EXHIBIT D
KERAVISION, INC.
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
June 12, 1998
TABLE OF CONTENTS
Page
1. Purchase and Sale of Preferred Stock.......................................1
1.1 Sale and Issuance of Series A Preferred Stock..........................1
1.2 Closing; Delivery......................................................1
2. Representations and Warranties of the Company..............................1
2.1 Organization, Good Standing and Qualification..........................2
2.2 Capitalization.........................................................2
2.3 Subsidiaries...........................................................3
2.4 Authorization..........................................................3
2.5 Valid Issuance of Securities...........................................4
2.6 Governmental Consents..................................................4
2.7 Litigation.............................................................4
2.8 SEC Documents; Financial Statements....................................4
2.9 Changes................................................................5
2.10 Title to Properties...................................................6
2.11 Tax Matters...........................................................7
2.12 No Material Defaults..................................................8
2.13 Patents and Trademarks................................................8
2.14 No Conflict...........................................................8
2.15 Securities Laws.......................................................8
2.16 Business..............................................................9
2.17 Certain Regulatory Matters............................................9
2.18 Registration Rights...................................................9
2.19 Disclosure............................................................9
2.20 Solvency; No Default..................................................9
2.21 Solvency; No Default..................................................9
3. Representations and Warranties of the Purchasers..........................10
3.1 Authorization.........................................................10
3.2 Purchase Entirely for Own Account.....................................10
3.3 Disclosure of Information.............................................10
3.4 Restricted Securities.................................................10
3.5 No Public Market......................................................11
3.6 Legends...............................................................11
3.7 Accredited Investor...................................................11
3.8 Foreign Investors.....................................................11
4. Conditions of the Purchasers' Obligations at Closing......................11
4.1 Representations and Warranties........................................12
4.2 Performance...........................................................12
4.3 Compliance Certificate................................................12
4.4 Qualifications........................................................12
4.5 Opinion of Company Counsel............................................12
4.6 Board of Directors....................................................12
4.7 Investors' Rights Agreement...........................................12
4.8 Certificate of Designation............................................12
5. Conditions of the Company's Obligations at Closing........................12
5.1 Representations and Warranties........................................13
5.2 Performance...........................................................13
5.3 Qualifications........................................................13
6. Miscellaneous.............................................................13
6.1 Survival of Warranties................................................13
6.2 Transfer; Successors and Assigns......................................13
6.3 Governing Law.........................................................13
6.4 Counterparts..........................................................13
6.5 Titles and Subtitles..................................................13
6.6 Notices...............................................................13
6.7 Finder's Fee..........................................................14
6.8 Attorney's Fees.......................................................14
6.9 Amendments and Waivers................................................14
6.10 Severability.........................................................14
6.11 Delays or Omissions..................................................15
6.12 Entire Agreement.....................................................15
6.13 Corporate Securities Law.............................................15
6.14 Confidentiality......................................................15
6.15 Exculpation Among Purchasers.........................................15
6.16 Waiver of Conflicts..................................................16
6.17 Publicity............................................................16
6.18 Expenses; Transfer Taxes.............................................16
KERAVISION, INC.
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Series B Convertible Preferred Stock Purchase Agreement (the
"Agreement") is made as of the 12th day of June, 1998 by and between
KeraVision, Inc., a Delaware corporation (the "Company") and the investors
listed on Exhibit A attached hereto (each a "Purchaser" and together the
"Purchasers").
The parties hereby agree as follows:
1. Purchase and Sale of Preferred Stock.
1.1 Sale and Issuance of Series B Convertible Preferred Stock.
(a) The Company shall adopt and file with the Secretary
of State of the State of Delaware on or before the Closing (as defined below)
the Certificate of Designation of Rights, Preferences and Privileges of Series
B Convertible Preferred Stock in the form attached hereto as Exhibit B (the
"Certificate of Designation").
(b) Subject to the terms and conditions of this
Agreement, each Purchaser agrees to purchase at the Closing and the Company
agrees to sell and issue to each Purchaser at the Closing that number of shares
of Series B Convertible Preferred Stock set forth opposite each such
Purchaser's name on Exhibit A attached hereto at a purchase price of $32.00 per
share. The shares of Series B Convertible Preferred Stock issued to the
Purchaser pursuant to this Agreement shall be hereinafter referred to as the
"Stock."
1.2 Closing; Delivery.
(a) The purchase and sale of the Stock shall take place
at the offices of Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx,
Xxxxxxxxxx, at 10:00 a.m., on June 12, 1998, or at such other time and place as
the Company and the Purchasers mutually agree upon, orally or in writing (which
time and place are designated as the "Closing").
