SERIES A PREFERRED STOCK PURCHASE AGREEMENT by and among OCUSENSE, INC., a Delaware corporation and OCCULOGIX, INC., a Delaware corporation Dated as of November 30, 2006
by
and among
OCUSENSE,
INC., a Delaware corporation
and
OCCULOGIX,
INC., a Delaware corporation
Dated
as of November 30, 2006
1.1Sale
and
Issuance of Series A Preferred
Stock............................................................................................................................................................................................1
1.2Filing
of
Certificate of
Incorporation.............................................................................................................................................................................................................1
1.3Payment
of Purchase
Price..............................................................................................................................................................................................................................1
1.4Closing;
Note Repayment; Milestones; Additional
Financing.................................................................................................................................................................2
1.5Warrant..............................................................................................................................................................................................................................................................4
2.REPRESENTATIONS
AND WARRANTIES OF THE
COMPANY............................................................................................................................................................................5
2.1Organization,
Good Standing and
Qualification..........................................................................................................................................................................................5
2.2Capitalization
and Voting
Rights...................................................................................................................................................................................................................6
2.3Subsidiaries.......................................................................................................................................................................................................................................................7
2.4Authorization....................................................................................................................................................................................................................................................7
2.5Governmental
Consents..................................................................................................................................................................................................................................8
2.6Litigation............................................................................................................................................................................................................................................................8
2.7Title
to
Property and
Assets...........................................................................................................................................................................................................................8
2.8Liabilities............................................................................................................................................................................................................................................................9
2.9Financial
Statements........................................................................................................................................................................................................................................9
2.10Material
Contracts..........................................................................................................................................................................................................................................9
2.11Registration
or First Offer
Rights.................................................................................................................................................................................................................9
2.12Proprietary
Rights.........................................................................................................................................................................................................................................10
2.13No
Conflict of
Interest.................................................................................................................................................................................................................................12
2.14Tax
Returns....................................................................................................................................................................................................................................................12
2.15Permits;
Compliance with
Laws..................................................................................................................................................................................................................12
2.16Compliance
with Charter Documents; No
Conflict..................................................................................................................................................................................13
2.17Employees......................................................................................................................................................................................................................................................13
2.18Assignment
of Inventions and Non-Disclosure
Agreements...............................................................................................................................................................13
2.19Environmental
and Safety
Laws.................................................................................................................................................................................................................13
2.20Real
Property.................................................................................................................................................................................................................................................14
2.21Development
and Marketing
Rights.........................................................................................................................................................................................................14
2.22Disclosure......................................................................................................................................................................................................................................................14
2.23Brokers
or Finders, Other
Offers................................................................................................................................................................................................................14
2.24Minute
Books................................................................................................................................................................................................................................................14
3.REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE PURCHASER TO THE
COMPANY......................................................................................................14
3.1Authorization..................................................................................................................................................................................................................................................14
3.2Purchase
Entirely for Own
Account............................................................................................................................................................................................................15
3.3Speculative
Nature of
Investment................................................................................................................................................................................................................15
3.4Disclosure
of
Information..............................................................................................................................................................................................................................15
3.5Investment
Experience...................................................................................................................................................................................................................................15
3.6Restricted
Securities.......................................................................................................................................................................................................................................15
3.7Further
Limitations on
Disposition..............................................................................................................................................................................................................15
3.8Legends............................................................................................................................................................................................................................................................16
4.CONDITIONS
OF THE PURCHASER’S OBLIGATIONS AT
CLOSING.................................................................................................................................................................
16
4.1Representations
and
Warranties..................................................................................................................................................................................................................17
4.2Performance......................................................................................................................................................................................................................................................17
4.3Compliance
Certificate....................................................................................................................................................................................................................................17
4.4Qualifications...................................................................................................................................................................................................................................................17
4.5Investor
Rights
Agreement...........................................................................................................................................................................................................................17
4.6Voting
Agreement...........................................................................................................................................................................................................................................17
4.7Legal
Opinion...................................................................................................................................................................................................................................................17
4.8Certificate
of
Incorporation............................................................................................................................................................................................................................17
4.9Board
of
Directors...........................................................................................................................................................................................................................................17
4.10Secretary’s
Certificate...................................................................................................................................................................................................................................17
4.11Stockholder
Consent to
Transactions.......................................................................................................................................................................................................18
4.12Financing........................................................................................................................................................................................................................................................18
4.13Warrant...........................................................................................................................................................................................................................................................18
4.14Brokers
or
Finders.........................................................................................................................................................................................................................................18
4.15Other
Deliveries.............................................................................................................................................................................................................................................18
5.CONDITIONS
OF THE COMPANY’S OBLIGATIONS AT
CLOSING.....................................................................................................................................................................18
5.1Representations
and
Warranties..................................................................................................................................................................................................................18
5.2Qualifications..................................................................................................................................................................................................................................................18
5.3Investor
Rights
Agreement..........................................................................................................................................................................................................................18
5.4Voting
Agreement..........................................................................................................................................................................................................................................18
5.5Certificate
of
Incorporation...........................................................................................................................................................................................................................18
5.6Note..................................................................................................................................................................................................................................................................18
5.7Other
Deliveries..............................................................................................................................................................................................................................................18
6.CONDITIONS
OF THE PURCHASER’S OBLIGATIONS AT THE ADDITIONAL
CLOSING.............................................................................................................................19
6.1Representations
and
Warranties..................................................................................................................................................................................................................19
6.2Performance.....................................................................................................................................................................................................................................................19
6.3Compliance
Certificate...................................................................................................................................................................................................................................19
6.4Qualifications..................................................................................................................................................................................................................................................19
6.5Material
Adverse
Effect.................................................................................................................................................................................................................................19
6.6Other
Deliveries..............................................................................................................................................................................................................................................20
7.CONDITIONS
OF THE COMPANY’S OBLIGATIONS AT THE ADDITIONAL
CLOSING................................................................................................................................20
7.1Representations
and
Warranties..................................................................................................................................................................................................................20
7.2Qualifications..................................................................................................................................................................................................................................................20
7.3Other
Deliveries..............................................................................................................................................................................................................................................20
8.ADDITIONAL
AGREEMENTS OF THE COMPANY AND THE
PURCHASER....................................................................................................................................................20
8.1Use
of
Proceeds..............................................................................................................................................................................................................................................20
8.2Insurance
Indemnity......................................................................................................................................................................................................................................20
8.3Sales
and
Marketing
Agreement..................................................................................................................................................................................................................21
8.4Right
of
First Offer
Waivers..........................................................................................................................................................................................................................21
9.MISCELLANEOUS...........................................................................................................................................................................................................................................................21
9.1Term...................................................................................................................................................................................................................................................................21
9.2Successors
and
Assigns...............................................................................................................................................................................................................................22
9.3Governing
Law................................................................................................................................................................................................................................................22
9.4Counterparts....................................................................................................................................................................................................................................................22
9.5Titles
and
Subtitles.........................................................................................................................................................................................................................................22
9.6Notices.............................................................................................................................................................................................................................................................22
9.7Finder’s
Fee.....................................................................................................................................................................................................................................................23
9.8Costs
and
Expenses.......................................................................................................................................................................................................................................24
9.9Amendment
and
Waivers.............................................................................................................................................................................................................................24
9.10Severability....................................................................................................................................................................................................................................................24
9.11Entire
Agreement..........................................................................................................................................................................................................................................24
9.12Survival
of
Warranties.................................................................................................................................................................................................................................24
9.13California
Corporate Securities
Law..........................................................................................................................................................................................................24
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OCUSENSE,
INC.
THIS
SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”)
is
made and entered into as of November 30, 2006, by and among OcuSense, Inc.,
a
Delaware corporation (the “Company”),
and
OccuLogix, Inc., a Delaware corporation (the “Purchaser”).
WHEREAS,
the
Purchaser desires to purchase from the Company an aggregate of 1,744,223
shares
(the “Shares”)
of the
Company’s Series A Preferred Stock, par value $0.001 per share (the
“Series A
Preferred”),
and
the Company desires to issue and sell to the Purchaser the Shares, on the
terms
and subject to the conditions specified herein.
WHEREAS,
all
parties hereto acknowledge and agree that they will benefit from the issuance
of
the Shares in the manner described herein.
WHEREAS,
the
Purchaser has agreed to purchase from the Company shares of the Company’s Series
B Preferred Stock, par value $0.001 per share (the “Series
B Preferred”),
upon
receipt by the Company of the 510K Clearance (as defined below) and the CLIA
Waiver (as defined below).
NOW,
THEREFORE,
in
consideration of the promises and mutual covenants contained herein, and
for
other valid consideration, the value and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Purchase
and Sale of Stock.
1.1 Sale
and Issuance of Series A Preferred Stock.
On and
subject to the terms and conditions of this Agreement, the Purchaser agrees
to
purchase, and the Company agrees to sell and issue to the Purchaser, the
Shares
at an aggregate purchase price of up to $8,000,000 (the “Purchase
Price”),
payable in accordance with Section 1.3 and subject to adjustment in
accordance with the terms hereof.
