such operating expenses shall include, but not
be limited to, real property taxes, maintenance and repairs, property
insurance and any other operating expense fairly allocated to the Premises.
6. MAINTENANCE, REPAIRS AND FIXTURES: Lessor, at Lessor's expense shall keep
the Premises in good working order.
7. OWNERSHIP, REMOVAL, SURRENDER AND RESTORATION: Lessor from time to time may
furnish Lessee with furniture, furnishings, office equipment or trade
fixtures (furnishings). Title in said furnishings shall at all times
remain in the name of Lessor and be surrendered by Sublessee upon
termination of this Lease. Notwithstanding the above, any furnishings
owned by Lessee shall remain the property of Lessee and may be removed at
any time or at Lessee's option remain with the Premises.
8. PROPERTY INSURANCE: Lessor shall provide the property insurance.
9. LIABILITY INSURANCE: Lessee shall obtain and keep in force during the term
of this Lease a Commercial General Liability policy of insurance protecting
Lessee, Lessor, the Ground Lessor and the Building Master Lessor (Kaiser
Aerospace and Electronics Corporation) as additional insured parties
against claims for bodily injury, personal injury and property damage based
upon, involving or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall provide single limit coverage in an amount not less than
$1,000,000 with an "Additional insured-Managers or Lessors of Premises"
Endorsement. The policy shall not contain any intra-insured exclusions as
between insured persons or organizations, but shall include coverage for
liability assumed under this Lease as an insured contract for the
performance of Lessee's indemnity obligations under this Lease. The limits
of said insurance required by this Lease or as carried by Lessee shall not,
however, limit the liability of Lessee nor relieve Lessee of any
obligations hereunder. All insurance to be carried by Lessee shall be
primary to and not contributory with any similar insurance carried by
Lessor, whose insurance shall be considered excess insurance only.
10. INSURANCE POLICIES: Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are
located and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, or such other rating as may be required from
time to time. Lessee shall cause to be delivered to Lessor certified
copies of, or certificates evidencing the existence and amounts of, the
insurance, and with the additional insureds, required under Paragraph 8. No
such policy shall be cancelable or subject to modification except after
thirty (30) days prior written notice to Lessor. Lessee shall at least
thirty (30) days prior to the expiration date of such policies, furnish
Lessor with evidence of renewals or "insurance binders" evidencing renewal
thereof.
11. REAL PROPERTY TAXES: Lessor shall pay the Real Property Taxes.
12. LESSEE'S COMPLIANCE WITH LAW: Lessee shall at Lessee's sole cost and
expense, fully, diligently and in a timely manner comply with all
applicable law, to include all laws, rules, regulations, ordinances,
directives, covenants, easements and restrictions of record, permits and
the requirements and recommendations of Lessor's staff, engineers and/or
2
consultants relating in any manner to the Premises (including but not
limited to (i) industrial hygiene. (ii) environmental conditions on, in or
about the Premises, including soil and groundwater conditions, and (iii)
the use generation, manufacture, production, installation, maintenance,
removal, transportation, storage, spill or release of any hazardous
substance, not in effect or which hereafter may come into effect. Lessee
shall, within five (5) days after Lessor's request provide Lessor with
copies of all documents and information, including but not limited to,
permits, registrations, manifests, applications, reports and certificates
evidencing Lessee's compliance with any applicable law specified by Lessor,
and shall immediately upon receipt, notify Lessor in writing of any
threatened or actual claim, notice, citation warning, complaint or report
pertaining to or involving failure by Lessee or the Premises to comply,
with any applicable law.
13. INDEMNITY: Lessee shall indemnify, defend and hold harmless Lessor and its
agents, the Building Master Lessor, Ground Lessor and Lenders from and
against all claims, damages, costs, liens, judgments, penalties and/or any
liability arising out of Lessee's occupancy of the Premises, the conduct of
Lessee's business, any act, omission or neglect of Lessee or its agents,
contractors, employees, or invitees, and any default or breach by Lessee in
the performance of its obligations under this Lease.
Lessor shall not be liable for injury or damage to the person or goods,
wares, merchandise or other property of Lessee, Lessee's employees,
contractors, invitees, customers or any other person in or about the
Premises, whether such damage or injury is caused by or results from fire,
steam, gas, electricity, gas, water, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures or from any other cause,
whether the said injury or damage results from conditions arising from the
Premises or upon other portions of the building of which the Premises are a
part.
3
14. ASSIGNMENT AND SUBLETTING: Lessee shall not voluntarily or by operation of
law assign, transfer, mortgage or otherwise transfer or sublet all or any
part of Lessee's interest in this Lease or in the Premises.
15. DEFAULT; BREACH; REMEDIES: A "Default" is defined as a failure by the
Lessee to observe, comply with or perform any of the terms, covenants or
conditions or rules applicable to Lessee under this Lease. A "Breach" is
defined as the occurrence of any one or more of the following Defaults,
and, where a grace period is specified herein, the failure by Lessee to
cure such Default prior to the expiration of the applicable grace period,
and shall entitle Lessor to pursue the remedies set forth in Paragraph 16.
(a) The vacating of the Premises without the intention to reoccupy same,
or the abandonment of the Premises.
(b) The failure by Lessee to make any payment of rent or any other
monetary payment due hereunder.
(c) The failure by Lessee to provide Lessor with written evidence of
compliance with applicable law.
(d) Default by Lessee of any term covenant or condition of this Lease.
16. REMEDIES: If Lessee fails to perform any duty or obligation of Lessee
under this Lease, within ten (10) days after written notice to Lessee (or
in the event of an emergency, without notice), Lessor may at its option,
but without obligation, perform such duty or obligation on Lessee's behalf,
including but not limited to the obtaining of reasonably required bonds,
insurance policies or governmental licenses, permits or approvals. The
costs and expenses of any such performance by Lessor shall be due and
payable by Lessee to Lessor upon invoice therefor. In the event of a
Breach of this Lease by Lessee, as defined in Paragraph 14, with or without
further notice, or demand, and without limiting Lessor in the exercise of
any right or remedy which Lessor may have by reason of such Breach, Lessor
may terminate this Lease.
17. SIGNS: Lessee shall not place any signs upon the Premises without Lessor's
and Master Building Lessor's written approval.
4
The parties hereto have executed this Lease at the place on the dates
specified above to their respective signatures.
