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Preferred Stock Purchase Agreement

 

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Title:

Preferred Stock Purchase Agreement

Entities:

Integrated Surgical Systems Inc.; Nasdaq Stock Market Inc.

Date:

2000

Size:

Preview shows 27KB of 221KB total

Price:

$58

ID:

#883235

 

 

► Purchase & Sale ► Purchase ► Stock ► Preferred Stock Purchase Agreements
► Financial ► Investment Services
► Healthcare ► Medical Equipment & Supplies

 

 

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<SEQUENCE>2

<FILENAME>ex4-1.txt
<DESCRIPTION>FORM OF SERRIES G PREFERRED STOCK PURCHASE AGMT
<TEXT>

<PAGE> 1
PREFERRED STOCK PURCHASE AGREEMENT

BETWEEN

INTEGRATED SURGICAL SYSTEMS, INC.

AND THE

INVESTORS SIGNATORY HERETO


PREFERRED STOCK PURCHASE AGREEMENT dated as of May 30, 2000 (the
"Agreement"), between Integrated Surgical Systems, Inc., a corporation organized
and existing under the laws of the State of Delaware (the "Company"), and the
persons signatory hereto (each an "Investor").

WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase, for a total purchase price of $1,800,000,
1,800 shares of the Company's Series G Convertible Preferred Stock and warrants
to purchase an aggregate of 63,000 shares of the Company's common stock.

WHEREAS, the issuance and sale of the Series G Convertible Preferred
Stock and the warrants to the Investor will be made in reliance upon the
provisions of Section 4(2) of the Securities Act of 1933, as amended, and
Regulation D promulgated thereunder by the Securities and Exchange Commission.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

Section 1.1. "Bid Price" shall mean the closing bid price (as reported by
Bloomberg L.P.) of the Common Stock on the Principal Market.

Section 1.2. "Capital Shares" shall mean the Common Stock and any shares of any
other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.

Section 1.3. "Capital Shares Equivalents" shall mean any securities, rights or
obligations that are convertible into or exchangeable for or give any right to
subscribe for any Capital Shares of the Company or any warrants, options or
other rights to subscribe for or purchase Capital Shares or any such convertible
or exchangeable securities.



<PAGE> 2
Section 1.4. "Closing" shall mean the closing of the purchase and sale of the
Preferred Stock pursuant to Section 2.1.

Section 1.5. "Closing Date" shall mean the date on which all conditions to
closing have been satisfied and the Closing shall have occurred.

Section 1.6. "Common Stock" shall mean the Company's common stock, par value
$.01 per share.

Section 1.7. "Conversion Shares" shall mean the shares of Common Stock issuable
upon conversion of the Preferred Stock.

Section 1.8. "Damages" shall mean any loss, claim, damage, liability, costs and
expenses (including, without limitation, reasonable attorney's fees and
disbursements and costs and expenses of expert witnesses and investigation).

Section 1.9. "Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in Section 6.1.

Section 1.10 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.

Section 1.11 "Legend" See Section 9.1.

Section 1.12. "Market Price" on any given date shall mean the single lowest
price (as reported by Bloomberg L.P.) of the Common Stock on any Trading Day
during the five Trading Days prior to the date for which Market Price is to be
determined.

Section 1.13. "Material Adverse Effect" shall mean any effect on the business,
Bid Price, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise interfere with the ability of the Company to
enter into and perform any of its obligations under this Agreement, the
Registration Rights Agreement or the Warrant in any material respect.

Section 1.14. "NASD" shall mean the National Association of Securities Dealers,
Inc.

Section 1.15. "Outstanding" when used with reference to shares of Common Stock
or Capital Shares (collectively the "Shares"), shall mean, at any date as of
which the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
<PAGE> 3
Section 1.16. "Person" shall mean an individual, a corporation, a partnership,
an association, a trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

Section 1.17. "Preferred Stock" shall mean the Company's Series G Convertible
Preferred Stock, par value $.01 per share, issued pursuant to the Certificate of
Designations attached hereto as Exhibit A.

