Exhibit 10.7
SYMPHONIX DEVICES, INC.
SERIES D PREFERRED STOCK
PURCHASE AGREEMENT
JUNE 11, 1997
TABLE OF CONTENTS
PAGE
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SECTION 1 Authorization and Sale of the Shares................... -1-
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1.1 Authorization.......................................... -1-
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1.2 Sale and Purchase of the Shares........................ -1-
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1.3 Purchases and Sales Subsequent to the Closing.......... -1-
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SECTION 2 Closing Date; Delivery................................. -2-
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2.1 Closing Date........................................... -2-
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2.2 Closing................................................ -2-
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SECTION 3 Representations of the Company......................... -2-
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3.1 Organization and Standing.............................. -2-
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3.2 Corporate Power........................................ -3-
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3.3 Capitalization......................................... -3-
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3.4 Authorization.......................................... -4-
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3.5 Absence of Changes..................................... -4-
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3.6 Title to Properties and Assets; Liens, etc............. -5-
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3.7 Financial Statements................................... -5-
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3.8 Patents, Trademarks, and Trade Secrets................. -5-
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3.9 Compliance with Other Instruments, None Burdensome, etc -6-
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3.10 Litigation, etc........................................ -6-
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3.11 Registration Rights.................................... -7-
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3.12 Governmental Consent, etc.............................. -7-
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3.13 Offering............................................... -7-
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3.14 Disclosure............................................. -7-
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3.15 No Conflicting Agreements.............................. -7-
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3.16 Contracts and Other Commitments........................ -7-
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3.17 Subsidiaries........................................... -8-
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3.18 Manufacturing Rights................................... -8-
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3.19 Transactions with Principals........................... -8-
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3.20 Insurance.............................................. -8-
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3.21 Employees.............................................. -9-
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3.22 Voting Agreement....................................... -9-
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3.23 Permits................................................ -9-
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3.24 Environmental and Safety Laws.......................... -9-
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3.25 Tax Returns, Payments and Elections.................... -9-
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3.26 Section 83(b) Elections................................ -9-
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3.27 Qualified Small Business Stock......................... -10-
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SECTION 4 Investment Representations............................. -10-
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4.1 Authorization.......................................... -10-
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TABLE OF CONTENTS
(CONTINUED)
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4.2 Experience............................................. -10-
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4.3 Investment............................................. -10-
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4.4 Rule 144 and Rule 144A................................. -11-
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4.5 No Public Market....................................... -11-
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4.6 Access to Data......................................... -11-
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SECTION 5 Conditions to Investors' Obligations at the Closing.... -11-
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5.1 Representations and Warranties Correct................. -11-
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5.2 Covenants.............................................. -11-
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5.3 Opinion of Company's Counsel........................... -11-
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5.4 Election of Directors.................................. -12-
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5.5 Investors Rights Agreement............................. -12-
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5.6 Articles............................................... -12-
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5.7 Compliance Certificate................................. -12-
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5.8 Proceedings and Documents.............................. -12-
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SECTION 6 Conditions to Company's Obligations at Closing......... -12-
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6.1 Representations Correct................................ -12-
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6.2 Qualifications, Legal Investment....................... -12-
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6.3 Minimum Investment..................................... -12-
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6.4 Covenants.............................................. -13-
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6.5 Articles............................................... -13-
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SECTION 7 Affirmative Covenants of the Company................... -13-
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7.1 Employee Agreements.................................... -13-
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7.2 Key Man Life Insurance................................. -13-
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7.3 Preservation of Small Business Stock Status............ -13-
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7.4 Termination of Covenants............................... -14-
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SECTION 8 Certain Covenants...................................... -14-
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8.1 First Negotiation Right................................ -14-
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8.2 Observer Rights........................................ -14-
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8.3 Publicity.............................................. -15-
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SECTION 9 Miscellaneous.......................................... -15-
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9.1 Governing Law.......................................... -15-
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9.2 Survival............................................... -15-
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9.3 Successors and Assigns................................. -16-
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9.4 Entire Agreement; Amendment............................ -15-
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9.5 Effect of Amendment or Waiver.......................... -16-
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TABLE OF CONTENTS
(CONTINUED)
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9.6 Rights of Investors.................................... -16-
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9.7 Exculpation Among Investors............................ -16-
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9.8 Notices, etc........................................... -16-
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9.9 Delays or Omissions.................................... -16-
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9.10 California Corporate Securities Law.................... -17-
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9.11 Expenses............................................... -17-
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9.12 Counterparts........................................... -17-
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9.13 Severability........................................... -17-
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Exhibits
Exhibit A - Schedule of Investors
Exhibit B - Restated Certificate of Incorporation
Exhibit C - Restated Investors Rights Agreement
Exhibit D - Schedule of Exceptions
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SYMPHONIX DEVICES, INC.
Series D Preferred Stock
Purchase Agreement
This Agreement is made as of June 11, 1997 by and among Symphonix Devices,
Inc., a California corporation (the "Company"), and the persons and entities
listed on the "Schedule of Investors" attached hereto as Exhibit A (the
"Investors").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
SECTION 1
Authorization and Sale of the Shares
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1.1 Authorization. The Company has, or before the Closing (as
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hereinafter defined) will have, authorized the sale and issuance of one million
two hundred fifty thousand (1,250,000) shares of its Series D Preferred Stock
(the "Shares") having the rights, restrictions, privileges and preferences set
forth in the Restated Articles of Incorporation of the Company attached hereto
as Exhibit B (the "Articles"). The Company has, or before the Closing will
have, adopted and filed the Articles with the Secretary of State of the State of
California.