Executed at: Carlsbad Executed at: Carlsbad
---------------- --------------------------
on: July 21, 1995 on: July 21, 1995
------------------------- -----------------------------------
by LESSOR by LESSEE
/s/ Xxxxx Xxxxxxxx /s/ Xxxx Xxxx
------------------------------ -----------------------------------
Xxxxx Xxxxxxxx, President Xxxx Xxxx, President
Medical Optics, Inc. Vista Medical Technologies
5
Exhibit D
VISTA MEDICAL TECHNOLOGIES, INC.
INVESTORS RIGHTS AGREEMENT
July 27, 1995
TABLE OF CONTENTS
Page
----
SECTION 1 RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.................... 1
1.1 Restrictions on Transferability.................................. 1
1.2 Certain Definitions.............................................. 1
1.3 Restrictive Legends.............................................. 2
1.4 Notice of Proposed Transfers..................................... 3
1.5 Demand Registration Rights....................................... 4
1.6 Company Registration............................................. 5
1.7 Form S-3 Registration Rights..................................... 6
1.8 Expenses of Registration......................................... 8
1.9 Registration Procedures.......................................... 8
1.10 Indemnification.................................................. 9
1.11 Information by Holder............................................ 11
1.12 Rule 144 Reporting............................................... 11
1.13 Transfer of Registration Rights.................................. 12
1.14 Termination of Registration Rights............................... 12
1.15 "Market Stand Off" Agreement..................................... 12
SECTION 2 AFFIRMATIVE COVENANTS OF THE COMPANY, FOUNDERS AND
SHAREHOLDERS..................................................... 13
2.1 Financial Information............................................ 13
2.2 Assignment of Rights to Financial Information.................... 13
2.3 Attendance at Board Meetings..................................... 13
2.4 Termination of Covenants......................................... 14
2.5 Confidential Information, etc.................................... 14
SECTION 3 RIGHTS OF FIRST REFUSAL.......................................... 15
3.1 Right of First Refusal on Company Issuances...................... 15
SECTION 4 MISCELLANEOUS.................................................... 16
4.1 Governing Law.................................................... 16
4.2 Successors and Assigns........................................... 16
4.3 Entire Agreement................................................. 16
4.4 Notices, etc..................................................... 16
4.5 Counterparts..................................................... 17
4.6 Severability..................................................... 17
4.7 Separability..................................................... 17
4.8 Approval of Amendments and Waivers............................... 17
i
VISTA MEDICAL TECHNOLOGIES, INC.
INVESTORS RIGHTS AGREEMENT
This Investors Rights Agreement (the "Agreement") is entered into as of
July 27, 1995 among Vista Medical Technologies, Inc., a California corporation
(the "Company"), with its principal office located at 0000 Xxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxx 00000, and the purchasers of shares of the Company's Series
A-1 Preferred Stock (the "Series A preferred") listed on the Schedule of
Shareholders attached as Exhibit A hereto. The purchasers of the Series A
Preferred shall be referred to hereinafter as the "Shareholders" and each
individually as a "Shareholder." This Agreement is being entered into pursuant
to Section 4.8 of that certain Series A-1 Preferred Stock Purchase Agreement of
even date herewith (the "Purchase Agreement") among the Company and the
Shareholders.
In consideration of the mutual agreements, covenants and conditions
contained herein, the Company and the Shareholders hereby agree as follows
(unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned in the Purchase Agreement):
SECTION 1
RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
1.1 RESTRICTIONS ON TRANSFERABILITY. Neither the Series A Preferred nor
the Registrable Securities (as defined below) shall be transferable except upon
the conditions specified in this Agreement, which conditions are intended to
insure compliance with the provisions of the Securities Act (as defined below),
or upon such other terms as are in the opinion of counsel to the Company
satisfactory to comply with the provisions of the Securities Act. Except for
transfers made pursuant to Rule 144 of the Securities Act, the Shareholders will
cause any proposed transferee of Series A preferred or Registrable Securities
held by any Shareholder to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement and it will be a
condition precedent to the effectiveness of any such transfer that the Company
shall have secured a written agreement in form and substance satisfactory to the
company to that effect, if so requested by the Company.
1.2 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"FORM S-3" shall mean F-3 under the Securities Act (as defined below) as in
effect on the date of this Agreement, or any substantially similar, equivalent
or successor form under the Securities Act.
1
"HOLDER" shall mean each holder of Registrable Securities.
"REGISTRABLE SECURITIES" means shares of the Company's Common Stock (i)
issued or issuable upon conversion of the shares of Series A Preferred which
have not been sold to the public, and (ii) issued in respect of the shares of
Common Stock referred to under the foregoing clause (i) by reason of any stock
split, stock dividend, recapitalization or similar event which have not been
sold to the public.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Sections 1.5, 1.6 and 1.7 hereof other than Selling Expenses,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel, blue sky fees
and expenses, and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company required
to bear the legend set forth in Section 1.3 hereof or a legend substantially
similar thereto and all shares of Common Stock outstanding on the date of this
Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the applicable sale.
1.3 RESTRICTIVE LEGENDS.
(a) Each certificate Representing the shares of Series A Preferred
and Registrable Securities shall (unless otherwise permitted by the provisions
of Section 1.4 below) be stamped or otherwise imprinted with a legend in the
following form (in addition to any legend required under applicable California
or other state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
2
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION.
(b) Each certificate representing shares of Registrable Securities
into which shares of the Series A Preferred are converted also shall be stamped
or otherwise imprinted with any legend required by the Bylaws of the Company (in
addition to any legend required under applicable California or other state
securities laws).
1.4 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing the Restricted Securities, by acceptance thereof, agrees to comply
in all respects with the provisions of this Section 1.4. Prior to any proposed
transfer of any Restricted Securities, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall be
accompanied (except in transactions in compliance with Rule 144) by either (i) a
written opinion of legal counsel who shall be reasonably satisfactory to the
Company addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
the Restricted Securities man. be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission, a copy of any
holder's request (together with all supplements or amendments thereto) for which
shall have been provided to the Company, at or prior to the time of first
delivery to the Commission's staff, to the effect that the transfer of such
securities without registration will not result in a recommendation by such
staff that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
provided for above shall bear the appropriate restrictive legend set forth in
Section 1.3 above, except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for the Company or counsel for such holder,
such legend is not required in order to establish compliance with any provisions
of the Securities Act.