Section 1.18. "Principal Market" shall mean the Nasdaq National Market, The
Nasdaq SmallCap Market, the American Stock Exchange or the New York Stock
Exchange, whichever is at the time the principal trading exchange or market for
the Common Stock.

Section 1.19. "Purchase Price" shall mean one thousand dollars ($1,000) per
share.

Section 1.20. "Registrable Securities" shall mean the Conversion Shares and the
Warrant Shares until (i) the Registration Statement has been declared effective
by the SEC, and all Conversion Shares and Warrant Shares have been disposed of
pursuant to the Registration Statement, (ii) all Conversion Shares and Warrant
Shares have been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act ("Rule 144") are met, (iii) all Conversion Shares and Warrant
Shares have been otherwise transferred to holders who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend or (iv) such time as, in the opinion of counsel to the
Company, all Conversion Shares and Warrant Shares may be sold without any time,
volume or manner limitations pursuant to Rule 144(k) (or any similar provision
then in effect) under the Securities Act.

Section 1.21. "Registration Rights Agreement" shall mean the agreement regarding
the filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and each Investor on the Closing
Date annexed hereto as Exhibit C.

Section 1.22. "Registration Statement" shall mean a registration statement on
Form S-3 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale of the Registrable
Securities to be registered thereunder in accordance with the provisions of this
Agreement, the Registration Rights Agreement, and the Warrant and in accordance
with the intended method of distribution of such securities), for the
registration of the resale by the Investors of the Registrable Securities under
the Securities Act.

Section 1.23 "Regulation D" shall mean Regulation D promulgated by the SEC under
Section 4(2) of the Securities Act.

Section 1.24 "SEC" shall mean the Securities and Exchange Commission.

<PAGE> 4
Section 1.25 "Section 4(2)" shall mean Section 4(2) of the Securities Act.

Section 1.26 "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.

Section 1.27 "SEC Documents" shall mean the Company's Form 10-KSB for the fiscal
year ended December 31, 1999, as amended, and any other reports subsequently
filed with the SEC by the Company under the Exchange Act, as the same may be
amended, prior to the date of this Agreement.

Section 1.28. "Trading Day" shall mean any day during which the New York Stock
Exchange shall be open for business.

Section 1.29, "Warrant" shall have the meaning set forth in Section 2.2 and
substantially in the form of Exhibit B.

Section 1.30. "Warrant Shares" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to exercise of the Warrant.

ARTICLE II

PURCHASE AND SALE OF COMMON STOCK

Section 2.1. Investment.

(a) The Company agrees to sell and each Investor, separately and not
jointly, agrees to purchase the number of shares of Preferred Stock set forth on
the signature page hereto at the Purchase Price on the Closing Date.

(b) On the Closing Date, the Company shall issue and sell to each
Investor, against payment of the total Purchase Price of the shares of Preferred
Stock purchased by that Investor by wire transfer of immediately available funds
in accordance with instructions from the Company, the shares of Preferred Stock
set forth on the signature page hereto and the Warrant.

(c) The Closing of the sale and purchase of the Preferred Stock and
Warrant shall be subject to the completion of the following conditions:


(i) acceptance and execution by the Company and the Investor
of this Agreement and all Exhibits hereto;

(ii) all representations and warranties of the Investor and of
the Company contained herein shall remain true and correct as
of the Closing Date;

(iii) the Company shall have obtained all permits and
qualifications required by any state for the offer and sale of
the Preferred Stock and Warrant, or shall have the
availability of exemptions therefrom;

<PAGE> 5
(iv)the sale and issuance of the Preferred Stock and Warrant,
and the proposed issuance of the Common Stock underlying the
Preferred Stock and the Warrant shall be legally permitted by
all laws and regulations to which the Investor and the Company
are subject and there shall be no ruling, judgment or writ of
any court prohibiting the transactions contemplated by this
Agreement;


(v) receipt by the Investor of an opinion of Snow Becker
Krauss P.C., counsel to the Company, in the form of Exhibit D
hereto;