1.2 Sale and Purchase of the Shares. Subject to the terms and conditions
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hereof and in reliance upon the representations and agreements contained herein,
at the Closing the Company will issue and sell to each Investor and each
Investor, severally and not jointly, will purchase from the Company, the number
of Shares set forth opposite the Investor's name in the column entitled "Shares"
on the Schedule of Investors at a purchase price of eight dollars ($8.00) per
Share.
1.3 Purchases and Sales Subsequent to the Closing. If less than all of
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the authorized number of Shares are sold at the closing, then, subject to the
terms and conditions of this Agreement, the Company may sell, on or before the
thirtieth (30th) day after the date hereof, up to the balance of the authorized
but unissued Shares to such persons or entities (the "Subsequent Investors") as
the Company may determine at the same price per share as the Shares purchased
and sold at the Closing. Any such sale shall be upon the same terms and
conditions as those contained herein, may occur on one or more occasions, and
the Subsequent Investors shall become parties to this Agreement and that certain
Restated Investors Rights Agreement dated as of the date hereof, by and among
the Company and the Investors, the form of which is attached hereto as Exhibit C
(the "Investors Rights Agreement"). Such persons or entities may become
parties to such agreements (i)(a) by executing copies of such agreements which,
as of the date hereof, provide for execution by them or (b) by appending
additional signature pages to such agreements containing their signatures and
(ii) by
appending additional pages to or revising the Exhibit A of each such agreement
appropriately, and the Company is authorized to effect any of such alternatives
on one or more occasions without the further consent of the Investors, provided,
however, that (i) those persons designated in the Schedule of Investors who do
not purchase the Shares set forth opposite their respective names shall be
entitled to and the Company shall sell to them, upon receipt of the requisite
consideration and signature pages and upon the Company's satisfaction that the
issuance to such persons is in compliance with federal and state securities
laws, the amount of Shares set forth opposite their respective names (and such
purchases and sales shall not be deemed separate Closings hereunder) and (ii)
the Shares reserved for any persons designated in the Schedule of Investors at
the time of execution of this Agreement may not be allocated to any other person
without the consent of Investors holding a majority of the then outstanding
Shares. In the event that there is more than one Closing, the term "Closing"
shall apply to each such Closing unless otherwise specified. At any Closing
after the first Closing, to satisfy the conditions set forth in Section 5
hereof, the Company shall only be required to satisfy the conditions set forth
in Sections 5.1, 5.2 and 5.8 thereof. A bring-down of the opinion of counsel
referred to in Section 5.3 shall also be provided at any such Closing.
SECTION 2
Closing Date; Delivery
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2.1 Closing Date. The closing for the purchase and sale of the Shares
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hereunder (the "Closing") shall be held at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, on June 11, 1997,
at 10:00 a.m. or at such other time and place as the Company and a majority in
interest of the Investors mutually agree upon (the "Closing Date").
2.2 Closing. At the Closing, the Company will deliver to each Investor a
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certificate representing the number of Shares to be purchased by such Investor,
each as set forth in the Schedule of Investors, against payment of the purchase
price therefor by cancellation of indebtedness, check payable to the order of
the Company, wire transfer or any combination of the foregoing in the amounts
specified in the Schedule of Investors.
SECTION 3
Representations of the Company
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Subject to and except as disclosed by the Company in the Schedule of
Exceptions attached hereto as Exhibit D, the Company hereby represents to each
Investor as follows:
3.1 Organization and Standing. The Company is a corporation duly
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organized, validly existing, and in good standing under the laws of the State of
California. The Company has all requisite corporate power to own and operate its
properties and 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 in each jurisdiction in which such qualification is required
and where the failure
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to be so qualified would have a material adverse effect on the Company's
business. The Company has made available to special counsel for the Investors
copies of its Articles of Incorporation, Bylaws, and minute books. Said copies
are true, correct and complete and contain all amendments through the date of
this Agreement.
3.2 Corporate Power. The Company has all requisite legal and corporate
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power to execute and deliver this Agreement and any other agreement contemplated
hereby, to sell and issue the Shares hereunder and to carry out and perform its
obligations under the terms of this Agreement and any other agreement
contemplated hereby.
3.3 Capitalization. The authorized capital stock of the Company consists
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of twenty million (20,000,000) shares of Common Stock (the "Common Stock"), of
which three million three hundred fifteen thousand five hundred sixty-one
(3,315,561) shares are issued and outstanding, and nine million seven hundred
fifty thousand (9,750,000) shares of Preferred Stock, of which five million four
hundred sixty-three thousand (5,463,000) shares designated Series A Preferred
Stock, one million three hundred seventy-eight thousand five hundred (1,378,500)
shares designated Series B Preferred Stock, one million one hundred sixty two
thousand four hundred fifty one (1,162,451) shares designated Series C Preferred
Stock, and four hundred forty thousand six hundred eighty (440,680) shares
designated Series D Preferred Stock are issued and outstanding. All such issued
and outstanding shares have been duly authorized and validly issued, and are
fully paid and nonassessable. Five million five hundred thousand (5,500,000)
shares of the Preferred Stock have been designated "Series A Preferred Stock,"
one million five hundred thousand (1,500,000) shares of the Preferred Stock have
been designated "Series B Preferred Stock," one million five hundred thousand
(1,500,000) shares of the Preferred Stock have been designated "Series C
Preferred Stock" and one million two hundred fifty thousand (1,250,000) shares
have been designated "Series D Preferred Stock." The rights, restrictions,
privileges and preferences of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock
are as stated in the Articles. The Company by appropriate action by the Board
of Directors has reserved (or shall have reserved prior to the Closing) nine
million seven hundred fifty thousand (9,750,000) shares of Common Stock for
issuance upon conversion of the Preferred Stock. Two million two hundred
thirty-five thousand (2,235,000) shares of Common Stock have been duly reserved
under the Company's 1994 Stock Option Plan, and options exercisable for seven
hundred ninty-five thousand three hundred sixty-two (795,362) shares of Common
Stock are issued and outstanding, and warrants exercisable for 37,000 and 9,250
shares of Series A Preferred Stock and Series B Preferred Stock, respectively,
are issued and outstanding.