Notwithstanding the provisions above, no such opinion of counsel or
"no action letter" shall be necessary for a transfer by a Shareholder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner ("PARTNERS"), if the transferee agrees in WRITING to
be subject to the terms hereof to the same extent as if he were an original
Shareholder hereunder.
1.5 DEMAND REGISTRATION RIGHTS.
(a) Commencing on July 27, 1998, if the Company shall receive a
written request (specifying that it is being made pursuant to this Section 1.5)
from the Holders of at least forty percent (40%) of the Registrable Securities
that the Company file a registration statement
3
or similar document under the Securities Act covering the registration of
Registrable Securities the expected aggregate offering price to the public of
which is at least $7,500,000, then the Company shall promptly notify all other
Holders of such request and shall use its best efforts to cause all Registrable
Securities that such Holders have requested, within 15 days after receipt of
such written notice, to be registered in accordance with this Section 1.5 to be
registered under the Securities Act. The Holders making the written request
pursuant to this Section 1.5 shall be referred to hereinafter as the "INITIATING
HOLDERS".
Notwithstanding the foregoing, (i) the Company shall not be obligated to
effect a registration pursuant to this Section 1.5 during the period starting
with the date one hundred twenty (120) days prior to the Company's estimated
date of filing of, and ending on a date one hundred twenty (120) days following
the effective date of, a registration statement pertaining to an underwritten
public offering of the Company's securities, provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective and that the Company's estimate of
the date of filing such registration statement is made in good faith; and (ii)
if the Company shall furnish to such Holders a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, then the Company's
obligation to use its best efforts to file a registration statement shall be
deferred for a period not to exceed six (6) months; provided, however, that the
Company shall not obtain such a deferral more than once in any 12-month period.
The Company shall be obligated to effect not more than two (2)
registrations pursuant to this Section 1.5 for which holders of Registrable
Securities are the Initiating Holders.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their demand by means of an underwriting, they shall so
advise the Company as part of their demand made pursuant to this Section 1.5,
and the Company shall include such information in the notice referred to in
Section 1.5(a). In such event, the right of any Holder to registration pursuant
to this Section 1.5 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder) to the extent provided herein.
The Company shall, together with all Holders proposing to distribute their
securities through such underwriting, enter into an underwriting agreement in
customary form with the underwriter or underwriters selected by a majority of
interest of the Initiating Holders and reasonably satisfactory to the Company.
Notwithstanding any other provision of this Section 1.5, if the underwriter
shall advise the Company in writing that marketing factors (including, without
limitation, an adverse effect on the per share offering price) require a
limitation of the number of shares to be underwritten, then the Company shall so
advise all Holders of Registrable Securities
4
that would otherwise be registered and underwritten pursuant hereto. and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated pro rata among such Holders
thereof in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
If any Holder disapproves of the terms of the underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company, the underwriter,
and the Initiating Holders. The Registrable Securities so withdrawn shall also
be withdrawn from registration. If by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion used in determining the
underwriter limitation in this Section 1.5.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account (or for
the account of other securityholders) in such registration if the underwriter so
agrees and if the number of Registrable Securities that would otherwise have
been included in such registration and underwriting will not thereby be limited.
1.6 COMPANY REGISTRATION.
(a) If, at any time or from time to time, the Company shall determine
to register any of its securities, either for its own account or the account of
a securityholder or holders exercising their respective demand registration
rights, other than a registration relating solely to employee benefit plans on
Form S-8 or similar forms which may be promulgated in the future or a
registration on Form S-4 or similar forms which may be promulgated in the future
relating solely to a Securities and Exchange Commission Rule 145 or similar
transaction, the Company will (i) promptly give to each Holder written notice
thereof and (ii) include in such registration (and any related qualification
under Blue Sky laws or other compliance), and in any underwriting involved
therein, all Registrable Securities of such Holders as specified in a written
request or requests made within 15 days after receipt of such written notice
from the Company.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so indicate in the notice given pursuant to Section 1.6(a). In
such event the right of any Holder to registration pursuant to this Section 1.6
shall be conditioned upon such Holder's agreeing to participate in such
underwriting and in the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities
5
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company or by other holders exercising any demand registration rights.
Notwithstanding any other provision of this Section 1.6, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may exclude some or all Registrable
Securities or other securities from such registration and underwriting
(hereinafter an "UNDERWRITER CUTBACK"); provided, however, that if such
underwriting relates to any registration statement other than a registration
statement being filed with respect to the first registration statement filed by
the Company covering an underwritten offering of any of its securities to the
general public ("INITIAL PUBLIC OFFERING") in which no secondary shares are
included. then (i) in no event shall the aggregate number of shares of
Registrable Securities included in such underwriting be reduced below thirty
(30%) of the total number of shares proposed to be included in such
underwriting. In the event of an Underwriter Cutback, the Company shall so
advise all Holders and the other holders distributing their securities through
such underwriting, and the number of Registrable Securities and other securities
that may be included in the registration and underwriting shall be allocated
among all holders thereof (other than those holders who are exercising their
demand registration rights) on the basis that the holders who are not Holders
shall be cut back before any cutback of Holders. If the limitation determined
by the underwriter requires an Underwriter Cutback, such Underwriter Cutback
shall be in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
1.7 FORM S-3 REGISTRATION RIGHTS. After the Initial Public Offering, the
Company shall use its best efforts to qualify for registration on Form S-3, and
to that end the Company shall use its best efforts to comply with the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), within twelve (12) months following the effective date of the first
registration of any securities of the Company for an underwritten registered
public offering. After the Company has qualified for the use of Form S-3, and
subject to the provisions of Section 1.14, each Holder shall have the right to
request registrations on Form S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of such shares by each such Holder), subject only
to the following limitations:
(a) The Company shall not be obligated to cause a registration on
Form S-3 to become effective prior to one hundred eighty (180) days following
the effective date of a Company initiated registration (other than a
registration effected solely to qualify an employee benefit plan or to effect a
business combination pursuant to Rule 145);
(b) The Company shall not be required to effect a registration
pursuant to this Section 1.7 unless the Holder or Holders requesting such a
registration propose to dispose of
6
shares of Registrable Securities having an aggregate disposition price (before
deduction of underwriting discounts and expenses of sale) of at least $500,000;
(c) The Company shall not be required to effect a registration
pursuant to this Section 1.7 if the Company shall furnish to the requesting
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company or its shareholders for the registration
statement to be filed at the date filing would be required, in which case the
Company shall have an additional period of not more than one hundred twenty
(120) days within which to file such registration statement; provided however,
that the Company shall not use this right more than once in any twelve-month
period;
(d) The Company shall not be required to maintain and keep any such
registration on Form S-3 effective for a period exceeding one hundred twenty
(120) days from the effective date thereof;
(e) The Company shall not be obligated to cause a registration on
Form S-3 if in the prior six-month period the Company has caused a registration
on Form S-3 to become effective; and
(f) The Company shall be obligated to effect not more than two
registrations per year pursuant to this Section 1.7 for which holders of
Registrable Securities request such registration.