(vi) delivery to the Investor of the Irrevocable Instructions
to Transfer Agent in the form attached hereto as Exhibit E;

(vii) there not having occurred (i) any general suspension of
trading in, or limitation on prices listed for, the Common
Stock on The Nasdaq Small Cap Market, (ii) the declaration of
a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) the commencement of a
war, armed hostilities or other international or national
calamity directly or indirectly involving the United States or
any of its territories, protectorates or possessions, or (iv)
in the case of the foregoing existing at the date of this
Agreement, a material acceleration or worsening thereof; and;

(viii) there not having occurred any event or development, and
there being in existence no condition, having or which
reasonably and forseeably could have a Material Adverse
Effect.

Section 2.2. The Warrant. On the Closing Date, the Company will issue to the
Investor a warrant, exercisable beginning six months from the Closing Date and
then exercisable any time over the three-year period there following, to
purchase the Investor's pro rata share of an aggregate of 63,000 Warrant Shares
at the Exercise Price (as defined in the Warrant) in the form of Exhibit B
hereto. The Warrant Shares shall be registered for resale pursuant to the
Registration Rights Agreement.

Section 2.3. Liquidated Damages. The parties hereto acknowledge and agree that
the sums payable pursuant to the Registration Rights Agreement shall constitute
liquidated damages and not penalties. The parties further acknowledge that (a)
the amount of loss or damages likely to be incurred is incapable or is difficult
to precisely estimate, (b) the amounts specified in such Sections bear a
reasonable proportion and are not plainly or grossly disproportionate to the
probable loss likely to be incurred by the Investor in connection with the
failure by the Company to timely cause the registration of the Registrable
Securities and (c) the parties are sophisticated business parties and have been
represented by sophisticated and able legal and financial counsel and negotiated
this Agreement at arm's length.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF INVESTOR

The Investor represents and warrants to the Company that:

Section 3.1. Intent. The Investor is entering into this Agreement for its own
account and the Investor has no present arrangement (whether or not legally
binding) at any time to sell the Common Stock to or through any person or
entity; provided, however, that by making the
<PAGE> 6
representations herein, the Investor does not agree to hold the Common Stock for
any minimum or other specific term and reserves the right to dispose of the
Common Stock at any time in accordance with federal and state securities laws
applicable to such disposition.

Section 3.2. Sophisticated Investor. The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in Common Stock. The Investor acknowledges that an
investment in the Common Stock is speculative and involves a high degree of
risk.

Section 3.3. Authority. This Agreement and each Exhibit hereto which is
required to be executed by Investor has been duly authorized and validly
executed and delivered by the Investor and is a valid and binding agreement of
the Investor enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.

Section 3.4. Not an Affiliate. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.

Section 3.5. Absence of Conflicts. The execution and delivery of this Agreement
and any other document or instrument executed in connection herewith, and the
consummation of the transactions contemplated thereby, and compliance with the
requirements thereof, will not violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Investor, or, to the Investor's
knowledge, (a) violate any provision of any indenture, instrument or agreement
to which Investor is a party or is subject, or by which Investor or any of its
assets is bound; (b) conflict with or constitute a material default thereunder;
(c) result in the creation or imposition of any lien pursuant to the terms of
any such indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by Investor to any third party; or (d) require the approval
of any third-party (which has not been obtained) pursuant to any material
contract, agreement, instrument, relationship or legal obligation to which
Investor is subject or to which any of its assets, operations or management may
be subject.

Section 3.6. Disclosure; Access to Information. Investor has received all
documents, records, books and other publicly available information pertaining to
Investor's investment in the Company that have been requested by Investor. The
Company is subject to the periodic reporting requirements of the Exchange Act,
and Investor has reviewed or received copies of any such reports that have been
requested by it.

Section 3.7. Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

<PAGE> 7
The Company represents and warrants to the Investor that, except as set forth on
the Schedule of Exceptions attached hereto:

Section 4.1. Organization of the Company. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted as described in the Company's SEC
Documents. The Company does not have any subsidiaries and does not own more that
fifty percent (50%) of or control any other business entity, except as set forth
in the SEC Documents. The Company is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify could not
reasonably be expected to have a Material Adverse Effect.