1.2 Filing
of Certificate of Incorporation.
The
Company shall, prior to the Closing (defined below), adopt and file with
the
Secretary of State of the State of Delaware a Third Amended and Restated
Certificate of Incorporation so as to authorize the Series A Preferred and
the Series B Preferred substantially in the form attached hereto as
Exhibit A (the “Certificate
of Incorporation”).
1.3 Payment
of Purchase Price.
The
payment of the Purchase Price shall be made as follows:
(a) at
the
Closing (as defined below), $2.0 million by wire transfer of immediately
available funds to an account designated by the Company to the Purchaser
prior
to the Closing (the “Closing
Cash Payment”);
(b) at
the
Closing (as defined below), a promissory note of the Purchaser in the form
of
the note attached hereto as Exhibit B (the “Note”);
1
(c) provided
that the First Milestone (as defined below) is achieved, and within the time
period specified in Section 1.4(c)(i), $2.0 million by wire transfer
of immediately available funds to an account designated by the Company to
the
Purchaser concurrently with, or following, delivery of the First Milestone
Achievement Certification (as defined below); and
(d) provided
that the Second Milestone (as defined below) is achieved, and within the
time
period specified in Section 1.4(c)(ii), $2.0 million by wire transfer
of immediately available funds to an account designated by the Company to
the
Purchaser concurrently with, or following, delivery of the Second Milestone
Achievement Certification (as defined below).
1.4 Closing;
Note Repayment; Milestones; Additional Financing.
(a) The
closing (the “Closing”)
of the
purchase and sale of the Shares set forth in Section 1.1 above shall take
place at the offices of Torys LLP (“Torys”),
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on the fifth Business Day (as
defined below) following the date on which the conditions to close set forth
in
Sections 4 and 5 hereof have been satisfied or waived by the party entitled
to
waive such conditions or at such other time and place as the Company and
the
Purchaser mutually agree upon orally or in writing. For purposes of this
Agreement, “Business
Day”
shall
mean any day which is not a Saturday or a Sunday, or a day on which banking
institutions located in New York, New York are required or permitted to be
closed. At the Closing, (i) the Company will deliver to the Purchaser the
certificates, instruments and documents referred to in Section 4 below,
(ii) the Purchaser will deliver to the Company the certificates,
instruments and documents referred to in Section 5 below and (iii) the
Company shall deliver to the Purchaser a share certificate registered in
the
Purchaser’s name representing the Shares, against payment of the portion of the
Purchase Price that is due at the Closing pursuant to
Section 1.3.
(b) The
Note
shall be payable to the order of the Company and be dated as of the date
of the
Closing, with a stated principal amount equal to $2.0 million. The Note
shall mature on January 3, 2007 (the “Note
Payment Date”).
Within three Business Days prior to the Note Payment Date, the Company shall
deliver to the Purchaser (i) a written notice (the “Note
Payment Notice”),
signed by the Chief Executive Officer of the Company, requesting payment
of the
principal amount of the Note and designating the account to which a wire
transfer of immediately available funds representing such payment should
be made
and certifying that no Material Adverse Effect (as defined below) has occurred
during the period commencing on the date of the Closing and ending on the
Note
Payment Date which has not been cured or which will not be cured on or prior
to
the Note Payment Date, and (ii) the original copy of the Note. Provided
that there shall not have occurred a Material Adverse Effect that is continuing
on the Note Payment Date, on the Note Payment Date, the principal amount
of the
Note shall be paid in full by wire transfer of immediately available funds
to
the account designated by the Company to the Purchaser in the Note Payment
Notice (the “Note
Payment”)
and
the Note shall be cancelled and terminated immediately thereafter. It is
understood and agreed that, in the event of an occurrence of a Material Adverse
Effect that is continuing on the Note Payment Date, the Purchaser shall not
be
required to make the Note Payment, the Note shall be cancelled and terminated
as
of the Note Payment Date and the Purchase Price, for all purposes, shall
be
(i) the Closing Cash Payment plus (ii) the $2.0 million payment
pursuant to Section 1.3(c)(i), if it is paid, plus (iii) the
$2.0 million payment pursuant to Section 1.3(c)(ii), if it is
paid.
2
(c) At
any
time prior to May 1, 2009, (i) upon written certification (the
“First
Milestone Achievement Certification”)
by the
Company to the Purchaser, which certification shall be by an authorized officer
of the Company to the effect that the Company has achieved the First Milestone
(as defined below), then within fifteen (15) days of receipt of the First
Milestone Achievement Certification, the Purchaser shall pay the Company
an
additional amount of $2.0 million for the achievement of such First Milestone
and (ii) following the achievement of the Second Milestone (as defined
below) and upon written certification (the “Second
Milestone Achievement Certification”)
by the
Company to the Purchaser, which certification shall be by an authorized officer
of the Company to the effect that the Company has achieved the Second Milestone,
then within fifteen (15) days of receipt of the Second Milestone Achievement
Certification, the Purchaser shall pay the Company an additional amount of
$2.0
million for the achievement of such Second Milestone. For greater certainty,
if
the First Milestone and the Second Milestone are not achieved prior to
May 1, 2009, then the Purchaser shall never become obligated to make the
payments of $2.0 million contemplated in each of (i) and (ii) of this
Section 1.4(c), and the Purchase Price, for all purposes, shall be (A) the
Closing Cash Payment plus (B) the amount of the Note Payment, if it is paid
(and
merely the Closing Cash Payment if the Note Payment is not made). In addition,
for greater certainty, if the First Milestone is achieved but the Second
Milestone is not achieved, then the Purchase Price, for all purposes, shall
be
the aggregate of (x) the Closing Cash Payment, (y) the amount of the Note
Payment, if it is paid, plus (z) the $2.0 million payment pursuant to (i)
of
this Section 1.4(c) (and the aggregate of the Closing Cash Payment and the
$2.0
million payment pursuant to (i) of this Section 1.4(c) if the Note Payment
is
not made), and, if the Note Payment is made and both the First Milestone
and the
Second Milestone are achieved prior to May 1, 2009, then the Purchase Price,
for
all purposes, shall be $8,000,000. For purposes hereof, “First
Milestone”
means
the achievement of the successful production and testing of Osmolarity
Alpha/Alpha Units as further described on Schedule 1.4(c)(i) hereto; and
“Second
Milestone”
means
the achievement of the successful production and testing of (A) Osmolarity
Beta/Beta Units and (B) IgE Alpha lab cards as further described on
Schedule 1.4(c)(ii) hereto.
(d) Subject
to the fulfillment or waiver of the conditions set forth in Sections 6 and
7
hereof and all other conditions as may be agreed to by the Purchaser and
the
Company: (i) following receipt by the Company from the U.S. Food and Drug
Administration (the “FDA”)
of
510K clearance to market the Company’s Osmolarity test (the “510K
Clearance”),
as
further described on Schedule 1.4(d) hereto, the Purchaser shall purchase,
and
the Company shall issue to the Purchaser, for an aggregate purchase price
of
$3,000,000, such number of shares of the Series B Preferred which, upon their
conversion to shares of the common stock, par value $.001 per share of the
Company (the “Common
Stock”),
shall
constitute 10% of the issued and outstanding capital stock of the Company,
on a
fully diluted basis and calculated as of the time immediately preceding the
closing of such purchase and sale (the “First
Series B Closing”);
and
(ii) following receipt by the Company from the FDA of all relevant approvals
under the Clinical Laboratory Improvement Amendments (the “CLIA
Waiver”;
together with the 510K Clearance and any other necessary approval, consent
or
waiver of the FDA, collectively the “FDA
Approvals”),
as
further described on Schedule 1.4(d) hereto, the Purchaser shall purchase,
and
the Company shall issue to the Purchaser, for an aggregate purchase price
of
$3,000,000, such number of shares of the Series B Preferred which, upon their
conversion to shares of the Common Stock, shall constitute 10% of the issued
and
outstanding capital stock of the Company, on a fully diluted basis and
calculated as of the time immediately preceding the closing of such purchase
and
sale (the “Second
Series B Closing”).
The
shares of the Series B Preferred to be purchased pursuant to this Section
1.4(d)
are hereinafter referred to as the “Additional
Shares”,
and
the First Series B Closing and the Second Series B Closing are referred to
hereinafter, collectively, as the “Additional
Closings”.
The
First Series B Closing shall take place within fifteen (15) days of receipt
by
the Purchaser of a certification signed by an authorized officer to the Company
confirming receipt by the Company of the 510K Clearance, and the Second Series
B
Closing shall take place within fifteen (15) days of receipt by the Purchaser
of
a certification signed by an authorized officer of the Company confirming
receipt by the Company of the CLIA Waiver. The Additional Closings shall
take
place at the offices of Torys on the dates and at the times as mutually agreed,
orally or in writing, by and among the Company and the Purchaser. At the
Additional Closings, (A) the Company will deliver to the Purchaser the
certificates, instruments and documents referred to in Section 6 below and
any other certificates, instruments, documents or other deliverable items
as may
be agreed to by the Purchaser and the Company, (B) the Purchaser will
deliver to the Company the certificates, instruments and documents referred
to
in Section 7 below and any other certificates, instruments, documents or
other deliverable items as may be agreed to by the Purchaser and the Company
and
(C) the Company shall deliver to the Purchaser a share certificate
registered in the Purchaser’s name representing the Additional Shares that the
Purchaser is to receive from the Company at the Additional Closings, against
payment of the purchase price therefor by wire transfer, to an account
designated by the Company to the Purchaser prior to such Additional Closings
or
other reasonable means acceptable to the Company.
