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EXHIBIT 10.6
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
SPECTRX, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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TABLE OF CONTENTS
PAGE
SECTION 1 Authorization and Sale of Preferred Stock . . . . . . . . . . . . . . . . . . . . . 1
1.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Sales of Preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 Closing Dates; Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Subsequent Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3 Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . 2
3.1 Organization and Standing; Articles and By-Laws . . . . . . . . . . . . . . . 2
3.2 Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.5 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.6 Labor Agreements and Actions . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.7 Agreements; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.8 Title to Properties and Assets; Liens, etc . . . . . . . . . . . . . . . . . . 4
3.9 Compliance with Other Instruments, None Burdensome, etc . . . . . . . . . . . 4
3.10 Litigation, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.12 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.13 Governmental Consent, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.14 Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.15 Brokers or Finders; Other Offers . . . . . . . . . . . . . . . . . . . . . . . 6
3.16 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.17 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4 Representations and Warranties of the Purchaser . . . . . . . . . . . . . . . . . . 6
4.1 Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 No Public Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Access to Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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4.8 Tax Liability . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.9 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5 Conditions to Closing of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Representations and Warranties Correct . . . . . . . . . . . . . . . . . . . . 8
5.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Opinion of Company's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Amended and Restated Articles . . . . . . . . . . . . . . . . . . . . . . . . 9
5.7 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6 Conditions to Closing of Company . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Amended and Restated Articles . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7 Affirmative Covenants of the Company and the Purchaser . . . . . . . . . . . . . . . 9
7.1 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 Assignment of Rights to Financial Information . . . . . . . . . . . . . . . 10
7.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4 Termination of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 8 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 9 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.4 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . 11
9.5 Notices, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.6 Delays or Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.7 California Corporate Securities Law . . . . . . . . . . . . . . . . . . . . 12
9.8 Georgia Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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9.10 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.13 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EXHIBITS
A Amended and Restated Certificate of Incorporation
B Exceptions to Representations and Warranties
C Proprietary Information Agreement
D Amended and Restated Registration Rights Agreement
E Legal Opinion
F License Agreement
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SPECTRX, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of October ___, 1996 between SpectRx, Inc.,
a Delaware corporation located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Company"), and ▇▇▇▇▇▇ Laboratories, an Illinois corporation located at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser").
SECTION 1
AUTHORIZATION AND SALE OF PREFERRED STOCK
1.1 AUTHORIZATION. The Company will authorize the sale and
issuance of up to 500,000 shares of its Series C Preferred Stock (the "Series C
Shares"), having the rights, privileges and preferences as set forth in the
Amended and Restated Certificate of Incorporation (the "Articles") in the form
attached to this Agreement as Exhibit A.
1.2 SALES OF PREFERRED. Subject to the terms and conditions
hereof, the Company will severally issue and sell to the Purchaser and the
Purchaser will buy from the Company 500,000 Series C Shares the Closing (as
defined below) for the purchase price of $6.00 per share.
SECTION 2
CLOSING DATES; DELIVERY
2.1 CLOSING DATE. The closing of the purchase and sale of the
Series C Shares hereunder (the "Closing") shall be held at the offices of
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 9:00 a.m., local time, on October ___,
1996 or at such other time and place upon which the Company and the Purchaser
shall agree. The Closing shall occur simultaneously with or promptly after
execution and delivery of this Agreement by the Purchaser and the Company, but
in any event within ten (10) days of the satisfaction of the conditions set
forth in Section 5.
2.2 DELIVERY. At the Closing, the Company will deliver to the
Purchaser a certificate, registered in the Purchaser's name, representing the
500,000 Series C Shares to be purchased by the Purchaser at the Closing,
against payment of the purchase price therefor by cancellation of indebtedness,
by check payable to the Company, or by wire transfer per the Company's wiring
instructions.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on Exhibit B attached hereto, the Company
represents and warrants to the Purchaser as follows:
3.1 ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. The Company
is a corporation duly organized and validly existing under, and by virtue of,
the laws of the State of Delaware and is in good standing under such laws. The
Company has requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted and
as proposed to be conducted. The Company is not presently qualified to do
business as a foreign corporation in any jurisdiction other than Georgia, and
the failure to be so qualified will not have a material adverse affect on the
Company's business as now conducted or as now proposed to be conducted.
3.2 CORPORATE POWER. The Company will have at the Closing all
requisite legal and corporate power and authority to execute and deliver this
Agreement and the agreements set forth as Exhibits hereto (collectively, the
"Agreements"), to sell and issue the Series C Shares hereunder, to issue the
Common Stock issuable upon conversion of the Series C Shares and the Series C1
Preferred Stock and to carry out and perform its obligations under the terms of
the Agreements.
3.3 SUBSIDIARIES. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity.
3.4 CAPITALIZATION. The authorized capital stock of the Company
consists or will, upon the filing of the Articles, consist of 15,000,000 shares
of Common Stock, 3,560,000 shares of Series A Preferred Stock, 3,560,000 shares
of Series A1 Preferred Stock, 1,375,000 shares of Series B Preferred Stock,
1,375,000 shares of Series B1 Preferred Stock, 500,000shares of Series C
Preferred Stock and 500,000 shares of Series C1 Preferred Stock (the Series C
and Series C1 Preferred Stock shall be referred to as the "Preferred Stock").
Immediately prior to the Closing 2,083,500 shares of Common Stock, 3,103,784
shares of Series A Preferred Stock and 1,300,000 shares of Series B Preferred
Stock will be outstanding and no other shares of capital stock will be
outstanding. There are also outstanding immediately prior to the Closing
warrants to purchase an aggregate of 1,268,643 shares of Common Stock and
360,000 shares of Series A Preferred Stock. All of the outstanding shares of
Common Stock, Series A Preferred Stock and Series B Preferred Stock are duly
authorized, validly issued, fully paid and nonassessable, and were issued in
compliance with applicable federal and state securities laws. The Series C
Shares, when issued pursuant to the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable. The Company has
reserved 5,435,000 shares of Common Stock for issuance upon conversion of the
Preferred Stock, and 1,150,000 shares of its Common Stock for issuance pursuant
to its 1995 Incentive Stock Plan. The Company has also reserved 1,268,643
shares of Common Stock and 360,000 shares of Series A Preferred Stock for
issuance upon the exercise of warrants to purchase
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shares of Common Stock and Series A Preferred Stock outstanding as of the
Closing. Except for those set forth in the Agreements, there are no options,
warrants or other rights (including conversion or preemptive rights) or
agreements outstanding to purchase any of the Company's authorized and unissued
capital stock.
3.5 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of the Agreements by the
Company, the authorization, sale, issuance and delivery of the Series C Shares
(and the Common Stock issuable upon conversion of the Preferred Stock) and the
performance of all of the Company's obligations under the Agreements has been
taken or will be taken prior to the Closing. The Agreements, when executed and
delivered by the Company, shall constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, except as the
indemnification provisions of paragraph 7 of the Registration Rights Agreement
(as defined below) hereof may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Series C Shares, when
issued in compliance with the provisions of this Agreement, will be validly
issued, will be fully paid and nonassessable, and will have the rights,
preferences and privileges described in the Articles; the Common Stock issuable
upon conversion of the Preferred Stock has been duly and validly reserved and,
when issued in compliance with the provisions of this Agreement and the
Articles, will be validly issued, and will be fully paid and nonassessable; and
the Preferred Stock and such Common Stock will be free of any liens or
encumbrances, assuming the Purchaser takes the Series C Shares with no notice
thereof, other than any liens or encumbrances created by or imposed upon the
holders; provided, however, that the Preferred Stock (and the Common Stock
issuable upon conversion thereof) may be subject to restrictions on transfer
under state and/or federal securities laws as set forth herein.
3.6 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the knowledge of the Company threatened, which could
have a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. The Company is not aware
that any officer or key employee, or that any group of key employees, intends
to terminate their employment with the Company, nor does the Company have a
present intention to terminate the employment of any of the foregoing. The
employment of each officer and, to the best of the Company's knowledge, each
employee of the Company is terminable at the will of the Company.
3.7 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, affiliates, or any affiliate
thereof nor are there agreements or understandings between any
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person and/or entities, which affects or relates to the voting or giving of
written consents with respect to any security or by a director of the Company.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to the Company in excess
of, $5,000, or (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from the Company or (iii) provisions restricting or
affecting the development, manufacture or distribution of the Company's
products or services or (iv) indemnification by the Company with respect to
infringements of proprietary rights.
(c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or any other liabilities individually in excess of $5,000 or, in the
case of indebtedness and/or liabilities individually less than $5,000, in
excess of $25,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above,
all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual
minimum dollar amounts of such subsections.
3.8 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has
good and marketable title to its properties and assets, and has good title to
all its leasehold interests, in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than (i) the lien of current taxes not yet
due and payable, and (ii) possible minor liens and encumbrances which do not in
any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and which have not arisen
otherwise than in the ordinary course of business. The Company has timely
filed or will file with appropriate taxing authorities all returns and other
information required with respect to taxes (regardless of form) for all taxable
periods ending on or prior to the Closing; all such returns shall be or have
been complete and accurate in all material respects.
3.9 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC. The
Company is not in violation or default of any term of its Articles or Bylaws,
or in any material respect of any term or provision of any material mortgage,
indebtedness, indenture, contract, agreement, instrument, judgment, order or
decree, and to the best of its knowledge is not in violation of any statute,
rule or regulation applicable to the Company where such violation would
materially and adversely affect the Company. The execution, delivery and
performance of and compliance with the Agreements, and the issuance of the
Series C Shares and the Common Stock issuable upon conversion of the Preferred
Stock, have not resulted and will not result in any material violation of, or
conflict with, or constitute,
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with or without the passage of time and the giving of notice, a material
violation or default under the Company's Articles or Bylaws or any of its
agreements, nor result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company; and
there is no such violation or default which materially and adversely affects
the business of the Company or any of its properties or assets.
3.10 LITIGATION, ETC. There are no actions, suits, proceedings or
investigations pending against the Company or its properties before any court
or governmental agency (nor, to the best of the Company's knowledge, is there
any reasonable basis therefor or threat thereof). The foregoing includes,
without limitation, actions pending or threatened (or any basis therefor known
to the Company) involving the prior employment of any of the Company's
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers or their obligations under any agreement with their former employers.
The Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.11 EMPLOYEES. To the best of the Company's knowledge, no
employee of the Company is in violation of any term of any employment contract,
patent disclosure agreement or any other contract or agreement relating to the
relationship of such employee with the Company or any other party because of
the nature of the business conducted or to be conducted by the Company. Each
employee of the Company with access to confidential or proprietary information
has executed a Proprietary Information Agreement, the form of which is attached
hereto as Exhibit D.
3.12 REGISTRATION RIGHTS. Except as set forth in the Amended and
Restated Registration Rights Agreement attached hereto as Exhibit D (the
"Registration Rights Agreement"), the Company is not under any contractual
obligation to register (as defined in Section 1 of the Registration Rights
Agreement) any of its presently outstanding securities or any of its securities
which may hereafter be issued.
