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PREFERRED STOCK PURCHASE AGREEMENT

Stock Purchase Agreement

PREFERRED STOCK PURCHASE AGREEMENT | Document Parties: OCCULOGIX, INC. | OCUSENSE, INC You are currently viewing:
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OCCULOGIX, INC. | OCUSENSE, INC

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Title: PREFERRED STOCK PURCHASE AGREEMENT
Governing Law: Delaware     Date: 3/15/2007
Industry: Medical Equipment and Supplies     Law Firm: Torys LLP;Wilson, Sonsini, Goodrich Rosati, P.C.     Sector: Healthcare

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SERIES A PREFERRED STOCK PURCHASE AGREEMENT

 

 

by and among

 

 

OCUSENSE, INC., a Delaware corporation

 

 

and

 

 

OCCULOGIX, INC., a Delaware corporation

 

 

Dated as of November 30, 2006

 

 

 

 

 

 

 


                                                                                                                                                                                                                   Page

 

1.1Sale and Issuance of Series A Preferred Stock............................................................................................................................................................................................1

1.2Filing of Certificate of Incorporation.............................................................................................................................................................................................................1

1.3Payment of Purchase Price..............................................................................................................................................................................................................................1

1.4Closing; Note Repayment; Milestones; Additional Financing.................................................................................................................................................................2

1.5Warrant..............................................................................................................................................................................................................................................................4

 

 

2.REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................................................................................................................................5

 

2.1Organization, Good Standing and Qualification..........................................................................................................................................................................................5

2.2Capitalization and Voting Rights...................................................................................................................................................................................................................6

2.3Subsidiaries.......................................................................................................................................................................................................................................................7

2.4Authorization....................................................................................................................................................................................................................................................7

2.5Governmental Consents..................................................................................................................................................................................................................................8

2.6Litigation............................................................................................................................................................................................................................................................8

2.7Title to Property and Assets...........................................................................................................................................................................................................................8

2.8Liabilities............................................................................................................................................................................................................................................................9

2.9Financial Statements........................................................................................................................................................................................................................................9

2.10Material Contracts..........................................................................................................................................................................................................................................9

2.11Registration or First Offer Rights.................................................................................................................................................................................................................9

2.12Proprietary Rights.........................................................................................................................................................................................................................................10

2.13No Conflict of Interest.................................................................................................................................................................................................................................12

2.14Tax Returns....................................................................................................................................................................................................................................................12

2.15Permits; Compliance with Laws..................................................................................................................................................................................................................12

2.16Compliance with Charter Documents; No Conflict..................................................................................................................................................................................13

2.17Employees......................................................................................................................................................................................................................................................13

2.18Assignment of Inventions and Non-Disclosure Agreements...............................................................................................................................................................13

2.19Environmental and Safety Laws.................................................................................................................................................................................................................13

2.20Real Property.................................................................................................................................................................................................................................................14

2.21Development and Marketing Rights.........................................................................................................................................................................................................14

2.22Disclosure......................................................................................................................................................................................................................................................14

2.23Brokers or Finders, Other Offers................................................................................................................................................................................................................14

2.24Minute Books................................................................................................................................................................................................................................................14

 

 

3.REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER TO THE COMPANY......................................................................................................14

 

3.1Authorization..................................................................................................................................................................................................................................................14

3.2Purchase Entirely for Own Account............................................................................................................................................................................................................15

3.3Speculative Nature of Investment................................................................................................................................................................................................................15

3.4Disclosure of Information..............................................................................................................................................................................................................................15

3.5Investment Experience...................................................................................................................................................................................................................................15

3.6Restricted Securities.......................................................................................................................................................................................................................................15

3.7Further Limitations on Disposition..............................................................................................................................................................................................................15

3.8Legends............................................................................................................................................................................................................................................................16

 

 

4.CONDITIONS OF THE PURCHASER’S OBLIGATIONS AT CLOSING................................................................................................................................................................. 16

 

4.1Representations and Warranties..................................................................................................................................................................................................................17

4.2Performance......................................................................................................................................................................................................................................................17