Except as set forth above and in the Investors Rights Agreement, there are
no preemptive or other outstanding rights, options, warrants, conversion rights,
understandings or agreements for the purchase or acquisition from the Company of
any shares of its capital stock or other securities of the Company. To the best
of the Company's knowledge, there are not any agreements, understandings or
arrangements among the shareholders relating to the transfer of outstanding
capital stock of the Company. All of the outstanding shares of Common Stock have
been duly and validly issued in compliance with federal and state securities
laws. Set forth in Section 3.3 of the Schedule of
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Exceptions is an accurate list of the holders of the Company's outstanding
Common Stock, Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock.
3.4 Authorization. All corporate action on the part of the Company, its
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directors and shareholders necessary for the sale and issuance of the Shares,
the Common Stock issuable upon conversion of the Shares (the Common Stock
issuable upon conversion of the Shares being referred to herein as the
"Underlying Stock") and the performance of the Company's obligations hereunder
and under each of the other Agreements contemplated hereby and the reservation
of the Underlying Stock has been taken or will be taken prior to the Closing.
This Agreement and the other agreements contemplated hereby are valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and subject to general equity principles
and to limitations on the availability of equitable relief, including specific
performance. The Shares and the Underlying Stock, when issued in compliance
with the provisions of this Agreement, will be validly issued and will be fully
paid and nonassessable, and will be free of any liens or encumbrances; provided,
however, that the Shares and the Underlying Stock may be subject to restrictions
on transfer under state and/or federal securities laws as set forth herein.
3.5 Absence of Changes.
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Since March 31, 1997, there has not been:
(a) Any change in the assets, liabilities, financial condition or
operations of the Company except changes in the ordinary course of business
which have not been, either in any case or in the aggregate, materially adverse;
(b) Any change (individually or in the aggregate), except in the
ordinary course of business, in the contingent obligations of the Company by way
of guaranty, endorsement, indemnity, warranty or otherwise;
(c) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of the
Company;
(d) Any waiver or compromise by the Company of a valuable right or of
a material debt owed to it;
(e) Any loans made by the Company to its employees, officers or
directors other than travel advances made in the ordinary course of business;
(f) Any changes in the compensation of the Company's employees,
officers or directors;
(g) Any declaration or payment of any dividend or other distribution
of the assets of the Company;
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(h) Any agreement obligating the Company to make payments that could
exceed twenty five thousand dollars ($25,000) in any fiscal year;
(i) To the best knowledge of the Company, any other event or
condition of any character which has materially and adversely affected the
Company's business or prospects; or
(j) Any agreement or commitment by the Company to do any of the
things described in this Section 3.5.
3.6 Title to Properties and Assets; Liens, etc. The Company has good and
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marketable title to all of its properties and assets, 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 which 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. With
respect to the property and assets it leases, the Company is in compliance with
such leases and, to the best of its knowledge, holds a valid leasehold interest
free of any liens, claims or encumbrances.
3.7 Financial Statements. The Company has delivered to each Investor,
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its audited balance sheet and income statement for the fiscal year ended
December 31, 1996 and unaudited balance sheet and income statement for the
period ended March 31, 1997 (collectively the "Financial Statements"). The
Financial Statements, together with the notes thereto, (i) are complete and
correct in all material respects, (ii) are in accordance with the Company's
books and records, (iii) present fairly its financial position as of that date
and the results of its operations for the period indicated, and (iv) have been
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods indicated, subject in the case of
interim statements to normal year end adjustments and the absence of footnotes.
Except as set forth in the Financial Statements, the Company has no material
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Financial Statements
which, in both cases, individually or in the aggregate, are not material to the
financial condition or operating results of the Company. Except as disclosed in
the Financial Statements, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
3.8 Patents, Trademarks, and Trade Secrets. There are no pending or, to
--------------------------------------
the best of the Company's knowledge, threatened claims against the Company
alleging that the Company's business, as conducted or as proposed to be
conducted, infringes or conflicts with the rights of others under patents,
service marks, trade names, trademarks, copyrights, trade secrets or other
proprietary rights. The Company's business as now conducted and as proposed to
be conducted in the Business
Plan (as hereinafter defined) does not and will not infringe or conflict with
the rights of others, including rights under patents, service marks, trade
names, trademarks, copyrights, trade secrets and other proprietary rights. The
Company owns or possesses sufficient legal rights to all the patents,
copyrights, trademarks, trade names, service marks, trade secrets and other
rights necessary for the
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operation of its business as now conducted and as proposed to be conducted
without conflict or infringement against the rights of others. 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 has not received
any communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. To the best of the Company's knowledge, no employee
or consultant of the Company owns any rights in patents, trademarks, trade
names, processes, data or know-how directly or indirectly competitive with those
owned or to be used by the Company or derived from or in connection with the
conduct of the Company's business. The Company is not aware of any violation or
infringement by a third party of any of the Company's patents, licenses,
trademarks, service marks, trade names, copyrights, trade secrets or other
proprietary rights. The Company has taken and will take reasonable security
measures to protect the secrecy, confidentiality and value of all trade secrets
useful in the conduct of its business. The Company does not believe it is or
will be necessary to use any proprietary information of any of its employees or
consultants (or persons it intends to hire or retain) made prior to their
employment by, or consultation with, the Company.