(b) At the Closing, the Company shall deliver to each
Purchaser a certificate, registered in such Purchaser's name, representing the
Stock being purchased thereby against payment of the purchase price therefor by
wire transfer to the Company's designated account or certified or cashier's
check drawn on a United States bank made payable to the order of KeraVision,
Inc.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Purchaser that, except as expressly indicated
on a Schedule of Exceptions attached hereto as Exhibit C (the "Schedule of
Exceptions"), which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. Each of the
Company and its subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
and has all requisite corporate power and authority to own its property and
assets and to carry on its business. The Company and its subsidiary are duly
qualified to transact business and are in good standing in all jurisdictions
where such qualification is required, except for such failures to be so
qualified or in good standing as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company or its subsidiary. For purposes
of this Agreement, a "Material Adverse Effect" or a "Material Adverse Change"
shall mean (i) any change in, or effect on, a specified entity that is, or is
reasonably likely to be, materially adverse to the condition (financial or
other), business, results of operations, prospects, assets, liabilities or
operations of the entity or on the ability of the entity to consummate any of
the transactions contemplated hereby, or (ii) any event or condition that
would, with or without the passage of time, constitute a "Material Adverse
Effect" or a "Material Adverse Change" as defined in clause (i) above. The
copies of the Certificate of Incorporation and Bylaws of the Company, as
amended to date, have been furnished to each Purchaser by the Company and are
correct and complete as so furnished.
2.2 Capitalization. The authorized capital of the Company will
consist, immediately prior to the Closing (unless another time period is
specified below), of:
(a) 2,000,000 shares of Preferred Stock, 30,000 shares of
which have been designated Series A Preferred Stock and 662,500 shares of which
have been designated Series B Convertible Preferred Stock, none of which are
issued and outstanding immediately prior to the Closing, and 100,000 of which
are reserved for the payment of dividends to holders of the Stock. The rights,
privileges and preferences of the Series B Convertible Preferred Stock are as
stated in the Certificate of Designation.
(b) 30,000,000 shares of Common Stock, 12,672,950 shares
of which are issued and outstanding as of May 31, 1998. All of the outstanding
shares of Common Stock have been duly authorized, fully paid and are
nonassessable and issued in compliance with all applicable federal and state
securities laws.
(c) The Company has reserved 2,650,000 shares of Common
Stock for issuance upon conversion of the Series B Convertible Preferred Stock.
The Company has reserved (i) 1,290,000 shares of Common Stock for issuance to
employees and consultants of the Company pursuant to its 1995 Stock Plan duly
adopted by the Board of Directors and approved by the Company stockholders (the
"1995 Stock Plan"), (ii) 200,000 shares of Common Stock for issuance to
employees of the Company pursuant to its 1995 Employee Stock Purchase Plan duly
adopted by the Board of Directors and approved by the Company stockholders (the
"ESPP"), (iii) 150,000 shares of Common Stock for issuance to employees of the
Company pursuant to its 1995 Directors Stock Option Plan duly adopted by the
Board of Directors and approved by the Company stockholders (the "Directors'
Plan") and (iv) 300,000 shares of Common Stock for issuance to employees and
consultants pursuant to its 1997 Stock Plan duly adopted by the Board of
Directors (the "1997 Stock Plan"). Of such reserved shares of Common Stock, as
of May 31, 1998, (i) 895,377 options to purchase shares have been granted under
the 1995 Stock Plan and 504,225 shares of Common Stock remain available for
issuance pursuant to the 1995 Stock Plan, (ii) 41,202 shares have been issued
under the ESPP and 158,798 shares of Common Stock remain available for issuance
pursuant to the ESPP, (iii) 84,500 options to purchase shares have been granted
under the Directors' Plan and 85,500 shares of Common Stock remain available
for issuance pursuant to the Directors' Plan, and (iv) 141,215 options to
purchase shares have been granted under the 1997 Stock Plan and 184,430 shares
of Common Stock remain available for issuance pursuant to the 1997 Stock Plan.
No shares of Common Stock or Preferred Stock are held in the Company's
treasury.
(d) Except for outstanding options issued pursuant to the
1995 Stock Plan, the 1997 Stock Plan, and the Director's Plan and outstanding
rights to purchase shares of Common Stock pursuant to the ESPP, there are no
outstanding securities, options, warrants, rights (including conversion or
preemptive rights and rights of first refusal or similar rights) or agreements,
orally or in writing, to purchase or acquire, or exchangeable for or
convertible into, any shares of the Company's capital stock. To the Company's
knowledge, there are no outstanding stockholder agreements, voting trusts,
proxies or other arrangements or understandings among the stockholders of the
Company relating to the voting of their respective shares.