Section 4.2. Authority. (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement, the
Registration Rights Agreement and the Warrant and to issue the Preferred Stock,
the Conversion Shares, the Warrant and the Warrant Shares, (ii) the execution,
issuance and delivery of this Agreement, the Registration Rights Agreement and
the Warrant by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
and no further consent or authorization of the Company or its Board of Directors
or stockholders is required, and (iii) this Agreement, the Registration Rights
Agreement and the Warrant have been duly executed and delivered by the Company
and constitute valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. The Company has duly and
validly authorized and reserved for issuance shares of Common Stock sufficient
in number for the conversion of 1,800 shares of Preferred Stock and for the
exercise of the Warrants. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock of the issuance of the
Conversion Shares and the Warrant Shares. The Company further acknowledges that
its obligation to issue Conversion Shares upon conversion of the Preferred Stock
and Warrant Shares upon exercise of the Warrants in accordance with this
Agreement and the Certificate of Designations is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company and notwithstanding the
commencement of any case under 11 U.S.C. Section 101 et seq. (the "Bankruptcy
Code"). In the event the Company is a debtor under the Bankruptcy Code, the
Company hereby waives to the fullest extent permitted any rights to relief it
may have under 11 U.S.C. Section 362 in respect of the conversion of the
Preferred Stock and the exercise of the Warrants. The Company agrees, without
cost or expense to the Investor, to take or consent to any and all action
necessary to effectuate relief under 11 U.S.C. Section 362.

Section 4.3. Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, par value $0.01, of which
16,898,460 shares were issued and outstanding as of May 1, 2000 and 987,730
shares of Preferred Stock, par value $0.01, of which 734 shares of Series F
Convertible Preferred Stock were issued and outstanding as of May
<PAGE> 8
1, 2000, and 1,800 shares of Preferred Stock have been properly designated
as Series G Convertible Preferred Stock. Except as set forth in the SEC
Documents and the Schedule of Exceptions, there are no outstanding Capital
Shares Equivalents. All of the outstanding shares of Common Stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable.

Section 4.4. Common Stock. The Company has registered its Common Stock pursuant
to Section 12(b) or (g) of the Exchange Act and is in full compliance with all
reporting requirements of the Exchange Act, and the Company has maintained all
requirements for the continued listing or quotation of its Common Stock, and
such Common Stock is currently quoted on The Nasdaq SmallCap Market and the
Company has not received any notice regarding, and to its knowledge there is no
threat, of the termination or discontinuance of the eligibility of the Common
Stock for inclusion on The Nasdaq SmallCap Market.

Section 4.5. SEC Documents. The Company has delivered or made available to the
Investor true and complete copies of the SEC Documents. The Company has not
provided to the Investor any information that, according to applicable law, rule
or regulation, should have been disclosed publicly prior to the date hereof by
the Company, but which has not been so disclosed. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act, and rules and regulations of the SEC promulgated thereunder and
the SEC Documents did not contain any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) as set forth in Section 4.5 to the Schedule of Exceptions) and fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of operations and cash flows for the periods then
ended. Neither the Company nor any of its subsidiaries has any indebtedness,
obligations or liabilities of any kind (whether accrued, absolute, contingent or
otherwise, and whether due or to become due) that would have been required to be
reflected in, reserved against or otherwise described in the financial
statements or in the notes thereto in accordance with GAAP, which was not fully
reflected in, reserved against or otherwise described in the financial
statements or the notes thereto or was not incurred in the ordinary course of
business consistent with the Company's past practices since the late date of the
financial statements.

Section 4.6. Exemption from Registration; Valid Issuances. The sale of the
Preferred Stock, the Conversion Shares, the Warrant and the Warrant Shares will
be properly issued pursuant to Rule 4(2), Regulation D and/or any applicable
state securities law. When issued, the Preferred Stock, the Conversion Shares
and the Warrant Shares will be duly and validly issued, fully paid, and

 

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