3.9 Compliance with Other Instruments, None Burdensome, etc. The Company
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is not in violation of any term of its Articles or Bylaws, or of any term
contained in any instrument or contract to which it is a party the damages
arising from which would have a liquidated value exceeding five thousand dollars
($5,000), and, to the best of its knowledge, is not in violation of any order,
statute, rule or regulation applicable to the Company. No event or failure of
performance has occurred which, with the passage of time or the giving of notice
or both, would constitute such a violation. Neither the execution, delivery and
performance of this Agreement nor any other agreement contemplated hereby, nor
the issuance of the Shares or the Underlying Stock, will result in any such
violation or be in conflict with or constitute a default under any such term, or
result in the creation of any mortgage, pledge, lien, encumbrance or charge upon
any of the properties or assets of the Company; and there is no such violation
or default, nor any such term, which materially and adversely affects the
business of the Company as presently conducted or as proposed to be conducted or
any of its properties or assets. To the best of the Company's knowledge, no
other party is in material default of any such instrument or contract.
3.10 Litigation, etc. There is no action, suit, proceeding or
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investigation pending or currently threatened against the Company, nor, to the
best of its knowledge, is there any basis therefor. The foregoing includes any
action, suit, proceeding or investigation, pending or threatened, which
questions the validity of this Agreement or any other agreement contemplated
hereby or the right of the Company to enter into such agreements, or which might
result, either individually or in
the aggregate, in any material adverse change in the assets, condition, affairs
or prospects of the Company, financial or otherwise, and also includes any
litigation pending or threatened, (or any basis therefor known to the Company),
against the Company, by reason of the past employment or consulting
relationships of any employee, officer or consultant of the Company, the
activities or proposed activities of the Company, or negotiations by the Company
with possible backers of, or
-6-
investors in, the Company or its proposed business. No action, suit, proceeding
or investigation is pending or threatened by the Company. The Company is not a
party or subject to the provisions of any order, writ, injunction, judgement or
decree of any court or governmental agency or instrumentality.
3.11 Registration Rights. Except as set forth in the Investors Rights
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Agreement, the Company is not under any obligation to register any of its
presently outstanding securities or any of its securities which may hereafter be
issued.
3.12 Governmental Consent, etc. No consent, approval or authorization
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of, or designation, declaration or filing with, any governmental authority on
the part of the Company is required in connection with the valid execution,
delivery and performance of this Agreement and any other agreement contemplated
hereby, or the offer, sale or issuance of the Shares or the Underlying Stock
except (i) the filing of the Articles with the Secretary of State of the State
of California which filing will have been made and be effective on the Closing
Date, and (ii) the filing of a Notice with the California Commissioner of
Corporations pursuant to Section 25102(f) of the California Corporations Code
within 15 days of the Closing covering the sale of the Shares, which filing
shall be promptly made.
3.13 Offering. Based in part on the representations of the Investors set
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forth in Section 4 hereof, the offer, sale and issuance of the Shares and the
Underlying Stock in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act").
3.14 Disclosure. The Company has fully provided each Investor with all
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the information which such Investor has requested for deciding whether to
purchase the Series D Preferred Stock and all information which the Company
believes is reasonably necessary to enable such Investor to make such decision.
No representation or warranty by the Company contained in this Agreement or any
other agreement contemplated hereby, nor any other statement or certificate
furnished or to be furnished to the Investors pursuant hereto or in connection
with the transactions contemplated hereby by the Company (when read together)
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein or herein not misleading in light of the circumstances under which they
were made; except that no representation is made with respect to projections
delivered to the Investors, other than that the Company represents that such
projections were prepared in good faith and that the Company reasonably believes
there is a reasonable basis for such projections.
3.15 No Conflicting Agreements. To the best of the Company's knowledge,
-------------------------
no employee of the Company is, or will be in connection with the proposed
operations of the Company, in violation of any term of any employment contract,
proprietary information and inventions agreement, or any other contract or
agreement relating to the relationship of any such employee with the Company or
any previous employer. The Company is not aware that any of its employees is
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
-7-
would interfere with the use of his best efforts to promote the interests of the
Company or that would conflict with the Company's business as proposed to be
conducted.