4.3Compliance Certificate....................................................................................................................................................................................................................................17

4.4Qualifications...................................................................................................................................................................................................................................................17

4.5Investor Rights Agreement...........................................................................................................................................................................................................................17

4.6Voting Agreement...........................................................................................................................................................................................................................................17

4.7Legal Opinion...................................................................................................................................................................................................................................................17

4.8Certificate of Incorporation............................................................................................................................................................................................................................17

4.9Board of Directors...........................................................................................................................................................................................................................................17

4.10Secretary’s Certificate...................................................................................................................................................................................................................................17

4.11Stockholder Consent to Transactions.......................................................................................................................................................................................................18

4.12Financing........................................................................................................................................................................................................................................................18

4.13Warrant...........................................................................................................................................................................................................................................................18

4.14Brokers or Finders.........................................................................................................................................................................................................................................18

4.15Other Deliveries.............................................................................................................................................................................................................................................18

 

 

5.CONDITIONS OF THE COMPANY’S OBLIGATIONS AT CLOSING.....................................................................................................................................................................18

 

5.1Representations and Warranties..................................................................................................................................................................................................................18

5.2Qualifications..................................................................................................................................................................................................................................................18

5.3Investor Rights Agreement..........................................................................................................................................................................................................................18

5.4Voting Agreement..........................................................................................................................................................................................................................................18

5.5Certificate of Incorporation...........................................................................................................................................................................................................................18

5.6Note..................................................................................................................................................................................................................................................................18

5.7Other Deliveries..............................................................................................................................................................................................................................................18

 

 

6.CONDITIONS OF THE PURCHASER’S OBLIGATIONS AT THE ADDITIONAL CLOSING.............................................................................................................................19

 

6.1Representations and Warranties..................................................................................................................................................................................................................19

6.2Performance.....................................................................................................................................................................................................................................................19

6.3Compliance Certificate...................................................................................................................................................................................................................................19

6.4Qualifications..................................................................................................................................................................................................................................................19

6.5Material Adverse Effect.................................................................................................................................................................................................................................19

6.6Other Deliveries..............................................................................................................................................................................................................................................20

 

 

7.CONDITIONS OF THE COMPANY’S OBLIGATIONS AT THE ADDITIONAL CLOSING................................................................................................................................20

 

7.1Representations and Warranties..................................................................................................................................................................................................................20

7.2Qualifications..................................................................................................................................................................................................................................................20

7.3Other Deliveries..............................................................................................................................................................................................................................................20

 

 

8.ADDITIONAL AGREEMENTS OF THE COMPANY AND THE PURCHASER....................................................................................................................................................20

 

8.1Use of Proceeds..............................................................................................................................................................................................................................................20

8.2Insurance Indemnity......................................................................................................................................................................................................................................20

8.3Sales and Marketing Agreement..................................................................................................................................................................................................................21

8.4Right of First Offer Waivers..........................................................................................................................................................................................................................21

 

 

9.MISCELLANEOUS...........................................................................................................................................................................................................................................................21

 

9.1Term...................................................................................................................................................................................................................................................................21

9.2Successors and Assigns...............................................................................................................................................................................................................................22

9.3Governing Law................................................................................................................................................................................................................................................22

9.4Counterparts....................................................................................................................................................................................................................................................22

9.5Titles and Subtitles.........................................................................................................................................................................................................................................22

9.6Notices.............................................................................................................................................................................................................................................................22

9.7Finder’s Fee.....................................................................................................................................................................................................................................................23

9.8Costs and Expenses.......................................................................................................................................................................................................................................24

9.9Amendment and Waivers.............................................................................................................................................................................................................................24

9.10Severability....................................................................................................................................................................................................................................................24

9.11Entire Agreement..........................................................................................................................................................................................................................................24

9.12Survival of Warranties.................................................................................................................................................................................................................................24

9.13California Corporate Securities Law..........................................................................................................................................................................................................24

 

 

 

 

-i-

 

 


 

 

OCUSENSE , INC.