3.13 GOVERNMENTAL CONSENT, ETC. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement, or the offer, sale or issuance of the
Series C Shares (and the Common Stock issuable upon conversion of the Preferred
Stock), or the consummation of any other transaction contemplated hereby,
except (a) filing of the Articles in the office of the Delaware Secretary of
State, and (b) qualification (or taking such action as may be necessary to
secure an exemption from qualification, if available) of the offer and sale of
the Series C Shares (and the Common Stock issuable upon conversion of the
Preferred Stock) under applicable state securities laws, which filings and
qualifications, if required, will be accomplished in a timely manner.
3.14 OFFERING. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, the offer, sale and issuance of the Series
C Shares to be issued in conformity with the terms of this Agreement, and the
issuance of the Common Stock to be issued upon conversion of the Preferred
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Stock, constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended (the "Securities Act") and
in compliance with applicable state securities laws.
3.15 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.
3.16 PATENTS AND TRADEMARKS. There are no outstanding options,
licenses, or agreements of any kind relating to the intellectual property of
the Company. The Company is not bound by or a party to any options, licenses
or agreements of any kind with respect to the patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company
has not received any communications alleging that the Company has violated or,
by conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his best efforts to promote the interests of the
Company or that would conflict with the Company's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions of any of
its employees (or people it currently intends to hire) made prior to their
employment by the Company.
3.17 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. The audited
financial statements of the Company for the fiscal years ended December 31,
1993, December 31, 1994 and December 31, 1995 (the "Financial Statements"),
which include audited balance sheets, statements of operations, statements of
stockholders' equity and statements of cash flows as of such dates and for the
periods then ended, have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the financial
condition and results of operations of the Company as of such dates and for the
periods then ended. Except as set forth in the Schedule of Exceptions or as
set forth in the Financial Statements (including the footnotes thereto), there
are no liabilities, debts, claims or obligations, whether accrued, absolute,
contingent or otherwise, of or affecting the Company or its property or assets.
Except as set forth in the Schedule of Exceptions, since December 31, 1995
there has been no material adverse change in the financial condition, operating
results, assets, operation or business prospects of the Company.
3.18 DISCLOSURE. This Agreement, together with the Exhibits
attached hereto and all other certificates delivered in connection herewith,
when taken as a whole, does not contain any untrue statement of a material fact
or omit any material fact necessary in order to make the statements contained
herein not misleading in light of the circumstances under which they were made.
The
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Company has fully provided each Purchaser with all the information such
Purchaser has requested for deciding whether to purchase the Series C Shares
and all information which the Company believes is reasonably necessary to
enable such Purchaser to make such decision.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby severally represents and warrants to the Company
with respect to the purchase of the Series C Shares as follows:
4.1 EXPERIENCE. It has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
4.2 INVESTMENT. It is acquiring the Series C Shares and the
Common Stock underlying the Preferred Stock for investment for its own account,
not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof. It understands that the Series C
Shares to be purchased and the Common Stock underlying the Preferred Stock have
not been, and will not be, registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature
of the investment intent and the accuracy of such Purchaser's representations
as expressed herein.
4.3 RULE 144. It acknowledges that the Preferred Stock and the
underlying Common Stock must be held indefinitely unless subsequently
registered under the Securities Act or unless an exemption from such
registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than two years after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not exceeding
specified limitations.
4.4 NO PUBLIC MARKET. It understands that no public market now
exists for any of the securities issued by the Company and that the Company has
made no assurances that a public market will ever exist for the Company's
securities.
4.5 ACCESS TO DATA. It has had an opportunity to discuss the
Company's business, management and financial affairs with its management. It
has also had an opportunity to ask questions of officers of the Company, which
questions were answered to its satisfaction. It
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understands that such discussions, as well as any written information issued by
the Company, were intended to describe certain aspects of the Company's
business and prospects but were not a thorough or exhaustive description.
4.6 AUTHORIZATION. This Agreement when executed and delivered by
such Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, except as the
indemnification provisions of paragraph 7 of the Registration Rights Agreement
may be limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.7 BROKERS OR FINDERS. The Company has not, and will not, incur,
directly or indirectly, as a result of any action taken by such Purchaser, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.
4.8 TAX LIABILITY. It has reviewed with its own tax advisors the
federal, state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement (including any tax consequences
resulting from the recently enacted tax legislation). It relies solely on such
advisors and not on any statements or representations of the Company or any of
its agents. It understands that it (and not the Company) shall be responsible
for its own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
4.9 LEGEND. It is understood that the certificates evidencing the
Series C Shares will bear the following legend: "THESE SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
SECTION 5
CONDITIONS TO CLOSING OF PURCHASER
The Purchaser's obligation to purchase the Series C Shares at the
Closing is, at the option of the Purchaser, subject to the fulfillment of the
following conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the Company in Section 3 hereof shall be true and
correct in all material respects as of the Closing.
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13
5.2 COVENANTS. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing
shall have been performed or complied with in all material respects.
5.3 OPINION OF COMPANY'S COUNSEL. The Purchaser shall have
received from Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, an
opinion addressed to it, dated the Closing Date, in substantially the form of
Exhibit E.
5.4 COMPLIANCE CERTIFICATE. The Company shall have delivered to
the Purchaser a certificate of the Company executed by the President of the
Company, dated as of the Closing certifying to the fulfillment of the
conditions specified in Sections 5.1 and 5.2 of this Agreement.
5.5 BLUE SKY. The Company shall have obtained all necessary state
securities law permits and qualifications, or have the availability of
exemptions therefrom, required by any state for the offer and sale of the
Series C Shares and the Common Stock issuable upon conversion of the Preferred
Stock.
5.6 AMENDED AND RESTATED ARTICLES. The Articles shall have been
filed with the Delaware Secretary of State.
5.7 REGISTRATION RIGHTS AGREEMENT. The Company and the parties
listed thereon shall have executed and delivered the Registration Rights
Agreement in substantially the form attached hereto as Exhibit D.
5.8 DEVELOPMENT AND LICENSE AGREEMENT. The Company and the
Purchaser shall have entered into a research and development and license
agreement in the form attached hereto as Exhibit F.
5.9 SECRETARY'S CERTIFICATE. The Company shall have delivered to
the Purchaser a certificate of the Company executed by the Secretary of the
Company, dated as of the Closing, certifying (i) resolutions adopted by the
Board of Directors and the stockholders of the Company authorizing the
execution of the Agreement, the filing of the Restated Articles and the
transactions contemplated hereby; (ii) the Restated Articles and Bylaws of the
Company; copies of third party consents, approvals and filings required in
connection with the consummation of the transactions contemplated by the
Agreement; and (iii) such other documents relating to the transactions
contemplated by the Agreement.
SECTION 6
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Series C Shares at the
Closing is, at the option of the Company, subject to the fulfillment as of the
Closing of the following conditions:
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6.1 REPRESENTATIONS. The representations made by the Purchaser in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing.
6.2 BLUE SKY. The Company shall have obtained all necessary state
securities law permits and qualifications, or have the availability of
exemptions therefrom, required by any state for the offer and sale of the
Series C Shares and the Common Stock issuable upon conversion of the Preferred
Stock.
6.3 AMENDED AND RESTATED ARTICLES. The Articles shall have been
filed with the Delaware Secretary of State.
6.4 LEGAL MATTERS. All material matters of a legal nature which
pertain to this Agreement, and the transactions contemplated hereby, shall have
been reasonably approved by counsel to the Company.
SECTION 7
AFFIRMATIVE COVENANTS OF THE COMPANY AND THE PURCHASER
The Company hereby covenants and agrees as follows:
7.1 FINANCIAL INFORMATION. As long as the Purchaser holds not
less than 66,700 shares of Preferred Stock and/or Common Stock issued upon
conversion of the Preferred Stock, to furnish to the Purchaser:
(a) As soon as practicable after the end of each fiscal
year, and in any event within 120 days thereafter, consolidated balance sheets
of the Company and its subsidiaries, if any, as of the end of such fiscal year,
and consolidated statements of income and consolidated statements of changes in
financial position of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and
setting forth in each case in comparative form the figures for the previous
fiscal year (or, at the election of the Company, setting forth in comparative
form the budgeted figures for the fiscal year then reported), all in reasonable
detail and audited by independent public accountants of national standing
selected by the Company.
(b) As soon as practicable after the end of each calendar
quarter, and in any event within 15 days thereafter, an unaudited quarterly
report including a balance sheet, profit and loss statement cash flow analysis
(prepared in accordance with generally accepted accounting principles other
than for accompanying notes and subject to changes resulting from year-end
audit adjustments).
7.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights
granted pursuant to Section 7.1 may not be assigned or otherwise conveyed by
any Purchaser or by any subsequent transferee of any such rights without the
prior written consent of the Company; provided, however, that any Purchaser may
assign to any transferee, other than a competitor of the Company, and after
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15
giving notice to the Company, the rights granted pursuant to Section 7.1 to (i)
a transferee who acquires at least 66,700 shares of Preferred Stock and/or
Common Stock issued upon conversion of the Preferred Stock (appropriately
adjusted for recapitalizations) or (ii) any constituent partner of a Purchaser.
7.3 INSPECTION. The Company shall permit the Purchaser, at such
Purchaser's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be
requested by the Purchaser, provided, however, that the Company shall not be
obligated pursuant to this Section 7.3 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential
information.
7.4 TERMINATION OF COVENANTS. The covenants set forth in Sections
7.1, 7.2 and 7.3 shall terminate and be of no further force or effect at such
time as the Company is required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended.
SECTION 8
REGISTRATION RIGHTS
The Purchaser shall have the registration rights set forth in the
Registration Rights Agreement attached hereto as Exhibit D.
SECTION 9
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the internal laws of the State of Delaware as applied to agreements
entered into among Delaware residents to be performed entirely within Delaware.
9.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser
and the Closing of the transactions contemplated hereby.
9.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of the Purchaser to purchase the Preferred
Stock shall not be assignable without the consent of the Company.
9.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or
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bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein. Except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought; provided, however, that holders of a
majority of the Common Stock issued or issuable upon conversion of the
Preferred Stock may, with the Company's prior written consent, waive, modify or
amend on behalf of the Purchaser, any provision hereof.
9.5 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or by facsimile transmission, or otherwise
delivered by hand or by messenger, addressed (a) if to the Purchaser, at the
Purchaser's address set forth above, or at such other address as such Purchaser
shall have furnished to the Company in writing, or (b) if to any other holder
of any shares, at such address as such holder shall have furnished the Company
in writing, or, until any such holder so furnishes an address to the Company,
then to and at the address of the last holder of such shares who has so
furnished an address to the Company, or (c) if to the Company, one copy should
be sent to its address set forth on the cover page of this Agreement and
addressed to the attention of the Corporate Secretary, or at such other address
as the Company shall have furnished to the Purchaser.