3.16 Contracts and Other Commitments. The Company does not have any
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contract, agreement, lease, or other commitment, written or oral, absolute or
contingent, other than contracts for the purchase of supplies and services that
were entered into in the ordinary and usual course of business and that do not
involve more than twenty five thousand ($25,000), or do not extend for more than
one year beyond the date hereof. For the purpose of this section, employment and
consulting contracts, contracts with labor unions, license agreements,
agreements with employees, directors or affiliates of employees or directors and
any other agreements relative to the Company's technology, shall not be
considered to be contracts entered into in the ordinary and usual course of
business. For the purposes of the foregoing, all indebtedness, liabilities,
agreements, understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities the Company
has reason to believe are affiliated therewith) shall be aggregated for the
purpose of meeting the individual minimum dollar amounts set forth above. The
Company has not engaged in any discussion (i) with any representative of any
corporation or corporations regarding the consolidation or merger of the Company
with or into any such corporation or corporations, (ii) with any corporation,
partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets of
the Company of a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of, or
(iii) regarding any other form of acquisition, liquidation, dissolution or
winding up of the Company.
3.17 Subsidiaries. The Company does not presently own or control,
------------
directly or indirectly, and has no stock or other interest as owner or principal
in, any other corporation or partnership, joint venture, association or other
business venture
or entity.
3.18 Manufacturing Rights. The Company has not granted rights to
--------------------
manufacture, produce, assemble, license or sell its products to any other person
and is not bound by any agreement which affects the Company's exclusive right to
manufacture, assemble or sell its products.
3.19 Transactions with Principals. No employee, shareholder, officer or
----------------------------
director of the Company is indebted to the Company, nor is the Company indebted
(or committed to make loans or extend or guarantee credit) to any of them. 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 business relationship, or
any firm or corporation that competes with the Company, except that employees,
officers, or directors of the Company and members of their immediate families
may own stock (not to exceed 3% of the outstanding voting securities of any such
entity) in publicly traded companies that may compete with the Company. No
member of the immediate family of any officer or director of the Company is
directly or indirectly interested in any material contract with the Company.
-8-
3.20 Insurance. The Company has insurance with financially sound and
---------
reputable insurers, with respect to its properties that are of a character
customarily insured by entities engaged in the same or a similar business
similarly situated, against loss or damage of the kinds customarily insured
against by such entities, which insurance is of such types (including public
liability insurance) as are customarily carried under similar circumstances by
such other entities.
3.21 Employees. The Company has no employment contract with any officer
---------
or employee or any other consultant or person which is not terminable by it at
will without liability, except as the Company's right to terminate its employees
at will may be limited by applicable law. 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. The Company has
no deferred compensation, pension, health, profit sharing, bonus, stock
purchase, stock option, hospitalization, insurance, severance or any other
employee benefit or welfare benefit plan or obligation covering any of its
officers or employees. There are no controversies or labor trouble or union
organization activities pending or, to the knowledge of the Company, threatened,
between it and its employees. None of the Company's employees belongs to any
union or collective bargaining unit. All employees of the Company have signed
proprietary information agreements with the Company prior to or at the
commencement of their employment in substantially the form attached as Exhibit F
to the Company's Series A Preferred Stock Purchase Agreement dated July 27,
1994. To the best of its knowledge, the Company has complied with all
applicable state and federal equal employment opportunity and other laws related
to employment.
3.22 Voting Agreement. Except as set forth in the Articles and the
----------------
Shareholders Agreement dated May 23, 1996 among the Company and certain holders
of the Company's Common Stock and Series A, Series B, and Series C Preferred
Stock (the "Shareholders Agreement"), the Company has no agreement, obligation
or commitment with respect to the election of any individual or individuals to
the Board of Directors, and to the best of the Company's knowledge, except as
set forth in the Shareholders Agreement, there is no voting agreement or other
arrangement among its shareholders with respect to the election of any
individual or individuals to the Board of Directors.
3.23 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 could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
3.24 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.
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3.25 Tax Returns, Payments and Elections. The Company has filed all tax
-----------------------------------
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due.
3.26 Section 83(b) Elections. To the best of the Company's knowledge,
-----------------------
all elections and notices required by Section 83(b) of the Internal Revenue Code
and any analogous provisions of applicable state tax laws have been timely filed
by all individuals who have purchased shares of the Company's Common Stock.
3.27 Qualified Small Business Stock.
------------------------------
(a) As of and immediately following the Closing Date, the Shares will
meet each of the requirements for qualification as "qualified small business
stock" set forth in Section 1202(c) of the Internal Revenue Code of 1986, as
amended (the "Code"), including without limitation the following: (i) the
Company will be a domestic C corporation, (ii) the Company will not have made
any purchases of its own stock described in Code Section 1202(c)(3)(B) during
the one-year period preceding the Closing, and (iii) the Company's (and any
predecessor's) aggregate gross assets, as defined by Code Section 1202(d)(2), at
no time between August 10, 1993 and through the Closing Date have exceeded or
will exceed $50 million, taking into account the assets of any corporations
required to be aggregated with the Company in accordance with Code Section
1202(d)(3).
(b) As of the Closing Date, at least 80% (by value) of the assets of
the Company are used by it in the active conduct of one or more qualified trades
or businesses, as defined by Code Section 1202(e)(3), and the Company is an
eligible corporation, as defined by Code Section 1202(e)(4).
SECTION 4
Investment Representations
--------------------------
Each Investor hereby represents and warrants only to the Company with
respect to this purchase as follows:
4.1 Authorization. The Investor has all the requisite power and is duly
-------------
authorized to execute and deliver this agreement and each other agreement
contemplated hereby and has taken all necessary action to consummate the
transactions contemplated hereby and thereby. This Agreement and each other
agreement contemplated hereby have been duly executed and delivered by the
Investor and constitute valid and binding obligations of the Investor,
enforceable in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and subject to general equity principles and to limitations on the availability
of equitable relief, including specific performance.
