EXHIBIT 10.5
VISTA MEDICAL TECHNOLOGIES, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
---------------------
November 27, 1996
TABLE OF CONTENTS
Page
1. Purchase and Sale of Stock. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Sale and Issuance of Series C Preferred Stock. . . . . . . . . . . 1
1.2 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Representations and Warranties of the Company . . . . . . . . . . . . . 1
2.1 Organization, Good Standing and Qualification. . . . . . . . . . . 2
2.2 Capitalization and Voting Rights . . . . . . . . . . . . . . . . . 2
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Valid Issuance of Preferred and Common Stock . . . . . . . . . . . 3
2.6 Governmental Consents. . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Proprietary Information Agreements . . . . . . . . . . . . . . . . 4
2.9 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Compliance with Other Instruments. . . . . . . . . . . . . . . . . 5
2.11 Agreements; Action . . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 Related-Party Transactions . . . . . . . . . . . . . . . . . . . . 6
2.13 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.14 Environmental and Safety Laws. . . . . . . . . . . . . . . . . . . 7
2.15 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . 7
2.16 Title to Property and Assets . . . . . . . . . . . . . . . . . . . 7
2.17 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 7
2.18 Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 9
2.20 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.21 Real Property Holding Company. . . . . . . . . . . . . . . . . . . 9
2.22 Tax Returns, Payments and Elections. . . . . . . . . . . . . . . . 9
2.23 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.25 Labor Agreements and Actions . . . . . . . . . . . . . . . . . . . 10
2.26 Manufacturing and Marketing Rights . . . . . . . . . . . . . . . . 11
2.27 Finder or Broker . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.28 Customer Complaints. . . . . . . . . . . . . . . . . . . . . . . . 11
2.29 Warranties; Product Liability. . . . . . . . . . . . . . . . . . . 11
2.30 Relations with Suppliers . . . . . . . . . . . . . . . . . . . . . 11
3. Representations and Warranties of the Investor. . . . . . . . . . . . . 12
3.1 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Purchase Entirely for Own Account. . . . . . . . . . . . . . . . . 12
3.3 Disclosure of Information. . . . . . . . . . . . . . . . . . . . . 12
i
3.4 Investment Experience. . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Accredited Investor. . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Restricted Securities. . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Further Limitations on Disposition . . . . . . . . . . . . . . . . 13
3.8 Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. Conditions of Investor's Obligations at Closing . . . . . . . . . . . . 13
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . 13
4.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Proceedings and Documents. . . . . . . . . . . . . . . . . . . . . 14
4.6 Opinion of Company Counsel . . . . . . . . . . . . . . . . . . . . 14
4.7 Amended and Restated Investors' Rights Agreement . . . . . . . . . 14
4.8 Supplemental Rights Agreement. . . . . . . . . . . . . . . . . . . 14
4.9 Sales Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 14
5. Conditions of the Company's Obligations at Closing. . . . . . . . . . . 14
5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . 14
5.2 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . 15
5.3 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.4 Amended and Restated Investors' Rights Agreement . . . . . . . . . 15
5.5 Supplemental Rights Agreement. . . . . . . . . . . . . . . . . . . 15
5.6 Sales Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 15
6. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Survival of Warranties . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 15
6.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . . . 15
6.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.7 Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.8 Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.10 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 16
6.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 17
Exhibit A - Amended and Restated Certificate of Incorporation
ii.
VISTA MEDICAL TECHNOLOGIES, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT is made as of the 27th day
of November, 1996, by and between Vista Medical Technologies, Inc., a Delaware
corporation (the "Company"), and Medtronic Asset Management, Inc., a Minnesota
corporation (the "Investor") which is a wholly-owned subsidiary of Medtronic,
Inc. ("Medtronic").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF SERIES C PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of State
of Delaware on or before the Closing (as defined below), the Amended and
Restated Certificate of Incorporation in substantially the form attached hereto
as EXHIBIT A (the "Restated Certificate").
(b) Subject to the terms and conditions of this Agreement, the
Investor agrees to purchase at the Closing pursuant to Section 1.2, and the
Company agrees to sell and issue to the Investor at the Closing pursuant to
Section 1.2, 2,000,000 shares of the Company's Series C Preferred Stock for the
purchase price of $5.00 per share.
1.2 THE CLOSING.
(a) The purchase and sale of the Series C Preferred Stock shall
take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ "▇"
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ or by telecopy exchange of signature
pages (with originals to follow via overnight delivery) at 11:00 a.m., on
November 27, 1996, or at such other time and place as the Company and the
Investor hereto 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 the Investor a
certificate representing the shares of Series C Preferred Stock that the
Investor is purchasing against payment of the purchase price therefor by check
or wire transfer.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor that, except as set forth on a Schedule
of Exceptions furnished to the Investor, which exceptions shall be deemed to be
representations and warranties as if made hereunder:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on its business or
properties.
2.2 CAPITALIZATION AND VOTING RIGHTS. The authorized capital of the
Company consists, or will consist prior to the Closing, of:
(i) PREFERRED STOCK. 18,000,000 shares of Preferred Stock (the
"Preferred Stock"), 8,300,000 shares of which have been designated Series A-1
Preferred Stock, and 8,094,340 of which are issued and outstanding, 500,000
shares of which have been designated Series A-3, and 154,581 of which are issued
and outstanding, 3,100,000 shares of which have been designated Series B
Preferred Stock, and 1,325,331 of which are issued and outstanding, and
2,000,000 shares of which have been designated Series C Preferred Stock, up to
all of which will be sold pursuant to this Agreement. The rights, privileges
and preferences of the Series C Preferred Stock will be as stated in the
Restated Certificate.
(ii) COMMON STOCK. 25,000,000 shares of common stock ("Common
Stock"), of which 712,250 shares are issued and outstanding.
(iii) Except for (A) the conversion privileges of the
Series A-1 Preferred Stock, Series A-3 Preferred Stock and Series B Preferred
Stock, (B) the conversion privileges of the Series C Preferred Stock to be
issued under this Agreement, (C) the rights provided in Section 3.1 of that
certain Amended and Restated Investors' Rights Agreement dated the date hereof
between the Company and the parties listed on Schedule A thereto (the "Rights
Agreement"), (D) the rights provided in that certain Supplemental Rights
Agreement dated the date hereof between the Company and Medtronic (the
"Supplemental Rights Agreement") and (E) the 2,687,481 shares of Common Stock
reserved for issuance pursuant to the Company's 1995 Stock Option Plan (the
"Plan"), of which options to purchase 2,202,701 shares have been granted under
the Plan, there are not outstanding any options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of its capital stock. The Company is not a party
or subject to any agreement or understanding, and, to the Company's knowledge,
there is no agreement or understanding between any persons and/or entities,
which affects or relates to the voting or giving of written consents with
respect to any security or by a director of the Company.
2.3 SUBSIDIARIES. Except as set forth in the Schedule of Exceptions,
the Company does not presently own or control, directly or indirectly, any
interest in any other corporation, association or other business entity, and the
Company is not an equity owner in any joint venture, partnership or similar
arrangement.
2.
Each of the Company's subsidiaries listed in the Schedule of
Exceptions (a "Subsidiary" or the "Subsidiaries") is duly organized and existing
under the laws of its jurisdiction of organization and is in good standing under
such laws. Each of the Company's Subsidiaries is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on the Company's business or
properties.
2.4 AUTHORIZATION. All corporate action on the part of the Company,
its Subsidiaries, officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Rights Agreement,
the Supplemental Rights Agreement and that certain Sales Agreement dated the
date hereof between the Company and Medtronic (the "Sales Agreement") and any
other agreement to which the Company is a party, the execution and delivery of
which is contemplated hereby (the "Ancillary Agreements"), the performance of
all obligations of the Company hereunder and thereunder and the authorization,
issuance (or reservation for issuance) and delivery of the Series C Preferred
Stock being sold hereunder and the Common Stock issuable upon conversion of the
Series C Preferred Stock has been taken or will be taken prior to the Closing,
and this Agreement, the Rights Agreement, the Supplemental Rights Agreement, the
Sales Agreement and any Ancillary Agreements constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Rights Agreement may be limited by applicable federal or state securities
laws.
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK.
(a) The Series C Preferred Stock which is being purchased by the
Investor hereunder, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable and, based in part upon the representations of the
Investor in this Agreement, will be issued in compliance with all applicable
federal and state securities laws. The Common Stock issuable upon conversion of
the Series C Preferred Stock purchased under this Agreement has been duly and
validly reserved for issuance and, upon issuance in accordance with the terms of
the Restated Certificate, shall be duly and validly issued, fully paid and
nonassessable, and issued in compliance with all applicable securities laws, as
presently in effect, of the United States and each of the states whose
securities laws govern the issuance of any of the Series C Preferred Stock
hereunder.
(b) The outstanding shares of Series A-1 Preferred Stock, Series
A-3 Preferred Stock, Series B Preferred Stock and Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities laws.
3.
2.6 GOVERNMENTAL CONSENTS. To the best of the Company's knowledge
and belief, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state,
local or provincial governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement, except for the filing pursuant to Section 25102(f) of the
California Corporate Securities Law of 1968, as amended, and the rules
thereunder, which filing will be effected within fifteen (15) days of the sale
of the Series C Preferred Stock hereunder.
2.7 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company or any
Subsidiary which questions the validity of this Agreement, the Rights Agreement,
the Supplemental Rights Agreement, the Sales Agreement or any Ancillary
Agreements, or the right of the Company to enter into any of them, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse changes
in the assets, financial condition, or business of the Company or any
Subsidiary. The foregoing includes, without limitation, actions pending or
threatened (or any basis therefor known to the Company or any Subsidiary)
involving the prior employment of any of the Company's or any Subsidiaries'
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
Neither the Company nor any 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 any Subsidiary currently pending or which the
Company or any Subsidiary intends to initiate.
2.8 PROPRIETARY INFORMATION AGREEMENTS. Each employee, officer and
consultant of the Company and any Subsidiary has executed a Proprietary
Information Agreement in the Company's standard form. The Company, after
reasonable investigation, is not aware that any of its or any Subsidiaries'
employees, officers or consultants are in violation thereof, and the Company
will use its best efforts to prevent any such violation.