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered
if delivered personally, or, if sent by mail, at the earlier of its receipt or
72 hours after the same has been deposited in a regularly maintained receptacle
for the deposit of the United States mail, addressed and mailed as aforesaid,
or if by facsimile transmission, as indicated by the facsimile imprint date.
9.6 DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any holder
of any shares, upon any breach or default of the Company under this Agreement,
shall impair any such right, power or remedy of such holder nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any holder
of any breach or default under this Agreement, or any waiver on the part of any
holder of any provisions or conditions of this agreement, must be in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
9.7 GEORGIA LEGEND. The Purchaser acknowledges that each
certificate shall bear the following legend: THESE SECURITIES HAVE BEEN ISSUED
OR SOLD IN RELIANCE ON PARAGRAPH 13 OF CODE SECTION 10-5-9 OF THE GEORGIA
SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SUCH ACT.
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9.8 EXPENSES. The Company and the Purchaser shall bear its own
legal and other expenses with respect to this Agreement.
9.9 FINDER'S FEES. With respect to any finder's fees arising out
of the purchase of the Series C Shares pursuant to this Agreement:
(a) The Company hereby agrees to indemnify and to hold
the Purchaser harmless of and from any liability for any commission or
compensation in the nature of a finder's fee to any broker or other person or
firm (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its employees or
representatives are responsible.
(b) The Purchaser hereby agrees to indemnify and to hold
the Company harmless of and from any liability for any commission or
compensation in the nature of a finder's fee to any broker or other person or
firm (and the costs and expenses of defending against such liability or
asserted liability) for which such Purchaser or any of its employees or
representatives, are responsible.
9.10 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
9.11 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to
any party.
9.12 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
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The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY" "PURCHASER"
SPECTRX, INC. ▇▇▇▇▇▇ LABORATORIES,
a Delaware corporation an Illinois corporation
By: By:
------------------------------ --------------------------------
Title: Title:
--------------------------- -----------------------------
19
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
_________________________________
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, SECRETARY OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"SPECTRX, INC." FILED IN THIS OFFICE ON THE THIRTIETH DAY OF SEPTEMBER, A.D.
1996, AT 4:30 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
* * * * * * * * * *
[SEAL OF THE SECRETARY OF STATE]
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of State
2313878 8100
AUTHENTICATION: 8128301
960284480 DATE: 10-01-96
21
RESTATED CERTIFICATE OF INCORPORATION
OF
SPECTRX, INC.
SpectRx, Inc., a Corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), hereby certifies that:
1. The name of the Corporation is SpectRx, Inc. The Corporation
was originally incorporated under the same name, and the original Certificate
of Incorporation was filed with the Secretary of State of the State of Delaware
on October 27, 1992.
2. This Certificate restates and amends the provisions of the
Corporation's Restated Certificate of Incorporation to read as set forth in
Exhibit A attached to this Certificate.
3. This restatement and amendment of the Corporation's
Certificate of Incorporation has been duly adopted by the Corporation's Board
of Directors in accordance with Sections 242 and 245 of the General Corporation
Law of the State of Delaware, and by the holders of each class of outstanding
stock entitled to vote thereon as a class by written consent given in
accordance with Section 228 of the General Corporation Law of the State of
Delaware. Written notice pursuant to Section 228 has been given to those
stockholders of the Corporation who have not consented in writing to this
action.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Restatement of Certificate of Incorporation to be signed by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
its President, and attested by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its Assistant Secretary,
this 27th day of September, 1996.
SPECTRX, INC.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ATTEST:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Assistant Secretary
22
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SPECTRX, INC.
I
The name of this corporation is SpectRx, Inc. (the "Corporation").
II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle, Zip Code 19801. The name of its registered
agent at such address is The Corporation Trust Company.
III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
IV
The Corporation is authorized to issue two classes of capital stock:
Preferred Stock, $0.001 par value per share, and Common Stock, $0.001 par value
per share. The total number of shares of Preferred Stock which the Corporation
shall have the authority to issue is 10,870,000 of which 3,560,000 shares shall
be designated Series A Preferred Stock ("Series A Preferred Stock"), 3,560,000
shares shall be designated Series A1 Preferred Stock ("Series A1 Preferred
Stock"), 1,375,000 shares shall be designated Series B Preferred Stock ("Series
B Preferred Stock"), 1,375,000 shares shall be designated Series B1 Preferred
Stock ("Series B1 Preferred Stock"), 500,000 shares shall be designated Series
C Preferred Stock ("Series C Preferred Stock"), and 500,000 shares shall be
designated Series C1 Preferred Stock ("Series C1 Preferred Stock"). The total
number of shares of Common Stock which the Corporation shall have the authority
to issue is 15,000,000. The Series A Preferred Stock, Series A1 Preferred
Stock, Series B Preferred Stock, Series B1 Preferred Stock, Series C Preferred
Stock and Series C1 Preferred Stock are herein collectively referred to as the
"Preferred Stock."
V
The rights, preferences, privileges and restrictions granted to or
imposed upon the Common Stock and the Preferred Stock are as follows:
23
1. Dividends. The holders of Series A Preferred Stock, Series A1
Preferred Stock, Series B Preferred Stock, Series B1 Preferred Stock, Series C
Preferred Stock and Series C1 Preferred Stock shall be entitled, when and if
declared by the board of directors of the Corporation, to dividends out of
assets of the Corporation legally available therefor at the rate of $0.10,
$0.10, $0.40, $0.40, $0.60 and$0.60 per share, per annum, respectively.
Dividends on the Preferred Stock shall be payable in preference and prior to
any payment of any dividend on the Common Stock of the Corporation.
Thereafter, the holders of Common Stock shall be entitled, when and if declared
by the board of directors of the Corporation, to dividends out of assets of the
Corporation legally available therefor. Notwithstanding anything set forth in
this paragraph 1, no dividends shall be payable on any shares of Common Stock
issued with respect to shares of Series A1 Preferred Stock, Series B1 Preferred
Stock and Series C1 Preferred Stock issued pursuant to paragraph 4(e)(ii)(A)
and 4(e)(ii)(B). The right to dividends on shares of Common Stock and
Preferred Stock shall not be cumulative, and no right shall accrue to holders
of Common Stock or Preferred Stock by reason of the fact that dividends on said
shares are not declared in any prior period.
2. Liquidation Preference.
(a) Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, either voluntarily or
involuntarily, the holders of Preferred Stock shall, subject to the right of
each such holder to convert such holder's shares of Preferred Stock into shares
of Common Stock pursuant to the provisions of Section 4 below, be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of Common Stock of the
Corporation by reason of their ownership thereof, an amount equal to $1.00,
$1.00, $4.00, $4.00, $6.00 and $6.00 per share for each outstanding share of
Series A Preferred Stock, Series A1 Preferred Stock, Series B Preferred Stock,
Series B1 Preferred Stock, Series C Preferred Stock and Series C1 Preferred
Stock, respectively, plus any declared but unpaid dividends on such share. If
upon such liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation are insufficient to provide for the cash payment described
above to the holders of Preferred Stock, such assets as are available shall be
paid to the holders of Preferred Stock in proportion to the full preferential
amount each such holder is otherwise entitled to receive.
After the payment or setting apart of payment to the holders
of Preferred Stock of the preferential amounts so payable to them, the holders
of Common Stock shall be entitled to receive any remaining assets of the
Corporation on a pro rata basis, based upon the number of shares held.
(b) Reorganization or Merger. A reorganization or merger
of the Corporation with or into any other corporation or corporations, or a
sale of all or substantially all of the assets of the Corporation shall be
deemed to be a liquidation within the meaning of this paragraph 2; provided
that the holders of Preferred Stock and Common Stock shall be paid in cash or
in securities received or in a combination thereof (which combination shall be
in the same proportions as the consideration received in the transaction). Any
securities to be delivered to the holders of the Preferred Stock and Common
Stock upon a merger, reorganization or sale of substantially all of the assets
of the Corporation shall be valued as follows:
-2-
24
(i) If traded on a securities exchange, the value
shall be deemed to be the average of the closing prices of the securities on
such exchange over the 30-day period ending three (3) business days prior to
the closing;
(ii) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid prices over the
30-day period ending three (3) business days prior to the closing; and
(iii) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
Corporation and the holders of not less than a majority of the outstanding
shares of Preferred Stock, provided that if the Corporation and the holders of
a majority of the outstanding shares of Preferred Stock are unable to reach
agreement, then by independent appraisal by an investment banker hired and paid
by the Corporation, but acceptable to the holders of a majority of the
outstanding shares of Preferred Stock.
(c) Noncash Distributions. If any of the assets of the
Corporation are to be distributed other than in cash under this paragraph 2 or
for any purpose, then the board of directors of the Corporation shall promptly
engage independent competent appraisers to determine the value of the assets to
be distributed to the holders of Preferred Stock or Common Stock. The
Corporation shall, upon receipt of such appraiser's valuation, give prompt
written notice to each holder of shares of Preferred Stock or Common Stock of
the appraiser's valuation.
3. Voting Rights.
(a) The holder of each share of Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which each share of Preferred Stock could be converted on the record date
for the vote or written consent of stockholders and, except as otherwise
required by law, shall have voting rights and powers equal to the voting rights
and powers of the Common Stock. The holder of each share of Preferred Stock
shall be entitled to notice of any stockholders' meeting in accordance with the
bylaws of the Corporation and shall vote with holders of the Common Stock upon
all matters submitted to a vote of stockholders, except those matters required
to be submitted to a class or series vote pursuant to paragraph 5 herein or by
law. Fractional votes shall not, however, be permitted and any fractional
voting rights resulting from the above formula (after aggregating all shares of
Common Stock into which shares of Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half rounded
upward to one).
(b) Notwithstanding the foregoing, as long as more than
800,000 shares of Preferred Stock are outstanding, the holders of Preferred
Stock, voting as a class, shall have the right to elect two members of the
Corporation's board of directors. The holders of Common Stock, voting as a
single class, shall have the right to elect all other members of the
Corporation's board of directors. Notwithstanding any Bylaw provisions to the
contrary, the stockholders entitled to elect a particular director shall be
entitled to remove such director or to fill a vacancy in the seat formerly held
by such a director, all in accordance with the applicable provisions provided
in the General Corporation Law of the State of Delaware.