The Company shall give notice to all Holders of the receipt of a request
for registration pursuant to this Section 1.7 and shall use its best efforts to
cause all Registrable Securities that such Holders have requested, within 15
days after receipt of such written notice, be registered in accordance with this
Section 1.7 to be registered under the Securities Act. Subject to the
foregoing, the Company will use its best efforts to effect promptly any
registration pursuant to this Section 1.7. The provisions of Section 1.5(b)
shall apply to any registration effected pursuant to this Section 1.7
1.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1.5, 1.6 and 1.7 (exclusive of Selling Expenses but inclusive of the
reasonable fees and expenses of one special counsel to the selling Holders)
shall be borne by the Company. Notwithstanding anything to the contrary herein,
the Company shall not be required to pay for any expenses of any registration
proceeding under Section 1.5 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to have been registered, unless such Holders agree to forfeit their
right to a demand registration pursuant to Section 1.5 (in which event such
right shall be forfeited by all Holders). In the absence of such an agreement
to forfeit, the Holders of Registrable Securities to have been registered shall
bear all such expenses pro rata on the basis of the Registrable Securities to
have been registered. Notwithstanding the foregoing, however,
7
if at the time of the withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that known
to the Holders at the time of their request of which the Company had knowledge
at the time of the request, then the Holders shall not be required to pay any of
said expenses and shall retain their rights pursuant to Section 1.5.
1.9 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Keep such registration, qualification or compliance effective for
a period of one hundred twenty (120) days or until the Holder or Holders have
completed the distribution described in the registration statement relating
thereto, whichever first occurs;
(b) Prepare and file with the Commission 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;
(c) Furnish to the Holders 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 resister 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) 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 agreements; and
(f) 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.
8
Notwithstanding any provision to the contrary in this Agreement, the
Company shall not be required in connection with any registration pursuant to
Sections 1.5, 1.6 or 1.7 to qualify shares in any state or jurisdiction which
requires the Company to qualify to do business or to file a general consent to
service of process.
1.10 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will promptly reimburse each such Holder, each of its
officers and directors and partners, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred (as and when incurred) in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and partners and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof) including any of the foregoing incurred in
settlement of any litigation commenced or threatened, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any such registration statement, prospectus, offering circular or other
document, or any amendment or supplement
9
thereto, incident to any such registration, qualification or compliance or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances in which the), were made, not misleading, or any violation
by the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification, or compliance, and will promptly reimburse the Company, such
Holders, such directors, officers, partners, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred (as and when
incurred) in connection with investigation, preparing or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of each
such Holder hereunder shall be limited to an amount equal to the proceeds to
each such Holder of Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 1.10
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at its own
expense, and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section I unless such failure resulted in actual
detriment to the Indemnifying Party. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party a release from all liability in respect of
such claim or litigation.
(d) If the indemnification provided for in this Section 1.10 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. 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
10
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) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offerings of Registrable Securities in
a registration statement under this Section 1 and otherwise.
1.11 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 1.
1.12 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public;
(b) Use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Exchange Act at any time after it has become subject to such reporting
requirements;
(c) So long as a Shareholder owns any Restricted Securities, to
furnish to the Shareholder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) and of the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of the
Company as a Shareholder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Shareholder to sell any such
securities without registration.
1.13 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted under Sections 1.5, 1.6 and 1.7 may be assigned or
otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder," and the transferred shares shall be considered
"Registrable Securities," for purposes of this Section 1, provided that (1) said
transferee acquires (or, together with affiliates (as defined under the
11
Securities Act) ("AFFILIATES") of said transferee, after the acquisition then
beneficially owns) at least 250,000 shares of the Registrable Securities
(including shares of Series A Preferred prior to conversion into Registrable
Securities) and (ii) the Company is given written notice by such Holder at the
time of or within a reasonable time (but not more than 30 days) after said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned, subject to said transferee's agreement to be bound by and comply
with the provisions of this Section 1.
1.14 TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Section 1 shall terminate (i) upon the seventh anniversary of
the effective date of the first registration statement filed by the Company
covering the Initial Public Offering or (ii) if earlier, as to any individual
Holder, at such time after the Company's Initial Public Offering as all
Registrable Securities (including shares of Series A Preferred prior to
conversion into Registrable Securities) held by such Holder can be sold within
any three-month period without compliance with the registration requirements of
the Securities Act pursuant to Rule 144 (including Rule 144(k)) promulgated
thereunder.
1.15 "MARKET STAND OFF" AGREEMENT. Each Holder hereby agrees that it shall
not, to the extent requested by the Company and the underwriters managing any
underwritten offering of the Company's Common Stock (or other securities), sell
or otherwise transfer or dispose (other than to those who agree to be similarly
bound) of any Registrable Securities or any other securities of the Company
during the one hundred eighty (180) day period following the effective date of a
registration statement of the Company filed in connection with the Company's
Initial Public Offering. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities and other securities of the Holders (and the shares or securities of
every other person subject to the foregoing restriction) until the end of such
one hundred eighty (180) day period.
SECTION 2
AFFIRMATIVE COVENANTS OF THE COMPANY,
FOUNDERS AND SHAREHOLDERS
2.1 FINANCIAL INFORMATION. Subject to Section 2.3, the Company will
furnish the following reports to the Shareholders for so long as the
Shareholders are holders of any Series A Preferred or Registrable Securities:
(a) As soon as practicable after the end of each fiscal year, and in
any event within 90 days thereafter, audited consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and surplus and consolidated statements of
changes in financial position of the Company and its subsidiaries, if any, for
such year, prepared in accordance with generally accepted accounting principles
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in
12
reasonable detail and certified by independent public accountants of recognized
national standing selected by the Company;
(b) Each month, an unaudited consolidated balance sheet of the
Company and its subsidiaries, if any, and consolidated statements of income and
consolidated statements of changes in financial condition of the Company and its
subsidiaries for such period, all in reasonable detail and signed, subject to
changes resulting from year-end audit adjustments, by the principal financial or
accounting officer of the Company; and
(c) An annual operating budget for each coming year, delivered on or
before January 1 of each year.