2.9 PATENTS AND TRADEMARKS. The Company and each Subsidiary has
sufficient title and ownership of all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights and processes
necessary for its respective business as now conducted and as proposed to be
conducted without any conflict with or infringement of the rights of others.
The Schedule of Exceptions contains a complete list of patents and pending
patent applications of the Company or any Subsidiary. There are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company or any Subsidiary 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. Neither the Company nor any
Subsidiary is aware that any of its employees or consultants are obligated under
any
4.
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 agreement that would interfere with the use of his, her, or its
best efforts to promote the best interests of the Company or such Subsidiary or
that would conflict with the Company's or such Subsidiary's business as it is
proposed to be conducted. Neither the Company nor any Subsidiary has received
any communications alleging that the Company or such Subsidiary 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. Neither the execution nor
delivery of this Agreement, the Rights Agreement, the Supplemental Rights
Agreement, the Sales Agreement or any Ancillary Agreements, nor the carrying on
of the Company's or any Subsidiary's business by the employees of the Company
and any Subsidiary, nor the conduct of the Company's or any Subsidiary's
business as proposed, will, to the best of the Company's or such Subsidiary's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees or consultants is now obligated.
Neither the Company nor any Subsidiary believes that it is or will be necessary
to utilize any inventions of any of its employees or consultants (or persons it
currently intends to hire) made prior to their employment by the Company or such
Subsidiary.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company nor any
Subsidiary is in violation or default of any provisions of its Restated
Certificate or Bylaws or other governing instruments or of any instrument,
judgment, order, writ, decree or contract to which it is a party or by which it
is bound or, to its knowledge, of any provision of federal or state statute,
rule or regulation applicable to the Company or such Subsidiary. The execution,
delivery and performance of this Agreement, the Rights Agreement, the
Supplemental Rights Agreement, the Sales Agreement or any Ancillary Agreements
and the consummation of the transactions contemplated hereby and thereby will
not result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon any
assets of the Company or any Subsidiary or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization or approval applicable to the Company or any Subsidiary, its
business or operations or any of its assets or properties.
2.11 AGREEMENTS; ACTION.
(a) There are no agreements, understandings or proposed transactions
between the Company or any Subsidiary and any of its officers, directors,
affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
or any Subsidiary is a party or by which it is bound which may involve
(i) obligations
5.
(contingent or otherwise) of, or payments from the Company or such Subsidiary in
excess of, $25,000, or (ii) the license of any patent, copyright, trade secret,
or other proprietary right to or from the Company or such Subsidiary, from
(iii) provisions restricting or affecting the development, manufacture or
distribution of the Company's or such Subsidiary's products or services or
(iv) indemnification by the Company or such Subsidiary with respect to
infringements of proprietary rights.
(c) Neither the Company nor any Subsidiary has (other than to the
Company or another Subsidiary) (i) declared or paid any dividends, or authorized
or made any distribution upon or with respect to any class or series of its
capital stock, (ii) incurred any indebtedness for money borrowed or any other
liabilities individually in excess of $25,000 or, in the case of indebtedness
and/or liabilities individually less than $25,000, in excess of $100,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, 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 of
such subsections.
2.12 RELATED-PARTY TRANSACTIONS. Except as set forth on the Schedule
of Exceptions, no stockholder, employee, officer, or director of the Company or
any Subsidiary or member of his or her immediate family, is indebted to the
Company or any Subsidiary, nor is the Company or any Subsidiary indebted (or
committed to make loans or extend or guarantee credit) to any of them. To the
best of the Company's and its Subsidiaries' 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 any Subsidiary and members
of their immediate families may own less than one percent (1%) of the
outstanding stock in publicly traded companies that may compete with the
Company. No member of the immediate family of any officer or director of the
Company or any Subsidiary is directly or indirectly interested in any material
contract with the Company.
2.13 PERMITS. The Company and its Subsidiaries have all franchises,
permits, licenses and any similar authority necessary for the conduct of the
Company's business as now being conducted by them, the lack of which could
materially and adversely affect the business, properties, prospects or financial
condition of the Company and the Company and each Subsidiary 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 and its Subsidiaries
are not in default in any material respect under any of such franchises,
permits, licenses or other similar authority.
6.
2.14 ENVIRONMENTAL AND SAFETY LAWS. Neither the Company nor any
Subsidiary is in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety; and to the best
of the Company's and its Subsidiaries' knowledge, no material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation.
2.15 REGISTRATION RIGHTS. Except as provided in the Rights Agreement,
the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.
2.16 TITLE TO PROPERTY AND ASSETS. The Company and each Subsidiary
owns its property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's or such
Subsidiary's ownership or use of such property or assets. With respect to the
property and assets it leases, the Company and each Subsidiary 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.
2.17 FINANCIAL STATEMENTS. The Company has made available to the
Investor its audited consolidated financial statements (balance sheet and profit
and loss statement, statement of stockholders' equity and statement of changes
in financial position) for the fiscal year ended December 31, 1995 and its
unaudited consolidated financial statements (balance sheet and profit and loss
statement including notes) for the ten-month period ended October 26, 1996 (the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and accurately set out and describe the consolidated
financial condition and consolidated operating results of the Company and its
Subsidiaries as of the dates, and for the periods, indicated therein, subject,
with respect to its unaudited financial statements, to normal year-end audit
adjustments. The Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") except, with respect to its
unaudited financial statements, for footnotes required by GAAP. Except as set
forth in the Financial Statements, neither the Company nor any Subsidiary has
any liabilities, contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to October 26, 1996 which in the
aggregate do not exceed $25,000 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 consolidated financial condition or operating results of the
Company and its Subsidiaries. Except as disclosed in the Financial Statements,
neither the Company nor any Subsidiary is a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation (other than indebtedness
of another Subsidiary or the Company). The Company and each Subsidiary
maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
7.
2.18 CHANGES. Since December 31, 1995 (or as expressly set forth in
the October 26, 1996 unaudited financial statements, and except for transactions
between the Company and a Subsidiary or between Subsidiaries of the Company)
there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company or any Subsidiary from that reflected in the
Financial Statements, except changes in the ordinary course of business which
have not been, in the aggregate, materially adverse.
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, prospects or business of the Company or any Subsidiary (as such
business is presently conducted and as it is proposed to be conducted);
(c) any waiver by the Company or any 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 any Subsidiary, except in the
ordinary course of business and which is not material to the assets, properties,
financial condition, prospects or business of the Company or any Subsidiary (as
such business is presently conducted and as it is proposed to be conducted);
(e) any change or amendment to a material contract or arrangement by
which the Company or any Subsidiary or any of its assets or properties is bound
or subject;
(f) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(g) any resignation or termination of employment of any key officer
or consultant of the Company or any Subsidiary; and neither the Company nor any
Subsidiary, knows of the impending resignation or termination of employment of
any such officer or consultant;
(h) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company or any Subsidiary, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable;
(i) any loans or guarantees made by the Company or any Subsidiary to
or for the benefit of its employees, officers, directors or consultants, or any
members of their immediate families, other than travel advances and other
advances made in the ordinary course of its business;
8.
(j) any declaration, setting aside or payment or other distribution
in respect of any of the Company's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by the Company;
(k) any material change in any compensation arrangement or agreement
with any employee or consultant;
(l) to the best of the Company's and its Subsidiaries' knowledge, any
other event or condition of any character which might materially and adversely
affect the assets, properties, financial condition, prospects or business of the
Company or any Subsidiary (as such business is presently conducted and as it is
proposed to be conducted);
(m) any agreement or commitment by the Company or any Subsidiary to
do any of the things described in this Section 2.18; or
(n) receipt of notice that there has been a material order
cancellation by any major customer of the Company or any Subsidiary.
2.19 EMPLOYEE BENEFIT PLANS. Neither the Company nor any Subsidiary
has any Employee Benefit Plan as defined in the Employee Retirement Income
Security Act of 1974 (referred to herein as a "Benefit Plan"), except for those
Benefit Plans of the Company or any Subsidiary listed in the Schedule of
Exceptions (a "Company Benefit Plan"). To the Company's knowledge, no person
has engaged in any act or omission which could reasonably be expected to subject
the Company or any Subsidiary to any material tax, penalty or liability. Full
payment or adequate provisions for reserves have been made of all amounts
required under applicable law with respect to all Company Benefit Plans. The
IRS has issued favorable determination letters, or applications for favorable
determination letters have been timely submitted and no unfavorable
determination letters have been received, with respect to all Company Benefit
Plans that are intended to be qualified under Section 401(a) of the Code.
2.20 INSURANCE. The Company maintains in full force and effect fire
and casualty insurance policies, with extended coverage, sufficient in amount to
allow it to replace any of its properties that might be damaged or destroyed.
The Company has in full force and effect products liability and errors and
omissions insurance in amounts customary for similarly situated companies.
2.21 REAL PROPERTY HOLDING COMPANY. Neither the Company nor any
Subsidiary is a real property holding company within the meaning of Internal
Revenue Code Section 897.
2.22 TAX RETURNS, PAYMENTS AND ELECTIONS. The Company and its
Subsidiaries have filed any and all tax returns and reports as required by law.
These returns and reports, if any, are true and correct in all material
respects. The Company and its Subsidiaries have paid all taxes and other
assessments due, except those contested
9.
by it in good faith that are listed in the Schedule of Exceptions. The
provision for taxes of the Company as shown in the Financial Statements is
adequate for taxes due or accrued as of the date thereof. Neither the Company
nor any Subsidiary has elected pursuant to the Internal Revenue Code of 1986, as
amended (the "Code"), to be treated as a Subchapter S corporation or a
collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the
Code, nor have they made any other elections pursuant to the Code (other than
elections that relate solely to methods of accounting, depreciation or
amortization) that would have a material effect on the Company or any
Subsidiary, their financial condition, their prospects, their business as
presently conducted or proposed to be conducted or any of their properties or
material assets. Neither the Company nor any Subsidiary has ever had any tax
deficiency proposed or assessed against it and has not executed any waiver of
any statute of limitations on the assessment or collection of any tax or
governmental charge. None of the Company's or any Subsidiary's federal income
tax returns, if any, and none of their state income or franchise tax or sales or
use tax returns, if any, has ever been audited by governmental authorities.