2.3 Subsidiaries. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture
or partnership.
2.4 Authorization. The Company has full power to execute, deliver
and perform this Agreement and the Investors' Rights Agreement, in the form
attached hereto as Exhibit D (the "Investors' Rights Agreement" and
collectively with this Agreement, the "Agreements"). All corporate action on
the part of the Company, its officers and directors necessary for the
authorization, execution and delivery of this Agreement and the Investors'
Rights Agreement, the performance of all obligations of the Company hereunder
and thereunder and the authorization, sale, issuance and delivery of the Stock
and the Common Stock issuable upon conversion of the Stock (together, the
"Securities") has been taken or will be taken prior to the Closing, and the
Agreements, when executed and delivered by the Company, shall constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws
of general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies or (ii) to the extent the
indemnification provisions contained in the Investors' Rights Agreement may be
limited by applicable federal or state securities laws.
2.5 Valid Issuance of Securities. The Stock that is being issued
to the Purchasers hereunder, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly issued and outstanding, fully paid and nonassessable, free of any
liens, encumbrances, preemptive rights or rights of first refusal, and free of
restrictions on transfer other than restrictions on transfer under this
Agreement, the Investors' Rights Agreement and applicable state and federal
securities laws. Based in part upon the representations of the Purchasers in
this Agreement and subject to the provisions of Section 2.6 below, the Stock
will be issued in compliance with all applicable federal and state securities
laws. The Common Stock issuable upon conversion of the Stock has been duly and
validly reserved for issuance, and upon issuance in accordance with the terms
of the Certificate of Designation, shall be duly and validly issued, fully paid
and nonassessable, free of any liens, encumbrances, preemptive rights or rights
of first refusal, and free of restrictions on transfer other than restrictions
on transfer under this Agreement, the Investors' Rights Agreement and
applicable federal and state securities laws and will be issued in compliance
with all applicable federal and state securities laws. The Common Stock
issuable upon conversion of the Stock will be subject to the rights provided in
the Company's Preferred Shares Rights Agreement dated August 18, 1997, to the
extent applicable, as described therein.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the valid and lawful authorization,
execution and delivery by the Company of this Agreement or the Investors'
Rights Agreement, and the consummation of the transactions contemplated hereby
or thereby, or for or in connection with the valid and lawful authorization,
issuance, sale and delivery of the Stock and the Common Stock issuable upon
conversion of the Stock in accordance with this Agreement, other than filings
pursuant to Regulation D of the Securities Act of 1933, as amended (the
"Securities Act"), and the qualification (or taking of such action as may be
necessary to secure an exemption from qualification if available) of the offer
and sale of the Stock under all applicable state securities laws, which filings
and qualifications, if required, will be accomplished in a timely manner so as
to comply with such qualification or exemption from qualification requirements.
2.7 Litigation. There is no action, suit, proceeding or
investigation pending or, to the knowledge of the Company and its subsidiary,
currently threatened against or affecting the Company or its subsidiary, its
business or its assets, nor is the Company or its subsidiary aware that there
is any basis for the foregoing. Neither the Company nor its subsidiary is a
party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Company or its subsidiary
currently pending or which the Company or its subsidiary intends to initiate.
2.8 SEC Documents; Financial Statements. Each complete or
partial statement, report, prospectus filed under the Securities Act of 1933,
as amended ("Securities Act"), is a true and complete copy of or excerpt from
such document as filed by the Company with the Securities and Exchange
Commission ("SEC") (the "Security Act Documents"). The Company has timely
filed all the documents that it was required to file with the SEC under the
Securities Exchange Act of 1934, as amended ("Exchange Act") (the "Exchange Act
Documents" and together with the Securities Act Documents, the "SEC
Documents"), since the date on which its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 was filed. As of their respective filing dates,
the SEC Documents complied in all material respects with the requirements of
the Exchange Act or the Securities Act, as applicable, and were duly and timely
filed with the SEC. None of the SEC Documents as of their respective dates
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in
the SEC Documents (the "Financial Statements") comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto. Except as may
be indicated in the notes to the Financial Statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC, the Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly present the financial position of
the Company and its subsidiary at the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end adjustments).