 

 

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

 

THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into as of November 30, 2006, by and among OcuSense, Inc., a Delaware corporation (the “ Company ”), and OccuLogix, Inc., a Delaware corporation (the “ Purchaser ”).

 

WHEREAS , the Purchaser desires to purchase from the Company an aggregate of 1,744,223 shares (the “ Shares ”) of the Company’s Series A Preferred Stock, par value $0.001 per share (the “ Series A Preferred ”), and the Company desires to issue and sell to the Purchaser the Shares, on the terms and subject to the conditions specified herein.

 

WHEREAS , all parties hereto acknowledge and agree that they will benefit from the issuance of the Shares in the manner described herein.

 

WHEREAS, the Purchaser has agreed to purchase from the Company shares of the Company’s Series B Preferred Stock, par value $0.001 per share (the “Series B Preferred” ), upon receipt by the Company of the 510K Clearance (as defined below) and the CLIA Waiver (as defined below).

 

NOW, THEREFORE , in consideration of the promises and mutual covenants contained herein, and for other valid consideration, the value and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.    Purchase and Sale of Stock .

 

1.1    Sale and Issuance of Series A Preferred Stock . On and subject to the terms and conditions of this Agreement, the Purchaser agrees to purchase, and the Company agrees to sell and issue to the Purchaser, the Shares at an aggregate purchase price of up to $8,000,000 (the “ Purchase Price ”), payable in accordance with Section 1.3 and subject to adjustment in accordance with the terms hereof.

 

1.2    Filing of Certificate of Incorporation . The Company shall, prior to the Closing (defined below), adopt and file with the Secretary of State of the State of Delaware a Third Amended and Restated Certificate of Incorporation so as to authorize the Series A Preferred and the Series B Preferred substantially in the form attached hereto as Exhibit A (the “ Certificate of Incorporation ”).

 

1.3    Payment of Purchase Price . The payment of the Purchase Price shall be made as follows:

 

(a)    at the Closing (as defined below), $2.0 million by wire transfer of immediately available funds to an account designated by the Company to the Purchaser prior to the Closing (the “Closing Cash Payment” );

 

(b)    at the Closing (as defined below), a promissory note of the Purchaser in the form of the note attached hereto as Exhibit B (the “Note” );

 

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(c)    provided that the First Milestone (as defined below) is achieved, and within the time period specified in Section 1.4(c)(i), $2.0 million by wire transfer of immediately available funds to an account designated by the Company to the Purchaser concurrently with, or following, delivery of the First Milestone Achievement Certification (as defined below); and

 

(d)    provided that the Second Milestone (as defined below) is achieved, and within the time period specified in Section 1.4(c)(ii), $2.0 million by wire transfer of immediately available funds to an account designated by the Company to the Purchaser concurrently with, or following, delivery of the Second Milestone Achievement Certification (as defined below).

 

1.4    Closing; Note Repayment; Milestones; Additional Financing .

 

(a)    The closing (the “ Closing ”) of the purchase and sale of the Shares set forth in Section 1.1 above shall take place at the offices of Torys LLP (“ Torys ”), 237 Park Avenue, 20th Floor, New York, NY 10017, on the fifth Business Day (as defined below) following the date on which the conditions to close set forth in Sections 4 and 5 hereof have been satisfied or waived by the party entitled to waive such conditions or at such other time and place as the Company and the Purchaser mutually agree upon orally or in writing. For purposes of this Agreement, “ Business Day ” shall mean any day which is not a Saturday or a Sunday, or a day on which banking institutions located in New York, New York are required or permitted to be closed. At the Closing, (i) the Company will deliver to the Purchaser the certificates, instruments and documents referred to in Section 4 below, (ii) the Purchaser will deliver to the Company the certificates, instruments and documents referred to in Section 5 below and (iii) the Company shall deliver to the Purchaser a share certificate registered in the Purchaser’s name representing the Shares, against payment of the portion of the Purchase Price that is due at the Closing pursuant to Section 1.3.