3
1.5 Warrant.
At the
Closing and for no additional consideration, the Company shall issue to the
Purchaser a warrant (the “Warrant”),
evidenced by a warrant certificate in the form of Exhibit G attached hereto,
to
purchase, at each of the four vesting dates set forth in such Warrant and
further described below, the number of whole shares of the Series A Preferred
which, upon conversion will equal five percent (5%) of the issued and
outstanding Common Stock of the Company (the “Warrant
Shares”),
on a
fully diluted basis and calculated as of each such vesting date, at an exercise
price of $.001 per Warrant Share. The Warrant will vest as follows:
(a) in
the
event the Company fails to receive the 510K Clearance on or before May 1,
2009 (the “First
Approval Deadline”)
or
fails to have developed successfully a functionally effective alpha prototype
of
the Company’s IgE lab card (the “IgE
Development Milestone”)
on or
prior to May 1, 2009, as further described on Schedule 1.5 hereto, then the
Purchaser shall have the right to exercise the Warrant (as defined below)
with
respect to the number of shares of the Series A Preferred that shall have
vested as of the First Approval Deadline, as further set forth in the Warrant,
being the number of shares of the Series A Preferred, which upon
conversion, will equal five percent (5%) of the issued and outstanding Common
Stock of the Company, on a fully diluted basis and calculated as of the First
Approval Deadline;
(b) in
the
event the Company fails to receive both the 510K Clearance and the CLIA Waiver
on or before November 1, 2009 (the “Second
Approval Deadline”)
or
fails to achieve the IgE Development Milestone on or prior to the Second
Approval Deadline, then the Purchaser shall have the right to exercise the
Warrant with respect to the number of additional shares of the Series A
Preferred that shall have vested as of the Second Approval Deadline, as further
set forth in the Warrant, being the number of additional shares of the
Series A Preferred, which upon conversion, will equal an additional five
percent (5%) of the issued and outstanding Common Stock of the Company, on
a
fully diluted basis and calculated as of the Second Approval
Deadline;
4
(c) in
the
event the Company fails to receive both the 510K Clearance and the CLIA Waiver
on or before May 1, 2010 (the “Third
Approval Deadline”)
or
fails to achieve the IgE Development Milestone on or prior to the Third Approval
Deadline, then the Purchaser shall have the right to exercise the Warrant
with
respect to the number of additional shares of the Series A Preferred that
shall have vested as of the Third Approval Deadline, as further set forth
in the
Warrant, being the number of additional shares of the Series A Preferred,
which upon conversion, will equal an additional five percent (5%) of the
issued
and outstanding Common Stock of the Company, on a fully diluted basis and
calculated as of the Third Approval Deadline; and
(d) in
the
event the Company fails to receive both the 510K Clearance and the CLIA Waiver
on or before November 1, 2010 (the “Fourth
Approval Deadline”)
or
fails to achieve the IgE Development Milestone on or prior to the Fourth
Approval Deadline, then the Purchaser shall have the right to exercise the
Warrant with respect to the number of additional shares of the Series A
Preferred that shall have vested as of the Fourth Approval Deadline, as further
set forth in the Warrant, being the number of additional shares of the
Series A Preferred, which upon conversion, will equal an additional five
percent (5%) of the issued and outstanding Common Stock of the Company, on
a
fully diluted basis and calculated as of the Fourth Approval
Deadline.
For
purposes of this Agreement, the First Approval Deadline, the Second Approval
Deadline, the Third Approval Deadline and the Fourth Approval Deadline are
sometimes each referred to herein as an “Approval
Deadline”
and,
collectively, the “Approval
Deadlines”).
2. Representations
and Warranties of the Company.
Except
as set forth on the Disclosure
Schedules
attached
as Exhibit C hereto (the “Disclosure
Schedules”),
specifically identifying the relevant subsection hereof, the Company represents
and warrants to the Purchaser that the statements contained in this
Section 2 are complete and accurate as of the date of this Agreement. As
used in this Section 2, the term “Knowledge”
shall
mean the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, after reasonable
inquiry. The Purchaser shall be entitled to rely on the statements contained
in
this Section 2 regardless of any due diligence or other investigation of
the subject matter thereof that may be, or may have been, conducted by or
on
behalf of the Purchaser.
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 the corporate power to own
its
property and to carry on its business as now being conducted and as currently
contemplated to be conducted. The Company has the power to execute and deliver
this Agreement, the Warrant, the Rights Agreement (defined below) and the
Voting
Agreement (defined below) (collectively, the “Transaction
Documents”);
to
issue and sell the Shares, the Additional Shares, the Warrant, the Warrant
Shares and the shares of Common Stock issuable upon conversion of the Shares
and
the Additional Shares (the “Conversion
Shares”),
and
to carry out the provisions of the Transaction Documents and to perform its
obligations thereunder. The Company is duly qualified and authorized as a
foreign corporation to do business and is in good standing in California
and in
every other jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to so qualify would not have a material adverse effect on the business,
assets, properties, operations, prospects or financial condition of the Company
(as such business is currently being conducted or currently contemplated
to be
conducted), as determined from the perspective of a reasonable person in
the
Purchaser’s position (a “Material
Adverse Effect”).
True
and accurate copies of the Company’s Certificate of Incorporation and Bylaws,
each as amended and in effect at the Closing, have been made available to
the
Purchaser.
5
2.2 Capitalization
and Voting Rights.
Immediately prior to the Closing, the authorized capital stock of the Company
consists of:
(a) Preferred
Stock consisting of 3,350,000 shares of Preferred Stock, par value $0.001
per
share, 2,600,000 of which have been designated Series A Preferred, none of
which are outstanding prior to the Closing and all of which have been reserved
for issuance pursuant to this Agreement and 750,000 of which have been
designated Series B Preferred, none of which are outstanding prior to the
Closing and all of which have been reserved for issuance pursuant to this
Agreement. The Shares, the Additional Shares the Warrant, the Warrant Shares
and
the Conversion Shares, when issued in compliance with the provisions of this
Agreement, will be duly authorized, validly issued, fully paid and nonassessable
and will be free of any liens or encumbrances or other restrictions on transfer
caused or created by the Company, except for restrictions on transfer under
the
Transaction Documents and under applicable state and federal securities laws,
and will have the rights, preferences and privileges described in the
Certificate of Incorporation. The Conversion Shares have been duly and validly
reserved and, upon issuance in accordance with the terms of the Certificate
of
Incorporation, will be duly and validly issued, fully paid and nonassessable
and
free of restrictions on transfer caused or created by the Company other than
restrictions on transfer set forth under the Transaction Documents and under
applicable state and federal securities laws.
(b) Common
Stock consisting of 10,000,000 shares of Common Stock, of which 1,222,979
shares
are issued and outstanding upon the Closing. All outstanding securities of
the
Company have been duly and validly authorized and issued, are fully paid
and
nonassessable and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as amended (the
“Securities
Act”),
and
any relevant state securities laws, or pursuant to valid exemptions therefrom.
The Company has reserved 367,311 shares of Common Stock for issuance to
advisors, employees, directors and consultants of the Company under compensatory
arrangements that have been approved by the Board of Directors of the Company
(the “Option
Agreements”).
There
are options for an aggregate of 347,857 shares of Common Stock outstanding,
and
immediately following the Closing options for 19,454 shares of Common Stock
remain available for future grant.
(c) Except
for currently outstanding options to purchase 347,857 shares of Common Stock
pursuant to the Option Agreements, except for currently outstanding warrants
to
purchase 77,000 shares of Common Stock, except for rights to purchase capital
stock of the Company as provided herein and in the Warrant, and except as
set
forth in that certain Preferred Stock Investor Rights Agreement substantially
in
the form attached hereto as Exhibit D (the “Rights
Agreement”)
and
Schedule 2.2(c), there are no outstanding options, warrants, rights
(including conversion, preemptive rights, rights of first refusal or other
similar rights) or proxy or stockholder agreements of any kind for the purchase
or acquisition from the Company of any shares of its capital stock or other
securities convertible into shares of equity securities of the Company. Except
for the Rights Agreement, the Company is not a party or subject to any agreement
or understanding, and no stockholder or option holder of the Company is a
party
to any agreement or understanding with respect to the voting or transfer
of any
security of the Company, the voting of a director or any other aspect of
the
Company’s affairs.