2.9 Changes. Since March 31, 1998, there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company or its subsidiary from that
reflected in the Financial Statements, except changes in the ordinary course of
business that have not been, in the aggregate, a Material Adverse Change for
the Company or its subsidiary;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the business,
properties, prospects, or financial condition of the Company or its subsidiary;
(c) any waiver or compromise by the Company or its
subsidiary of a valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company or its subsidiary,
except in the ordinary course of business and that is not material to the
business, properties, prospects or financial condition of the Company;
(e) any material change to a material contract or
agreement by which the Company or its subsidiary or any of their assets is
bound or subject;
(f) any material change in any compensation arrangement
or agreement with any employee, officer, director or stockholder;
(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any
officer or key employee of the Company or its subsidiary; and neither the
Company nor its subsidiary is aware of any impending resignation or termination
of employment of any such officer or key employee;
(i) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company or its subsidiary, with respect to any of
its material properties or assets, except liens for taxes not yet due or
payable;
(j) any loans or guarantees made by the Company or its
subsidiary to or for the benefit of its employees, officers or directors, or
any members of their immediate families, other than travel advances and other
advances made in the ordinary course of its business;
(k) any declaration, setting aside or payment or other
distribution in respect to any of the capital stock of the Company or its
subsidiary, or any direct or indirect redemption, purchase, or other
acquisition of any of such stock by the Company or its subsidiary;
(l) to the Company's knowledge, any other event or
condition of any character that might have a Material Adverse Effect on the
Company or its subsidiary;
(m) any borrowing of or agreement to borrow any funds or
any material liability (contingent or otherwise) incurred by the Company or its
subsidiary, other than obligations incurred in the ordinary course of business
and consistent with past practice;
(n) any issuance of any stock, bonds or other securities
of the Company or its subsidiary or options, warrants or rights or agreements
or commitments to purchase or issue such securities or to grant such options,
warrants or rights, except for the granting of options to employees, directors
and consultants in the ordinary course of business and consistent with past
practice;
(o) any change in the accounting methods or practices
followed by the Company or its subsidiary; or
(p) any arrangement or commitment (contingent or
otherwise) by the Company or its subsidiary to do any of the things described
in this Section 2.9.
Since March 31, 1998, neither the Company nor its subsidiary has entered
into any transaction or arrangement except in the ordinary course of business
and consistent with past practice, or entered into any agreement (contingent or
otherwise) to do so.
2.10 Title to Properties. Except as disclosed in the Financial
Statements, the Company or its subsidiary has good and marketable title to, or
has a valid leasehold interest in, or a valid license for, all of the
properties and assets reflected in the Financial Statements, free and clear of
all mortgages, security interests, liens, restrictions or encumbrances
(collectively, "Liens") other than (i) liens for taxes not yet due and payable
and (ii) Liens which, individually or in the aggregate, do not materially
detract from the value of the property subject thereto or materially impair the
operations of the Company or its subsidiary, would not result in the occurrence
of a Material Adverse Change, and which have not arisen otherwise than in the
ordinary course of business.
2.11 Tax Matters.
(a) All taxes, including, without limitation, income,
excise, property, sales, transfer, use, franchise, payroll, employees' income
withholding and social security taxes imposed or assessed by the United States
or by any foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country, or by any other
taxing authority, which are due and payable by the Company or its subsidiary,
and all interest, penalties and additions thereon, whether disputed or not,
have been paid in full or are adequately reserved for in the Financial
Statements; all tax returns or other documents required to be filed in
connection therewith have been accurately prepared and duly and timely filed,
except for tax returns the non-filing of which in the aggregate would not have
a Material Adverse Effect on the Company or its subsidiary; and neither the
Company nor its subsidiary is the beneficiary of any extension of time within
which to file any such returns. Neither the Company nor its subsidiary has
been delinquent in the payment of any foreign or domestic tax, assessment or
governmental charge or deposit and has no tax deficiency or claim outstanding,
assessed or, to its knowledge, proposed against it, and there is no basis for
any such deficiency or claim. No issues have been raised (or are currently
pending) by the Internal Revenue Service or any other taxing authority in
connection with any of the returns and reports referred to above, and no
waivers of statutes of limitations have been given or requested with respect to
the Company or its subsidiary in connection therewith. The provisions for
taxes in the Financial Statements are sufficient for the payment of all accrued
and unpaid federal, state, county and local taxes of the Company or its
subsidiary.
(b) The Company is not now and has never been a "United
States real property holding corporation," as defined in Section 897(c)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), and Section
1.897-2(b) of the Regulations promulgated by the Internal Revenue Service, and
the Company has filed with the Internal Revenue Service all statements, if any,
with its United States income tax returns which are required under Section
1.897-2(h) of such Regulations.
(c) Neither the Company nor its subsidiary is a party to
or bound by any tax indemnity, tax sharing or tax allocation agreement.