Since October 26, 1996 the Company has made adequate provisions on its books of
account for all taxes, assessments and governmental charges with respect to its
business, properties and operations for such period. The Company and any
Subsidiary has withheld or collected from each payment made to each of its
employees, the amount of all taxes (including, but not limited to, federal
income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment
Tax Act taxes) required to be withheld or collected therefrom, and has paid the
same to the proper tax receiving officers or authorized depositaries.
2.23 MINUTE BOOKS. The copy of the minute books of the Company
provided to the Investor contains a complete summary of all meetings of
directors and stockholders and all actions by written consent in lieu of a
meeting by directors or stockholders since the time of incorporation and reflect
all transactions referred to in such minutes accurately in all material
respects.
2.24 DISCLOSURE. The Company has fully provided the Investor with all
the information which the Investor has requested for deciding whether to
purchase the Series C Preferred Stock and all information which the Company
believes is reasonably necessary to enable the Investor to make such decision.
Neither this Agreement, the Rights Agreement, the Supplemental Rights Agreement,
the Sales Agreement and any Ancillary Agreements, nor any other statements or
certificates made or delivered in connection herewith or therewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.
2.25 LABOR AGREEMENTS AND ACTIONS. Neither the Company nor any
Subsidiary is bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the best of the Company's or such Subsidiary's knowledge, has sought to
represent any of the employees, representatives or agents of the Company or any
Subsidiary. There is no strike or other labor dispute involving the Company or
any Subsidiary pending, or to the best of the
10.
Company's or such Subsidiary's knowledge, threatened, that could have a material
adverse effect on the assets, properties, financial condition, operating
results, or business of the Company or any Subsidiary (as such business is
presently conducted and as it is proposed to be conducted), nor is the Company
or any Subsidiary aware of any labor organization activity involving its or any
Subsidiaries' employees. Neither the Company nor any Subsidiary is aware that
any officer, consultant or key employee, or that any group of key employees,
intends to terminate their employment with the Company or any Subsidiary, nor
does the Company or any Subsidiary have a present intention to terminate the
employment of any of the foregoing. Subject to general principles related to
wrongful termination of employees, the employment of each officer, consultant
and employee of the Company or any Subsidiary is terminable at the will of the
Company.
2.26 MANUFACTURING AND MARKETING RIGHTS. Neither the Company nor any
Subsidiary has granted rights to manufacture, produce, assemble, license, market
or sell its products to any other person and is not bound by any agreement that
affects the Company's or any Subsidiary's exclusive rights to develop,
manufacture, assemble, distribute and sell its products.
2.27 FINDER OR BROKER. The Company is not obligated to pay any
brokerage commissions, finder's fees or other similar compensation to any
finder, broker, intermediary or any similar person in connection with the
transactions contemplated herein. The Company will indemnify the Investor and
hold the Investor harmless from any liability or expense arising from any claim
for brokerage commissions, finder's fees or other similar compensation based
upon any agreement, arrangement or understanding made by or on behalf of the
Company.
2.28 CUSTOMER COMPLAINTS. Neither the Company nor any Subsidiary has
received any customer complaints concerning alleged defects in its products or
the design thereof that, if true, would have a material adverse effect on the
assets, financial condition or business of the Company or such Subsidiary.
2.29 WARRANTIES; PRODUCT LIABILITY. All products manufactured or
sold, and all services provided, by the Company or any Subsidiary have complied,
and are in compliance, in all material respects with all contractual
requirements, warranties, covenants and specifications applicable thereto. The
terms of the Company's and each Subsidiary's product and service warranties and
product return, discount, demo sales and credit policies have been provided to
the Investor. Neither the Company nor any Subsidiary has ever incurred any
uninsured or insured product liability (including product recalls). Neither the
Company nor any Subsidiary has ever received a claim based upon alleged product
liability, and, to the Company's knowledge, no basis for any such claim exists.
2.30 RELATIONS WITH SUPPLIERS. No material current supplier of the
Company or any Subsidiary has cancelled any contract or order for provision of,
and, to the knowledge of the Company, there has been no threat by any such
supplier not to
11.
provide, raw materials, products, supplies, or services to the businesses of the
Company or any Subsidiary.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby
represents and warrants that:
3.1 AUTHORIZATION. This Agreement constitutes its valid and legally
binding obligation, enforceable in accordance with its terms.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Series C Preferred Stock to be received by the Investor and
the Common Stock issuable upon conversion thereof (collectively, the
"Securities") will be acquired for investment for the Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that the Investor has no present intention of selling,
granting any participation in or otherwise distributing the same. By executing
this Agreement, the Investor further represents that the Investor does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant any participation to such person or to any third person, with
respect to any of the Securities. The Investor represents that it has full
power and authority to enter into this Agreement.
3.3 DISCLOSURE OF INFORMATION. The Investor believes it has received
all the information it considers necessary or appropriate for deciding whether
to purchase the Series C Preferred Stock. The Investor further represents that
it has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series C Preferred
Stock. 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
Investor to rely thereon.
3.4 INVESTMENT EXPERIENCE. The Investor is an investor in securities
of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Series C Preferred Stock. The
Investor also represents it has not been organized for the purpose of acquiring
the Series C Preferred Stock.
3.5 ACCREDITED INVESTOR. The Investor is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 RESTRICTED SECURITIES. The Investor understands that the shares
of Series C Preferred Stock it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act of
12.
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the Investor represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
3.7 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
the representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and Section 6, provided and to the extent such sections are then
applicable, the Rights Agreement and:
(a) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b)(i) The Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, the Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
3.8 LEGENDS. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) Any legend required by the laws of any State.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of
the Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment of each of the following conditions on or before the Closing with
respect to the Investor's purchase of Series C Preferred Stock.
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true 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 such Closing.
13.
4.2 PERFORMANCE. The Company shall have performed and complied with
all 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 President of the Company shall
deliver to the Investor at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 QUALIFICATIONS. The Commissioner of Corporations of the State of
California and the Blue Sky authorities of any other State applicable shall have
issued a permit qualifying the offer and sale of the Series C Preferred Stock
and the underlying Common Stock to the Investor pursuant to this Agreement, or
such offer and sale shall be exempt from such qualification.
4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto (including satisfactory results of due diligence
review of the Company) shall be reasonably satisfactory in form and substance to
the Investor, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
4.6 OPINION OF COMPANY COUNSEL. The Investor shall have received
from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, an opinion, dated
as of the Closing, in substantially a form mutually agreed upon by the Company
and the Investor.
4.7 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT. The Company
shall have entered into the Rights Agreement.
4.8 SUPPLEMENTAL RIGHTS AGREEMENT. The Company shall have entered
into the Supplemental Rights Agreement.
4.9 SALES AGREEMENT. The Company shall have entered the Sales
Agreement.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to the Investor under this Agreement are subject to the
fulfillment of each of the following conditions on or before the Closing with
respect to the purchase of Series C Preferred Stock by the Investor.
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 3 shall be true 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.
14.
5.2 PAYMENT OF PURCHASE PRICE. The Investor shall have delivered the
purchase price specified in Section 1.2.
5.3 QUALIFICATIONS. The Commissioner of Corporations of the State of
California and the Blue Sky authorities, of any other State applicable shall
have issued a permit qualifying the offer and sale to the Investor the Series C
Preferred Stock and the Common Stock issuable upon the conversion thereof or
such offer and sale shall be exempt from such qualification.
5.4 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT. The Investor
shall have entered into the Rights Agreement.
5.5 SUPPLEMENTAL RIGHTS AGREEMENT. Medtronic shall have entered into
the Supplemental Rights Agreement.
5.6 SALES AGREEMENT. Medtronic shall have entered the Sales
Agreement.
6. MISCELLANEOUS.
6.1 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and the Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the Company.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, 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 (including
transferees of any shares of Series C Preferred Stock sold hereunder or any
Common Stock issued upon conversion thereof). 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 shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
6.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same 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.
15.
6.6 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or by
registered or certified mail, postage prepaid, or otherwise delivered by hand or
by messenger, addressed (a) if to the Investor, to the address set forth on the
signature page hereto or to such other address as the Investor shall have
furnished to the Company in writing or (b) if to the Company, to its address set
forth on the signature page hereto and addressed to the attention of the
President or at such other addresses as the Company shall have furnished to the
Investor. All notices and other communications pursuant to the provisions of
this Section 6.6 shall be deemed delivered when mailed or sent by facsimile.
6.7 FINDER'S FEE. Each party represents that it neither is nor will
be obligated for any finder's fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Investor 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 LEGAL FEES. Each party to this Agreement shall bear its own
expenses and legal fees incurred by it with respect to this Agreement and all
related transactions outside of or in excess of these covered costs.
6.9 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or the Restated Certificate,
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.
6.10 AMENDMENTS AND WAIVERS. 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), only with the written consent of the Company and the Investor.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any securities purchased under this Agreement at the
time outstanding (including securities into which such securities are
convertible), each future holder of all such securities and the Company.
6.11 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
16.
6.12 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
17.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
VISTA MEDICAL TECHNOLOGIES, INC., a Delaware
corporation
By: /s/ ▇▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇, President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTOR:
MEDTRONIC ASSET MANAGEMENT, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Title:Vice President
-----------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SIGNATURE PAGE TO SERIES C
PREFERRED STOCK PURCHASE AGREEMENT]
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
A-1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
VISTA MEDICAL TECHNOLOGIES, INC.
The undersigned, ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, hereby certify that:
ONE: The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on October 31, 1996.
TWO: The Certificate of Incorporation of this corporation is amended and
restated to read as follows:
ARTICLE I.
The name of the corporation (hereinafter called "Corporation") is Vista
Medical Technologies, Inc.
ARTICLE II.
The address of the registered office of the Corporation in the State of
Delaware is ▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ of Kent 19901, and the
name of the registered agent of the Corporation in the State of Delaware at such
address is CorpAmerica, Inc.
ARTICLE III.
The purpose of this Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV.