6
(d) Except
as
set forth on Schedule 2.2(d), no stock plan or stock purchase, stock option
or other agreement or understanding between the Company and any holder of
any
securities or rights exercisable or convertible for securities provides for,
and
no person is otherwise entitled to, (i) acceleration of vesting (or lapse
of repurchase rights) or other changes in the vesting (or lapse of repurchase
rights) provisions as the result of the occurrence of a change in control
(including by way of merger, reorganization, sale of assets or other similar
transaction) of the Company or a termination of services to the Company,
or both
or (ii) vesting (or lapse of repurchase rights) at a rate greater than 25%
at the end of the first year following such issuance or grant or the
commencement of services to the Company, and the remaining 75% in equal monthly
installments over the next three (3) years.
(e) Immediately
following the Closing, the capital stock of the Company (including options
and
other rights to acquire capital stock of the Company) shall be as set forth
on
Schedule 2.2(e).
2.3 Subsidiaries.
The
Company does not currently own or control, directly or indirectly, any interest
in any other corporation, partnership, limited liability company, association
or
other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement. Since its inception, the Company has
not
consolidated or merged with, acquired all or substantially all of the assets
of,
or acquired the stock of or any interest in any corporation, partnership,
association or other business entity.
2.4 Authorization.
All
corporate action on the part of the Company and its respective officers,
directors and stockholders necessary for the authorization, execution and
delivery of the Transaction Documents; the performance of all obligations
of the
Company hereunder and thereunder; and the authorization, issuance (or
reservation for issuance), sale and delivery of the Shares being sold hereunder,
the Additional Shares, the Warrant, the Warrant Shares and the Conversion
Shares, either have been taken or will be taken prior to the Closing or the
Additional Closings, as the case may be, and the Transaction Documents
constitute valid and legally binding obligations of the Company, enforceable
in
accordance with their respective terms, except (i) as limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and
similar laws affecting creditors’ rights and remedies generally, and subject to
general principles of equity (regardless of whether enforcement is sought
in a
proceeding at law or in equity), (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies (regardless of whether enforcement is sought in a proceeding at
law or
in equity) and (iii) as the enforceability of Section 1.9 of the
Rights Agreement may be limited by public policy. Subject in part to the
truth
and accuracy of the Purchaser’s representations set forth in Section 3 of
this Agreement and subject to timely filing of notices or other filings required
under applicable state and federal securities laws that the Company agrees
to
make within the required time periods, the offer, sale and issuance of the
Shares, the Additional Shares, the Warrant, the Warrant Shares and the
Conversion Shares as contemplated by this Agreement are exempt from the
registration and qualification requirements of any applicable state and federal
securities laws (pursuant to Regulation D under the Securities Act),
including Section 5 of the Securities Act and the qualification
requirements of Section 25110 of the California Securities
Law.
7
2.5 Governmental
Consents.
No
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of the Company is required in connection
with
the consummation of the transactions contemplated by the Transaction Documents
or in connection with the performance by the Company of any of its obligations
hereunder or thereunder, including, but not limited to, the valid offer,
issue,
sale or delivery of the Shares, the Additional Shares, the Warrant, the Warrant
Shares and the Conversion Shares, except for (i) the filing of the
Certificate of Incorporation with the Secretary of State of the State of
Delaware and (ii) filings pursuant to applicable state and federal
securities laws and the respective rules thereunder that the Company agrees
to
make within the required time periods.
2.6 Litigation.
Except
as set forth on Schedule 2.6, there is no action, suit, proceeding or
investigation pending or, to the Company’s Knowledge, currently threatened
against the Company, or any of its properties or assets, including any
(i) that is reasonably likely to impair the right or ability of the Company
to carry on its business as now conducted or as currently contemplated to
be
conducted, or (ii) that is reasonably likely to question the validity of
the Transaction Documents or the Company’s ability to consummate the
transactions contemplated hereby or thereby, and (iii) nothing has come to
the attention of the Company that causes it to believe that there is any
reasonable basis for any of the foregoing. The Company is not a party to,
or to
the Company’s knowledge, named in or subject to any order, writ, injunction,
judgment or decree of any court, government agency or instrumentality. The
foregoing includes, but is not limited to, actions pending, or to the Company’s
knowledge, threatened against the Company, involving the prior employment
of any
of the Company’s employees or consultants or the use by any of them in
connection with the Company’s business(es), of any information or techniques
allegedly proprietary to any of their former employers or parties for whom
they
acted as consultants.
2.7 Title
to Property and Assets.
Except
as set forth on Schedule 2.7, the Company has good, valid and marketable
title to its properties and assets, free and clear of all mortgages, liens,
loans, charges and encumbrances. The assets of the Company constitute all
of the
assets used in the operations of, and necessary to operate, the business
as
presently conducted and as currently contemplated to be conducted, and such
assets are currently, as a whole, in normal operating condition and repair,
normal wear and tear excepted, and have been maintained and serviced in
accordance with the prudent conduct of business. With respect to the property
and assets leased by the Company, the Company is in substantial compliance
with
the applicable leases, and such leases are valid and enforceable and are
in full
force and effect, and except as set forth on Schedule 2.7, to the Company’s
Knowledge, the Company holds a valid leasehold interest in the leased property
and assets free of any liens, claims or encumbrances.
8
2.8 Liabilities.
Other
than as set forth in Schedule 2.8, the Company has no debts, commitments or
obligations, except for ordinary business expenses that do not exceed $25,000
individually or $50,000 in the aggregate.
2.9 Financial
Statements.
As at
October 31, 2006: (i) the current assets of the Company were between $100,000
and $175,000, and the current liabilities of the Company were between $1,300,000
and $1,600,000; and (ii) the long-term assets of the Company were between
$1,100,000 and $1,300,000, and the long-term liabilities of the Company were
between $200,000 and $500,000. The terms “assets” and “liabilities”, as they are
used in this Section 2.9, shall be understood in the same manner that they
are
understood under generally accepted accounting principles of the United States,
consistently applied. Except as set forth on Schedule 2.9, since October
31,
2006, there has not occurred any event or circumstance that has caused the
current or long-term assets or liabilities of the Company to be materially
different on the date hereof, or any event or circumstance that would reasonably
cause the Company to believe that they are materially different on the date
hereof, or that otherwise would make the statements contained in this Section
2.9 misleading in light of the circumstances under which they are made.
2.10 Material
Contracts.
Schedule 2.10 contains a true, correct and complete list and description of
all of the contractual obligations to which the Company is a party or by
which
it is bound that involve (i) obligations (contingent or otherwise) of the
Company in an amount exceeding $25,000 or payments to the Company in an amount
exceeding $50,000; (ii) the license, by or from the Company, of any patent,
copyright, trade secret or any other proprietary right material to the Company’s
business; (iii) provisions materially restricting the development,
manufacture or distribution of the Company’s products or services, (iv) any
obligation material to the business of the Company that cannot be terminated,
without interest or other penalty, upon thirty (30) days’ notice; or
(v) any other obligation or agreement that is otherwise material to the
Company’s business, financial condition, assets, properties, prospects or
results of operations (collectively, the “Material
Contracts”).
Each
Material Contract is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and
similar laws affecting creditors’ rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles
of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)). The Company
has
fulfilled all obligations required pursuant to each Material Contract to
have
been performed by it. Except as set forth on Schedule 2.10, the Company is
not in default or breach, nor to its knowledge is any third party in default
or
breach, under or with respect to any Material Contract.
2.11 Registration
or First Offer Rights.
Except
as set forth in the Rights Agreement, the Company is not under any contractual
obligation and has not granted (i) any rights to register any of its
currently outstanding securities or any of its securities that hereafter
may be
issued or (ii) any right of first offer to any person.
9
2.12 Proprietary
Rights.
(a) Schedule
2.12 sets out an accurate and complete list and description of: (a) all pending
applications and registrations for Company Proprietary Information (as defined
below) and (b) all written agreements for Licensed Proprietary Information
(as
defined below) (excluding licenses for commercially available software).
“Proprietary
Information”
means
any and all proprietary information and intellectual property rights including
any and all software (including object code and source code), trade secrets,
know-how, inventions, designs, processes, compositions, formulae, technical
data, patents, copyrights, industrial designs, trademarks, trade names and
domain names, including all applications and registrations and all common
law
rights therefor and all goodwill associated therewith. “Company
Proprietary Information”
means
Proprietary Information that has been developed by or for, or is being developed
by or for, the Company or that is being used or is proposed to be used by
the
Company, other than Licensed Proprietary Information. “Licensed
Proprietary Information”
means
Proprietary Information owned by persons other than the Company and which
the
Company uses or intends to use.