-10-
4.2 Experience. The Investor is experienced in evaluating and investing
----------
in high technology companies such as the Company and is an "accredited investor"
as such term is defined in Rule 501 under the Securities Act.
4.3 Investment. The Investor is acquiring the Shares for investment for
----------
its own account and not with a view to, or for resale in connection with, any
distribution thereof, and it has no present intention of selling or distributing
the Shares or the Underlying Stock. The Investor understands that the Shares and
the Underlying Stock to be purchased by it 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.
4.4 Rule 144 and Rule 144A. The Investor acknowledges that, because they
----------------------
have not been registered under the Securities Act, the Shares and the Underlying
Stock being purchased by the Investor must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available. The Investor is aware of the provisions of Rule 144
and Rule 144A promulgated under the Securities Act, which rules permit limited
resale of securities purchased in a private placement subject to the
satisfaction of certain conditions.
4.5 No Public Market. The Investor understands that no public market now
----------------
exists for any of the securities issued by the Company and that it is uncertain
whether a public market will ever exist for the Shares or the Underlying Stock.
4.6 Access to Data. The Investor has received and reviewed such
--------------
information that such Investor deemed necessary to make an informed decision
concerning the purchase of the Shares and has had an opportunity to discuss the
Company's business, management and financial affairs with its management and to
obtain any additional information necessary to verify the accuracy of the
information given to such Investor. The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 3 of this
Agreement or the right of the Investors to rely thereon.
SECTION 5
Conditions to Investors' Obligations at the Closing
---------------------------------------------------
The Investors' obligations to purchase the Shares at the Closing are
subject to the fulfillment on or prior to the Closing Date of all of the
conditions set forth below in this Section 5 to the extent not waived by each
Investor.
5.1 Representations and Warranties Correct. The representations and
--------------------------------------
warranties made in Section 3 hereof shall be true and correct when made, and
shall be true and correct on the Closing Date.
-11-
5.2 Covenants. All covenants, agreements and conditions contained in
---------
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all respects.
5.3 Opinion of Company's Counsel. At the Closing the Investors shall
----------------------------
have received from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to the Company, an
opinion in form and substance satisfactory to them.
5.4 Election of Directors. The members of the Board of Directors as of
---------------------
the Closing shall be Xxxxx Xxxxxxx, Xxxxxxxx Xxxx, Xxxxxxx Xxxxxxxxx, Petri
Vainio, X.X. Xxxxxx and Xxxxx Xxxxx.
5.5 Investors Rights Agreement. The Company and the Investors shall have
--------------------------
entered into the Investors Rights Agreement attached hereto as Exhibit C.
5.6 Articles. The Articles attached hereto as Exhibit B shall have been
--------
filed with the Secretary of State of the State of California.
5.7 Compliance Certificate. The Company shall have delivered to the
----------------------
Investors a certificate, executed by the President of the Company, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1 and 5.2 of this Agreement.
5.8 Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Investors and their special counsel,
and the Investors and their special counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
SECTION 6
Conditions to Company's Obligations at Closing
----------------------------------------------
The Company's obligation to sell the Shares at the Closing is subject to
the fulfillment of the following conditions to the extent not waived by the
Company:
6.1 Representations Correct. The representations made by the Investors
-----------------------
in Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date.
6.2 Qualifications, Legal Investment. All authorizations, approvals, or
--------------------------------
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the lawful sale and
issuance of the Shares pursuant to this Agreement shall have been duly obtained
and shall be effective on and as of the Closing. No stop order or other order
enjoining the sale of the Shares or the proposed issuance of the Underlying
Stock shall have been issued and no proceedings for such purpose shall be
pending or, to the knowledge of the Company, threatened by the Securities and
Exchange Commission, the California Commissioner of
-12-
Corporations, or any commissioner of corporations or similar officer of any
other state having jurisdiction over this transaction. At the time of the
Closing, the sale and issuance of the Shares and the Warrants and the proposed
issuance of the Underlying Stock shall be legally permitted by all laws and
regulations to which the Investors and the Company are subject.
6.3 Minimum Investment. The Investors shall purchase Shares with an
------------------
aggregate purchase price of at least $6,000,000.
6.4 Covenants. All covenants, agreements and conditions contained in
---------
this Agreement to be performed by the Investors on or prior to the Closing Date
shall have been performed or complied with in all respects.
6.5 Articles. The Articles in the form of Exhibit B shall have been
--------
filed with the Secretary of State of the State of California.
SECTION 7
Affirmative Covenants of the Company
------------------------------------
The Company hereby covenants and agrees as follows:
7.1 Employee Agreements. All future technical and other key employees
-------------------
and consultants of the Company shall be required to execute a proprietary
information agreement substantially in the form attached as Exhibit F to the
Company's Series A Preferred Stock Purchase Agreement dated July 27, 1994, with
such amendments thereto or deviations therefrom as the Board of Directors may
from time to time deem appropriate. All current and future employees, officers
and consultants of the Company who shall, subsequent to the Closing Date,
purchase or receive options to purchase shares of the Company's Common Stock
shall (unless the Board of Directors shall direct otherwise) be required to
execute stock purchase or option agreements providing for vesting of shares no
less restrictive than as follows: one-eighth of the total number of shares
subject to such an agreement six months after the date of employment and one
forty-eighth of the total number of shares subject to such an agreement each
month thereafter. Upon the termination of an employee, officer or consultant,
with or without cause, the Company or its assignee will (unless the Board of
Directors shall direct otherwise) have the option to repurchase the unvested
portion of such shares held by the employee, officer or consultant at cost. Such
stock purchase or option agreements shall (unless the Board of Directors shall
direct otherwise) also provide for (i) no transfers prior to vesting, (ii) a
right of first refusal on any vested shares terminating not prior to the initial
public offering of the Company's securities and (iii) a "lock-up" provision of
at least 180 days after the initial public offering of the Company's securities.