A. CLASSES OF STOCK. This Corporation is authorized to issue two (2)
classes of shares, to be designated "Common" and "Preferred" and referred to
herein as the "Common Shares" or the "Preferred Shares" respectively. The total
number of Common Shares the Corporation is authorized to issue is twenty-five
million (25,000,000). The par value is $0.01 per share. The total number of
Preferred Shares the Corporation is authorized to issue is eighteen million
(18,000,000). The par value is $0.01 per share.
The Board of Directors of the Corporation may divide the Preferred
Shares into any number of series. The Board of Directors shall fix the
designation and number of
shares of each such series. The Board of Directors may determine and alter the
rights, preferences, privileges and restrictions granted to and imposed upon any
wholly unissued series of the Preferred Shares. The Board of Directors (within
the limits and restrictions of any resolution adopted by it, originally fixing
the number of shares of any series) may increase or decrease the number of
shares of any such series after the issue of shares of that series, but not
below the number of then outstanding shares of such series.
B. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF THE SERIES A-1
PREFERRED STOCK, SERIES A-3 PREFERRED STOCK, SERIES B PREFERRED STOCK AND SERIES
C PREFERRED STOCK.
1. DESIGNATION OF SERIES A-1 PREFERRED STOCK, SERIES A-3 PREFERRED
STOCK, SERIES B PREFERRED STOCK AND SERIES C PREFERRED STOCK. Eight Million
Three Hundred Thousand (8,300,000) shares of Preferred Stock are designated
Series A-1 Preferred Stock (the "Series A-1 Preferred") with the rights,
preferences and privileges specified herein. Five Hundred Thousand (500,000)
shares of Preferred Stock are designated Series A-3 Preferred Stock (the "Series
A-3 Preferred") with the rights, preferences and privileges specified herein.
Three Million One Hundred Thousand (3,100,000) shares of Preferred Stock are
designated Series B Preferred Stock (the "Series B Preferred") with the rights,
preferences and privileges specified herein. Two Million (2,000,000) shares of
Preferred Stock are designated Series C Preferred Stock (the "Series C
Preferred") with the rights, preferences and privileges specified herein. As
used in this Article IV, Section B., the term "Series A Preferred" shall refer
to the Series A-1 Preferred and the Series A-3 Preferred. As used in this
Article IV, Section B., the term "Preferred Stock" shall refer to the Series A-1
Preferred, the Series A-3 Preferred, the Series B Preferred and the Series C
Preferred.
2. DIVIDEND RIGHTS OF PREFERRED STOCK. The holders of the then
outstanding shares of Preferred Stock shall be entitled to receive dividends pro
rata, in preference to any dividend on the Common Stock of this Corporation
("Common"), at the rate of eight percent (8%) of the Original Purchase Price per
share (as defined below) per annum, whenever funds are legally available and
when and as declared by the Board of Directors. The dividends shall be non-
cumulative. The original purchase price of the Series A Preferred shall be
$1.325 per share (the "Series A Original Purchase Price"). The original
purchase price of the Series B Preferred shall be $4.00 per share (the "Series B
Original Purchase Price"). The original purchase price of the Series C
Preferred shall be $5.00 per share (the "Series C Original Purchase Price"). As
used in this Section 2, the term "Original Purchase Price" shall refer to the
Series A Original Purchase Price, the Series B Original Purchase Price or the
Series C Original Purchase Price, as the case may be.
3. LIQUIDATION PREFERENCE.
a. In the event of any liquidation event, either voluntary or
involuntary, the holders of the Preferred Stock shall be entitled to receive pro
rata, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Common by reason of their
ownership thereof, with respect to the Series C Preferred, the sum of (i) $5.00
per share for each share of Series C Preferred then
-2-
held by them and (ii) an amount equal to all declared but unpaid dividends on
the Series C Preferred then held by them, with respect to the Series B
Preferred, the sum of (i) $4.00 per share for each share of Series B Preferred
then held by them and (ii) an amount equal to all declared but unpaid dividends
on the Series B Preferred then held by them, and, with respect to the Series A
Preferred, the sum of (i) $1.325 per share for each share of Series A Preferred
then held by them and (ii) an amount equal to all declared but unpaid dividends
on the Series A Preferred then held by them. If, upon the occurrence of such
event, the assets and funds thus distributed among the holders of the Preferred
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Preferred Stock in proportion to the preferential
amount each such holder would have been entitled to receive pursuant to this
Section 3 if such distribution had been sufficient to permit the full payment of
such preferential amount.
b. After payment has been made to the holders of the Preferred
Stock of the full amounts to which they shall be entitled pursuant to Section
3.a. above, the holders of the Common and Preferred Stock shall be entitled to
receive the remaining assets of the Corporation in proportion to the shares of
Common Stock then held by them and the shares of Common Stock which they have
the right to acquire upon conversion of Preferred Stock until such time as the
distributions made to the holders of the Preferred Stock (taken together with
all payments made pursuant to Section 3.a. above) equal, with respect to the
Series A Preferred, $3.975 per share for each share of Series A Preferred then
held by them, with respect to the Series B Preferred, $12.00 per share for each
share of Series B Preferred then held by them and, with respect to the Series C
Preferred, $15.00 per share for each share of Series C Preferred then held by
them. If, upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Preferred Stock shall be insufficient to
permit the payment to such holders of the full aforesaid preferential amounts,
then the entire remaining assets and funds of the Corporation legally available
for distribution after payment has been made to the holders of the Preferred
Stock of the full amounts to which they shall be entitled pursuant to Section
3.a. above shall be distributed ratably among the holders of the Common and
Preferred Stock in proportion to the preferential amount each such holder would
have been entitled to receive pursuant to this Section 3 if such distribution
had been sufficient to permit the full payment of the preferential amounts under
this Section 3.b. to the holders of the Preferred Stock.
c. After payment has been made to the holders of the Preferred
Stock of the full amounts to which they shall be entitled pursuant to Sections
3.a. and 3.b. above, the holders of the Common shall be entitled to receive all
remaining assets of the Corporation in proportion to the shares of Common Stock
then held by them.
d. For purposes of this Section 3, a liquidation, dissolution
or winding up of the Corporation shall be deemed to be occasioned by, or to
include, the Corporation's sale of all or substantially all of its assets or the
acquisition of this Corporation by another entity by means of merger or
consolidation resulting in the exchange of the outstanding shares of this
Corporation for securities or consideration issued, or caused
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to be issued, by the acquiring Corporation or its subsidiary in which the
stockholders of the Corporation are holders of less than 50% of voting power of
the surviving corporation.
4. CONVERSION. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
a. OPTIONAL AND AUTOMATIC CONVERSION. Each share of Preferred
Stock shall be convertible at the option of the holder thereof, without payment
of additional consideration, at any time after the date of issuance of such
share, at the office of the Corporation or any transfer agent for the Preferred
Stock, into such number of fully paid and nonassessable shares of Common as is
determined by dividing, with respect to the Series A Preferred, $1.325, with
respect to the Series B Preferred, $4.00, or, with respect to the Series C
Preferred, $5.00 by the Conversion Price, determined as hereinafter provided, in
effect at the time of conversion. The price at which shares of Common shall be
deliverable upon conversion of the Series A-1 Preferred (the "Series A-1
Conversion Price") shall initially be $1.325 per share of Common. The price at
which shares of Common shall be deliverable upon conversion of the Series A-3
Preferred (the "Series A-3 Conversion Price") shall initially be $1.325 per
share of Common. The price at which shares of Common shall be deliverable upon
conversion of the Series B Preferred (the "Series B Conversion Price") shall
initially be $4.00 per share of Common. The price at which shares of Common
shall be deliverable upon conversion of the Series C Preferred (the "Series C
Conversion Price") shall initially be $5.00 per share of Common. As used in
this Section 4., the term "Conversion Price" shall refer to the Series A-1
Conversion Price, the Series A-3 Conversion Price, the Series B Conversion Price
or the Series C Conversion Price, as the case may be. The initial Series A-1
Conversion Price, Series A-3 Conversion Price, Series B Conversion Price and
Series C Conversion Price shall be subject to adjustment as hereinafter
provided.
Each share of Preferred Stock shall automatically be converted into shares
of Common at the then effective Conversion Price in the event of either (i) the
closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Act"), covering the offer and sale of Common (whether for the account of
the Corporation or for the account of one or more stockholders of the
Corporation) of the Corporation to the public in which the aggregate gross cash
proceeds to the Corporation (prior to underwriters' discounts and expenses) are
equal to or exceed $15,000,000 and the public offering price is equal to or
exceeds $5.00 per share of Common (as adjusted for any stock dividends,
combinations or splits with respect to such shares) (a "Qualified Public
Offering") or (ii) the written consent of holders of more than fifty percent
(50%) of the then outstanding shares of Preferred Stock voting together as a
single class (a "Qualifying Consent"). In the event of the automatic conversion
of the Preferred Stock upon a Qualified Public Offering, the conversion of
Preferred Stock shall be deemed to have occurred immediately prior to the
closing of such Qualified Public Offering. In the event of the automatic
conversion of the shares of Preferred Stock upon a Qualifying Consent, the
conversion of Preferred Stock shall be deemed to have occurred on the date
specified in such Qualifying Consent.
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b. MECHANICS OF CONVERSION. No fractional shares of Common
shall be issued upon conversion of Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation shall
pay cash equal to such fraction multiplied by the then effective Conversion
Price. Before any holder of Preferred Stock shall be entitled to convert the
same into full shares of Common, it shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Preferred Stock, and shall give written notice to the
Corporation at such office that it elects to convert the same (except that no
such written notice of election to convert shall be necessary in the event of an
automatic conversion pursuant to Section 4.a.). The Corporation shall, as soon
as practicable thereafter, issue and deliver at such office to such holder of
Preferred Stock a certificate or certificates, registered in such names as
specified by the holder, for the number of shares of Common to which he shall be
entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a conversion into fractional shares of
Common, and any declared and unpaid dividends on the converted Preferred Stock.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common on such date (except that in the
event of an automatic conversion (i) upon a Qualified Public Offering pursuant
to Section 4.a. such conversion shall be deemed to have been made immediately
prior to the closing of the Qualified Public Offering and (ii) upon a Qualifying
Consent pursuant to Section 4.a. such conversion shall be deemed to have been
made on the date specified in such Qualifying Consent). If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Act, the conversion may, at the option of any holder tendering Preferred
Stock for conversion, be conditioned upon the closing with the underwriter of
the sale of securities pursuant to such offering, in which event the person(s)
entitled to receive the Common issuable upon such conversion of the Preferred
Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
c. ADJUSTMENTS TO SERIES A-1 CONVERSION PRICE, SERIES A-3
CONVERSION PRICE, SERIES B CONVERSION PRICE AND SERIES C CONVERSION PRICE FOR
DILUTIVE ISSUES.