-3-
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4. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock
shall be convertible without the payment of any additional consideration by the
holder thereof and, at the option of the holder thereof, at any time after the
date of issuance of such share at the office of the Corporation or any transfer
agent for the Preferred Stock. Each share of each series of Preferred Stock
shall be convertible into the number of fully paid and nonassessable shares of
Common Stock which results from dividing the Conversion Price (as hereinafter
defined) per share in effect for such series of Preferred Stock at the time of
conversion into the per share Conversion Value (as hereinafter defined) of such
series. Upon the filing of this Amended and Restated Certificate of
Incorporation with the Delaware Secretary of State, the initial Conversion
Price per share of Series A Preferred Stock, Series A1 Preferred Stock, Series
B Preferred Stock, Series B1 Preferred Stock, Series C Preferred Stock and
Series C1 Preferred Stock shall be $1.00, $1.00, $4.00, $4.00, $6.00 and $6.00,
respectively. The per share Conversion Value of the Series A Preferred Stock,
the Series A1 Preferred Stock, the Series B Preferred Stock, the Series B1
Preferred Stock, the Series C Preferred Stock and the Series C1 Preferred Stock
shall be $1.00, $1.00, $4.00, $4.00, $6.00 and $6.00, respectively. The
initial Conversion Price of the Series A Preferred Stock, the Series A1
Preferred Stock, the Series B Preferred Stock, the Series B1 Preferred Stock,
the Series C Preferred Stock and the Series C1 Preferred Stock shall be subject
to adjustments from time to time as provided below. The number of shares of
Common Stock into which a share of Preferred Stock is convertible is
hereinafter referred to as the "Conversion Rate" of such series.
(b) Automatic Conversion. Each share of Preferred Stock
shall automatically be converted into shares of Common Stock at its then
effective Conversion Rate immediately upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock of which the aggregate gross proceeds attributable to sales for
the account of the Corporation exceed $10,000,000 at a per share issuance price
of at least $9.00 per share.
(c) Mechanics of Conversion. Before any holder of
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate(s) therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for the Preferred
Stock and shall give written notice to the Corporation at such office that the
holder elects to convert the same (except that no such written notice of
election to convert shall be necessary in the event of an automatic conversion
pursuant to paragraph 4(b) hereof). The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred Stock certificate(s) for the number of shares of Common Stock to
which the holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Preferred Stock to be converted (except that
in the case of an automatic conversion pursuant to paragraph 4(b) hereof such
conversion shall be deemed to have been made immediately prior to the closing
of the offering referred to in paragraph 4(b)) and the person(s) entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder(s) of such shares of Common Stock
on such date.
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26
(d) Fractional Shares. In lieu of any fractional shares
to which the holder of Preferred Stock would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of one share of Common Stock as determined by the board of directors of
the Corporation. Whether or not fractional shares of Common Stock are issuable
upon such conversion shall be determined on the basis of the total number of
shares of Preferred Stock of each holder at the time converting into Common
Stock and the number of shares of Common Stock issuable upon such aggregate
conversion.
(e) Adjustment of Conversion Price.
(i) Special Definitions. For purposes of this
paragraph 4(e), the following definitions shall apply:
(A) "Excluded Stock" shall mean:
(1) all shares of Common Stock
issued and outstanding on the date this document is filed with the Delaware
Secretary of State and all shares of Common Stock issued or issuable upon
conversion of Preferred Stock; and
(2) all shares of Common Stock or
other securities issued or issuable to officers, directors, consultants or
employees of the Corporation or lessors, lenders or licensors to the
Corporation which are approved by of the board of directors of the Corporation.
All outstanding shares of Excluded Stock (including shares of Common Stock
issuable upon conversion of the Preferred Stock) shall be deemed to be
outstanding for all purposes of the computations of subparagraph 4(e)(iii)
below.
(B) "Financing" means any issuance of
Common Stock (including securities exercisable for or convertible into Common
Stock) in a transaction with gross proceeds to the Corporation equal to or
greater than $100,000 where the holders of Preferred Stock are offered an
opportunity to purchase their Preferred Stock Pro Rata Share of the additional
shares of Common Stock (including securities exercisable for or convertible
into Common Stock) issued in such transaction.
(C) "Preferred Stock Pro Rata Share"
shall mean the amount determined by multiplying the total number of shares of
Common Stock (including securities exercisable for or convertible into Common
Stock) offered for sale by the Corporation in a Financing to all parties by a
fraction, (x) the numerator of which is the total number of shares of Common
Stock (including securities convertible into Common Stock) held by such
stockholder and (y) the denominator of which is the total number of shares of
Common Stock (including securities convertible into Common Stock) then
outstanding plus any shares reserved for issuance pursuant to plans approved by
the board of directors of the Corporation.
(D) "Series A Dilutive Issuance" shall
mean an issuance of Common Stock (including securities exercisable for or
convertible into Common Stock) in a Financing for a
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27
consideration per share less than the Conversion Price of the Series A
Preferred Stock in effect on the date of and immediately prior to such issue.
(E) "Series B Dilutive Issuance" shall
mean an issuance of Common Stock (including securities exercisable for or
convertible into Common Stock) in a Financing for a consideration per share
less than the Conversion Price of the Series B Preferred Stock in effect on the
date of and immediately prior to such issue.
(F) "Series C Dilutive Issuance" shall
mean an issuance of Common Stock (including securities exercisable for or
convertible into Common Stock) in a Financing for a consideration per share
less than the Conversion Price of the Series C Preferred Stock in effect on the
date of and immediately prior to such issue.
(G) "Participating Investor" shall mean
any holder of Preferred Stock that purchases at least its Preferred Stock Pro
Rata Share of either a Series A Dilutive Issuance or Series B Dilutive
Issuance.
(H) "Non-Participating Investor" shall
mean any holder of Preferred Stock that is not a Participating Investor.
(ii) Shadow Preferred.
(A) Series A Preferred Stock. In the
event the Corporation issues additional shares of Common Stock (including
securities exercisable for or convertible into Common Stock) in a Series A
Dilutive Issuance, each share of Series A Preferred Stock held by each and
every Nonparticipating Investor shall, immediately prior to the closing of the
applicable Series A Dilutive Issuance (the "Closing"), be converted into one
fully paid and nonassessable share of Series A1 Preferred Stock plus such
number of fully paid and nonassessable shares of Common Stock as is determined
by multiplying one by the Forced Conversion Rate. The Forced Conversion Rate
shall be equal to (X) minus one, where (X) equals the per share Conversion
Price of Series A Preferred Stock immediately prior to the Closing divided into
the per share Conversion Value of Series A Preferred Stock. Upon the
conversion of Series A Preferred Stock held by a Nonparticipating Investor as
set forth herein, such shares of Series A Preferred Stock shall no longer be
outstanding on the books of the Corporation and the Nonparticipating Investor
shall be treated for all purposes as the record holder of such shares of Series
A1 Preferred Stock and, if applicable, Common Stock upon the Closing of the
applicable Series A Dilutive Issuance.
(B) Series B Preferred Stock. In the
event the Corporation issues additional shares of Common Stock (including
securities exercisable for or convertible into Common Stock) in a Series B
Dilutive Issuance, each share of Series B Preferred Stock held by each and
every Nonparticipating Investor shall, immediately prior to the closing of the
applicable Series B Dilutive Issuance (the "Closing"), be converted into one
fully paid and nonassessable share of Series B1 Preferred Stock plus such
number of fully paid and nonassessable shares of Common Stock as is determined
by multiplying one by the Forced Conversion Rate. The Forced Conversion Rate
shall be equal to (X) minus
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one, where (X) equals the per share Conversion Price of Series B Preferred
Stock immediately prior to the Closing divided into the per share Conversion
Value of Series B Preferred Stock. Upon the conversion of Series B Preferred
Stock held by a Nonparticipating Investor as set forth herein, such shares of
Series B Preferred Stock shall no longer be outstanding on the books of the
Corporation and the Nonparticipating Investor shall be treated for all purposes
as the record holder of such shares of Series B1 Preferred Stock and, if
applicable, Common Stock upon the Closing of the applicable Series B Dilutive
Issuance.
(C) Series C Preferred Stock. In the
event the Corporation issues additional shares of Common Stock (including
securities exercisable for or convertible into Common Stock) in a Series C
Dilutive Issuance, each share of Series C Preferred Stock held by each and
every Nonparticipating Investor shall, immediately prior to the closing of the
applicable Series C Dilutive Issuance (the "Closing"), be converted into one
fully paid and nonassessable share of Series C1 Preferred Stock plus such
number of fully paid and nonassessable shares of Common Stock as is determined
by multiplying one by the Forced Conversion Rate. The Forced Conversion Rate
shall be equal to (X) minus one, where (X) equals the per share Conversion
Price of Series C Preferred Stock immediately prior to the Closing divided into
the per share Conversion Value of Series C Preferred Stock. Upon the
conversion of Series C Preferred Stock held by a Nonparticipating Investor as
set forth herein, such shares of Series C Preferred Stock shall no longer be
outstanding on the books of the Corporation and the Nonparticipating Investor
shall be treated for all purposes as the record holder of such shares of Series
C1 Preferred Stock and, if applicable, Common Stock upon the Closing of the
applicable Series C Dilutive Issuance.
(iii) Adjustment of Conversion Price for Issuance
of Common Stock. No adjustment in the Conversion Price of Series A1 Preferred
Stock or Series B1 Preferred Stock or Series C1 Preferred Stock shall be made
in respect of the issuance of additional shares of Common Stock or securities
exercisable for or convertible into Common Stock (other than in the event of
stock dividends, subdivisions, split-ups, combinations, dividends or
recapitalizations which are covered by paragraphs 4(e)(iv), (v) and (vi)
hereof).
The Conversion Price of each series of Preferred
Stock shall be subject to adjustment from time to time as follows:
If the Corporation shall issue any Common Stock other
than Excluded Stock for a consideration per share less than the Conversion
Price in effect immediately prior to the issuance of such Common Stock
(excluding stock dividends, subdivisions, split-ups, combinations, dividends or
recapitalizations which are covered by paragraphs 4(e)(iv), (v) and (vi)), the
Conversion Price in effect immediately after each such issuance shall forthwith
(except as provided in this paragraph 4(e)) be adjusted to a price equal to the
quotient obtained by dividing:
(1) an amount equal to the sum of
(x) the total number of shares of
Common Stock outstanding (including any shares of Common Stock issuable upon
conversion of the Preferred Stock, or deemed to
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have been issued pursuant to subdivision (C) of this clause (iii)) immediately
prior to such issuance multiplied by the Conversion Price in effect immediately
prior to such issuance, plus
(y) the consideration received by
the Corporation upon such issuance, by
(2) the total number of shares of Common
Stock outstanding (including any shares of Common Stock issuable upon
conversion of the Preferred Stock or deemed to have been issued pursuant to
subdivision (C) of this clause (iii)) immediately after the issuance of such
Common Stock.
For the purposes of this clause (iii), the
following provisions shall be applicable:
(A) In the case of the issuance of
Common Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefor after deducting any discounts or commissions paid or
incurred by the Corporation in connection with the issuance and sale thereof.
(B) In the case of the issuance of
Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value thereof as
determined by the board of directors of the Corporation, in accordance with
generally accepted accounting treatment; provided, however, that if, at the
time of such determination, the Corporation's Common Stock is traded in the
over-the- counter market or on a national or regional securities exchange, such
fair market value as determined by the board of directors of the Corporation
shall not exceed the aggregate "Current Market Price" (as defined below) of the
shares of Common Stock being issued.