7.2 Key Man Life Insurance. The Company will maintain, with financially
----------------------
sound and reputable insurers, a term life insurance policy on the life of Xxxxx
X. Xxxxxxx in the amount of $1,000,000. Such policy shall be owned by the
Company and all benefits thereunder shall be payable to the Company.
-13-
7.3 Preservation of Small Business Stock Status. After the Closing Date,
-------------------------------------------
the Company shall not (a) make any purchases of its stock during the one year
period following the Closing Date having an aggregate value exceeding 5% of the
aggregate value of all of the Company's stock, (b) fail to use at least 80% (by
value) of its assets in the active conduct of one or more qualified trades or
businesses for substantially all of the five-year period following the Closing
Date, or (c) cease to be a C corporation which is an eligible corporation, as
defined by Code Section 1202(e)(4).
7.4 Termination of Covenants. The covenants of the Company set forth in
------------------------
Section 7 shall terminate upon the first to occur of (i) the closing of the
Company's first public offering at a price per share in excess of eleven dollars
($11.00) per share of Common Stock (as shares are presently constituted) with
aggregate proceeds in excess of seventeen million dollars ($17,000,000) or (ii)
the tenth anniversary of the Closing Date.
SECTION 8
Certain Covenants
-----------------
8.1 First Negotiation Right. The Company agrees that it shall not
-----------------------
transfer, dispose of, sell, lease or license (exclusively or nonexclusively),
any of the Rights (as defined below) or transfer or dispose of all or
substantially all of the assets or voting securities of the Company (any of such
transactions begin hereinafter referred to as a "Sale") until it complies in
full with the provisions of this Section 8.1.
(a) Prior to consummating a Sale, or if the Company determines to
commence discussions with any party with respect to a proposed Sale or receives
an unsolicited offer from a third party with respect to a proposed Sale, the
Company shall promptly notify Xxxxxxx & Xxxxxxx Development Corporation ("J&J")
of the proposed Sale and the principal terms thereof (but not the identity of
the third party) and shall, before entering into any agreement with respect
thereto, during a sixty (60) day period negotiate in good faith with J&J to
provide J&J the opportunity to consummate a similar Sale, If at the end of such
period the parties are unable to agree upon mutually acceptable terms thereof,
the Company shall have the right to continue or enter into discussions with
third parties, but may not enter into any agreement with respect hereto with a
third party on terms more favorable to the third party or less favorable to the
Company than those offered by or to J&J either during or after such period.
(b) For purposes of this Section 8.1, all inventions, developments,
patents, patent applications, know-how, other proprietary rights or products
owned, developed or acquired by the Company after the date hereof that are or
may be used or may have application in the field of implantable and semi-
implantable hearing aid devices shall be referred to as "Rights." J&J's rights
under Section 8.1 shall not be assignable except to an affiliate of J&J and
shall survive for a period of eighteen (18) months from the date of this
Agreement or twelve (12) months from the effective date of the Company's
registration statement relating to its initial public offering of equity
securities, whichever first occurs. Notwithstanding the foregoing, J&J's rights
under this Section 8.1 shall terminate in the event that J&J, either directly or
through an affiliate, does not participate as an
-14-
investor in the Company's next equity financing transaction (which may involve
the issuance of Common Stock, Preferred Stock or other equity security).
(c) This Section 8.1 terminates and supersedes any prior agreements
or understandings between the Company and J&J with regard to a first negotiation
right, including Section 8.1 from the Company's Series D Preferred Stock
Purchase Agreement dated November 13, 1996.
8.2 Observer Rights. Any holder of more than 100,000 shares of Series D
---------------
Preferred Stock or an equivalent number of shares of Common Stock issued or
issuable upon conversion of Series D Preferred Stock (subject to proportionate
adjustment in the event of stock splits, dividends, combination and the like)
shall be entitled to appoint one representative (an "Observer") to attend
meetings of the Board of Directors of the Corporation. Notwithstanding the
foregoing, the Company's board of directors may request the Observer to leave
meetings of the board of directors when, in the reasonable judgment of the
board, such recusal is necessary or appropriate because the matters to be
discussed are of a competitive or confidential nature or relate to the
relationship of the Company with J&J and/or one or more of its affiliates.
8.3 Publicity The Corporation shall not originate any publicity, news
---------
release, or other announcement, written or oral, relating to this Agreement, or
the performance hereunder or the existence of an arrangement between the
parties, without the prior written approval of a majority in interest of the
Investors. Notwithstanding the foregoing, the Company may make such disclosures
as are necessary to comply with applicable laws, including without limitation
the Securities Act of 1933, the Securities Exchange Act of 1934 and the rules
and regulations thereunder.
SECTION 9
Miscellaneous
-------------
9.1 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California without regard to that body
of law known as Conflict of Laws.
9.2 Survival. The representations, warranties, covenants and agreements
--------
made by the parties herein shall survive any investigation made by any Investor
or the Company and shall survive the closing of the transactions contemplated
hereby.