(1) SPECIAL DEFINITIONS. For purposes of this Section 4.c.
and Section 5, the following definitions shall apply:
(a) "OPTION" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(b) "ORIGINAL ISSUE DATE" shall mean, with respect to
the Series A-1 Preferred, the date on which a share of Series A-1 Preferred was
first issued, and with respect to the Series A-3 Preferred, the date on which a
share of Series A-3 Preferred was first issued, with respect to the Series B
Preferred, the date on which a share
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of Series B Preferred was first issued and with respect to the Series C
Preferred, the date on which a share of Series C Preferred was first issued.
(c) "CONVERTIBLE SECURITIES" shall mean any evidences
of indebtedness, shares (other than Common and Preferred Stock) or other
securities directly or indirectly convertible into or exchangeable for Common.
(d) "ADDITIONAL SHARES OF COMMON" shall mean all
shares of Common issued (or, pursuant to Section 4.c.(3), deemed to be issued)
by the Corporation after the Original Issue Date, other than shares of Common
issued or issuable:
i) upon conversion of shares of Preferred Stock
authorized herein;
ii) to officers, directors or employees of, or
consultants to, the Corporation pursuant to any plan or agreement approved by
the Board of Directors;
iii) as a dividend or distribution on the
Preferred Stock or any event for which adjustment is made pursuant to Sections
4.d. or 4.e. hereof;
iv) in connection with equipment leasing or bank
financing transactions, provided such shares are issued for other than primarily
equity financing purposes;
v) pursuant to transactions involving technology
licensing, research or development activities or the distribution or manufacture
of the Corporation's products, provided that each of the forgoing transactions
is for other than primarily equity financing purposes; or
vi) by way of dividend or other distribution on
shares excluded from the definition of Additional Shares of Common by the
foregoing clauses i) through v) or this clause vi) or on shares of Common so
excluded.
(2) NO ADJUSTMENT OF SERIES A-1 CONVERSION PRICE,
SERIES A-3 CONVERSION PRICE, SERIES B CONVERSION PRICE OR SERIES C CONVERSION
PRICE. No adjustment in the Series A-1 Conversion Price, Series A-3 Conversion
Price, Series B Conversion Price or Series C Conversion Price shall be made in
respect of the issuance of Additional Shares of Common unless the consideration
per share for an Additional Share of Common issued or deemed to be issued by the
Corporation is less than the Series A-1 Conversion Price, Series A-3 Conversion
Price, Series B Conversion Price or Series C Conversion Price, respectively, in
effect on the date of, and immediately prior to, the issue of such Additional
Shares.
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(3) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES
OF COMMON -- OPTIONS AND CONVERTIBLE SECURITIES. In the event the Corporation
at any time or from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date, provided that in any such case in which Additional
Shares of Common are deemed to be issued:
(a) no further adjustment in the Series A-1 Conversion
Price, Series A-3 Conversion Price, Series B Conversion Price or Series C
Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common upon the exercise of such Options or conversion
or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Corporation, or decreases in the number of shares
of Common issuable, upon the exercise, conversion or exchange thereof, the
Series A-1 Conversion Price, Series A-3 Conversion Price, Series B Conversion
Price and Series C Conversion Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(c) no readjustment pursuant to clause (b) above shall
have the effect of increasing the Series A-1 Conversion Price, Series A-3
Conversion Price, Series B Conversion Price or Series C Conversion Price to an
amount which exceeds the lower of (i) such Series A-1 Conversion Price,
Series A-3 Conversion Price, Series B Conversion Price or Series C Conversion
Price, respectively, on the original adjustment date with respect to such deemed
issuance of Additional Shares of Common, or (ii) such Series A-1 Conversion
Price, Series A-3 Conversion Price, Series B Conversion Price or Series C
Conversion Price, respectively, that would have resulted from any issuance of
Additional Shares of Common between such original adjustment date and such
readjustment date; and
(d) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any decrease in the
consideration payable to the Corporation upon the exercise, conversion or
exchange thereof, the Series A-1 Conversion Price, Series A-3 Conversion Price,
Series B Conversion Price and Series C Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
decrease becoming effective, be recomputed to reflect such decrease insofar
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as it affects such Options or the rights of conversion or exchange under such
Convertible Securities.
(4) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON. In the event this Corporation shall issue
Additional Shares of Common (including Additional Shares of Common deemed to be
issued pursuant to Section 4.c.(3)) without consideration or for a consideration
per share less than the Series A-1 Conversion Price, Series A-3 Conversion
Price, Series B Conversion Price or Series C Conversion Price in effect on the
date of and immediately prior to such issue, then and in such event, such Series
A-1 Conversion Price, Series A-3 Conversion Price, Series B Conversion Price or
Series C Conversion Price, respectively, shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Series A-1 Conversion Price, Series A-3 Conversion Price,
Series B Conversion Price or Series C Conversion Price, respectively, by a
fraction, the numerator of which shall be the number of shares of Common
outstanding immediately prior to such issue plus the number of shares of Common
which the aggregate consideration received by the Corporation for the total
number of Additional Shares of Common so issued would purchase at such Series A-
1 Conversion Price, Series A-3 Conversion Price, Series B Conversion Price or
Series C Conversion Price, respectively, in effect immediately prior to such
issue; and the denominator of which shall be the number of shares of Common
outstanding immediately prior to such issue plus the number of such Additional
Shares of Common so issued; and provided further that, for the purposes of this
Section 4.c.(4): (i) no shares of Common issued or issuable upon conversion of
Preferred Stock shall be deemed to be outstanding and all such shares shall be
excluded from such calculation, (ii) all shares of Common issuable upon
conversion of outstanding Options and Convertible Securities (excluding
outstanding Preferred Stock) shall be deemed to be outstanding and all such
shares shall be included in such calculation, and (iii) except as provided in
the foregoing clauses (i) and (ii) above, immediately after any Additional
Shares of Common are deemed issued pursuant to Section 4.c.(3), such Additional
Shares of Common shall be deemed to be outstanding. The Series A-1 Conversion
Price, Series A-3 Conversion Price, Series B Conversion Price and Series C
Conversion Price shall not be increased except as set forth in Section
4.c.(3)(b) and in Section 4.d.
(5) DETERMINATION OF CONSIDERATION. For purposes of this
Section 4.c., the consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(a) CASH AND PROPERTY. Such consideration shall:
i) insofar as it consists of cash, be computed
at the aggregate amount of cash received by the Corporation excluding amounts
paid or payable for accrued interest or accrued dividends;
ii) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
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iii) in the event Additional Shares of Common are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses i) and ii) above, as
reasonably determined in good faith by the Board of Directors.
(b) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 4.c.(3), relating to
Options and Convertible Securities, shall be determined by dividing:
i) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
ii) the maximum number of shares of Common (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
d. ADJUSTMENT FOR STOCK SPLITS, DIVIDENDS AND COMBINATIONS. If
the Corporation shall at any time or from time to time effect a subdivision of
the outstanding Common, or shall issue a dividend of Common on its outstanding
Common, the Series A-1 Conversion Price, Series A-3 Conversion Price, Series B
Conversion Price and Series C Conversion Price then in effect immediately before
that subdivision or dividend shall be proportionately decreased, and conversely,
if the Corporation shall combine the outstanding shares of Common, the Series ▇-
▇ Conversion Price, Series A-3 Conversion Price, Series B Conversion Price and
Series C Conversion Price then in effect immediately before the combination
shall be proportionately increased. Any adjustment under this Section 4.d.
shall become effective at the close of business on the date the subdivision or
combination becomes effective or on the date on which the dividend is declared.
e. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time or from time to time shall make or issue, or
fix a record date for the determination of holders of Common entitled to receive
a dividend or other distribution payable in securities of the Corporation other
than shares of Common, then, and in each such event, provision shall be made so
that the holders of Series A-1 Preferred, Series A-3 Preferred, Series B
Preferred and Series C Preferred shall receive upon conversion thereof, in
addition to the number of shares of Common receivable thereupon, the amount of
securities of the Corporation that they would have received had their Series A-1
Preferred, Series A-3 Preferred, Series B Preferred and Series C Preferred been
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converted into Common on the date of such event, giving effect to all
adjustments called for with respect to such securities during the period from
the date of such event to and including the conversion date.
f. ADJUSTMENT FOR MERGER OR REORGANIZATION. In case of any
consolidation or merger of the Corporation with or into another corporation or
the conveyance of all or substantially all of the assets of the Corporation to
another corporation (other than a consolidation, merger or conveyance provided
for elsewhere in this Section 4 or Section 3), provisions shall be made so that
holders of shares of Series A-1 Preferred, Series A-3 Preferred, Series B
Preferred and Series C Preferred shall thereafter be convertible into the number
of shares of stock or other securities or property to which a holder of the
number of shares of Common of the Corporation deliverable upon conversion of
such Series A-1 Preferred, Series A-3 Preferred, Series B Preferred and Series C
Preferred would have been entitled upon such consolidation, merger or
conveyance; and, in any case, appropriate adjustment (as reasonably determined
in good faith by the Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and interest thereafter
of the holders of the Series A-1 Preferred, Series A-3 Preferred, Series B
Preferred and Series C Preferred, to the end that the provisions set forth
herein (including provisions with respect to changes in and other adjustments of
the Conversion Price) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any shares of stock or other property thereafter
deliverable upon the conversion of the Series A-1 Preferred, Series A-3
Preferred, Series B Preferred and Series C Preferred.
g. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If the Common issuable upon the conversion of the Series A-1 Preferred,
Series A-3 Preferred, Series B Preferred and Series C Preferred shall be changed
into the same or different number of shares of any class or series of stock,
whether by capital reorganization, reclassification or otherwise (other than as
set forth above in this Section 4), then and in each such event the holder of
each share of Series A-1 Preferred, Series A-3 Preferred, Series B Preferred and
Series C Preferred shall have the right thereafter to convert such share into
the kind and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other change by holders
of the number of shares of Common into which such shares of Series A-1
Preferred, Series A-3 Preferred, Series B Preferred and Series C Preferred might
have been converted immediately prior to such reorganization, reclassification
or change, all subject to further adjustment as provided herein.
h. NO IMPAIRMENT. The Corporation will not, by amendment of
this Amended and Restated Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A-1 Preferred, Preferred, Series
A-3 Preferred, Series B Preferred and Series C Preferred against impairment.