(d) The Company is not presently a member of an
affiliated group of corporations within the meaning of Section 1504 of the
Code. The Company was formerly a member of an affiliated group of corporations
within the meaning of Section 1504 of the Code. As a former member of such
group, the Company did not assume any tax liability or asset under a tax
sharing arrangement for its share of a consolidated tax liability or a
consolidated tax loss, nor was there a tax liability or asset assumed upon
leaving the affiliated group.
2.12 No Material Defaults. Each of the Company and its subsidiary
is not in violation of or default under any provision of (a) its Certificate of
Incorporation or Bylaws or (b) any mortgage, indenture, lease or other
agreement or instrument, permit, concession, franchise or license to which it
is a party or by which it is bound or (c) any federal or state judgment, order,
decree, statue, law, ordinance, rule or regulation applicable to the Company,
except with respect to clauses (b) and (c) above, such violations or defaults
as would not have a Material Adverse Effect on the Company.
2.13 Patents and Trademarks. To its knowledge, and except as
disclosed in the SEC Documents, the Company and its subsidiary owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
tradenames, copyrights, trade secrets, licenses, information and proprietary
rights and processes necessary for its business as now conducted and as
proposed to be conducted, without infringement of any rights of a third party.
Neither the Company nor its subsidiary has received any communications alleging
that it has violated or, by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, tradenames, copyrights, trade
secrets or other proprietary rights or processes of any other person or entity,
which violation would have a Material Adverse Effect on the Company or its
subsidiary. Except as disclosed in the SEC Documents, neither the Company nor
its subsidiary has granted (nor has the Company or its subsidiary licensed from
a third party) any material rights to or licenses to its patents, trademarks,
service marks, tradenames, copyrights, trade secrets or other proprietary
rights or processes.
2.14 No Conflict. The execution and delivery of this Agreement
and the Investors' Rights Agreement do not, and the consummation of the
transactions contemplated hereby and thereby will not, (i) conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit, under, any
provision of the Certificate of Incorporation or Bylaws of the Company or any
mortgage, indenture, lease or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statue, law,
ordinance, rule or regulation applicable to the Company, its properties or
assets, which conflict, violation, default or right would have a Material
Adverse Effect on the Company or (ii) result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets
of the Company or the Securities.
2.15 Securities Laws. Assuming that the Purchasers'
representations and warranties contained in Section 3 of this Agreement are
true and correct, the offer, issuance and sale of the Securities are and will
be exempt from the registration and prospectus delivery requirements of the
Securities Act and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws.
2.16 Business. The Company and its subsidiary have complied in
all respects with all federal, state, local and foreign laws, ordinances,
regulations and orders applicable to the business of the Company and its
subsidiary as presently or previously conducted and as proposed to be
conducted, except where the noncompliance of which in the aggregate would not
have a Material Adverse Effect on the Company or its subsidiary. The Company
and its subsidiary have all federal, state, local and foreign governmental
licenses and permits that are required for the conduct of its business as
presently or previously conducted by the Company or its subsidiary, except
where the noncompliance of which in the aggregate would not have a Material
Adverse Effect on the Company or its subsidiary, which licenses and permits are
in full force and effect, and no violations are outstanding or uncured with
respect to any such licenses or permits and no proceeding is pending or, to the
knowledge of the Company or its subsidiary, threatened to revoke or limit any
thereof.
2.17 Certain Regulatory Matters. There are no unfulfilled
outstanding agreements with or commitments to the United States Department of
Health, Food and Drug Administration (the "FDA") or any other regulatory body
(domestic or foreign) of any kind or character with respect to any product sold
or contemplated to be sold by the Company or its subsidiary (the "Products");
there are no adverse regulatory actions by the FDA or any other foreign or
domestic regulatory body pending with respect to any Product; and neither the
Company nor its subsidiary has any knowledge or information with respect to the
initiation, pendency or threat by the FDA or other such regulatory body of any
adverse regulatory action that could affect any of the Products.
2.18 Registration Rights. The Company is not presently under
any obligation and has not granted any rights to register its securities under
the Securities Act with respect to any of its presently outstanding securities
or any of its securities that may hereafter be issued, which rights would be
implicated with respect to the registration contemplated by the Investors'
Rights Agreement and which rights have not been waived by the holders thereof.
2.19 Disclosure. Neither this Agreement, nor any other written
document, certificate, instrument or statement furnished or made available in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading. There
is no fact known to the Company or its subsidiary materially affecting the
Company, its subsidiary or its business or the existence of which could have a
Material Adverse Effect on the Company or its subsidiary, which has not been
set forth in this Agreement or in the other documents, certificates,
instruments or statements furnished to each Purchaser by or on behalf of the
Company or its subsidiary.