(C) In the case of the issuance of
(i) options to purchase or rights to subscribe for Common Stock (other than
Excluded Stock), (ii) securities by their terms convertible into or
exchangeable for Common Stock (other than Excluded Stock), or (iii) options to
purchase or rights to subscribe for such convertible or exchangeable securities
(other than Excluded Stock):
(1) the aggregate maximum
number of shares of Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in subdivisions
(1) and (2) above), if any, received by the Corporation upon the issuance of
such options or rights plus the minimum purchase price provided in such options
or rights for the Common Stock covered thereby;
(2) the aggregate maximum
number of shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities, or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof, shall be deemed to
have been
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issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration received by the
Corporation for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued dividends), plus
the minimum additional consideration, if any, to be received by the Corporation
upon the conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be determined in
the manner provided in subdivisions (1) and (2) above);
(3) on any change in the
number of shares of Common Stock deliverable upon exercise of any such options
or rights or conversion of or exchange for such convertible or exchangeable
securities, or on any change in the minimum purchase price of such options,
rights or securities, other than a change resulting from the antidilution
provisions of such options, rights or securities, the Conversion Price shall
forthwith be readjusted to such Conversion Price as would have obtained had the
adjustment made upon (x) the issuance of such options, rights or securities not
exercised, converted or exchanged prior to such change, as the case may be,
been made upon the basis of such change or (y) the options or rights related to
such securities not converted or exchanged prior to such change, as the case
may be, been made upon the basis of such change; and
(4) on the expiration of
any such options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such convertible
or exchangeable securities, the Conversion Price shall forthwith be readjusted
to such Conversion Price as would have obtained had the adjustment made upon
the issuance of such options, rights, convertible or exchangeable securities or
options or rights related to such convertible or exchangeable securities, as
the case may be, been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such convertible or exchangeable
securities or upon the exercise of the options or rights related to such
convertible or exchangeable securities, as the case may be.
(iv) If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, on the date such payment is made or such change is
effective, the Conversion Price of a series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable
on conversion of any shares of such series of Preferred Stock shall be
increased in proportion to such increase of outstanding shares of Common Stock.
(v) If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, then, on the effective date of such
combination, the Conversion Price of a series of Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable
on conversion of any shares of a series of Preferred Stock shall be decreased
in proportion to such decrease in outstanding shares of Common Stock.
(vi) In case, at any time after the date hereof,
of any capital reorganization (other than a reorganization covered by paragraph
2(b) above), or any reclassification of the stock of the Corporation (other
than as a result of a stock dividend or subdivision, split-up or combination of
shares
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of stock), the shares of a series of Preferred Stock shall, after such capital
reorganization or reclassification, be convertible into the kind and number of
shares of stock or other securities or property of the Corporation or otherwise
to which such holder would have been entitled if immediately prior to such
capital reorganization or reclassification he had converted his shares of such
series of Preferred Stock into Common Stock. The provisions of this clause
(vi) shall similarly apply to successive reorganizations and reclassifications
of the type described in the first sentence of this section 4(e)(vi).
(vii) All calculations under this paragraph 4 shall
be made to the nearest cent or to the nearest one hundredth (1/100) of a share
of stock, as the case may be.
(viii) For the purpose of any computation pursuant
to this paragraph 4(e), the "Current Market Price" at any date of one share of
Common Stock, shall be deemed to be the average of the highest reported bid and
the lowest reported offer prices on the preceding business day as furnished by
the National Quotation Bureau, Incorporated (or equivalent recognized source of
quotations) or the closing sale price, if reported; provided, however, that if
the Common Stock is not traded in such manner that the quotations referred to
in this clause (viii) are available for the period required hereunder, Current
Market Price shall be determined in good faith by the board of directors of the
Corporation, but if challenged by the holders of more than 50% of the
outstanding shares of Preferred Stock, then as determined by an independent
appraiser selected by the board of directors of the Corporation, the cost of
such appraisal to be borne by the challenging parties.
(f) Minimal Adjustments. No adjustment in the Conversion
Price need be made if such adjustment would result in a change in the
Conversion Price of less than $0.01. Any adjustment of less than $0.01 which
is not made shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, on a cumulative basis, amounts
to an adjustment of $0.01 or more in the Conversion Price.
(g) No Impairment. The Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this paragraph 4
and in the taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of Preferred Stock
against impairment.
(h) Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Rate pursuant to this
paragraph 4, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon written
request at any time of any holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Rate of such series of Preferred Stock
at the time in effect, and (iii) the number of shares of Common Stock
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32
and the amount, if any, of other property which at the time would be received
upon the conversion of such holder's shares of Preferred Stock.
(i) Notices of Record Date. In the event of any taking
by the Corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution (including any
distribution under section 2(b) above), any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property or to receive any right, the Corporation shall mail to each holder of
Preferred Stock at least ten (10) days prior to such record date, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution or right, and the amount and character of such
dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares of stock as shall be sufficient for such
purpose.
(k) Notices. Any notice required by the provisions of
this paragraph 4 to be given to the holder of shares of Preferred Stock shall
be deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at such holder's address appearing on the
books of the Corporation.
(l) Reissuance of Converted Shares. No shares of
Preferred Stock which have been converted into Common Stock after the original
issuance thereof shall ever again be reissued and all such shares of Preferred
Stock so converted shall upon such conversion cease to be a part of the
authorized shares of stock of the Corporation.
5. Protective Provisions.
(a) Preferred Stock. In addition to any other class vote
that may be required by law, so long as any of the Preferred Stock shall be
outstanding the Corporation shall not, without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Preferred Stock, voting together as
a single class:
(i) Change of Rights. Materially and adversely
alter or change the rights, preferences or privileges of the Preferred Stock;
(ii) Create a New Class. Create, or obligate
itself to create, any new class or series of shares of stock having preferences
over or being on a parity with any outstanding shares of
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33
Preferred Stock as to dividends, assets, liquidation preferences, conversion
rights or voting rights or being otherwise superior to or on a parity with any
such preference or priority of any outstanding shares of Preferred Stock, or
authorize or issue shares of stock of any class or series (or any bonds,
debentures, notes or other obligations convertible into or exchangeable for, or
having option rights to purchase, any shares of stock of this Corporation)
having any such preference or priority or being otherwise superior to or being
on a parity with any such preference or priority; or
(iii) merge or consolidate with any other
Corporation or sell, lease, or convey substantially all of the assets of the
corporation or otherwise effect a recapitalization or reorganization of the
Corporation.
VI
1. Limitation of Directors' Liability. The liability of the
directors of this Corporation for monetary damages shall be eliminated to the
fullest extent permissible under the laws of the State of Delaware.
2. Indemnification of Corporate Agents. This Corporation is
authorized to indemnify the directors and officers of the Corporation to the
fullest extent permissible under the laws of the State of Delaware.
3. Repeal or Modification. Any repeal or modification of the
foregoing provisions of this Section VI shall not adversely affect any right of
indemnification or limitation of liability of an agent of this Corporation
relating to acts or omissions occurring prior to such repeal or modification.
VII
The Corporation is to have perpetual existence.
VIII
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend
or repeal the bylaws of the Corporation.
IX
The number of directors which will constitute the whole Board of
Directors of the Corporation shall be as specified in the bylaws of the
Corporation.
X
The election of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide.
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34
XI
Meeting of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provisions contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the bylaws of the Corporation.
XII
Advance notice of new business and stockholder nomination for the
election of directors shall be given in the manner and to the extent provided
in the bylaws of the Corporation.
XIII
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
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35
EXHIBIT B
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
36
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions, dated as of October 21, 1996, is made and
given pursuant to Section 3 of the SpectRx, Inc. Series C Preferred Stock
Purchase Agreement dated October 21, 1996 (the "Agreement"). The Section
numbers in this Schedule of Exceptions correspond to the section numbers in the
Agreement; however, any information disclosed herein under any section number
shall be deemed to be disclosed and incorporated into any other section number
under this Agreement where such disclosure would be appropriate. Any terms
defined in the Agreement shall have the same meaning when used in this Schedule
of Exceptions as when used in the Agreement unless the context otherwise
requires.
3.3 Subsidiaries. The Company is currently in the process of
forming a subsidiary (the "Subsidiary") for the purpose of commercializing
certain technology of the Company. The Company intends to own approximately
65% of the Subsidiary, and the remaining stock of the Subsidiary will be owned
by the Subsidiary's management.
3.4 Capitalization. One of the warrants outstanding as of the
Closing, for the purchase of up to 824,000 shares of Common Stock, is not
currently exercisable and will only become exercisable upon the occurrence of
certain events as specified in the warrant.
3.7 Agreements; Action.
- The Company has entered into an agreement with one of its
officers, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President of Research and
Development (the "Officer"), and two corporations controlled
by the Officer, pursuant to which the Company received a
license to certain technology owned by the Officer's
corporations. In return, the Company paid a license fee,
agreed to pay a royalty and issued a warrant to the
corporations which, upon the occurrence of certain events,
will become exercisable.
- ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, the Company's chief executive
officer and chioef operating officer, respectively, purchased
shares of Common Stock of the Company and paid for such shares
by delivering a promissory note to the Company. The aggregate
amount owed under the notes was approximately $48,525 as of
the Closing.
- The Company has entered into a development and licensing
agreement with Boehringer Mannheim Corporation.
- The Company has entered into a development and licensing
agreement with Healthdyne Technologies.
- The Company has entered into a development and licensing
agreement with Teijin Limited.
37
- The Company has entered into a licensing agreement with ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇.
- The Company has entered into a licensing agreement with M.D.
▇▇▇▇▇▇▇▇ Cancer Center, University of Texas.
- The Company has entered into a licensing agreement with
Georgia Institute of Technology.
3.10 Litigation, etc. The Company has received a demand notice for
payment of a $20,000 license fee due under an expired license from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Energy Systems. The Company is presently in the process of
negotiating a resolution of this dispute.
3.16 Patents and Trademarks
The Company purchased all of the technology and other intellectual
property, relating to non-invasive means of diagnosing disease through the use
of fluorescence spectroscopy, of Laser Atlanta Optics, Inc.
38
EXHIBIT C
PROPRIETARY INFORMATION AGREEMENT
39
SPECTRX, INC.
EMPLOYEE PROPRIETARY INFORMATION AGREEMENT
As a condition of my employment with Spectrx, Inc., its subsidiaries,
affiliates, successors or assigns (together the "COMPANY"), and in
consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company, I agree to the following:
1. At-Will Employment. I understand and acknowledge that my
employment with the Company is for an unspecified duration and constitutes
"at-will" employment. I acknowledge that this employment relationship may be
terminated at any time, with or without good cause or for any or no cause, at
the option either of the Company or myself, with or without notice.