(b) Other
than to the extent that any person may have usurped Company Proprietary
Information in violation of any agreement with the Company or otherwise
illegally or improperly, and of which the Company has no Knowledge, the Company
is the sole legal and beneficial owner of, has good and marketable title
to, and
owns all right, title and interest in, all Company Proprietary Information
free
and clear of all charges, covenants, conditions, options to purchase and
restrictions or other adverse claims or interests of any kind or nature and
has
the right to transfer all right, title and interest in the Company Proprietary
Information. Other than to the extent that any person may have usurped Company
Proprietary Information in violation of any agreement with the Company or
otherwise illegally or improperly, and of which the Company has no Knowledge,
none of the Company Proprietary Information is owned by or registered in
the
name of any person other than the Company, including, without limitation,
any
current or former owner, shareholder, partner, director, executive, officer,
employee or contractor, nor does any such person have any interest therein
or
right thereto, including any license or the right to any royalty or other
payments. No consent of any person is necessary to make, use, reproduce,
license, sell, modify, update, enhance or otherwise exploit any Company
Proprietary Information. The Company has not received any notice or claim
(whether written, oral or otherwise) challenging the Company’s ownership of any
of the Company Proprietary Information or suggesting that any other person
has
any claim of legal or beneficial ownership or other claim or interest with
respect thereto, nor is there a reasonable basis for any claim that any person
other than the Company has any claim of legal or beneficial ownership or
other
claim or interest in any of the Company Proprietary Information.
(c) There
has
been no public disclosure, sale, offer for sale or other use of any Company
Proprietary Information or, to the Knowledge of the Company, of any Licensed
Proprietary Information by an officer or key employee of the Company or by
a
consultant of the Company who, notwithstanding his or her legal status as
a
consultant of the Company, fulfills or has fulfilled the role of a key employee
or principal of the Company (each, a “Key
Consultant”),
anywhere in the world that may affect the validity of all available intellectual
property rights in such Company Proprietary Information or Licensed Proprietary
Information. To the Company’s Knowledge, there has been no such public
disclosure, sale, offer for sale or other use of any Company Proprietary
Information or any Licensed Proprietary Information by a Key
Consultant.
10
(d) The
Company has taken all reasonably appropriate security measures to protect
the
secrecy, confidentiality and value of all software source code, trade secrets,
know-how, inventions, designs, processes, compositions, formulae, technical
data, and any other secret or confidential information in its possession
or
control. All technical information developed by the Company or for the Company
by a Key Consultant, that is material to its business and that is not the
subject of a patent or pending patent application, has been maintained
confidential. To the Company’s Knowledge, all technical information developed
for the Company by a person who is not a Key Consultant, that is material
to the
Company’s business and that is not subject of a patent or pending patent
application, has been maintained confidential. Except as set forth on
Schedule 2.10 and for agreements with its own employees or consultants,
substantially in the form referenced in Section 2.18 of this Agreement,
there are no outstanding options, licenses or other similar agreements relating
to the Company Proprietary Information or Licensed Proprietary Information,
nor
is the Company bound by or a party to any options, licenses or agreements
of any
kind with respect to the Proprietary Information of any other person or entity.
To the Knowledge of the Company, none of its employees is obligated under
any
contract (including licenses, covenants or commitments of any nature) or
other
agreement or is subject to any judgment, decree or order of any court or
administrative agency that conflicts with the Company’s business as currently
conducted. Neither the execution nor delivery of this Agreement nor the carrying
on of the Company’s business as currently conducted by the employees of the
Company will conflict with, or result in a breach of, the terms, conditions
or
provisions of, or constitute a default under, any material contract, covenant
or
instrument under which any of such employees is now obligated. None of the
Company’s current officers, key employees or consultants, and, to the Company’s
Knowledge, none of the Company’s former officers, key employees or consultants,
has improperly used or is making improper use of any confidential information
or
trade secrets of others, including those of any former employer of such officer,
key employee or consultant, or those of any party for whom such officer,
key
employee or consultant acted as a consultant. To the Knowledge of the Company,
the conduct of its business as currently conducted, or as currently contemplated
to be conducted, has not infringed, violated, misappropriated or otherwise
conflicted with any Proprietary Information of any person. The Company is
not a
party to any action or proceeding, nor, to the best of the Company’s Knowledge,
has any action or proceeding been threatened that alleges that any conduct
of
the Company’s business as currently conducted, or as currently contemplated to
be conducted, has infringed, violated, misappropriated or otherwise conflicted
with any Proprietary Information of any person.
(e) To
the
best of the Company’s Knowledge, no person has infringed or misappropriated, or
is infringing or misappropriating, any Company Proprietary Information or
any
Licensed Proprietary Information.
(f) The
Company has lawfully acquired the right(s) to use the Licensed Proprietary
Information in the manner in which it has been used and is currently being
used
by the Company and in the manner currently contemplated to be used in the
future. All agreements in respect of Licensed Proprietary Information are
in
full force and effect, and (i) the Company is not in default of any of its
obligations thereunder and (ii) the Company does not have any written notice
or
any reasonable belief that any licensor is in default of any of its obligations
thereunder. Neither the entering into nor the performance of this Agreement
breaches any duty or obligation owed to any person (including, without
limitation, any licensor).
11
2.13 No
Conflict of Interest.
(a) There
are
no agreements, understandings or proposed transactions between the Company
on
the one hand, and any of its officers or directors on the other
hand.
(b) Except
as
set out on Schedule 2.13(b), the Company is not indebted, directly or
indirectly, to any of its officers or directors, or to the respective spouses
or
children of any of its officers or directors, in any amount whatsoever other
than in connection with expenses or advances of expenses, if any, incurred
in
the ordinary course of business. None of the Company’s officers or directors, or
any members of any of their immediate families, is, directly or indirectly,
indebted to the Company. No member of the immediate family of any officer
or
director of the Company is directly or indirectly interested in any Material
Contract.
(c) None
of
the officers, directors or key employees of the Company is obligated under
any
contract (including licenses, covenants or commitments of any nature) or
other
agreement, or subject to any judgment, decree or order of any court of
administrative agency, that would conflict with his or her best efforts to
promote the interests of the Company or that would conflict with the business
of
the Company as presently, or currently contemplated to be,
conducted.
2.14 Tax
Returns.
All tax
returns, declarations, statements, reports, schedules, forms and information
returns (“Returns”)
required by all U.S. federal, state and local and foreign jurisdictions (in
each
case, including all political subdivisions thereof) relating to all U.S.
federal, state and local and foreign taxes and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax or penalties applicable thereto (“Taxes”),
if
any, required to be filed by the Company prior to the First Closing have
been
(or will be) timely filed, and such Returns are (or will be) true, complete
and
correct in all material respects. The Company has paid all Taxes shown to
be due
on such Returns. The Company has never had any Tax deficiency proposed or
assessed against it, nor has it executed any waiver of any statute of
limitations on the assessment or collection of any Tax or governmental charge.
Neither the Company’s federal income tax returns nor its state income or
franchise tax or sales or use tax returns has ever been audited by any
governmental authorities.
2.15 Permits;
Compliance with Laws.
The
Company has obtained and maintained in good standing all of its licenses,
permits, franchises, consents, registrations, certificates, orders, approvals,
authorizations and any similar authority (“Permits”)
required to be obtained by it under federal, state and local laws and
regulations (collectively, “Laws”),
and
such Permits are the only Permits required by the Company to conduct its
business as currently conducted or currently contemplated to be conducted.
Except as set forth on Schedule 2.15, the Company is in compliance with
such Laws in all material respects, and there is no pending or, to the Company’s
knowledge, threatened action or proceeding against the Company under any
of such
Laws. The execution and delivery of this Agreement and the consummation of
the
transactions contemplated hereby will not result in the termination of any
such
Permit.
12
2.16 Compliance
with Charter Documents; No Conflict.
The
Company is not in breach or violation of any term of its Charter Documents
(as
defined below). Except as set forth on Schedule 2.16, the execution,
delivery and performance of and compliance with the Transaction Documents
and
the consummation of the transactions contemplated hereby or thereby (a) do
not conflict with, and shall not result in a breach or violation of, the
terms,
conditions or provisions of or constitute a default (or an event that, with
the
giving of notice or passage of time, or both, could result in a default)
under:
(i) the Charter Documents, (ii) any statute, law, rule or regulation,
(iii) any state or federal order, judgment or decree, or (iv) any
indenture, mortgage, deed of trust, lease or other agreement or instrument
to
which the Company or any of its properties or assets is subject, and (b) to
the Company’s Knowledge, will not result in the creation or imposition of any
lien, charge or encumbrance upon any of the assets of the Company pursuant
to
the terms of any of the foregoing. For purposes of this Agreement, “Charter
Documents”
shall
mean (i) the certificate of incorporation of the Company, as filed with the
Secretary of State of the State of Delaware, together with all amendments,
restatements, certificates and designations filed with respect thereto from
time
to time, (including, for greater certainty, the Certificate of Incorporation)
and (ii) the bylaws of the Company.
2.17 Employees.
(a) There
is
no strike, labor dispute or union organization activities pending with respect
to or, to the Company’s knowledge, threatened against the Company. The Company
is not a party to any collective bargaining agreements covering any of its
employees. None of the Company’s employees belong to any union or collective
bargaining unit.
(b) Except
as
set forth on Schedule 2.17(b), the Company is not party to or bound by any
currently effective employment contract, deferred compensation agreement,
bonus
plan, incentive plan, profit sharing plan, retirement agreement, severance
or
other employee compensation agreement. The Company is not aware that any
officer
or key employee intends to terminate his or her employment with the Company,
nor
does the Company have a present intention to terminate the employment of
any of
the foregoing.