2.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 2.1 may be assigned by the Shareholders (or by any permitted
transferee of any such rights) so long as (i) the Company is given notice of any
such assignment within a reasonable time after the date the same is effected,
(ii) the transferee shall have acquired (or, together with such transferee's
Affiliates, after the acquisition shall then beneficially own) at least 250,000
shares of Registrable Securities (including shares Series A Preferred prior to
conversion into Registrable Securities) in a private transaction and (iii) the
transferee is not engaged in a business that is competitive with the Company.
2.3 ATTENDANCE AT BOARD MEETINGS. So long as Kaiser Aerospace &
Electronics ("Kaiser") owns at least an aggregate of 1,000,000 shares of Series
A Preferred, and so long as Kaiser does not have a representative on the Board
of Directors of the Company, Kaiser shall receive from the Company notices of
all meetings of the Board of Directors, including without limitation telephonic
meetings, and Kaiser shall receive, with such limitations provided herein, any
materials distributed for such meeting, and may send one representative to such
meetings: PROVIDED, HOWEVER, that the Company may require as a condition
precedent that such representative proposing to attend any meeting of the Board
of Directors shall agree to hold in confidence and trust and to act in a
fiduciary manner with respect to all information so received during such
meetings and may require that such representative sign a confidentiality
agreement with the Company; and, PROVIDED, FURTHER, that the Company reserves
the right not to provide information and to exclude such representative from any
meeting or portion thereof if attendance at such meeting by such representative
or dissemination of any information at such meeting to such representative
would, in the good faith judgment of the Board of Directors, result in
disclosure of trade secrets to such representative, would compromise or
adversely affect the attorney-client privilege between the Company and its
counsel, or would, in the good faith judgment of the Board of Directors, result
in a conflict of interest situation. If such representative in his or her good
faith judgment believes that an item to be discussed by the Board of Directors
would result in any conflict of interest, such representative shall prompted,
bring such conflict to the attention of the Chairman of the Board. In no event
shall any provision of this paragraph waive any obligation of confidentiality to
the Company owed by any such representative or Kaiser.
13
2.4 TERMINATION OF COVENANTS. The covenants set forth in Section 2.1 and
Section 2.3 shall terminate and be of no further force or effect after the
closing date of the Initial Public Offering.
2.5 CONFIDENTIAL INFORMATION, ETC. Each Shareholder agrees that all
information received by it pursuant to this Section 2, and any other information
relating to the Company's technology, processes or formulas that is disclosed by
the Company to any Shareholder in writing and is marked "Confidential," shall be
considered confidential information. Each Shareholder further agrees that it
shall hold all such confidential information in confidence and shall not
disclose any such confidential information to any third party other than its
counsel or accountants nor shall such Shareholder use such confidential
information for any purpose other than evaluation of such Shareholder's
investment in the Company; provided, however, that the foregoing obligation to
hold in confidence and not to disclose confidential information shall not apply
to any such information that (a) was known to the public prior to disclosure by
the Company, (b) becomes known to the public through no fault of such
Shareholder, (c) is disclosed to such Shareholder on a non-confidential basis by
a third party having a legal right to make such disclosure or (d) is
independently developed by such Shareholder.
SECTION 3
RIGHTS OF FIRST REFUSAL
3.1 RIGHT OF FIRST REFUSAL ON COMPANY ISSUANCES.
(a) The Company hereby grants to each Shareholder the right of first
refusal to purchase its Pro Rata Share (defined below) of all (or any part) of
New Securities (defined below) that the Company may from time to time propose to
sell and issue. Such Shareholder's "PRO RATA SHARE," for purposes of this
Section 3, is the ratio of the number of shares of Common Stock (assuming
conversion of all shares of Series A Preferred) then held by such Shareholder to
the total number of shares of Common Stock then outstanding (assuming conversion
of all shares of Series A Preferred). This right of first refusal shall be
subject to the following provisions:
(b) "NEW SECURITIES" shall mean any Common Stock or Preferred Stock
of the Company, whether now authorized or not, and rights, options, or warrants
to purchase said Common Stock or Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
Common Stock or Preferred Stock; provided, however, that "NEW SECURITIES" does
not include (i) securities issuable upon conversion of or with respect to Series
A-1 Preferred Stock or any future series of preferred stock; (ii) shares of the
Company's Common Stock (or related options) issued to officers, directors,
employees of and/or consultants to the Company pursuant to plans or agreements
as approved by the Company's Board of Directors; (iii) shares of the Company's
Common Stock or Preferred Stock issued in connection with any stock split, stock
dividend, or recapitalization by the Company; (iv) securities issued in
connection with any equipment leasing, technology licensing, corporate
partnering, strategic
14
alliance, acquisition, merger, purchase of assets or similar transaction as
approved by the Company's Board of Directors; and (v) shares of the Company's
Common Stock issued or issuable as a result of any antidilution adjustment
provided for in the Company's Articles of Incorporation as in effect at the time
of such issuance.
(c) In the event that the Company proposes to undertake an issuance
of New Securities, it shall give each Shareholder written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. Each Shareholder shall
have twenty (20) business days from the date of receipt of any such notice to
agree to purchase some or all of his Pro Rata Share of such New Securities for
the price and upon the general terms specified in the notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased. Each Shareholder shall have a right of over-allotment such that if
any Shareholder fails to exercise his right hereunder to purchase his Pro Rata
Share of New Securities, the other Shareholders may Purchase the non-purchasing
Shareholder's portion on a pro rata basis, within fifteen (15) business days
from the date such non-purchasing Shareholder fails to exercise his right
hereunder to purchase his Pro Rata Share of New Securities.
(d) In the event that the Shareholders fail to exercise in full the
right of first refusal within said twenty (20) plus fifteen (15) business day
period, the Company shall have one hundred twenty (120) days thereafter to sell
(or enter into an agreement pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within one hundred twenty (120) days from
the date of said agreement) the New Securities respecting which the
Shareholders' rights were not exercised, at a price and upon general terms no
more favorable to the purchasers thereof than specified in the Company's notice.
In the event the Company has not sold the New Securities within said one hundred
twenty (120) day period (or sold and issued New Securities in accordance with
the foregoing within one hundred twenty (120) days from the date of said
agreement), the Company shall not thereafter issue or sell any New Securities,
without first offering such securities to the Shareholders in the manner
provided above.