 

(b)    The Note shall be payable to the order of the Company and be dated as of the date of the Closing, with a stated principal amount equal to $2.0 million. The Note shall mature on January 3, 2007 (the “ Note Payment Date ”). Within three Business Days prior to the Note Payment Date, the Company shall deliver to the Purchaser (i) a written notice (the “ Note Payment Notice ”), signed by the Chief Executive Officer of the Company, requesting payment of the principal amount of the Note and designating the account to which a wire transfer of immediately available funds representing such payment should be made and certifying that no Material Adverse Effect (as defined below) has occurred during the period commencing on the date of the Closing and ending on the Note Payment Date which has not been cured or which will not be cured on or prior to the Note Payment Date, and (ii) the original copy of the Note. Provided that there shall not have occurred a Material Adverse Effect that is continuing on the Note Payment Date, on the Note Payment Date, the principal amount of the Note shall be paid in full by wire transfer of immediately available funds to the account designated by the Company to the Purchaser in the Note Payment Notice (the “ Note Payment ”) and the Note shall be cancelled and terminated immediately thereafter. It is understood and agreed that, in the event of an occurrence of a Material Adverse Effect that is continuing on the Note Payment Date, the Purchaser shall not be required to make the Note Payment, the Note shall be cancelled and terminated as of the Note Payment Date and the Purchase Price, for all purposes, shall be (i) the Closing Cash Payment plus (ii) the $2.0 million payment pursuant to Section 1.3(c)(i), if it is paid, plus (iii) the $2.0 million payment pursuant to Section 1.3(c)(ii), if it is paid.

 

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(c)    At any time prior to May 1, 2009, (i) upon written certification (the “ First Milestone Achievement Certification ”) by the Company to the Purchaser, which certification shall be by an authorized officer of the Company to the effect that the Company has achieved the First Milestone (as defined below), then within fifteen (15) days of receipt of the First Milestone Achievement Certification, the Purchaser shall pay the Company an additional amount of $2.0 million for the achievement of such First Milestone and (ii) following the achievement of the Second Milestone (as defined below) and upon written certification (the “ Second Milestone Achievement Certification ”) by the Company to the Purchaser, which certification shall be by an authorized officer of the Company to the effect that the Company has achieved the Second Milestone, then within fifteen (15) days of receipt of the Second Milestone Achievement Certification, the Purchaser shall pay the Company an additional amount of $2.0 million for the achievement of such Second Milestone. For greater certainty, if the First Milestone and the Second Milestone are not achieved prior to May 1, 2009, then the Purchaser shall never become obligated to make the payments of $2.0 million contemplated in each of (i) and (ii) of this Section 1.4(c), and the Purchase Price, for all purposes, shall be (A) the Closing Cash Payment plus (B) the amount of the Note Payment, if it is paid (and merely the Closing Cash Payment if the Note Payment is not made). In addition, for greater certainty, if the First Milestone is achieved but the Second Milestone is not achieved, then the Purchase Price, for all purposes, shall be the aggregate of (x) the Closing Cash Payment, (y) the amount of the Note Payment, if it is paid, plus (z) the $2.0 million payment pursuant to (i) of this Section 1.4(c) (and the aggregate of the Closing Cash Payment and the $2.0 million payment pursuant to (i) of this Section 1.4(c) if the Note Payment is not made), and, if the Note Payment is made and both the First Milestone and the Second Milestone are achieved prior to May 1, 2009, then the Purchase Price, for all purposes, shall be $8,000,000. For purposes hereof, “ First Milestone ” means the achievement of the successful production and testing of Osmolarity Alpha/Alpha Units as further described on Schedule 1.4(c)(i) hereto; and “ Second Milestone ” means the achievement of the successful production and testing of (A) Osmolarity Beta/Beta Units and (B) IgE Alpha lab cards as further described on Schedule 1.4(c)(ii) hereto.