2.18 Assignment
of Inventions and Non-Disclosure Agreements.
Except
as set forth on Schedule 2.18, each current and former employee and officer
of the Company and each consultant retained by the Company has executed the
Company’s standard form Assignment of Inventions and Non-Disclosure Agreement,
substantially in the form attached hereto as Exhibit E, and no such person
has set forth any inventions or other items as exclusions thereto that are
related to the Company’s business or otherwise material to the
Company.
2.19 Environmental
and Safety Laws.
To its
Knowledge, Company is not in violation of any statute, law or regulation
applicable to it relating to the environment or occupational health and safety
(collectively, the “Environmental
Laws”),
and
no material expenditures are or will be required in order to comply with
any
Environmental Law. No Hazardous Materials (as defined below) are used or
have
been used, stored, or disposed of by the Company or, to the Company’s knowledge,
by any other person or entity on any property owned, leased or used by the
Company. For the purposes of the preceding sentence, “Hazardous
Materials”
shall
mean (a) materials which are listed or otherwise defined as “hazardous” or
“toxic” under any applicable local, state, federal and/or foreign laws and
regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control
of
hazardous wastes or other activities involving hazardous substances, including
building materials, or (b) any petroleum products or nuclear
materials.
13
2.20 Real
Property.
The
Company does not own any real property. Schedule 2.20 sets forth all real
property leased by the Company, and the Company is in compliance with the
applicable leases and holds a valid leasehold in such real property interest
free of any liens, claims and encumbrances.
2.21 Development
and Marketing Rights.
Except
as set forth on Schedule 2.21, the Company has not granted rights to
develop, produce, assemble, license, distribute, market or sell its products
or
services, whether now existing or in development, to any other person and
is not
bound by any agreement that affects the Company’s exclusive right to develop,
produce, assemble, license, distribute, market or sell its products and
services, now existing or in development.
2.22 Disclosure.
The
Company has provided the Purchaser with all the information that the Purchaser
has requested for deciding whether to purchase the Shares and to enter into
the
Transaction Documents. No representation or warranty of the Company contained
in
this Agreement and the Exhibits attached hereto and in any certificate furnished
or to be furnished to the Purchaser at the Closing contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made.
2.23 Brokers
or Finders, Other Offers.
The
Company has not incurred, and will not incur, directly or indirectly, as
a
result of any action taken by the Company any liability for brokerage or
finders’ fees or agents’ commissions or any similar charges in connection with
this Agreement or the transactions contemplated hereunder.
2.24 Minute
Books.
The
minute books of the Company provided to the Purchaser contain minutes of
all
meetings of directors (and committees thereof) and stockholders and all actions
by written consent without a meeting by the directors and stockholders since
the
date of the Company’s inception, and accurately reflect all actions by the
directors and stockholders with respect to all transactions referred to in
such
minutes in all material respects.
3. Representations,
Warranties and Covenants of the Purchaser to the Company.
The
Purchaser hereby represents and warrants to the Company that, as of the date
of
this Agreement, the statements contained in this Section 3 are true and
correct and hereby acknowledges and agrees that the Company shall be entitled
to
rely on such statements regardless of any due diligence or other investigation
of the subject matter thereof that may be, or may have been, conducted by
or on
behalf of the Company:
3.1 Authorization.
The
Purchaser has full power and authority to enter into the Transaction Documents.
All action on the part of the Purchaser, its officers, directors and
stockholders necessary for the authorization, execution and delivery of the
Transaction Documents has been taken or will be taken prior to the Closing.
Each
such agreement constitutes a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms except (i) as limited
by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, and subject to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity); and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies (regardless
of whether enforcement is sought in a proceeding at law or in equity) and
(iii) as the enforceability of Section 1.9 of the Rights Agreement may
be limited by public policy.
14
3.2 Purchase
Entirely for Own Account.
The
Purchaser is purchasing the Shares for its own account, for investment purposes
and not with a view to the resale or distribution of any part thereof. The
Purchaser will not, directly or indirectly, offer, transfer, sell, assign,
pledge, hypothecate or otherwise dispose of any of the Shares or the Conversion
Shares (collectively, the “Securities”),
except in compliance with the Securities Act. By executing this Agreement,
the
Purchaser further represents that the Purchaser does not have any contract,
undertaking, agreement or arrangement with any person to sell or transfer
to
such person or to any third person any of the Securities.
3.3 Speculative
Nature of Investment.
The
Purchaser acknowledges that its investment in the Company is highly speculative
and entails a substantial degree of risk and that the Purchaser may lose
the
entire amount of such investment.
3.4 Disclosure
of Information.
The
Purchaser further represents that it has had an opportunity to ask questions
and
receive answers from the Company regarding the terms and conditions of the
offering of the Securities and the business, properties and financial condition
of the Company and to obtain additional information necessary to verify the
accuracy of any information furnished to the Purchaser. The foregoing, however,
does not limit or modify the representations and warranties of the Company
in
Section 2 of this Agreement or derogate, in any way, from the right of the
Purchaser to rely thereon.
3.5 Investment
Experience.
The
Purchaser represents that it is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act. The Purchaser acknowledges
that it is able to fend for itself, can bear the economic risk of its investment
(including a total loss of such 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 Securities and that it has not
been
organized solely for the purpose of acquiring the Securities.
3.6 Restricted
Securities.
The
Purchaser understands that the Securities 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, only in certain limited
circumstances. In addition, the Purchaser represents that it is familiar
with
Rule 144 of the Securities Act (“Rule
144”)
as
currently in effect and understands the resale limitations imposed thereby
and
by the Securities Act. The Purchaser understands that no public market currently
exists for the Series A Preferred or Common Stock and that there are no
assurances that any such market will be created.
3.7 Further
Limitations on Disposition.
Without
in any way limiting the above, the Purchaser further agrees not to make any
disposition of all or any portion of the Securities, unless and until
(i) such disposition will not require registration of such Securities under
the Securities Act, (ii) the transferee has agreed in writing for the
benefit of the Company to be bound by this Section 3.7 and Section 6
of this Agreement, and (iii) if reasonably requested by the Company, the
Purchaser shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration of such Securities under the Securities Act; provided, however,
that this Section 3.7 shall be inapplicable if:
15
(a) there
is
then in effect a Registration Statement under the Securities Act covering
the
proposed disposition of Securities and such disposition is made in accordance
with such Registration Statement; or
(b) the
Securities are sold by the Purchaser pursuant to, and in accordance with
all of
the requirements then applicable under, Rule 144.
3.8 Legends.
It is
understood that the certificate(s) evidencing the Securities shall bear the
legends substantially in the form set forth below, in addition to any legend
required by the Rights Agreement:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”). SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS
EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES
ACT
OR UNLESS SOLD PURSUANT TO RULE 144 OF THE SECURITIES ACT.
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO OTHER RESTRICTIVE
PROVISIONS AS SET FORTH IN THE COMPANY’S PREFERRED STOCK INVESTOR RIGHTS
AGREEMENT AND VOTING AGREEMENT, AS SUCH AGREEMENTS MAY BE AMENDED FROM TIME
TO
TIME IN ACCORDANCE WITH THEIR RESPECTIVE TERMS. COPIES OF SUCH AGREEMENTS
MAY BE
OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
PLACE OF BUSINESS. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF IT, AGREES
TO BE BOUND BY THE PROVISIONS OF SUCH AGREEMENTS.
4. Conditions
of the Purchaser’s Obligations at Closing.
The
obligation of the Purchaser to purchase the Shares at the Closing is subject
to
the fulfillment at or before the Closing, of each of the following
conditions.
16
4.1 Representations
and Warranties.
The
representations and warranties made by the Company in Section 2 hereof
shall be true and correct in all respects on the date of the Closing, with
the
same effect as though such representations and warranties had been on and
as of
the date of the Closing.
4.2 Performance.
The
Company shall have performed or observed in all respects all obligations,
covenants and conditions herein required to be performed or observed by it
on or
prior to the date of the Closing.
4.3 Compliance
Certificate.
An
authorized officer of the Company shall deliver to the Purchaser, at the
Closing, a certificate certifying that the conditions specified in
Sections 4.1, 4.2, 4.4, 4.8 and 4.9 have been fulfilled, and certifying
that since October 31, 2006 there has not occurred a Material Adverse
Effect.
4.4 Qualifications.
All
authorizations, approvals or permits, if any, of any governmental authority
or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Shares, the Additional
Shares, the Warrant, the Warrant Shares and the Conversion Shares pursuant
to
this Agreement, shall have been duly obtained by the Company and be effective
as
of the Closing, except for post-closing filings required under applicable
federal and state securities laws.
4.5 Investor
Rights Agreement.
The
Company, the Purchaser and the stockholders named therein shall have entered
into the Rights Agreement.
4.6 Voting
Agreement.
The
Company, the Purchaser and the stockholders named therein shall have entered
into a voting agreement in the form of the voting agreement attached hereto
as
Exhibit H
(the
“Voting
Agreement”).
4.7 Legal
Opinion.