(e) The right of first refusal granted under this Section 3.1 shall
not apply to and shall expire upon the closing of the Company's Initial Public
Offering.
(f) The rights granted pursuant to this Section 3.1 may be assigned
by the Shareholders (or by any permitted transferee of any such rights) so long
as (i) the Company is given notice of any such assignment within a reasonable
time after the date the same is effected and (ii) the transferee shall have
acquired (or, together with such transferee's Affiliates, after the acquisition
shall then beneficially own) at least 250,000 shares of Registrable Securities
(including shares of Series A Preferred prior to conversion into Registrable
Securities) in a private transaction.
SECTION 4
15
MISCELLANEOUS
4.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by California residents.
4.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
4.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or by
registered or certified mail, postage prepaid, or otherwise delivered by hand or
by messenger, addressed (a) if to the Shareholders, to such Shareholders'
addresses set forth on the Schedule of Purchasers or to such other address as
such Shareholders shall have furnished to the Company in writing, (b) if to any
other holder of Registrable Securities, at such address as such holder shall
have furnished the Company in writing, or (c) if to the Company, to its address
set forth above and addressed to the attention of the President or at such other
addresses as the Company shall have furnished to the Shareholders. All notices
and other communications pursuant to the provisions of this Section 4.4 shall be
deemed delivered when mailed or sent by facsimile.
4.5 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
4.6 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
4.7 SEPARABILITY. Any invalidity, illegality, or limitation of the
enforceability with respect to any Shareholder of any one or more of the
provisions of this Agreement, or any part thereof, whether arising by reason of
the law of any such Shareholder's domicile or otherwise, shall in no way affect
or impair the validity, legality, or enforceability of this Agreement with
respect to other Shareholder. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired.
4.8 APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived (either
16
generally or in a particular instance and either retroactively or prospectively)
with the written consent of (i) the Company and (ii) the holders of at least a
majority of the then outstanding shares of Registrable Securities, excluding
from the determination of such a majority in clause (ii) (both in determining
the total number of such shares outstanding and the number of such shares
consenting or not consenting) all shares previously disposed of by such holders
pursuant to one or more registration statements under the Securities Act or
pursuant to Rule 144. Any amendment, termination or waiver effected in
accordance with this section shall be binding upon the Shareholders, each of
their transferees and the Company. Each Shareholder acknowledges that by the
operation of this Section the holders of a majority of the outstanding
Registrable Securities as aforesaid may have the right and power to diminish or
eliminate all rights of such Shareholders under this Agreement.
17
The foregoing Investors Rights Agreement is hereby executed as of the date
first above written.
THE COMPANY:
VISTA MEDICAL TECHNOLOGIES, INC.
By
-----------------------------
Title
--------------------------
THE SHAREHOLDERS:
--------------------------------
[NAME]
By:
-----------------------------
Title:
--------------------------
18
EXHIBIT A
SCHEDULE OF SHAREHOLDERS
Purchasers Number of Shares
---------- ----------------
KAISER AEROSPACE & ELECTRONICS 1,792,453
000 Xxxxx Xxxx, Xxx. 000
Xxxxxx Xxxx, XX 00000
Attention: Xx. X.X. Xxxxx
XXX XXXX 264,151
c/o Oktas
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
ONE LIBERTY FUND III 747,170
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxx Xxxxxxx
XXXXX INTERNATIONAL B.V.
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxx Xxxxxxx 7,547
B.U.N.P.
c/o Community Technology Fund
Boston University Ventures
000 Xxx Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Xx. 226,416
DOMAIN PARTNERS III, L.P. 2,041,746
Xxx Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Ph.D.
OLD COURT LIMITED 1,056,604
St. Julian's Court
St. Xxxxx Port
Guernsey, Channel Islands
with copy to:
c/o Domain Associates
Xxx Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Ph.D.
DP III ASSOCIATES, L.P. 71,461
Xxx Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Ph.D.
SBIC PARTNERS, L.P. 1,886,792
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx
EXHIBIT E
NON-DISCLOSURE AGREEMENT
FOR
PROPRIETARY OR BUSINESS CONFIDENTIAL INFORMATION
THIS AGREEMENT was made this ___ day of _______, 19__, by and between Vista
Medical Technologies, located at 000 Xxxxxxxx Xx., Xxxxxxxxxxx, Xxxxxxxxxxxxx
00000 hereafter called "Vista" and ________________ located at ________________
__________________ hereafter called "________________" are parties to this
Agreement.
WHEREAS, the parties wish to disclose and exchange certain proprietary or
business confidential information or data concerning their respective products
in order to evaluate these products and related technical, engineering,
manufacturing and business information; and
WHEREAS, the parties will furnish this information to each other at their
own expense and without obligation as to any future contractual relationship
unless otherwise agreed.
NOW THEREFORE, in consideration of the following mutual promises, the
parties hereby agree:
(a) Vista will disclose proprietary information concerning its Medical
Video Camera systems, Electronic Endoscope Systems and any medical
devices associated with Vista.
(b) ________________ will disclose proprietary information as required by
the Consulting Agreement.
(c) The parties agree that the subject of this Agreement involves
confidential business of the respective parties.
(d) Any information received by either party of from the other which is
designated by the disclosing party as proprietary or business
confidential (or any proprietary information which, if disclosed
orally or visually, is reduced to writing within thirty 30 days and
designated as proprietary or confidential as provided in this
Agreement) shall be kept in confidence by the receiving party and used
only for the purposes described in this Agreement.
(e) All proprietary or business confidential information or data to be
protected by this Agreement must be in writing and clearly identified
or marked as proprietary of confidential on each page or portion
thereof with a suitable restrictive legend. Neither party may
reproduce or make copies of this material without the prior written
approval of the other party.
(f) Except as provided herein, the proprietary or business confidential
information or data exchanged or disclosed between the parties shall
not be used by either party in their own business or in association
with others or disclosed to any third parties without the prior
written consent of the other party.
(g) The receiving party is authorized (i) to examine and evaluate the
information; and (ii) to incorporate the information in a proposal or
other report to the other party.
(h) Each party shall take reasonable precautions to prevent disclosure
to the public, competitors of the parties, or any other
unauthorized use of the proprietary of confidential information
received. The obligation to retain such information in confidence
will be satisfied if the party receiving such information uses the
same degree of care it employees to avoid disclosure, publication
or dissemination of its own proprietary or confidential
information. The receiving party shall not be liable for
inadvertent or accidental disclosure if such disclosure occurs
after a period of one year from receipt in spite of the exercise of
the foregoing precautions and care.