2.20 Solvency; No Default. As of this date the Company and its
subsidiary have sufficient funds and cash flow to pay their debts and other
liabilities as they become due, and neither the Company nor its subsidiary is
in default with respect to any material debt or liability.
3. Representations and Warranties of the Purchasers. Each Purchaser
hereby represents and warrants to the Company that:
3.1 Authorization. Such Purchaser has full power and authority
to enter into this Agreement. The Agreements, when executed and delivered by
the Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the
availability of a specific performance, injunctive relief, or other equitable
remedies or (ii) to the extent the indemnification provisions contained in the
Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made
with the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the Purchaser's execution of this Agreement, the Purchaser
hereby confirms, that the Securities to be acquired by the Purchaser will be
acquired for investment for the Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof.
3.3 Disclosure of Information. The Purchaser has had an
opportunity to discuss the Company's business, management, financial affairs
and the terms and conditions of the offering of the Stock with the Company's
management and has had an opportunity to review the Company's facilities. The
Purchaser understands that such discussions, as well as the Business Plan and
any other written information delivered by the Company to the Purchaser, were
intended to describe the aspects of the Company's business which it believes to
be material. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of the Purchasers to rely thereon.
3.4 Restricted Securities. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are
"restricted securities" under applicable U.S. federal and state securities laws
and that, pursuant to these laws, the Purchaser must hold the Securities
indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The Purchaser
acknowledges that the Company has no obligation to register or qualify the
Securities for resale except as set forth in the Investors' Rights Agreement.
The Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Securities, and on requirements relating to the Company which are
outside of the Purchaser's control, and, subject to the Company's obligations
under the Investors' Rights Agreement, which the Company is under no obligation
and may not be able to satisfy.
3.5 No Public Market. The Purchaser understands that no public
market now exists for the Stock, and that the Company has made no assurances
that a public market will ever exist for the Stock.
3.6 Legends. The Purchaser understands that the Securities and
any securities issued in respect of or exchange for the Securities, may bear
one or all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN
A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS SOLD PURSUANT TO RULE 144 OF
SUCH ACT."
(b) Any legend set forth in the Investors' Rights
Agreement.
(c) Any legend required by the Blue Sky laws of any state
to the extent such laws are applicable to the shares represented by the
certificate so legended.
3.7 Accredited Investor. The Purchaser is an accredited investor
as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
3.8 Foreign Investors. If the Purchaser is not a United States
person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended), such Purchaser hereby represents that it has satisfied itself as
to the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Stock or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase of the
Stock, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Stock. Such
Purchaser's subscription and payment for and continued beneficial ownership of
the Stock, will not violate any applicable securities or other laws of the
Purchaser's jurisdiction.
4. Conditions of the Purchasers' Obligations at Closing. The
obligations of each Purchaser to the Company under this Agreement are subject
to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived in writing by each Purchaser:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects (disregarding for this purpose any qualifications with
respect to materiality), on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the date
of the Closing.
4.2 Performance. The Company shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 Compliance Certificate. The Vice President, Finance and
Administration and Chief Financial Officer of the Company shall deliver to the
Purchasers at the Closing a certificate certifying that the conditions
specified in Sections 4.1, 4.2 and 4.4 have been fulfilled.
4.4 Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock pursuant to this Agreement shall be obtained and effective as of
the Closing.
4.5 Opinion of Company Counsel. The Purchasers shall have
received from Venture Law Group, counsel for the Company, an opinion, dated as
of the Closing, in substantially the form of Exhibit E.
4.6 Board of Directors. As of the Closing, the number of
authorized directors shall be eight (8) members, and the Board shall be
comprised of Xxxxxxx Xxxxxxx, Xxxx X. Xxxxxxx, Xxxxxxxx Xx Xxxxx, Xxxxxxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxx.
4.7 Investors' Rights Agreement. The Company and each Purchaser
shall have executed and delivered the Investors' Rights Agreement in
substantially the form attached as Exhibit D.
4.8 Certificate of Designation. The Company shall have filed the
Certificate of Designation in substantially the form attached as Exhibit B with
the Secretary of State of Delaware on or prior to the Closing Date, which shall
continue to be in full force and effect as of the Closing Date.
5. Conditions of the Company's Obligations at Closing. The
obligations of the Company to each Purchaser under this Agreement are subject
to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived in writing:
5.1 Representations and Warranties. The representations and
warranties of each Purchaser contained in Section 3 shall be true and correct
in all material respects on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing.
5.2 Performance. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchasers on or prior to
the Closing shall have been performed or complied with in all material
respects.