 

(d)    Subject to the fulfillment or waiver of the conditions set forth in Sections 6 and 7 hereof and all other conditions as may be agreed to by the Purchaser and the Company: (i) following receipt by the Company from the U.S. Food and Drug Administration (the “ FDA ”) of 510K clearance to market the Company’s Osmolarity test (the “ 510K Clearance ”), as further described on Schedule 1.4(d) hereto, the Purchaser shall purchase, and the Company shall issue to the Purchaser, for an aggregate purchase price of $3,000,000, such number of shares of the Series B Preferred which, upon their conversion to shares of the common stock, par value $.001 per share of the Company (the “ Common Stock ”), shall constitute 10% of the issued and outstanding capital stock of the Company, on a fully diluted basis and calculated as of the time immediately preceding the closing of such purchase and sale (the “ First Series B Closing ”); and (ii) following receipt by the Company from the FDA of all relevant approvals under the Clinical Laboratory Improvement Amendments (the “ CLIA Waiver ”; together with the 510K Clearance and any other necessary approval, consent or waiver of the FDA, collectively the “ FDA Approvals ”), as further described on Schedule 1.4(d) hereto, the Purchaser shall purchase, and the Company shall issue to the Purchaser, for an aggregate purchase price of $3,000,000, such number of shares of the Series B Preferred which, upon their conversion to shares of the Common Stock, shall constitute 10% of the issued and outstanding capital stock of the Company, on a fully diluted basis and calculated as of the time immediately preceding the closing of such purchase and sale (the “ Second Series B Closing ”). The shares of the Series B Preferred to be purchased pursuant to this Section 1.4(d) are hereinafter referred to as the “ Additional Shares ”, and the First Series B Closing and the Second Series B Closing are referred to hereinafter, collectively, as the “ Additional Closings ”. The First Series B Closing shall take place within fifteen (15) days of receipt by the Purchaser of a certification signed by an authorized officer to the Company confirming receipt by the Company of the 510K Clearance, and the Second Series B Closing shall take place within fifteen (15) days of receipt by the Purchaser of a certification signed by an authorized officer of the Company confirming receipt by the Company of the CLIA Waiver. The Additional Closings shall take place at the offices of Torys on the dates and at the times as mutually agreed, orally or in writing, by and among the Company and the Purchaser. At the Additional Closings, (A) the Company will deliver to the Purchaser the certificates, instruments and documents referred to in Section 6 below and any other certificates, instruments, documents or other deliverable items as may be agreed to by the Purchaser and the Company, (B) the Purchaser will deliver to the Company the certificates, instruments and documents referred to in Section 7 below and any other certificates, instruments, documents or other deliverable items as may be agreed to by the Purchaser and the Company and (C) the Company shall deliver to the Purchaser a share certificate registered in the Purchaser’s name representing the Additional Shares that the Purchaser is to receive from the Company at the Additional Closings, against payment of the purchase price therefor by wire transfer, to an account designated by the Company to the Purchaser prior to such Additional Closings or other reasonable means acceptable to the Company.

 

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1.5    Warrant . At the Closing and for no additional consideration, the Company shall issue to the Purchaser a warrant (the “Warrant” ), evidenced by a warrant certificate in the form of Exhibit G attached hereto, to purchase, at each of the four vesting dates set forth in such Warrant and further described below, the number of whole shares of the Series A Preferred which, upon conversion will equal five percent (5%) of the issued and outstanding Common Stock of the Company (the “Warrant Shares” ), on a fully diluted basis and calculated as of each such vesting date, at an exercise price of $.001 per Warrant Share. The Warrant will vest as follows:

 

(a)    in the event the Company fails to receive the 510K Clearance on or before May 1, 2009 (the “ First Approval Deadline ”) or fails to have developed successfully a functionally effective alpha prototype of the Company’s IgE lab card (the “ IgE Development Milestone ”) on or prior to May 1, 2009, as further described on Schedule 1.5 hereto, then the Purchaser shall have the right to exercise the Warrant (as defined below) with respect to the number of shares of the Series A Preferred that shall have vested as of the First Approval Deadline, as further set forth in the Warrant, being the number of shares of the Series A Preferred, which upon conversion, will equal five percent (5%) of the issued and outstanding Common Stock of the Company, on a fully diluted basis and calculated as of the First Approval Deadline;