(i) The obligations concerning proprietary or confidential information are
not applicable to information which:
(a) was in the receiving party's possession or knowledge prior to the
time of disclosure, which fact of prior possession shall be
provable only by documents prepared prior to the date thereof, or
(b) was in the public domain at the time of disclosure; or
(c) subsequently becomes a part of the public domain by publication
or otherwise without any wrongful act by the receiving party; or
(d) lawfully comes into either party's possession or knowledge
through lawful disclosures from third parties; or
(e) can be proven by written records to have been independently
developed; or
(f) becomes available by inspection or analysis of other products or
techniques in the market; or
(g) occurs three years after the receipt of the information.
(j) Pursuant to Item 4, each party designates the following individual(s)
within its organization as the only person(s) authorized to receive
proprietary or confidential information exchanged or disclosed between
the parties pursuant to this Agreement.
Vista ______________________________
000 Xxxxxxxx Xx. ________________________________________
Xxxxxxxxxxx, XX 00000 ________________________________________
Name: Xxxxxx Xxxxxx Name: _________________________________
Title: Director of Regulatory Title:_______________________
Affairs and Quality Assurance
(k) The parties shall, upon the written request by the other party, return
all written documents containing proprietary information covered by
this Agreement, together with any copies thereof, including any
subsidiary, derivative or equivalent documents or translation thereof
containing such proprietary or business confidential information. The
foregoing applies also upon termination or cancellation of this
Agreement.
(l) This Agreement shall not be construed as an obligation to enter into a
subcontract or contract or result in a claim by either party for
reimbursement of any costs from the other party, or be construed as
granting, either expressly or by implication, estoppel or otherwise,
any license under any invention or patent now or hereafter owned or
controlled by the party furnishing the information.
(m) Neither party shall make any news releases, public announcements,
advertisements, or publicity regarding this Agreement or the
proprietary or confidential information without the prior written
approval of the other party.
(n) Information exchanged under this Agreement shall not be disclosed to
other divisions or subsidiaries of the respective parties for any use
adverse to the interest of the respective parties without the prior
written approval of the disclosing party.
(o) This Agreement is governed by and shall be construed according to the
law of the Commonwealth of Massachusetts without regard to conflict of
laws provisions.
(p) This Agreement contains the sole and entire disclosure agreement
between the parties pertaining to the item listed on Paragraphs 1 and
2 and business information and supersedes all other Disclosure
Agreements entered into prior to this Agreement.
(q) This Agreement may be terminated by either party giving thirty (30)
days notice, and unless sooner terminated, shall expire on __________,
19__. Such termination does not affect the parties' respective rights
and obligations outlined in paragraphs 6 and 11 with regard to
proprietary or business confidential information or data disclosed to
the receiving party prior to the termination of the Agreement.
IN WITNESS WHEREOF, the Parties have signed this Agreement as of the
date first written above.
VISTA
By: By:
----------------- ----------------------
Title: Title:
------------------- ------------------------
WITNESS: WITNESS:
------------ -----------------
Exhibit F
July 27, 1995
To the Investors Listed on the
Schedule of Investors to the
Vista Medical Technologies, Inc.
Series A-1 Preferred Stock
Purchase Agreement dated
July 27, 1995
Ladies and Gentlemen:
We have acted as counsel for Vista Medical Technologies, Inc., a
California corporation (the "Company"), in connection with the issuance and sale
of shares of its Series A-1 Preferred Stock pursuant to the Vista Medical
Technologies, Inc. Series A-1 Preferred Stock Purchase Agreement dated July 27,
1995 (the "Stock Purchase Agreement") between the Company and you. This opinion
is being rendered to you pursuant to Section 4.7 of the Stock Purchase Agreement
in connection with the Closing of the sale of the Series A-1 Preferred Stock.
Capitalized terms not otherwise defined in this opinion have the meanings
assigned to them in the Stock Purchase Agreement.
In connection with the opinions expressed herein we have made such
examination of matters of law and of fact as we considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied upon the representations and warranties as to
factual matters contained in and made by the Company pursuant to the Stock
Purchase Agreement and upon certificates and statements of government officials
and of officers of the Company. We have also examined originals or copies of
such corporate documents or records of the Company as we have considered
appropriate for the opinions expressed herein. We have assumed for the purposes
of this opinion that the signatures on documents and instruments examined by us
are authentic, that each document is what it purports to be, and that all
documents submitted to us as copies conform with the originals, which facts we
have not independently verified.
In rendering this opinion we have also assumed: (A) that the Stock
Purchase Agreement and the Investors' Rights Agreement attached as Exhibit D
thereto (the "Investors' Rights Agreement") have been duly and validly executed
and delivered by you or on your behalf and constitute valid, binding and
enforceable obligations upon you; (B) that the representations and warranties
made in the Stock Purchase Agreement by you are true and correct; (C) that any
wire transfers, drafts or checks tendered by you will be honored; (D) if you are
a corporation or other entity, that you have filed any required state franchise,
income or similar tax returns and have paid any required state franchise, income
or similar taxes; and (E) that there are no extrinsic agreements or
understandings among the parties to the Stock Purchase Agreement and the
Investors' Rights Agreement that would modify or interpret the terms of the
Stock Purchase Agreement and the Investors' Rights Agreement, or the respective
rights or obligations of the parties thereunder.
As used in this opinion, the expression "we are not aware" or the phrase
"to our knowledge" means as to matters of fact that, based on the actual
knowledge of individual attorneys within the firm principally responsible for
handling current matters for the Company and after an examination of documents
referred to herein and after inquiries of certain officers of the Company, we
find no reason to believe that the opinions expressed are factually incorrect;
but beyond that we have made no factual investigation for the purposes of
rendering this opinion. Specifically, but without limitation, we have made no
inquiries of securities holders or employees of the Company.
This opinion relates solely to the laws of the State of California, and the
federal law of the United States, and we express no opinion with respect to the
effect of application of any other laws. Special rulings of authorities
administering such laws or opinions of other counsel have not been sought or
obtained.