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i. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Series A-1 Conversion Price, Series A-3
Conversion Price, Series B Conversion Price or Series C Conversion Price
pursuant to this Section 4, the Corporation at its expense shall promptly
compute such adjustments or readjustments in accordance with the terms hereof
and furnish to each holder of any such Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Series A-1 Conversion Price, Series A-3
Conversion Price, Series B Conversion Price or Series C Conversion Price at the
time in effect, and (iii) the number of shares of Common and the amount, if any,
of other property which at the time would be received upon the conversion of
such holder's shares.
j. NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to each
holder of Preferred Stock at least ten (10) days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend or distribution. Each such written notice
shall be given by first class mail, postage prepaid, addressed to the holders of
Preferred Stock at the address for each such holder as shown on the books of
this Corporation.
k. COMMON STOCK RESERVED. The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common,
solely for the purpose of effecting the conversion of the shares of Preferred
Stock, such number of shares of Common as shall from time to time be sufficient
to effect the conversion of all outstanding shares of Preferred Stock, and if at
any time the number of authorized but unissued shares of Common shall not be
sufficient to effect the conversion of all then outstanding shares of Preferred
Stock, the Corporation shall take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of
Common to such number of shares as shall be sufficient for such purpose.
5. VOTING RIGHTS. Each holder of shares of Series A-1 Preferred
shall be entitled to the number of votes equal to the number of shares of Common
into which such shares of Series A-1 Preferred could be converted on the record
date for the vote or the date of the solicitation of any written consent of
stockholders and shall have voting rights and powers equal to the voting rights
and powers of the Common. The Series A-3 Preferred shall be non-voting
Preferred, except as otherwise required by law. Each holder of shares of Series
B Preferred shall be entitled to the number of votes equal to the number of
shares of Common into which such shares of Series B Preferred could be converted
on the record date for the vote or the date of the solicitation of any written
consent of stockholders and shall have voting rights and powers equal to the
voting rights and powers of the Common. Each holder of shares of Series C
Preferred shall be entitled to the number of votes equal to the number of shares
of Common into which such shares of Series C Preferred could be
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converted on the record date for the vote or the date of the solicitation of any
written consent of stockholders and shall have voting rights and powers equal to
the voting rights and powers of the Common. Each holder of Common shall be
entitled to one vote per share of Common held by such holder. The holder of
each share of Series A-1 Preferred, Series B Preferred and Series C Preferred
shall be entitled to notice of any stockholders' meeting in accordance with the
Bylaws of the Corporation and shall vote with holders of the Common upon all
matters submitted to a vote of stockholders, except those matters required by
law to be submitted to a class vote and except as provided in Section 6 below.
Fractional votes by the holders of Series A-1 Preferred, Series B Preferred and
Series C Preferred shall not, however, be permitted and any fractional voting
rights resulting from the above formula shall be rounded to the nearest whole
number.
6. RESTRICTIONS AND LIMITS.
a. So long as fifty percent (50%) or more of the originally
issued shares of Series A-1 Preferred, Series B Preferred and Series C Preferred
shall be outstanding, the Corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less than sixty-six
and two-thirds percent (66-2/3%) of the then outstanding shares of Series A-1
Preferred, Series B Preferred and Series C Preferred, voting as a class:
(1) amend or repeal any provision of, or add any provision
to, the Corporation's Amended and Restated Certificate of Incorporation or
Bylaws if such action would adversely alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of the
Series A-1 Preferred, Series B Preferred or Series C Preferred;
(2) create any new series or class of stock having any
rights, preferences or privileges senior to or on a parity with any such rights,
preferences or privileges of the Series A-1 Preferred, Series B Preferred or
Series C Preferred;
(3) increase or decrease the authorized number of shares of
Series A Preferred, Series B Preferred, Series C Preferred or Preferred;
(4) pay any dividend on, or redeem, repurchase or otherwise
acquire any shares of, the Common or Preferred (other than (i) any repurchases
of shares of Common held by an employee of the Corporation upon termination of
employment, and (ii) as approved by the Board of Directors);
(5) merge into or consolidate with any other corporation or
entity (other than any transaction in which the Corporation's stockholders own a
majority of the securities of the surviving corporation) or sell all or
substantially all of the assets of the Corporation;
(6) amend, or take any action intended to circumvent, the
provisions of this Section 6.
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7. STATUS OF CONVERTED STOCK. In the event any shares of Preferred
Stock shall be converted pursuant to Section 4 hereof, the shares so converted
shall be cancelled and shall not be issuable by the Corporation. The
Certificate of Incorporation of this Corporation shall be appropriately amended
to effect the corresponding reduction in the Corporation's authorized capital
stock.
8. RESIDUAL RIGHTS. All rights accruing to the outstanding shares
of the Corporation not otherwise expressly provided for in this Amended and
Restated Certificate of Incorporation shall be vested in the Common.
9. REPURCHASE OF SHARES. In connection with repurchases by this
Corporation of its Common Stock pursuant to agreements with certain of the
holders thereof approved by this Corporation's Board of Directors, each holder
of Preferred Stock shall be deemed to have waived the application, in whole or
in part, of any provisions of the Delaware General Corporation Law or any
applicable law of any other state which might limit or prevent or prohibit such
repurchases.
ARTICLE V.
A. EXCULPATION.
1. CALIFORNIA. The liability of each and every director of this
Corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
2. DELAWARE. A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware General Corporation Law is hereafter
amended to further reduce or to authorize, with the approval of the
Corporation's stockholders, further reductions in the liability of the
Corporation's directors for breach of fiduciary duty, then a director of the
Corporation shall not be liable for any such breach to the fullest extent
permitted by the Delaware General Corporation Law as so amended.
3. CONSISTENCY. In the event of any inconsistency between Sections
1 and 2 of this subsection A, the controlling Section, as to any particular
issue with regard to any particular matter, shall be the one which provides to
the director in question the greatest protection from liability.
B. INDEMNIFICATION.
1. CALIFORNIA. This Corporation is authorized to indemnify the
directors and officers of this Corporation to the fullest extent permissible
under California law. Moreover, this Corporation is authorized to provide
indemnification of (and advancement
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of expenses to) agents (as defined in Section 317 of the California Corporations
Code) through bylaw provisions, agreements with agents, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 317 of the California Corporations
Code, subject only to applicable limits set forth in Section 204 of the
California Corporations Code, with respect to actions for breach of duty to the
Corporation and its stockholders.
2. DELAWARE. To the extent permitted by applicable law, this
Corporation is also authorized to provide indemnification of (and advancement of
expenses to) such agents (and any other persons to which Delaware law permits
this Corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to the
Corporation, its stockholders, and others.
3. CONSISTENCY. In the event of any inconsistency between Sections
1 and 2 of this subsection B, the controlling Section, as to any particular
issue with regard to any particular matter, shall be the one which authorizes
for the benefit of the agent or other person in question the provision of the
fullest, promptest, most certain or otherwise most favorable indemnification
and/or advancement.
C. EFFECT OF REPEAL OR MODIFICATION. Any repeal or modification of any
of the foregoing provisions of this Article V shall not adversely affect any
right or protection of a director, officer, agent or other person existing at
the time of, or increase the liability of any director of the Corporation with
respect to any acts or omissions of such director occurring prior to, such
repeal or modification.
ARTICLE VI.
The Corporation shall have perpetual existence.
ARTICLE VII.
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of the Corporation.
ARTICLE VIII.
Elections of directors need not be by written ballot except and to the
extent provided in the bylaws of the Corporation.
-14-
ARTICLE IX.
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
* * * * *
THREE: The foregoing Amendment and Restatement of Certificate of
Incorporation has been duly approved by the Board of Directors.
FOUR: The foregoing amendment and restatement of the Certificate of
Incorporation has been duly approved by the required vote of stockholders in
accordance with Section 242 of the Delaware General Corporation Law. The total
number of outstanding shares of the Corporation is 712,250 shares of Common
Stock, 8,094,340 shares of Series A-1 Preferred Stock, 154,581 shares of Series
A-3 Preferred Stock and 1,325,331 shares of Series B Preferred Stock. The
number of shares voting in favor of the amendment equaled or exceeded the vote
required, such required vote being (a) a majority of the outstanding shares of
Common Stock, Series A-1 Preferred Stock and Series B Preferred Stock (voting
together on an as-converted basis), (b) a majority of the outstanding shares of
Series A-1 Preferred Stock and Series B Preferred Stock (voting together as a
class) and (c) 66 2/3% of the outstanding shares of Series A-1 Preferred Stock
and Series B Preferred Stock (voting together as a class). The holders of
Series A-3 are not entitled to vote, except as required by law.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this certificate on
November 25, 1996.
-------------------------------------------
▇▇▇▇ ▇▇▇▇, President
-------------------------------------------
▇▇▇▇▇▇ De Vaere, Assistant Secretary
The undersigned certify under penalty of perjury that they have read
the foregoing Amended and Restated Certificate of Incorporation and know the
contents thereof, and that the statements therein are true.
Executed at San Diego, California, on November 25, 1996.