5.3 Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock pursuant to this Agreement shall be obtained and effective as of
the Closing.
6. Miscellaneous.
6.1 Survival of Warranties. Unless otherwise set forth in this
Agreement, the warranties, representations and covenants of the Company and the
Purchasers contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement for a period of two (2) years
following the Closing and shall in no way be affected by an investigation of
the subject matter thereof made by or on behalf of the Company or any such
Purchaser.
6.2 Transfer; Successors and Assigns. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
6.3 Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
6.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when
delivered personally or by overnight courier or sent by telegram or fax, or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, addressed to the party to be notified at
such party's address as set forth on the signature page or Exhibit A hereto, or
as subsequently modified by written notice, and (a) if to the Company, with a
copy to Xxxxxx X. Xxxxxx, Xx., Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx
Xxxx, XX 00000 or (b) if to the Purchasers, with a copy to Xxxxx Xxxxxxx,
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, 000 Xxxxxxxxxxxx
Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 and to Office of the General Counsel,
Xxxxxxx & Xxxxxxx, Xxx Xxxxxxx & Xxxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxx Xxxxxx
00000.
6.7 Finder's Fee. Except for the fees and expenses owed by the
Company to Xxxxx & Company, each party represents that it neither is nor will
be obligated for any finder's fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of
a finder's fee (and the costs and expenses of defending against such liability
or asserted liability) for which each Purchaser or any of its officers,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless each Purchaser from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company
or any of its officers, employees or representatives is responsible.
6.8 Attorney's Fees. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of any
of the Agreements, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
6.9 Amendments and Waivers. Any term of this Agreement may be
amended or waived only with the written consent of (i) the Company, (ii) the
holders of a majority of the shares of Common Stock issuable or issued upon
conversion of the Stock and each Purchaser adversely affected in a manner
different than the other Purchasers and (iii) Xxxxxxx & Xxxxxxx Development
Corporation if its obligations hereunder are materially increased by such
amendment. Any amendment or waiver effected in accordance with this Section
6.9 shall be binding upon the Purchasers and each transferee of the Stock (or
the Common Stock issuable upon conversion thereof), each future holder of all
such securities, and the Company.
6.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(a) such provision shall be excluded from this Agreement, (b) the balance of
the Agreement shall be interpreted as if such provision were so excluded and
(c) the balance of the Agreement shall be enforceable in accordance with its
terms.
6.11 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any
such right, power or remedy of such non-breaching or non-defaulting party nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
6.12 Entire Agreement. This Agreement, and the documents referred
to herein constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing between the parties hereto are
expressly canceled.
6.13 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
6.14 Confidentiality. Each party hereto agrees that, except with
the prior written permission of the other party, and except as any Purchaser
may be required to disclose under ERISA, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, the performance of its obligations hereunder or the
ownership of Stock purchased hereunder. The provisions of this Section 6.14
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.
6.15 Exculpation Among Purchasers. Each Purchaser acknowledges
that it is not relying upon any person, firm or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, agents, or
employees of any Purchaser shall be liable to any other Purchaser for any
action heretofore or hereafter taken or omitted to be taken by any of them in
connection with the purchase of the Securities, except as provided in the
Investors' Rights Agreement.
6.16 Waiver of Conflicts. Each party to this Agreement
acknowledges that Venture Law Group, counsel for the Company, has in the past
performed and may continue to perform legal services for certain of the
Purchasers in matters unrelated to the transactions described in this
Agreement, including the representation of such Purchasers in venture capital
financings and other matters. Accordingly, each party to this Agreement hereby
(a) acknowledges that they have had an opportunity to ask for information
relevant to this disclosure; and (b) gives its informed consent to Venture Law
Group's representation of certain of the Purchasers in such unrelated matters
and to Venture Law Group's representation of the Company in connection with
this Agreement and the transactions contemplated hereby.
6.17 Publicity. No party shall originate any publicity, news
release or other public announcement, written or oral (a "Release"), whether
relating to the performance under this Agreement or the existence of any
arrangement between the parties, without the prior written consent of the other
parties, except where such Release is required by law (in which event, the
Purchasers shall be consulted by the Company in connection with any such
Release prior to its release and shall be provided with a copy thereof);
provided that the parties hereby agree that a Release substantially in the form
attached hereto as Exhibit F shall be released by the Company as promptly as
practicable following the execution of this Agreement.
6.18 Expenses; Transfer Taxes. Upon closing, the Company shall
reimburse the reasonable fees and expenses of Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, L.L.P., not to exceed $20,000, incurred in
connection with all transactions leading up to and including the Closing.