9.3 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.
-15-
9.4 Entire Agreement; Amendment. 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.
Any term of this Agreement may be amended 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 at least a majority in interest of (i) the outstanding Shares and
(ii) any outstanding shares of Underlying Stock that have not been sold to the
public (collectively determined on an as if converted basis). Any amendment or
waiver effected in accordance with this section shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been converted or for
which such, securities have been exercised), each future holder of all such
securities, and the Company.
9.5 Effect of Amendment or Waiver. Each Investor acknowledges that, by
-----------------------------
the operation of Section 9.4 hereof, the holders of a majority in interest of
the outstanding Shares and outstanding shares of Underlying Stock (determined on
an as if converted basis) that have not been sold to the public will have the
right and power to diminish or eliminate all rights of such Investor under this
Agreement.
9.6 Rights of Investors. Each holder of the Shares, or the Underlying
-------------------
Stock shall have the absolute right to exercise or refrain from exercising any
right or rights that such holder may have by reason of this Agreement or its
ownership of the Shares or the Underlying Stock, including without limitation
the right to consent to the waiver of any obligation of the Company under this
Agreement and to enter into an agreement with the Company for the purpose of
modifying this Agreement or any agreement effecting any such modification, and
such holder shall not incur any liability to any other holder or holders of the
Shares or the Underlying Stock with respect to exercising or refraining from
exercising any such right or rights.
9.7 Exculpation Among Investors. Each Investor acknowledges that it is
---------------------------
not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Investor agrees that no Investor nor the respective
controlling person, officers, directors, partners, agents, or employees of any
Investor shall be liable for any action heretofore or hereafter taken or omitted
to be taken by any of them in connection with the purchase of the Shares.
9.8 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be effective five days after
mailed by first-class, registered, or certified mail, postage prepaid, or upon
delivery if delivered by hand or by messenger or a courier delivery service,
addressed (a) if to an Investor, at such Investor's address set forth in the
Schedule of Investors, or at such other address as such Investor shall have
furnished to the Company in writing, or (b) if to any other holder of any Shares
or Underlying Stock, at such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Shares or
Underlying Stock who has so furnished an address to the Company, or (c) if to
the Company, at the address set forth below the
-16-
Company's name on the signature page to this Agreement or at such other address
as the Company shall have furnished to each Investor and each such other holder
in writing.
9.9 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any holder of any Shares upon any breach or default
of the Company under this Agreement shall impair any such right, power or remedy
of such holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereunder occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any holder of any breach or default under this Agreement, or any
waiver on the part of any holder of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
9.10 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 OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
FROM SUCH QUALIFICATION BEING AVAILABLE.
9.11 Expenses. The Company and each Investor shall bear its own expenses
--------
and legal fees incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby.
9.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the Investors,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
9.13 Severability. In the 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 thereby.
-17-
The foregoing Series D Preferred Stock Purchase Agreement is hereby
executed as of the date first above written.
COMPANY:
SYMPHONIX DEVICES, INC.
/s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Chairman, President and CEO
SYMPHONOX DEVICES, INC.
Series D Preferred Stock Purchase Agreement
-18-
INVESTORS:
CORAL PARTNERS IV, LIMITED
PARTNERSHIP
By: Coral Management Partners IV
Limited Partnership, Its General Partner
/s/ Xxxxx X. XxXxxxxx
-----------------------------------------
Xxxxx X. XxXxxxxx, General Partner
XXXXXXXX VII
A CALIFORNIA LIMITED PARTNERSHIP
BY XXXXXXXX VII MANAGEMENT
A CALIFORNIA LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxxxxx
By:______________________________________
General Partner
Title:___________________________________
XXXXXXXX ASSOCIATES FUND II
A CALIFORNIA LIMITED PARTNERSHIP
/s/ Xxxxxxx X. Xxxxxxxxx
By:______________________________________
General Partner
Title:___________________________________
SIERRA VENTURES IV, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
BY SV ASSOCIATES IV, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP,
ITS GENERAL PARTNER
/s/Petri Vainio
By:______________________________________
Petri Vainio, General Partner
SYMPHONOX DEVICES, INC.
Series D Preferred Stock Purchase Agreement
-19-
SIERRA VENTURES IV
INTERNATIONAL, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY SV ASSOCIATES IV, L.P.
A CALIFORNIA LIMITED
PARTNERESHIP, ITS GENERAL PARTNER
By:\s\ Petri Vainio
-------------------------------------
Petri Vainio, General Partner
XXXXXXX VENTURE CAPITAL FUND
III, L.P
By: \s\ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx, Partner
XXXXXXX TRUST COMPANY AS
TRUSTEES OF THE XXXXXXX MAP
VENTURE CAPITAL FUND III
By:\s\ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx, Assistant Trust Officer
Xxxxxxx Trust Company
BRENDAN XXXXXX XXXXXX AND XXXXXX X.
XXXXXX, TRUSTEES OF THE XXXXXX
FAMILY TRUST U/D/T DATED JANUARY 31,
1996
\s\ X. X. Xxxxxx
-----------------------------------------
X. X. Xxxxxx, Trustee
SYMPHONOX DEVICES, INC.
Series D Preferred Stock Purchase Agreement
-20-
XXXXXXX & XXXXXXX
DEVELOPMENT CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Title: Vice President
----------------------------------
SYMPHONOX DEVICES, INC.
Series D Preferred Stock Purchase Agreement
-21-