-------------------------------------------
▇▇▇▇ ▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ De Vaere
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SCHEDULE OF EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
THIS SCHEDULE OF EXCEPTIONS IS MADE AND GIVEN PURSUANT TO ARTICLE 2 OF THE
SERIES C PREFERRED STOCK PURCHASE AGREEMENT (THE "AGREEMENT"). THE SECTION
NUMBERS IN THIS SCHEDULE OF EXCEPTIONS CORRESPOND TO THE SECTION NUMBERS IN THE
AGREEMENT; HOWEVER, ANY INFORMATION DISCLOSED HEREIN UNDER ANY SECTION NUMBER
SHALL BE DEEMED TO BE DISCLOSED AND INCORPORATED INTO ANY OTHER SECTION NUMBER
UNDER THE AGREEMENT TO WHICH THE APPLICABILITY OF SUCH DISCLOSURE IS REASONABLY
APPARENT. ANY TERMS DEFINED IN THE AGREEMENT SHALL HAVE THE SAME MEANING WHEN
USED IN THIS SCHEDULE OF EXCEPTIONS AS WHEN USED IN THE AGREEMENT UNLESS THE
CONTEXT OTHERWISE REQUIRES.
NOTHING HEREIN CONSTITUTES AN ADMISSION OF ANY LIABILITY OR OBLIGATION ON
THE PART OF THE COMPANY NOR AN ADMISSION AGAINST THE COMPANY'S INTEREST. THE
INCLUSION OF ANY SCHEDULE HEREIN OR ANY EXHIBIT HERETO SHOULD NOT BE INTERPRETED
AS INDICATING THAT THE COMPANY HAS DETERMINED THAT SUCH AN AGREEMENT OR OTHER
MATTER IS NECESSARILY MATERIAL TO THE COMPANY. THE INVESTOR ACKNOWLEDGES THAT
CERTAIN INFORMATION CONTAINED IN THESE SCHEDULES MAY CONSTITUTE MATERIAL
CONFIDENTIAL INFORMATION RELATING TO THE COMPANY WHICH MAY NOT BE USED FOR ANY
PURPOSE OTHER THAN THAT CONTEMPLATED IN THE AGREEMENT.
SCHEDULE 2.1
ORGANIZATION, GOOD STANDING AND QUALIFICATION
The Company has qualified or applied to qualify to do business in
Massachusetts and California. The Company also owns equipment used for
evaluation and demonstration purposes in several other states and countries, in
which states the failure to qualify to do business would not have a material
adverse effect on the Company's business or properties.
SCHEDULE 2.3
SUBSIDIARIES
Oktas, Inc., a Massachusetts corporation ("Oktas"), is a wholly-owned
subsidiary of the Company. Oktas is a holder of approximately thirty-five
percent (35%) of the partnership interest of Oktas, a General Partnership
("Oktas G.P."). The Company is the holder of the remaining partnership interest
in Oktas G.P. Oktas G.P. shall also be deemed to be a Subsidiary of the Company
for purposes of the Agreement.
Oktas intends to adopt a plan of dissolution which distributes all of its
assets to its sole shareholder, which is the Company. Having only one partner,
Oktas G.P. will dissolve and become part of the Company as a matter of law.
The Company is in discussions with UroHealth Systems, Inc.
("UroHealth") and may license certain proprietary rights of the Company for
gynecology products to UroHealth in exchange for a cash payment, royalty
payments and equity.
SCHEDULE 2.9
PATENTS AND TRADEMARKS
The Company owns the following United States patents:
Patent No. 5,536,234 entitled "Optical Surgical Device" (granted July 16,
1996);
Patent No. 5,349,941 entitled "Cleanable Endoscope" (granted September 27,
1994);
Patent No. 5,317,485 entitled "Connector And Method For Coupling An End Of
A Light-Transmitting Conduit" (granted May 31, 1994); and
Patent No. 5,538,497 entitled "Endoscope Having Parasitic Light Elements,"
(granted July 23, 1996).
The Company or Oktas has filed the following patent applications with the
U.S. Patent and Trademark Office (the "PTO"):
AST-001C2 entitled "Medical Video Endoscope System," Ser. No. 08/227,675
(filed April 14, 1994, to be abandoned regarding CIP case filed);
AST-001PC2 entitled "Medical Video Endoscope System," Ser. No.
PCT/US94/06673 (filed June 14, 1994);
AST-001C3 entitled "Medical Video Endoscope System," Ser. No. 08/324,006
(filed October 14, 1994) (Notice of Abandonment issued February 2, 1996);
HORI-101AX entitled "Electronic Endoscope," Ser. No. 08/067,140 (filed May
25, 1993) (Notice of Abandonment issued January 22, 1996);
HORI-101AXCON entitled "Electronic Endoscope," Ser. No. 08/581,307 (filed
December 28, 1995);
HORI-101XX entitled "Electronic Endoscope," Ser. No. 07/967,996 (filed
October 28, 1992);
HORI-101FX entitled "Electronic Endoscope," Ser. No. 08/400,503 (filed
March 7, 1995);
OKTA-1 entitled "Electronic Endoscope With Zoom Lens System," Ser. No.
08/319,886 (filed October 7, 1994);
OKTA-1 PCT entitled "Electronic Endoscope With Zoom Lens System," Ser. No.
PCT/US95/13352 (filed October 6, 1995);
OKTA-2 entitled "Asymmetric Stereo-Optic Endoscope," Ser. No. 08/475,364
(filed June 7, 1995);
OKTA-2 PCT entitled "Asymmetric Stereo-Optic Endoscope," Ser. No.
PCT/US96/07735 (filed May 28, 1996);
OKTA-3 entitled "A Device For Carrying Two Units In End To End Disposition
And For Moving One Of The Units Alongside The Other Of The Units," Ser. No.
08/628,448 (filed April 5, 1996);
OKTA-5 entitled "Fog-Free Endoscope," Ser. No. 08/546,271 (filed October
20, 1995);
OKTA-5 PCT entitled "Fog-Free Endoscope," Ser. No. PCT/US96/16377 (filed
October 15, 1996);
OKTA-6 entitled "Electronic Endoscope With Position Display," Ser. No.
08/545,927 (filed October 20, 1995);
-2-
OKTA-6 PCT entitled "Electronic Endoscope With Position Display," Ser. No.
PCT/US96/16353 (filed October 15, 1996); and
OKTA-10 entitled "Video Endoscopes," Ser. No. 08/722,742 (filed October 10,
1996).
The Company is preparing the following patent applications:
AST-001 CIP3 (continuation of AST-001C2) entitled "Medical Video Endoscope
System;"
OKTA-4 entitled "A Device For Carrying Two Units In End To End Disposition
And For Moving One Of The Units Alongside The Other Of the Units;"
OKTA-5 DIV (division of OKTA-5) entitled "Fog-Free Endoscope;"
OKTA-7 entitled "An Endoscope Apparatus (Irrigation Means);"
OKTA-8 entitled "A Rib Retractor And Accessory Support Assembly;" and
OKTA-9 entitled "An Endoscope Wherein Electrical Components Are
Electrically Isolated From Patient-Engaging Components."
The Company or Oktas has filed the following patent applications outside of
the United States:
AST-001PC2 entitled "Medical Video Endoscope System," Ser. No. 94919483
(filed June 14, 1994 in Europe); and
AST-PC2 entitled "Medical Video Endoscope System," Ser. No. 502165/95
(filed June 14, 1994 in Japan).
OKTA-1 PCT entitled "Electronic Endoscope With Zoom Lens System," Ser. No.
95937499.2 (filed October 6, 1995 in Europe);
OKTA-1 PCT entitled "Electronic Endoscope With Zoom Lens System," Ser. No.
2177283 (filed October 6, 1995 in Canada); and
OKTA-1 PCT entitled "Electronic Endoscope With Zoom Lens System," Ser. No.
512737/96 (filed October 6, 1995 in Japan).
The Company was granted the following foreign filing license:
Entitled "Optical Surgical Device With Scraping Tool," which is a
continuation of Patent 5,536,234 entitled "Optical Female Urethroscope."
The Company owns the following trademarks, which were acquired pursuant to
the AST Agreement (as defined herein):
3D Scope-Registered Trademark-
Stereolaparoscope-TM-
American Surgical Technology Corporation-TM-
The Company has filed the following trademark applications with the PTO:
Cardiocamera-TM-
Cardiozoom-TM-
Infomatix-TM-
-3-
Vista-TM-
Design of Cone-TM-
Vista & Design-TM-
Cardioview-TM-
Vista Cardiothoracic Endosurgery-TM-
MIM-TM-
The Company licenses the trademark Aspiroscope-TM- pursuant to the ▇▇▇▇▇▇
License Agreement (as defined below). The Aspiroscope-TM- trademark is owned by
▇▇▇▇▇▇ Medical, Inc.
Reference is made to a certain Asset Purchase Agreement between the Company
and AST dated September 15, 1995 (the "AST Agreement").
Reference is made to a certain License and Development Agreement dated as
of December 18, 1991 among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Optics, Inc. and AST, as
amended on June 28, 1994, which was assigned to the Company pursuant to the AST
Agreement.
Reference is made to a certain Agreement to Amend License and Development
Agreement dated September 15, 1995 between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the Company.
Reference is made to a certain International Distribution Agreement dated
as of September 20, 1994 between AST and AMCO, Inc., which was assigned to the
Company pursuant to the AST Agreement.
Reference is made to a certain Non-Competition, Non-Disclosure and Patent
and Inventions Assignment Agreement dated as of December 18, 1991 among ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Optics, Inc. and AST, which was assigned to the Company
pursuant to the AST Agreement.
Reference is made to a certain Non-Exclusive License Agreement between the
Company, Fuji Film Co. and Fuji Photo Optical Co. (collectively "Fuji") dated
June 25, 1996 (the "Fuji Agreement"), pursuant to which Fuji granted the Company
certain manufacturing and distribution rights to products which contain patented
Fuji technology in the United States.
Reference is made to a certain License Agreement between ▇▇▇▇▇ ▇▇▇▇▇▇ and
the Company dated September 2, 1994 (the "▇▇▇▇▇▇ License Agreement"), pursuant
to which ▇▇. ▇▇▇▇▇▇ granted the Company an exclusive license to use and
sublicense rights to certain technology.
Reference is made to a certain License Agreement between the Company and
Kaiser Aerospace and Electronics Corporation ("Kaiser"), dated July, 1995 (the
"Kaiser Agreement") pursuant to which Kaiser granted the Company an exclusive,
perpetual, worldwide license for the optical collimating apparatus (cholesteric
optics for use in head mounted displays) in all applications in or relating to
medicine.