2. Confidential Information.
(a) Company Information. I agree at all times during the term
of my employment and thereafter, to hold in strictest confidence, and not to
use, except for the benefit of the Company, or to disclose to any person, firm
or corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"CONFIDENTIAL INFORMATION" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and customers (including, but
not limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly, in
writing, orally, by drawings, or by observation of parts or equipment. I
further understand that Confidential Information does not include any of the
foregoing items which has become publicly known and made generally available
through no wrongful act of mine or of others who were under confidentiality
obligations as to the item or items involved.
(b) Former Employer Information. I agree that I will not,
during my employment with the Company, improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer
or other person or entity and that I will not bring onto the premises of the
Company any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such
employer, person or entity.
(c) Third Party Information. I recognize that the Company has
received and in the future will receive from third parties their confidential
or proprietary information subject to a duty on the Company's part to maintain
the confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
3. Inventions.
(a) Inventions Retained and Licensed. I have attached hereto,
as Exhibit A, a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company, which belong to me, which relate to the Company's
proposed business, products or research and development, and which are not
assigned to the Company hereunder (collectively referred to as "Prior
Inventions"); or, if no such list is attached, I represent that there are no
such Prior Inventions. If in the course of my employment with the Company, I
incorporate into any invention, improvement, development, product,
copyrightable material or trade secret any invention, improvement, development,
concept, discovery or other proprietary information owned by me or in which I
have an interest, the Company is hereby granted and shall have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license to make, have made,
modify, use and sell such item as part of or in connection with such product,
process or machine.
(b) Assignment of Inventions. I agree that I will promptly make
full written disclosure to the Company, will hold in trust for the sole right
and benefit of the Company, and hereby assign to the Company, or its designee,
all my right, title, and interest in and to any and all inventions, original
works of authorship, developments, concepts, improvements or trade secrets,
40
whether or not patentable or registrable under copyright or similar laws, which
I may solely or jointly conceive or develop or reduce to practice, or cause to
be conceived or developed or reduced to practice, during the period of time I
am in the employ of the Company (collectively referred to as "INVENTIONS"),
except as provided in Section 3(f) below. I further acknowledge that all
original works of authorship which are made by me (solely or jointly with
others) within the scope of and during the period of my employment with the
Company and which are protectible by copyright are "works made for hire," as
that term is defined in the United States Copyright Act.
(c) Inventions Assigned to the United States. I agree to assign
to the United States government all my right, title, and interest in and to any
and all Inventions whenever such full title is required to be in the United
States by a contract between the Company and the United States or any of its
agencies.
(d) Maintenance of Records. I agree to keep and maintain
adequate and current written records of all Inventions made by me (solely or
jointly with others) during the term of my employment with the Company. The
records will be in the form of notes, sketches, drawings, and any other format
that may be specified by the Company. The records will be available to and
remain the sole property of the Company at all times.
(e) Patent and Copyright Registrations. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns and nominees the
sole and exclusive rights, title and interest in and to such Inventions, and
any copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure
my signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original
works of authorship assigned to the Company as above, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents
as my agent and attorney in fact, to act for and in my behalf and stead to
execute and file any such applications and to do all other lawfully permitted
acts to further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by
me.
(f) Exception to Assignments. I understand that the provisions
of this Agreement requiring assignment of Inventions to the Company do not
apply to any invention which qualifies under the provisions of Exhibit B
attached hereto. I will advise the Company promptly in writing of any
inventions that I believe meet the criteria of Exhibit B.
4. Conflicting Employment. I agree that, during the term of my
employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of my employment, nor will I engage in any other activities that conflict
with my obligations to the Company.
5. Returning Company Documents. I agree that, at the time of leaving
the employ of the Company, I will deliver to the Company (and will not keep in
my possession, recreate or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items developed
by me pursuant to my employment with the Company or otherwise belonging to the
Company, its successors or assigns. In the event of the termination of my
employment, I agree to sign and deliver the "TERMINATION CERTIFICATION"
attached hereto as Exhibit C.
6. Notification to New Employer. In the event that I leave the employ
of the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
7. Solicitation of Employees. I agree that for a period of twelve
(12) months immediately following the termination of my relationship with the
Company for any reason, whether with or without cause, I shall not either
directly or indirectly solicit,
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41
induce, recruit or encourage any of the Company's employees to leave their
employment, or take away such employees, or attempt to solicit, induce,
recruit, encourage or take away employees of the Company, either for myself or
for any other person or entity.
8. Representations. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any oral or written agreement
in conflict herewith.
9. Arbitration and Equitable Relief.
(a) Arbitration. Except as provided in Section 9(b) below, I
agree that any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in Norcross, Georgia in accordance with the
rules then in effect of the American Arbitration Association. The arbitrator
may grant injunctions or other relief in such dispute or controversy. The
decision of the arbitrator shall be final, conclusive and binding on the
parties to the arbitration. Judgement may be entered on the arbitrator's
decision in any court having jurisdiction. The Company and I shall each pay
one-half of the costs and expenses of such arbitration, and each of us shall
separately pay our counsel fees and expenses.
(b) Equitable Remedies. I agree that it would be impossible or
inadequate to measure and calculate the Company's damages from any breach of
the covenants set forth in Sections 2, 3, and 5 herein. Accordingly, I agree
that if I breach any of such Sections, the Company will have available, in
addition to any other right or remedy available, the right to obtain an
injunction from a court of competent jurisdiction restraining such breach or
threatened breach and to specific performance of any such provision of this
Agreement. I further agree that no bond or other security shall be required in
obtaining such equitable relief and I hereby consent to the issuance of such
injunction and to the ordering of specific performance.
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10. General Provisions
(a) Governing Law; Consent to Personal Jurisdiction. This
Agreement will be governed by the laws of the State of Georgia. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in Georgia for any lawsuit filed there against me by the Company
arising from or relating to this Agreement.
(b) Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of
or amendment to this Agreement, nor any waiver of any rights under this
agreement, will be effective unless in writing signed by the party to be
charged. Any subsequent change or changes in my duties, salary or compensation
will not affect the validity or scope of this Agreement.
(c) Severability. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions will continue
in full force and effect.
(d) Successors and Assigns. This Agreement may not be assigned
without the prior written consent of the Company. Subject to the foregoing
sentence, this Agreement will be binding upon my heirs, executors,
administrators and other legal representatives and will be for the benefit of
the Company, its successors, and its assigns.
Date:
-------------------
-------------------------------
(Name)
------------------------
Witness
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EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
Identifying
Number of
Title Date Brief Description
----- ---- -----------------
__ No inventions or improvements
__ Additional Sheets Attached
Signature of Employee: ___________________________
(Name)
Date: _______________________
44
EXHIBIT B
EXCEPTION TO ASSIGNMENTS
The assignment provisions shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the
employer.
45
EXHIBIT C
SPECTRX, INC.
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I failed
to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to Spectrx, Inc., its subsidiaries, affiliates, successors or
assigns (together, the "COMPANY").
I further certify that I have complied with all the terms of the
Company's Employee Proprietary Information Agreement signed by me, including
the reporting of any inventions and original works of authorship (as defined
therein), conceived or made by me (solely or jointly with others) covered by
that agreement.
I further agree that, in compliance with the Employee Proprietary
Information Agreement, I will preserve as confidential all trade secrets,
confidential knowledge, data or other proprietary information relating to
products, processes, know-how, designs, formulas, developmental or experimental
work, computer programs, data bases, other original works of authorship,
customer lists, business plans, financial information or other subject matter
pertaining to any business of the Company or any of its employees, clients,
consultants or licensees.
I further agree that for twelve (12) months from this date, I will not
hire any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.
Date:
--------------------
--------------------------------
(Name)
46
EXHIBIT D
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
47
EXHIBIT D
SPECTRX, INC.
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement (the
"Agreement") amends and restates the Prior Registration Rights Agreement (as
defined in Section 1 hereof) and is effective as of October __, 1996 by and
among SpectRx, Inc., a Delaware corporation (the "Company"), the holders of
Registrable Securities (as such term is defined in the Prior Registration
Rights Agreement) and the purchaser of the Company's Series C Preferred Stock.
NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the agreements pursuant to which the holders of Registrable
Securities acquired their Registrable Securities in the Company, the parties
hereby agree as follows:
1. Amendment of Prior Registration Rights Agreements. This
Agreement amends and restates the Prior Registration Rights Agreement in its
entirety. Such amendment and restatement is effective upon the execution of
this Agreement by the holders of at least a majority of the Registrable
Securities (as such term is defined in the Prior Registration Rights Agreement)
outstanding as of the date of this Agreement. For purposes of this Agreement,
the term "Prior Registration Rights Agreement" shall mean that certain Amended
and Restated Registration Rights Agreement dated August 30, 1996.
2. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Act.
"Holder" shall mean any person owning or having the right to
acquire Registrable Securities and any person holding Registrable Securities to
whom the rights under this Agreement have been transferred in accordance with
paragraph 11 hereof.
"Initiating Holders" shall mean any Holders who in the
aggregate possess more than 50% of the Registrable Securities.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness
of such registration statement.
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"Registrable Securities" shall mean (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, (ii) the
Common Stock issuable or issued upon conversion of the Series A1 Preferred
Stock, (iii) the Common Stock issuable upon conversion of the Series A
Preferred Stock issuable or issued upon exercise of certain warrants issued
pursuant to the Note and Warrant Purchase Agreement dated April 6, 1994, (iv)
the Common Stock issuable upon conversion of the Series A Preferred Stock
issuable or issued upon exercise of certain warrants issued pursuant to the
Note and Warrant Purchase Agreement dated April 29, 1994, (v) the Common Stock
issuable upon conversion of the Series A Preferred Stock issuable or issued
upon exercise of certain warrants issued pursuant to the Note and Warrant
Purchase Agreement dated June 15, 1994, (vi) the Common Stock issuable or
issued upon conversion of the Series B Preferred Stock, (vii) the Common Stock
issuable or issued upon conversion of the Series B1 Preferred Stock, (viii) the
Common Stock issuable or issued upon conversion of the Series C Preferred
Stock, (ix) the Common Stock issuable or issued upon conversion of the Series
C1 Preferred Stock, and (x) any Common Stock or other securities issued or
issuable with respect to such Series A Preferred Stock, Series A1 Preferred
Stock, Series B Preferred Stock, Series B1 Preferred Stock, Series C Preferred
Stock, Series C1 Preferred Stock, or Common Stock upon any stock split, stock
dividend, recapitalization, or similar event, or any Common Stock otherwise
issued or issuable with respect to such Series A Preferred Stock, Series A1
Preferred Stock, Series B Preferred Stock, Series B1 Preferred Stock, Series C
Preferred Stock, Series C1 Preferred Stock, or Common Stock; provided, however,
that shares of Common Stock or other securities shall only be treated as
Registrable Securities if and so long as they have not been (i) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction or (ii) sold by a person in a transaction in which their
rights under this Agreement are not assigned.