Wilson,
Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to the Company, shall have
delivered to the Purchaser an opinion substantially in the form attached
hereto
as Exhibit F.
4.8 Certificate
of Incorporation.
The
Certificate of Incorporation shall have been accepted for filing with and
certified by the Secretary of State of the State of Delaware.
4.9 Board
of Directors.
The
Company shall have taken all necessary corporate action such that, immediately
after the Closing, the Board of Directors of the Company shall consist of
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇
▇▇▇▇▇▇.
4.10 Secretary’s
Certificate.
The
Company’s Secretary shall deliver to the Purchaser at the Closing a certificate
having attached thereto (i) the Company’s Certificate of Incorporation as
in effect at the time of the Closing, (ii) the Company’s Bylaws as in
effect at the time of the Closing, (iii) resolutions approved by the
Company’s Board of Directors authorizing the transactions contemplated hereby,
(iv) resolutions approved by the Company’s stockholders authorizing the
filing of the Certificate of Incorporation and (v) good standing
certificates with respect to the Company from the applicable authorities
in
Delaware and California.
17
4.11 Stockholder
Consent to Transactions.
The
requisite stockholders of the Company shall have approved, or executed written
consents approving, the transactions contemplated hereby and by the other
Transaction Documents.
4.12 Financing.
The
Purchaser shall have obtained sufficient financing to effect the transactions
contemplated by this Agreement, which financing shall be on terms and conditions
satisfactory to the Purchaser in its sole discretion.
4.13 Warrant.
The
Company shall have issued the Warrant.
4.14 Brokers
or Finders.
The
Company shall not have engaged any brokers, finders or agents in connection
with
the transactions contemplated by this Agreement.
4.15 Other
Deliveries.
The
Purchaser shall have received from the Company such additional documents,
certificates, instruments or writings, in form and substance satisfactory
to the
Purchaser and its counsel, as the Purchaser shall have reasonably requested
in
connection with the transactions contemplated hereby.
5. Conditions
of the Company’s Obligations at Closing.
The
obligations of the Company to sell and issue the Shares at the Closing are
subject to the fulfillment at or before the Closing of each of the following
conditions:
5.1 Representations
and Warranties.
The
representations and warranties made by the Purchaser in Section 3 hereof
shall be true and correct in all respects on the date of the Closing, with
the
same effect as though such representations and warranties had been made on
and
as of the date of the Closing.
5.2 Qualifications.
All
authorizations, approvals or permits, if any, of any governmental authority
or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Shares, the Additional
Shares, the Warrant, the Warrant Shares and the Conversion Shares pursuant
to
this Agreement shall be duly obtained and effective as of the Closing, except
for post-closing filings required under applicable federal and state securities
laws.
5.3 Investor
Rights Agreement.
The
Company, the Purchaser and the stockholders of the Company named therein
shall
have entered into the Rights Agreement.
5.4 Voting
Agreement.
The
Company, the Purchaser and the stockholders named therein shall have entered
into the Voting Agreement.
5.5 Certificate
of Incorporation.
The
Certificate of Incorporation shall have been accepted for filing with and
certified by the Secretary of State of the State of Delaware.
5.6 Note.
The
Purchaser shall have issued the Note to the Company.
5.7 Other
Deliveries.
The
Company shall have received from the Purchaser such additional documents,
certificates, instruments or writings, in form and substance satisfactory
to the
Company and its counsel, as the Company shall have reasonably requested in
connection with the transactions contemplated hereby.
18
6. Conditions
of the Purchaser’s Obligations at the Additional Closing.
The
obligations of the Purchaser to purchase the Additional Shares at each of
the
Additional Closings are subject to the fulfillment at or before each of the
Additional Closings of each of the following conditions.
6.1 Representations
and Warranties.
The
Company shall make representations and warranties, reasonably satisfactory
to
the Purchaser, on and as of the date of each Additional Closing.
6.2 Performance.
The
Company shall have performed or observed in all respects all obligations,
covenants and conditions herein required to be performed or observed by it
on or
prior to the date of the Additional Closing.
6.3 Compliance
Certificate.
An
authorized officer of the Company shall deliver to the Purchaser, at the
Additional Closing, a certificate certifying that the conditions specified
in
Sections 6.1 and 6.5 have been fulfilled and that the 510K Clearance and
the CLIA Waiver have been received by the Company in accordance with the
terms
set forth in Section 1.4(d) hereof.
6.4 Qualifications.
All
authorizations, approvals or permits, if any, of any governmental authority
or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Shares, the Additional
Shares, the Warrant, the Warrant Shares and the Conversion Shares pursuant
to
this Agreement shall have been duly obtained by the Company and be effective
as
of the Additional Closing, except for post-closing filings required under
applicable federal and state securities laws.
6.5 Material
Adverse Effect.
No
Additional Closing Material Adverse Effect (defined below) with respect to
the
matters set forth in Sections 2.1 (Organization, Good Standing and
Qualification), 2.2 (Capitalization and Voting Rights), 2.4 (Authorization),
2.5
(Governmental Consents), 2.6 (Litigation), 2.7 (Title to Property and Assets),
2.12 (Proprietary Rights), 2.15 (Permits; Compliance with Laws) and
2.16 (Compliance with Certificate of Incorporation and Bylaws; No Conflict)
shall have occurred since the date hereof and be continuing. For purposes
of
this Section 6.4, “Additional Closing Material Adverse Effect” means a
material adverse effect on the business, assets, properties, operations,
prospects or financial condition of the Company (as such business is currently
being conducted or contemplated to be conducted), as determined from the
perspective of a reasonable person in the Purchaser’s position; provided,
however, that none of the following shall be deemed, either alone or in
combination, to constitute an Additional Closing Material Adverse Effect,
nor
shall any of the following be taken into account in determining whether there
has been an Additional Closing Material Adverse Effect: any change or effect
resulting from or arising out of (a) the performance by the Company of its
obligations under this Agreement or the Sales and Marketing Agreement (as
defined below); (b) applicable legal or accounting requirements;
(c) general economic conditions in any country where the Company conducts
business (which changes in each case do not disproportionately affect the
Company in any material respect); (d) general conditions in any industry in
which the Company conducts business (which changes in each case do not
disproportionately affect the Company in any material respect); or (e) any
natural disaster or any acts of terrorism, sabotage, military action or war
(whether or not declared) or any escalation or worsening thereof.
19
6.6 Other
Deliveries.
The
Purchaser shall have received from the Company such additional documents,
certificates, instruments or writings, in form and substance satisfactory
to the
Purchaser and its counsel, as the Purchaser shall have reasonably requested
in
connection with the transactions contemplated hereby.
7. Conditions
of the Company’s Obligations at the Additional Closing.
The
obligations of the Company to sell and issue the Additional Shares at each
of
the Additional Closings are subject to the fulfillment at or before each
of the
Additional Closings of each of the following conditions:
7.1 Representations
and Warranties.
The
Purchaser shall make representations and warranties, reasonably satisfactory
to
the Company, on and as of the date of each Additional Closing.
7.2 Qualifications.
All
authorizations, approvals or permits, if any, of any governmental authority
or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale, pursuant to this Agreement,
of the
Additional Shares and the Conversion Shares issuable upon the conversion
of the
Additional Shares shall have been duly obtained and effective as of the
Additional Closing, except for post-closing filings required under applicable
federal and state securities laws.
7.3 Other
Deliveries.
The
Company shall have received from the Purchaser such additional documents,
certificates, instruments or writings, in form and substance satisfactory
to the
Company and its counsel, as the Company shall have reasonably requested in
connection with the transactions contemplated hereby.
8. Additional
Agreements of the Company and the Purchaser.
8.1 Use
of
Proceeds.
The
Company shall use the proceeds it receives from the sale of the Shares to
the
Purchaser solely to finance its current working capital requirements and
to
repay the long-term debt obligations set forth on Schedule 8.1, and no
portion of such proceeds shall be used for any other purpose, including without
limitation, to pay or make any dividend or other capital distribution to
any
equity holder.
8.2 Insurance
Indemnity.
(a) The
Company acknowledges and agrees that it has not purchased and does not carry
any
insurance coverage with respect to the Company’s business operations, activities
and properties of any sort or at any amount that would normally be purchased
by
a company or entity of similar size or engaged in similar
activities.
(b) The
Company further acknowledges and agrees that the Purchaser’s investment in the
Company pursuant to this Agreement could be substantially impaired and its
value
substantially reduced in the event the Company suffers a claim, loss, damage,
settlement, fine, penalty, cost or expense of any nature (“Insurable
Losses”)
or is
required to make any payment with respect to any such Insurable Losses for
which
the Company would have been able to recover all or a portion of such Insurable
Losses from the proceeds of insurance but for the Company’s failure to obtain
business liability, property, errors and omissions or other similar or
comparable insurance coverage of any sort prior to the date of the First
Closing.
20
(c) The
Company hereby agrees that in the event of, and to the extent that, the Company
incurs or suffers any Insurable Losses, or is required to make any payment
with
respect to any such Insurable Losses, the Company shall promptly (but in
no
event more than thirty (30) days after any such payment) issue to the Purchaser
a number of shares of the Series A Preferred, the fair market value of which,
as
determined in good faith by the Board of Directors of the Company, shall
equal
50% of the payment made by the Company in respect of such Insurable Losses.