Except as provided in the foregoing sentence, each party shall pay its own fees
and expenses (including the fees of any attorneys, accountants, investment
bankers or others engaged by such party) in connection with this Agreement and
the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated. Notwithstanding the foregoing, the
Company shall pay, and shall indemnify and hold harmless the Purchasers from
and against, all sales, use, transfer or similar taxes imposed as a result of
the transactions contemplated by this Agreement.
[Signature Page Follows]
The parties have executed this Series B Convertible Preferred
Stock Purchase Agreement as of the date first written above.
COMPANY:
KeraVision, Inc.
By: /s/Xxxx Xxxxxxx-Colbrie
-------------------------------
Name: Xxxx Xxxxxxx-Colbrie
-----------------------------
(print)
Title: VP Finance/Admin; CFO
----------------------------
PURCHASERS:
DLJ Capital Corp.
By: /s/Xxxxxxxx X. XxXxxxx
-------------------------------
Name: Xxxxxxxx X. XxXxxxx
-----------------------------
Title: General Partner and
Attorney in Fact
----------------------------
DLJ ESC II, L.P.
By: DLJ LBO Plans Management
Corporation
Its: Manager
By: /s/Xxxxxxxx X. XxXxxxx
-------------------------------
Name: Xxxxxxxx X. XxXxxxx
-----------------------------
Title: Attorney In Fact
----------------------------
Sprout Capital VIII, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
By:/s/Xxxxxxxx X. XxXxxxx
-------------------------------
Name: Xxxxxxxx X. XxXxxxx
-----------------------------
Title: General Partner and
Attorney in Fact
----------------------------
Sprout Venture Capital, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
By: /s/Xxxxxxxx X. XxXxxxx
-------------------------------
Name: Xxxxxxxx X. XxXxxxx
-----------------------------
Title: General Partner and
Attorney in Fact
----------------------------
The Sprout CEO Fund, L.P.
By: DLJ Capital Corp.
Its: General Partner
By: /s/Xxxxxxxx X. XxXxxxx
-------------------------------
Name: Xxxxxxxx X. XxXxxxx
-----------------------------
Title: General Partner and
Attorney in Fact
----------------------------
Xxxxxxx & Xxxxxxx Development
Corporation
By: /s/Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------
Title: Vice President
----------------------------
GMI/DRI INVESTMENT TRUST
By: /s/Xxxxx X. Xxx Xxxxxxxxxx
-------------------------------
Name: Xxxxx X. Xxx Xxxxxxxxxx
-----------------------------
Title: Executive Secretary -
Benefit Finance Committee
of General Xxxxx,
Inc. as Named
Financial Fiduciary
----------------------------
Special Situations Private
Equity Fund, LP
By: /s/Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: Managing Director
----------------------------
Special Situations Fund III, LP
By: /s/Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: Managing Director
----------------------------
Special Situations Cayman Fund, LP
By: /s/Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: Managing Director
----------------------------
EXHIBITS
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Certificate of Designation of Incorporation
Exhibit C - Schedule of Exceptions to Representations and Warranties
Exhibit D - Form of Investors' Rights Agreement
Exhibit E - Form of Legal Opinion of Venture Law Group
Exhibit F - Form of Press Release
Number of Purchase
Purchaser Shares Price
------------------------------------------- ------------- ---------------
DLJ Capital Corporation 4,987 $159,584
0000 Xxxx Xxxx Xxxx, Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
DLJ ESC II, L.P. 31,791 $1,017,312
0000 Xxxx Xxxx Xxxx, Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Sprout Capital VIII, L.P. 317,715 $10,166,880
0000 Xxxx Xxxx Xxxx,
Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Sprout Venture Capital, L.P. 19,063 $610,016
0000 Xxxx Xxxx Xxxx, Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
The Sprout CEO Fund, L.P. 1,444 $46,208
0000 Xxxx Xxxx Xxxx, Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx & Xxxxxxx Development 93,750 $3,000,000
Corporation
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: President
GMI/DRI INVESTMENT TRUST 31,250 $1,000,000
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000
CED: No. 136
(000) 000-0000
(000) 000-0000
Attn: Xxxxxxx Xxxxxx
Special Situations Private Equity Fund, LP 31,250 $1,000,000
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mr. Xxxxx Xxxxxx
Special Situations Fund III, LP 23,437 $749,984
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mr. Xxxxx Xxxxxx
Special Situations Cayman Fund, LP 7,813 $250,016
CIBC Bank
Xxxxxx Street
P.O. Box 694
Grand Cayman, Cayman Islands
British West Indies
Attn: Xx. Xxxxx Xxxxxxxxxxx
Total 562,500 $18,000,000