"Registration Expenses" shall mean all expenses, except
Selling Expenses as otherwise stated below, incurred by the Company in
complying with paragraphs 3, 4 and 5 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company).
"Selling Expenses" shall mean all underwriting discounts,
selling commissions, stock transfer taxes applicable to the securities
registered by the Holders, and any fees and expenses of special counsel of a
selling stockholder.
3. Requested Registration.
(a) Request for Registration. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to at least 80% of the
shares of Registrable Securities held by them (or any lesser number of shares
of Registrable Securities having an expected aggregate offering price, net of
underwriting discounts and commissions, greater than $7,500,000), the Company
will:
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49
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
received by the Company within 20 days after receipt of such written notice
from the Company.
Provided, however, that the Company shall not be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this paragraph 3:
(1) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required
by the Act;
(2) Prior to the earlier of (i) September 1,
1998 or (ii) six months after the effective date of the Company's first
registered public offering of its stock;
(3) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date three (3) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(4) After the Company has effected two such
registrations pursuant to this paragraph 3(a), and such registrations have been
declared or ordered effective; or
(5) If the Company shall furnish to such Holders
a certificate signed by the President of the Company that in the good faith
judgment of the Board of Directors it would be seriously detrimental to the
Company or its stockholders for a registration statement to be filed at such
time, then the Company's obligation to use its best efforts to register,
qualify or comply under this paragraph 3 shall be deferred for a period not to
exceed 90 days from the date of receipt of written request from the Initiating
Holders, provided, however, that the Company may not make such certification
more than once every calendar year.
Subject to the foregoing clauses (1) through (5), the Company
shall file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable,
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50
after receipt of the request or requests of the Initiating Holders and in any
event within one hundred eighty (180) days after receipt of such request.
(b) Underwriting. In the event that a registration
pursuant to this paragraph 3 is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as part of the notice
given pursuant to paragraph 3(a)(i). In such event, the right of any Holder to
such registration shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this paragraph 3, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent
requested shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by a majority in interest of the Initiating Holders, but
subject to the Company's reasonable approval. Notwithstanding any other
provision of this paragraph 3, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of
the number of shares to be underwritten, then the Company shall so advise all
holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof (except those Holders who have indicated to
the Company their decision not to distribute any of their Registrable
Securities through such underwriting) in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities held by such Holders at the
time of filing the registration statement, provided, however, that the number
of shares of Registrable Securities to be included in such underwriting shall
not be reduced unless all other securities are first entirely excluded from the
underwriting. No Registrable Securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of
shares allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn shall
also be withdrawn from registration, and such Registrable Securities shall not
be transferred in a public distribution prior to 90 days after the effective
date of such registration, or such other shorter period of time as the
underwriters may require.
4. Company Registration.
(a) Notice of Registration. If at any time or from time
to time the Company shall determine to register any of its securities, either
for its own account or the account of a security holder or holders, other than
(i) in connection with the Company's initial public offering, (ii) a
registration relating solely to employee benefit plans, or (iii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice
thereof; and
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51
(ii) include in such registration (and
any related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within 20 days after receipt of such written
notice from the Company, by any Holder.
(b) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to paragraph 4(a)(i). In such event the right of any
Holder to registration pursuant to this paragraph 4 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting
shall (together with the Company and the other holders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company.
Notwithstanding any other provision of this paragraph 4, if
the managing underwriter determines that marketing factors require a limitation
of the number of shares to be underwritten, the managing underwriter may limit
the Registrable Securities or other securities to be included in such
registration or exclude them entirely. The Company shall so advise all Holders
and other holders distributing their securities through such underwriting and
the number of shares of Registrable Securities and other securities that may be
included in the registration and underwriting shall be allocated among the
holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities and other securities held by such holders at
the time of filing the registration statement. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the
number of shares allocated to any Holder or holder to the nearest 100 shares.
If any Holder or holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration, and shall not
be transferred in a public distribution prior to 90 days after the effective
date of the registration statement relating thereto, or such other shorter
period of time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this paragraph 4 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
5. Registration on Form S-3.
(a) If any Holder or Holders request that the Company
file a registration statement on Form S-3 (or any successor form to Form S-3)
for a public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which, net of underwriting
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52
discounts and commissions, would exceed $500,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than one registration pursuant to this
paragraph 5 in any calendar year. The substantive provisions of paragraph 4(b)
shall be applicable to each registration under this paragraph 5.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to take any action pursuant to this paragraph 5: (i) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act; (ii) if the
Company, within ten (10) days of the receipt of the request of the initiating
Holders, gives notice of its bona fide intention to effect the filing of a
registration statement with the Commission within ninety (90) days of receipt
of such request (other than with respect to a registration statement relating
to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities); (iii) during the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on the date six
(6) months immediately following, the effective date of any registration
statement pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(iv) if the Company shall furnish to such Holder a certificate signed by the
President of the Company stating that in the good faith judgment of the Board
of Directors it would be seriously detrimental to the Company or its
stockholders for registration statements to be filed at such time, then the
Company's obligation to use its best efforts to file a registration statement
shall be deferred for a period not to exceed 90 days from the receipt of the
request to file such registration by such Holder provided that the Company may
not make such certification more than once every calendar year.
6. Expenses of Registration. All Registration Expenses
(exclusive of underwriting discounts and commissions or fees of special counsel
for a selling Holder) incurred in connection with (i) two registrations
pursuant to paragraph 3 and (ii) all registrations pursuant to paragraphs 4 and
5 shall be borne by the Company.
7. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for at least one
hundred and twenty (120) days or until the distribution described in the
Registration Statement has been completed;
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53
(b) Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Agreement, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement, (i) an opinion,
dated such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities
and (ii) a letter dated such date, from the independent accountants of the
Company, in form and substance as is customarily given by independent
accountants to underwriters in an underwritten public offering, addressed to
the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
8. Indemnification.
(a) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
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54
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Act, against all expenses,
claims, losses, damages or liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by the Company of any federal, state or common law rule or
regulation applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for
any legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the Act,
and each other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Act, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Company,
such Holders, such directors, officers, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this subsection (b) shall be limited in an amount equal to
the public offering price of the shares sold by such Holder, unless such
liability arises out of or is based on willful conduct by such Holder.
(c) Each party entitled to indemnification under this
paragraph 8 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
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55
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, provided, however, that the Indemnifying Party
shall bear the expense of independent counsel for the Indemnified Party if the
Indemnified Party reasonably determines that representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest, and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
9. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held
by them and the distribution proposed by such Holder or Holders as the Company
may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
10. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Act or the Securities Exchange Act of 1934, as amended.
(b) Use its best efforts to file with the Commission in
a timely manner all reports and other documents required of the Company under
the Act and the Securities Exchange Act of 1934, as amended (at any time after
it has become subject to such reporting requirements);
(c) So long as a Holder owns any Registrable Securities
to furnish to the Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Act and the Securities Exchange Act of 1934 (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Holder may reasonably request in
availing itself of any
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56
rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
11. Transfer of Registration Rights. The rights to cause the
Company to register securities granted Holders under paragraphs 3, 4 and 5 may
be assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by a Holder provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws, and (ii) such assignee or transferee acquires at least 400,000 shares of
Registrable Securities. Notwithstanding the foregoing, the rights to cause the
Company to register securities may be assigned, in connection with a
distribution by such Holder, to any parent or subsidiary company or to any
partner, former partner, or the estate of any such partner without compliance
with item (ii) above, provided written notice thereof is promptly given to the
Company.
12. Standoff Agreement. Each Holder agrees, in connection with
the Company's initial public offering of the Company's securities that, upon
request of the Company or the underwriters managing any underwritten offering
of the Company's securities, not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any Common Stock of the
Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) from the
effective date of such registration as may be requested by the underwriters,
provided that the officers and directors of the Company enter into similar
agreements.
13. Termination of Registration Rights. All rights of the
Holders under this Agreement shall terminate four (4) years from the date of
the Company's initial public offering.
14. Amendment of Registration Rights. Any provision of the
Agreement may be amended and the observance thereof 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 holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of
all such Registrable Securities, and the Company.
15. Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the then outstanding
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company which would allow such holder or
prospective holder (a) to include such securities in any registration filed
under paragraph 3 hereof, unless under the terms of such agreement, such holder
or prospective holder may include such securities in any such registration only
to the extent that the inclusion of his securities will not reduce the amount
of the Registrable Securities of the Holders which is included or (b) to make a
demand registration which could result in such registration statement being
declared effective prior to the earlier of either of the dates set forth in
subparagraph 3(a)(ii)(2) or within one hundred twenty (120) days of the
effective date of any registration effected pursuant to paragraph 3.
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57
16. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement among the parties with regard to the subject
matter hereof. Nothing in this Agreement, express or implied, is intended to
confer upon any person or entity, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
17. Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware as such laws are applied to
agreements between Delaware residents entered into and to be performed entirely
within Delaware.
18. Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
19. Notices, etc. All notices and other communications required
or permitted hereunder shall be effective upon receipt and shall be in writing
and may be delivered in person, by telecopy, electronic mail, overnight
delivery service or U.S. mail, in which event it may be mailed by first-class,
certified or registered, postage prepaid, addressed (a) if to a Holder, at such
Holder's address set forth at the end of this Agreement, or at such other
address as such Holder shall have furnished the Company in writing, or, until
any such holder so furnishes an address to the Company, then to and at the
address of the last holder of such shares who has so furnished an address to
the Company, or (b) if to the Company, at its address set forth at the end of
this Agreement, or at such other address as the Company shall have furnished to
the Holders and each such other holder in writing.
20. Severability. Any invalidity, illegality or limitation on
the enforceability of the Agreement or any part thereof, by any Holder whether
arising by reason of the law of the respective Holder's domicile or otherwise,
shall in no way affect or impair the validity, legality or enforceability of
this Agreement with respect to other Holders. If any provision of this
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
21. Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
22. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
23. Delays or Omissions. It is agreed that no delay or omission
to exercise any right, power or remedy accruing to the Holders, upon any breach
or default of the Company under this Agreement, shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach or
default, or any acquiescence therein, or of any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. It is further agreed that any waiver, permit, consent or approval
of any kind or character by a Holder of any breach or default under this
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58
Agreement, or any waiver by a Holder of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to a Holder, shall be cumulative and
not alternative.
24. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first written above.
COMPANY: SPECTRX, INC.