 

(b)    in the event the Company fails to receive both the 510K Clearance and the CLIA Waiver on or before November 1, 2009 (the “ Second Approval Deadline ”) or fails to achieve the IgE Development Milestone on or prior to the Second Approval Deadline, then the Purchaser shall have the right to exercise the Warrant with respect to the number of additional shares of the Series A Preferred that shall have vested as of the Second Approval Deadline, as further set forth in the Warrant, being the number of additional shares of the Series A Preferred, which upon conversion, will equal an additional five percent (5%) of the issued and outstanding Common Stock of the Company, on a fully diluted basis and calculated as of the Second Approval Deadline;

 

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(c)    in the event the Company fails to receive both the 510K Clearance and the CLIA Waiver on or before May 1, 2010 (the “ Third Approval Deadline ”) or fails to achieve the IgE Development Milestone on or prior to the Third Approval Deadline, then the Purchaser shall have the right to exercise the Warrant with respect to the number of additional shares of the Series A Preferred that shall have vested as of the Third Approval Deadline, as further set forth in the Warrant, being the number of additional shares of the Series A Preferred, which upon conversion, will equal an additional five percent (5%) of the issued and outstanding Common Stock of the Company, on a fully diluted basis and calculated as of the Third Approval Deadline; and

 

(d)    in the event the Company fails to receive both the 510K Clearance and the CLIA Waiver on or before November 1, 2010 (the “ Fourth Approval Deadline ”) or fails to achieve the IgE Development Milestone on or prior to the Fourth Approval Deadline, then the Purchaser shall have the right to exercise the Warrant with respect to the number of additional shares of the Series A Preferred that shall have vested as of the Fourth Approval Deadline, as further set forth in the Warrant, being the number of additional shares of the Series A Preferred, which upon conversion, will equal an additional five percent (5%) of the issued and outstanding Common Stock of the Company, on a fully diluted basis and calculated as of the Fourth Approval Deadline.

 

For purposes of this Agreement, the First Approval Deadline, the Second Approval Deadline, the Third Approval Deadline and the Fourth Approval Deadline are sometimes each referred to herein as an “ Approval Deadline ” and, collectively, the “ Approval Deadlines ”).

 

2.    Representations and Warranties of the Company . Except as set forth on the Disclosure Schedules attached as Exhibit C hereto (the “ Disclosure Schedules ”), specifically identifying the relevant subsection hereof, the Company represents and warrants to the Purchaser that the statements contained in this Section 2 are complete and accurate as of the date of this Agreement. As used in this Section 2, the term “ Knowledge ” shall mean the actual knowledge of Eric Donsky and Benjamin Sullivan, after reasonable inquiry. The Purchaser shall be entitled to rely on the statements contained in this Section 2 regardless of any due diligence or other investigation of the subject matter thereof that may be, or may have been, conducted by or on behalf of the Purchaser.

 

2.1    Organization, Good Standing and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power to own its property and to carry on its business as now being conducted and as currently contemplated to be conducted. The Company has the power to execute and deliver this Agreement, the Warrant, the Rights Agreement (defined below) and the Voting Agreement (defined below) (collectively, the “ Transaction Documents ”); to issue and sell the Shares, the Additional Shares, the Warrant, the Warrant Shares and the shares of Common Stock issuable upon conversion of the Shares and the Additional Shares (the “ Conversion Shares ”), and to carry out the provisions of the Transaction Documents and to perform its obligations thereunder. The Company is duly qualified and authorized as a foreign corporation to do business and is in good standing in California and in every other jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to so qualify would not have a material adverse effect on the business, assets, properties, operations, prospects or financial condition of the Company (as such business is currently being conducted or currently contemplated to be conducted), as determined from the perspective of a reasonable person in the Purchaser’s position (a “ Material Adverse Effect ”). True and accurate copies of the Company’s Certificate of Incorporation and Bylaws, each as amended and in effect at the Closing, have been made available to the Purchaser.

 

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2.2    Capitalization and Voting Rights . Immediately prior to the Closing, the authori


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