Based upon our examination of and reliance upon the foregoing and
subject to the limitations, exceptions, qualifications and assumptions set forth
below and except as set forth in the Stock Purchase Agreement or the Schedule of
Exceptions thereto, we are of the opinion that as of the date hereof:
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the
State of California, and the Company has the requisite corporate power and
authority to own its properties and to conduct its business as presently
conducted.
2. The Company has the requisite corporate power and authority to
execute, deliver and perform the Stock Purchase Agreement and the Investors'
Rights Agreement. Each of the foregoing has been duly and validly authorized by
the Company, duly executed and delivered by an authorized officer of the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company according to its terms; provided, however, that
no opinion is expressed with respect to the enforceability of the indemnity
obligations of Section 1.10 of the Investors' Rights Agreement.
3. The capitalization of the Company is as follows:
(a) PREFERRED STOCK. 18,000,000 shares of Preferred Stock
(the "Preferred Stock"), 8,300,000 which have been designated Series A-1
Preferred Stock up to all of which may be sold pursuant to the Stock Purchase
Agreement, and 8,300,000 shares of which have been designated Series A-2
Preferred Stock. The shares of Series A-1 Preferred Stock, when issued and
delivered in accordance with the terms of the Stock Purchase Agreement, will
be duly authorized issued and delivered, validly outstanding and
nonassessable, and fully paid. The respective rights, privileges and
preferences of the Series A-1 Preferred Stock and Series A-2 Preferred Stock
are as stated in the Company's Amended and Restated Articles of Incorporation
(the "Restated Articles") attached as Exhibit B to the Stock Purchase
Agreement.
(b) COMMON STOCK. 25,000,000 shares of Common Stock (the
"Common Stock"), 1,000 shares of which have been duly authorized and validly
issued, are nonassessable, and are fully paid.
(c) The Common Stock issuable upon conversion of the Series A-1
Preferred Stock purchased at the Closing has been duly and validly reserved for
issuance and, when and if issued upon such conversion in accordance with the
Company's Restated Certificate of Incorporation, will be validly issued, fully
paid and nonassessable.
(d) Except for (i) the conversion privileges of the Series
A-1 Preferred Stock and Series A-2 Preferred Stock, (ii) the rights provided
in Section 3.1 of the Investors' Rights Agreement, and (iii) currently
outstanding options to purchase 469,513 shares of Common Stock granted to
employees pursuant to the Company's 1995 Stock Option Plan pursuant to which
an aggregate of 896,208 shares have been reserved, there are not outstanding
any options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of
its capital stock.
4. The execution, delivery, performance and compliance with the
terms of the Stock Purchase Agreement and Investors' Rights Agreement do not
violate any provision of any applicable federal or state or, to our
knowledge, local law, rule or regulation or any provision of the Company's
Restated Articles or Bylaws and do not conflict with or constitute a default
under the provisions of any judgment, writ, decree or order specifically
identified in the Schedule of Exceptions or the material provisions of any
material agreement specifically identified in the Schedule of Exceptions to
which the Company is a party or by which it is bound.
5. All consents, approvals, permits, orders or authorizations of,
and all qualifications, registrations, designations, declarations or filings
with, any federal or California state governmental authority on the part of
the Company required in connection with the execution and delivery of the
Stock Purchase Agreement and consummation at the Closing of the transactions
contemplated by the Stock Purchase Agreement have been obtained, and are
effective, except the filing required by Section 25102(f) of the California
Corporate Securities Law of 1968, and we are not aware of any proceedings, or
threat therof, that question the validity therof.
6. Based in part upon the representations of you in the Stock
Purchase Agreement, the offer and sale of the Series A-1 Preferred Stock to
you pursuant to the terms of the Stock Purchase Agreement are exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, by virtue of Section 4(2) thereof and from the qualification
requirements of the California Corporate Securities Law of 1968, as amended,
by virtue of Section 25102(f) thereof, and, under such securities laws as they
presently exist, the issuance of Common Stock to you upon conversion of the
Series A-1 Preferred Stock would also be exempt from such registration and
qualification requirements.
7. We are not aware that there is any action, proceeding or
governmental investigation pending, against the Company or any of its
officers or directors, or that any of the foregoing has received any threat
thereof, which questions the validity of the Stock Purchase Agreement or the
Investors' Rights Agreement or the right of the Company or its officers or
directors and employees to enter into such Stock Purchase Agreement and
Investors' Rights Agreement, nor are we aware of any litigation pending,
against the Company or any of its officers or directors, or that any of the
foregoing has received any threat thereof, by reason of the proposed
activities of the Company, the past employment relationships of its officers,
directors or employees, or negotiations by the Company or any of its officers
or directors with possible investors in the Company or its business.
Our opinions expressed above are specifically subject to the following
limitations, exceptions, qualifications and assumptions:
(A) The effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting the relief of debtors or the
rights and remedies of creditors generally, including without limitation the
effect of statutory or other law regarding fraudulent conveyances and
preferential transfers.
(B) We express no opinion as to the Company's compliance or
noncompliance with applicable federal or state antifraud or antitrust statutes,
laws, rules and regulations.
(C) Limitations imposed by state law, federal law or general
equitable principles upon the specific enforceability of any of the remedies,
covenants or other provisions of any applicable agreement and upon the
availability of injunctive relief or other equitable remedies, regardless of
whether enforcement of any such agreement is considered a proceeding in equity
or at law.
(D) The effect of court decisions, invoking statutes or principles of
equity, which have held that certain covenants and provisions of agreements are
unenforceable where enforcement of such covenants or provisions under the
circumstances would violate the enforcing party's implied covenant of good faith
and fair dealing.
(E) The effect of subsequent issuances of securities of the Company,
to the extent that further issuances which may be integrated with the Closing
may include purchasers which do not meet the definition of "accredited
investors" under Rule 501 of Regulation D and equivalent definitions under
state securities or "blue sky" laws and to the extent that the Company may
issue shares of Common Stock such that there are not enough remaining
authorized but unissued shares of Common Stock for the conversion of the Series
A-1 Preferred Stock.
(F) The unenforceability under certain circumstances of provisions
indemnifying a party against, or requiring contributions toward, that party's
liability for its own wrongful or negligent acts, or where indemnification or
contribution is contrary to public policy.
This opinion is rendered as of the date first written above solely for
your benefit in connection with the Stock Purchase Agreement and may not be
delivered to, quoted or relied upon by any person other than you, or for any
other purpose, without our prior written consent. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company. We
assume no obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.
Very truly yours,
XXXXXXX, XXXXXXX & XXXXXXXX