By:
---------------------------------------
Title:
------------------------------------
INVESTORS: ▇▇▇▇▇▇▇ MEDICAL VENTURES 1993 L.P.,
a Delaware limited partnership
By: ▇▇▇▇▇▇▇/Dover Limited
Partnership, general partner
By: Wilmington Securities, Inc., its
sole general partner
By:
---------------------------------------
Title:
------------------------------------
NORO-▇▇▇▇▇▇▇ PARTNERS II, L.P., a
Georgia limited partnership
By: ▇▇▇▇▇▇▇ & Company, II,
general partner
By:
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
Title: General Partner
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59
▇▇▇▇▇▇▇ MEDICAL VENTURES 1994 L.P.,
a Delaware limited partnership
By: ▇▇▇▇▇▇▇/Dover Limited
Partnership, general partner
By: Wilmington Securities, Inc., its
sole general partner
By:
------------------------------------
Title:
---------------------------------
▇▇▇▇▇▇▇ MEDICAL VENTURES 1995 L.P.,
a Delaware limited partnership
By: ▇▇▇▇▇▇▇/Dover Limited
Partnership, general partner
By: Wilmington Securities, Inc., its
sole general partner
By:
------------------------------------
Title:
---------------------------------
▇▇▇▇▇▇▇ MEDICAL VENTURES 1996 L.P.,
a Delaware limited partnership
By: ▇▇▇▇▇▇▇/Dover Limited
Partnership, general partner
By: Wilmington Securities, Inc., its
sole general partner
By:
------------------------------------
Title:
---------------------------------
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BBOTT LABORATORIES,
an Illinois corporation
By:
------------------------------------
Title:
---------------------------------
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
PMM, INC.
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, M.D.
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---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, M.D.
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
I. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, O.D.
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------------
R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ Gold
The ▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. Successor Trust
By:
------------------------------------
Title: Trustee
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---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D.
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ JROS
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Dr. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
POWERVISION, INC.
By:
------------------------------------
Title:
---------------------------------
---------------------------------------
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-16-
63
EXHIBIT E
LEGAL OPINION
64
October 21, 1996
To ▇▇▇▇▇▇ Laboratories
Ladies and Gentlemen:
Reference is made to the Series C Preferred Stock Purchase Agreement,
dated as of October __, 1996 (the "Agreement"), complete with all listed
exhibits thereto, by and among SpectRx, Inc., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇ Laboratories, an Illinois corporation (the "Purchaser"),
which provides for the issuance by the Company to the Purchaser of shares of
Series C Preferred Stock of the Company (the "Series C Shares"). This opinion
is rendered to you pursuant to Section 5.3 of the Agreement, and all terms used
herein have the meanings defined for them in the Agreement unless otherwise
defined herein.
We have acted as counsel for the Company in connection with the
negotiation of the Agreement and the issuance of the Series C Shares. As such
counsel, we have made such legal and factual examinations and inquiries as we
have deemed advisable or necessary for the purpose of rendering this opinion.
In addition, we have examined originals or copies of such corporate records of
the Company, certificates of public officials and such other documents which we
consider necessary or advisable for the purpose of rendering this opinion. In
such examination we have assumed the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us
as originals, the conformity to original documents of all copies submitted to
us and the due execution and delivery of all documents (except as to due
execution and delivery by the Company) where due execution and delivery are a
prerequisite to the effectiveness thereof.
As used in this opinion, the expression "to our knowledge," "known to
us" or similar language with reference to matters of fact means that, after an
examination of documents made available to us by the Company, and after
inquiries of officers of the Company, but without any further independent
factual investigation, we find no reason to believe that the opinions expressed
herein are factually incorrect. Further, the expression "to our knowledge",
"known to us" or similar language with reference to matters of fact refers to
the current actual knowledge of the attorneys of this firm who have worked on
matters for the Company solely in connection with the Agreement and the
transactions contemplated thereby. Except to the extent expressly set forth
herein or as we otherwise believe to be necessary to our opinion, we have not
undertaken any independent investigation to determine the existence or absence
of any fact, and no inference as to our knowledge of the existence or absence
of any fact should be drawn from our representation of the Company or the
rendering of the opinion set forth below.
For purposes of this opinion, we are assuming that you have all
requisite power and authority, and have taken any and all necessary corporate
or partnership action, to execute and deliver the Agreement, and we are
assuming that the representations and warranties made by the Purchaser in the
65
Agreement and pursuant thereto are true and correct. We are also assuming that
the Purchaser has purchased the Series C Shares for value, in good faith and
without notice of any adverse claims within the meaning of the California
Uniform Commercial Code.
The opinions hereinafter expressed are subject to the following qualifications:
(a) We express no opinion as to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other similar federal or
state laws affecting the rights of creditors;
(b) We express no opinion as to the effect of rules of
law governing specific performance, injunctive relief or other equitable
remedies (regardless of whether any such remedy is considered in a proceeding
at law or in equity);
(c) We express no opinion as to compliance with the
anti-fraud provisions of applicable securities laws;
(d) We express no opinion as to the enforceability of the
indemnification provisions of Section 7 of the Registration Rights Agreement to
the extent the provisions thereof may be subject to limitations of public
policy and the effect of applicable statutes and judicial decisions;
(e) We are members of the Bar of the State of California
and, except as set forth in paragraph 7 below with respect to the securities
laws of other states, we express no opinion as to any matter relating to the
laws of any jurisdiction other than the federal laws of the United States of
America and the laws of the State of California. To the extent this opinion
addresses applicable securities laws of states other than the State of
California, we have not retained nor relied on the opinion of counsel admitted
to the bar of such states, but rather have relied on compilations of the
securities laws of such states contained in reporting services presently
available to us.
Based upon and subject to the foregoing, and except as set forth in
the Schedule of Exceptions to the Agreement, we are of the opinion that:
1. The Company is a corporation duly organized and validly
existing under, and by virtue of, the laws of the State of Delaware and is in
good standing under such laws. The Company has requisite corporate power to
own and operate its properties and assets, and to carry on its business as
presently conducted. The Company is qualified to do business as a foreign
corporation in the State of Georgia.
2. The Company has all requisite legal and corporate power to
execute and deliver the Agreement, to sell and issue the Series C Shares
thereunder, to issue the Common Stock issuable upon conversion of the Series C
Shares and to carry out and perform its obligations under the terms of the
Agreement.
3. The authorized capital stock of the Company consists of
15,000,000 shares of Common, 2,083,500 shares of which are issued and
outstanding, 3,560,000 shares of Series A Preferred of which
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66
3,103,784 shares are issued and outstanding, 3,560,000 shares of Series A1
Preferred none of which are issued and outstanding, 1,375,000 shares of Series
B Preferred of which 1,172,071 shares of Series B Preferred issued and
outstanding, and 1,375,000 shares of Series B1 Preferred none of which are
issued and outstanding, 500,000 shares of Series C Preferred of which 500,000
shares of Series C Preferred are to be issued and outstanding, and 500,000
shares of Series C1 Preferred none of which are issued and outstanding . There
are also options outstanding to purchase an aggregate of 458,351 shares of
Common Stock and warrants to purchase an aggregate of 1,268,643 shares of
Common Stock and 360,000 shares of Series A Preferred Stock. All such issued
and outstanding shares of Preferred Stock and Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable and free of
any preemptive or similar rights contained in the Certificate of Incorporation
or Bylaws of the Company or, to our knowledge, in any agreement to which the
Company is a party. The Common Stock issuable upon conversion of the Series C
Shares has been duly and validly reserved, and when issued in accordance with
the Company's Certificate of Incorporation will be validly issued, fully paid
and nonassessable. The Series C Shares issued under the Agreement will be
validly issued, fully paid and nonassessable and free of any liens,
encumbrances and preemptive or similar rights contained in the Certificate of
Incorporation or Bylaws of the Company, or, to our knowledge, in any agreement
by which the Company is a party, except as specifically provided in the
Agreement and in that certain Series A Preferred Stock Purchase Agreement dated
as of February 5, 1993; provided, however, that the Series C Shares (and the
Common Stock issuable upon conversion thereof) may be subject to restrictions
on transfer under state and/or federal securities laws as set forth in the
Agreement. To our knowledge, except for rights described in the Agreement and
the Certificate of Incorporation, there are no other options, warrants,
conversion privileges or other rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of capital stock or other
securities of the Company, or any other agreements to issue any such securities
or rights.
4. All corporate action on the part of the Company, its directors
and stockholders necessary for the authorization, execution and delivery of the
Agreement by the Company, the authorization, sale, issuance and delivery of the
Series C Shares (and the Common Stock issuable upon conversion thereof) and the
performance of the Company's obligations under the Agreement has been taken.
The Agreement has been duly and validly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
5. The execution, delivery and performance of and compliance with
the terms of the Agreement, and the issuance of the Series C Shares (and the
Common Stock issuable upon conversion thereof), do not violate any provision of
the Certificate of Incorporation or Bylaws, or, to our knowledge, any provision
of any applicable federal or state law, rule or regulation. To our knowledge,
the execution, delivery and performance of and compliance with the Agreement,
and the issuance of the Series C Shares (and the Common Stock issuable upon
conversion thereof) do not violate, or constitute a default under, any material
contract, agreement, instrument, judgment or decree binding upon the Company.
6. Except as identified in the Agreement, to our knowledge, there
are no actions, suits, proceedings or investigations pending against the
Company or its properties before any court or governmental agency (nor, to our
knowledge, has the Company received any written threat thereof), which, either
in any case or in the aggregate, are likely to result in any material adverse
change in the
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67
business or financial condition of the Company or any of its properties, or in
any material impairment of the right or ability of the Company to carry on its
business as now conducted, or which questions the validity of the Agreement or
any action taken or to be taken by the Company in connection therewith.
7. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the
Company is required in connection with the valid execution and delivery of the
Agreement, or the offer, sale or issuance of the Series C Shares (and the
Common Stock issuable upon conversion thereof) or the consummation of any other
transaction contemplated by the Agreement, except (a) filing of the Amended and
Restated Certificate of Incorporation in the Office of the Secretary of State
of the State of Delaware, and (b) qualification (or taking such action as may
be necessary to secure an exemption from qualification, if available) under the
Delaware General Corporation Law and other applicable blue sky laws (but
excluding jurisdictions outside of the United States) of the offer and sale of
the Series C Shares (and the Common Stock issuable upon conversion thereof) and
the modification of rights of shareholders contemplated by the Agreement. The
filing referred to in clause (a) above has been accomplished and is effective.
Our opinion herein is otherwise subject to the timely and proper completion of
all filings and other actions contemplated herein where such filings and
actions are to be undertaken on or after the date hereof.
8. Subject to the accuracy of the Purchasers' Representations and
Warranties in Section 4 of the Agreement and their responses (if any) to the
Company's inquiries, we are of the opinion that the offer, sale and issuance of
the Series C Shares in conformity with the terms of the Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended.
This opinion is furnished to the Purchasers solely for their benefit
in connection with the purchase of the Series C Shares, and may not be relied
upon by any other person or for any other purpose without our prior written
consent.
Very truly yours,
WILSON, SONSINI, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
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EXHIBIT F
LICENSE AGREEMENT
OMITTED
(PLEASE SEE EXHIBIT 10.23 BELOW)