The
Purchaser shall not be entitled to be issued any shares of the Series A
Preferred pursuant to this Section 8.2(c) in respect of Insurable Losses
unless
and until such time as the aggregate amount of Insurable Losses suffered
by the
Company equals or exceeds $100,000, at which time, the Purchaser shall be
entitled to compensation in accordance with the terms of this Section 8.2(c)
in
respect of all of the Insurable Losses suffered by the Company to that
time.
8.3 Sales
and Marketing Agreement.
The
Company and the Purchaser hereby agree to use commercially reasonable efforts
to
enter into a Sales and Marketing Agreement by and between the Company and
the
Purchaser within one hundred eighty (180) days of the Closing, providing
for the
provision by the Purchaser, on an exclusive worldwide basis, of all sales,
marketing and distribution services for or in connection with, or otherwise
relating to, all of the Company’s ophthalmic products and services (subject to
the Company’s currently existing agreements with third parties relating to such
subject matter) and providing for such other terms and conditions that may
be
mutually agreed upon by the parties in their reasonable discretion contained
in
the definitive agreement executed in connection therewith.
8.4 Right
of First Offer Waivers.
The
Company hereby agrees that it shall use commercially reasonable efforts to
obtain waivers from each of the stockholders of the Company set forth on
Schedule
8.4
regarding the respective right of first offer granted to such stockholders;
provided
further,
that in
the event the Company, following the consummation of the transactions
contemplated by this Agreement and the issuance of the warrants to purchase
Common Stock and the shares of Series A Preferred Stock to be issued to certain
noteholders of the Company in connection herewith, issues any equity securities
of the Company pursuant to any such right of first offer as a result of the
consummation of the transactions contemplated hereby, the Company shall
promptly, and in any event no later than two (2) Business Days following
any
such issuance, issue for no additional consideration to the Purchaser that
number of shares of Series A Preferred Stock such that the Purchaser shall
have
the same percentage ownership of the Company on a fully-diluted basis as
it
shall have immediately following the consummation of the transactions
contemplated hereby and the issuance of the warrants to purchase Common Stock
and the shares of Series A Preferred Stock to be issued in connection
herewith.
9. Miscellaneous.
9.1 Term.
(a) This
Agreement may be terminated at any time prior to the Closing (i) by mutual
written consent of the Company and the Purchaser, (ii) by the Company or
the
Purchaser if a material breach of any provision of this Agreement has been
committed by the other party, such that the conditions set forth in Sections
4
and 6 would not be met on or prior to December 15, 2006, and such breach
has not been waived or cured within fifteen (15) days after delivery of written
notification to the breaching party, (iii) by either party if the Closing
has
not occurred on or before December 15, 2006, or (iv) by the Purchaser in
the event that any governmental authority shall have issued an order, decree,
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement.
21
(b) In
the
event of the termination of this Agreement pursuant to Section 9.1(a), this
Agreement (other than Section 9.3, Section 9.7 and Section 9.8) shall forthwith
become wholly void and of no further force and effect and there shall be
no
liability on the part of the Company or the Purchaser; provided, however
that
neither the Company nor the Purchaser shall be relieved from liability for
any
breach of any provision of this Agreement as set forth herein existing at
the
time of such termination.
9.2 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, without limitation, transferees of any
Securities). In the event that the Purchaser is a party to a merger, change
of
control or consolidation, the obligations and rights of the Purchaser hereunder
shall be assumed by and assigned to the surviving corporation or its parent.
Except as provided herein, no rights, obligations or liabilities hereunder
will
be assignable by any party without the prior written consent of the other
party
hereto. 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.
9.3 Governing
Law.
This
Agreement and the transactions contemplated hereunder shall be governed by
and
construed under the laws of the State of Delaware without giving effect to
the
conflicts of law principles of that jurisdiction. The parties hereto agree
to
waive all rights they may otherwise have to trial by jury in connection with
any
action, suit or proceeding brought to enforce or defend any rights or remedies
arising under or relating to this Agreement and the agreements and transactions
contemplated hereby, whether grounded in tort, contract or
otherwise.
9.4 Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed
an
original, but all of which together shall constitute one and the same
instrument.
9.5 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.
9.6 Notices.
All
notices, reports and other communications required or permitted hereunder
shall
be in writing, shall be effective when given, and shall in any event be deemed
to be given upon the earlier of actual receipt, and: (i) three (3)
days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid; (ii) upon
delivery, if delivered by hand; (iii) one (1) business day after the
business day of deposit with Federal Express or similar overnight courier,
freight prepaid; or (iv) one (1) business day after the business day
of facsimile transmission (with confirmation), if delivered by facsimile
transmission. All notices delivered hereunder shall be addressed as follows:
22
If
to the
Purchaser:
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇.
Bldg.
9,
Ste 201
Mississauga,
ON L4W 5B2
Canada
Attention:
General Counsel
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to
Torys
LLP
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇ of America
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to the
Company:
OcuSense,
Inc.
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
United
States of America
Attention:
Chief Executive Officer
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to
Wilson,
Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇▇
▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
United
States of America
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
or
at
such other address as a party may designate by ten (10) days’ advance written
notice to the other party pursuant to the provisions above.
9.7 Finder’s
Fee.
Each
party represents that it neither is nor will be obligated for any finder’s or
broker’s fee or commission in connection with the transactions contemplated by
this Agreement, and each party agrees to indemnify and hold harmless the
other
party hereto from any liability for any commission or compensation in the
nature
of a finder’s or broker’s fee or commission (and the costs and expenses of
defending against such liability or asserted liability) for which such party
or
any of its officers, partners, employees or representatives is
responsible.
23
9.8 Costs
and Expenses.
The
Company and the Purchaser shall pay for any and all of their own costs and
expenses they incur in connection with the transactions contemplated by this
Agreement and the other Transaction Documents provided, however in the event
this Agreement is terminated by either party pursuant to Section 9.1(a)(ii),
the
breaching party shall reimburse the non-breaching party for all reasonable
out-of-pocket expenses (including, without limitation, reasonable attorney’s
fees and disbursements).
9.9 Amendment
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 Purchaser. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Securities, each future
holder of all such Securities and the Company.
9.10 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 this Agreement shall be interpreted as if such provision were
so
excluded and shall be enforceable in accordance with its terms.
9.11 Entire
Agreement.
This
Agreement and the documents referred to herein constitute the entire agreement
between the parties and supersede and render void every other prior written
or
oral understanding between the parties hereto. No party shall be liable or
bound
to the other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein.
9.12 Survival
of Warranties.
The
warranties, representations and covenants of the Company and the Purchaser
contained in, or made pursuant to, this Agreement shall survive for a period
of
one (1) year following the later to occur of: (i) the date on which
the Purchaser makes the payment of $2.0 million, contemplated in
Section 1.4(c)(ii) hereof, in connection with the achievement of the Second
Milestone, (ii) the date on which the Purchaser exercises the Warrant in
full following the Fourth Approval Deadline and receives all of the Warrant
Shares and (iii) the expiry of the Warrant; provided, however, that, if the
Second Milestone is not achieved prior to May 1, 2009 giving rise to the
consequence that the Purchaser shall never make the payment of $2.0 million
contemplated in Section 1.4(c)(ii) hereof, then the warranties,
representations and covenants of the Company and the Purchaser contained
in, or
made pursuant to, this Agreement shall survive for a period of one (1) year
following the later to occur of the dates referred to in (ii) and (iii) of
this
Section 9.12.
24
9.13 California
Corporate Securities Law.
THE
SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF
THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE
SALE
OF SECURITIES IS EXEMPT FROM SUCH QUALIFICATION BY SECTION 25100, 25102 OR
25105
OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS
THE
SALE IS SO EXEMPT.
-
-
25
IN
WITNESS HEREOF, the parties have executed this Agreement as of the date first
written above.
|
COMPANY:
|
OCUSENSE, INC.
|
||
|
By:
|
/s/ ▇▇▇▇ ▇▇▇▇▇▇ | ||
|
Name: ▇▇▇▇
▇▇▇▇▇▇
|
|||
|
Title: Chief
Executive Officer
|
|||
|
PURCHASER:
|
|
||
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
|
Name: ▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|||
|
Title: Chief
Executive Officer
|
|||
26
EXHIBIT
A
THIRD
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT
B
FORM
OF PROMISSORY NOTE
EXHIBIT
C
COMPANY
DISCLOSURE SCHEDULE
EXHIBIT
D
PREFERRED
STOCK INVESTOR RIGHTS AGREEMENT
EXHIBIT
E
FORM
OF ASSIGNMENT OF INVENTIONS
AND
NON-DISCLOSURE AGREEMENT
EXHIBIT
F
FORM
OF LEGAL OPINION TO BE RENDERED BY
WILSON,
SONSINI, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
EXHIBIT
G
FORM
OF WARRANT
EXHIBIT
H
VOTING
AGREEMENT