-4-
Reference is made to a certain Technology Alliance (as defined below). See
Schedule 2.11(b).
The Company is not in default of any of the material terms of the above
listed license agreements.
SCHEDULE 2.11
AGREEMENTS; ACTION
(a) Oktas intends to adopt a plan of dissolution which distributes all of
its assets to its sole shareholder, which is the Company. Having only one
partner, Oktas G.P. will dissolve and become part of the Company as a matter of
law.
Reference is made to the ▇▇▇▇▇▇ License Agreement. See Schedules 2.9
and 2.12.
Reference is made to the Kaiser Agreement. See Schedule 2.9 above.
In connection with the purchase of an aggregate of 622,500 shares of
Common Stock of the Company pursuant to the exercise of stock options, the
Company holds Promissory Notes (the "Promissory Notes") in the aggregate amount
of $93,375 to be paid by certain officers and consultants of the Company.
The Company has entered into a form of indemnification agreement with
each of its current directors.
Reference is made to a Certificate of Ownership and Merger dated
November 4, 1996, pursuant to which Vista Medical Technologies, Inc., a
California corporation
("Vista--California"), merged with and into the Company, its wholly-owned
subsidiary.
(b) Reference is made to Schedules 2.9 and 2.11(a) above.
Reference is made to the Oktas Lease. See Schedule 2.16 below.
The Company is in discussions with UroHealth and may license certain
proprietary rights of the Company for gynecology products to UroHealth in
exchange for a cash payment, royalty payments and equity.
Reference is made to an informal OEM arrangement with Linvatec,
pursuant to which Linvatec places purchase orders with the Company for
orthopedic products in the U.S. only.
Reference is made to certain Standard Sublease dated January 23, 1996
between Quintiles Pacific, Inc. and the Company.
-5-
Reference is made to an informal arrangement pursuant to which Pilling
▇▇▇▇ acts as an exclusive distributor of certain of the Company's products in
the United States in the field of laparoscopy and ENT. This arrangement is
being reviewed by the Company and may be terminated.
Reference is made to a certain Memorandum of Understanding (Revised
January 1996) between Pilling ▇▇▇▇ and the Company providing for continuing
cooperation between the parties.
Reference is made to an informal arrangement with ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
pursuant to which the Company may distribute with its products certain
specifically designed hand instruments developed by ▇▇. ▇▇▇▇▇▇▇▇.
Reference is made to a certain Consulting Agreement (the form of which
has been provided to Investor) between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the Company dated
September 15, 1995.
Reference is made to a form of Professional Services agreement entered
into with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for $80,000 over a nine-month period.
Reference is made to a form of Consulting Agreement entered into with
the following individuals or entities:
1. A & G Medical, European consultant, currently active, at $10,000
per month. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is a third party beneficiary to this
Consulting Agreement;
2. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, product design services, currently active at
$4,950 per month on a month to month basis;
3. Nova Microsystems, currently active, at $2,400 per week;
4. ▇▇▇▇ ▇▇▇▇▇▇, currently active, on an hourly basis;
5. ▇▇. ▇▇▇▇▇, currently active, at $2,000 per month;
6. Promedica International, Inc., currently active, at $3,000 per
month; and
7. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, currently active, on an hourly basis.
Reference is made to a consulting agreement (the form of which has
been provided to Investor) between the Company and ▇. ▇▇▇▇▇▇▇▇▇▇▇ & Co.,
currently active, at $3,500 per month.
Reference is made to a form of Professional Services Agreement
(Clinical Advisory Board) (the form of which has been provided to Investor)
entered into with the following individuals:
1. ▇▇. ▇▇▇▇▇▇▇ at $5,000 per month; and
2. Dr. Shennib at $2,000 per month.
-6-
Reference is made to certain Purchase Orders, for an aggregate amount
of approximately $1,652,150 placed with the following entities, copies of which
were provided to Investor:
1. Lithographix for $45,000;
2. ▇▇▇▇▇▇ Marketing for $45,000;
3. Kaiser Electro-Optics for $722,000;
4. ▇▇▇▇▇▇▇▇▇ Group for $100,000;
5. ▇.▇. ▇▇▇▇ for $96,300;
6. Precision Interconnect for $79,000;
7. ▇▇▇▇▇▇ Design for $75,500;
8. ▇▇▇▇▇▇▇ Optical for $41,575;
9. Lake Manufacturing for $28,900;
10. BEI Medical Systems for $73,875; and
11. Cogent Light Technologies for $95,500 and $250,000.
Reference is made to a certain partnership agreement between the
Company and Oktas, Inc. dated July 26, 1993 (the "Partnership Agreement").
Reference is made to a certain Standby Letter of Credit ("Standby
Letter of Credit") in the amount of $150,000, cash collateralized at $165,000,
which permits the Company to buy certain components directly from Matsushita
Electric Industrial Co., Ltd. ("Matsushita"), a Japanese corporation. This
Standby Letter of Credit will expire in August, 1997.
Reference is made to a certain Distributor Agreement dated July 15,
1996 between the Company and ▇▇▇▇▇▇.
Reference is made to a certain U.S.A. and Canada Distribution
Agreement dated July 11, 1996 between the Company and ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
Surgical Instruments.
Reference is made to an informal arrangement between the Company and
Matsushita pursuant to which Matsushita supplies the Company with certain
products.
Reference is made to a certain Memorandum of Understanding regarding
Technology Alliance between the Company and Cogent Light dated March 27, 1995
(the "Technology Alliance").
Reference is made to a certain Memorandum of Understanding regarding
Technology Alliance between the Company, Cogent Light and ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ dated
May 3, 1995. This agreement is currently non-operating in that the course of
action and technology development conceived by the agreement have been
abandoned.
Reference is made to a certain Technology Strategic Alliance:
Memorandum of Understanding dated July 19, 1996 with Kaiser Electro-Optics.
(c) Reference is made to Schedules 2.9 and 2.11(b) above and Schedule 2.12
below.
-7-
SCHEDULE 2.12
RELATED-PARTY TRANSACTIONS
Reference is made to a Certificate of Ownership and Merger dated November
4, 1996, pursuant to which Vista--California merged with and into the Company,
its wholly-owned subsidiary.
Venture capital funds affiliated with certain directors participated in the
Company's prior Series A-1 and Series B Preferred Stock financings. Such
directors may engage in the development and financing of other companies and/or
research projects which may be developing, or may in the future develop,
products which may compete directly, or indirectly, with the products intended
to be developed by the Company.
Pursuant to the License Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ currently
is indebted to the Company in the amount of $37,500, as an advance payment
against royalties due under the License Agreement.
SCHEDULE 2.16
TITLE TO PROPERTY AND ASSETS
Reference is made to a certain Lease of ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, dated April 14, 1994, as amended by a certain First Amendment to
Lease dated March 29, 1996 and a certain Second Amendment to Lease dated October
22, 1996 (the "Oktas Lease"). The Oktas Lease of facilities used by the Company
is between Oktas G.P. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Trustee of MAT Realty Trust,
u/d/t dated June 4, 1986.
SCHEDULE 2.17
FINANCIAL STATEMENTS
Reference is made to the Standby Letter of Credit. See Schedule 2.11(b).
See Partnership Agreement regarding credit facility between the Company and
Oktas G.P.
SCHEDULE 2.18
CHANGES
(f) Reference is made to the Fuji Agreement. See Schedule 2.9 above.
Reference is made to a Certificate of Ownership and Merger dated
November 4, 1996, pursuant to which Vista--California merged with and into the
Company, its wholly-
-8-
owned subsidiary (the "Merger"). Pursuant to the terms of the Merger, the
Company assumed all obligations and liabilities of Vista--California. The
Company intends to obtain all necessary consents to assignment required as a
result of the Merger.
(i) Reference is made to the Promissory Notes. See Schedule 2.11 above.
(k) On October 22, 1996, the Company granted to certain employees options
to purchase shares of Common Stock, in an aggregate amount of 116,500 shares,
pursuant to its 1995 Stock Option Plan.
SCHEDULE 2.19
EMPLOYEE BENEFIT PLANS
The Company has standard fringe benefit plans in the ordinary course of
business, including, but not limited to, medical plans and vacation policies.
The Company has a 401(k) Plan. The Company is not currently matching
employee contributions to its 401(k) Plan.
SCHEDULE 2.26
MANUFACTURING AND MARKETING RIGHTS
Reference is made to Schedules 2.9 and 2.11 above.
Reference is made to a Manufacturing Supply Agreement between ▇▇▇▇▇▇
Electro-Optics, Inc. and the Company dated July 21, 1995, pursuant to which
▇▇▇▇▇▇ Electro-Optics, Inc. has certain rights to manufacture optical sub-
assembly and head mounted electronics for the Company.
Reference is made to a certain Distributorship Agreement between the
Company and Oktas G.P. dated July 26, 1993.
Reference is made to a certain Distributor Agreement dated July 15, 1996
between the Company and ▇▇▇▇▇▇.
Reference is made to a certain U.S.A. and Canada Distribution Agreement
dated July 11, 1996 between the Company and ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Surgical
Instruments.
Reference is made to a certain International Distribution Agreement dated
as of September 20, 1994 between AST and AMCO, Inc., which was assigned to the
Company pursuant to the AST Agreement.
Reference is made to a form of Sales Representative Agreement (the form of
which has been provided to Investor) entered into with the following individuals
or entities:
-9-
1. ▇▇▇▇▇▇▇ Medical;
2. ▇. ▇▇▇▇▇▇▇ Enterprises, Inc.;
3. Mountain States Medical, Inc.;
4. Selected Medical Enterprises, Inc.;
5. ▇▇▇ ▇▇▇▇▇▇▇;
6. Affiliated Medical Research, Inc.;
7. Meadowbrook Medical Technologies, Inc.;
8. Med Team, Inc.;
9. Northeastern Medical;
10. New England Medical Equipment;
11. Corthomed, Inc.;
12. ▇▇▇▇▇ Associates, Inc.;
13. Cardio Medics;
14. ▇▇▇, Inc.;
15. ▇▇ ▇▇▇▇▇▇;
16. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
17. RTM Enterprises; and
18. Biolife, Inc.
-10-