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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 28, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CHROMAVISION MEDICAL SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 75-2649072
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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33171 PASEO CERVEZA
SAN JUAN CAPISTRANO, CALIFORNIA 92675
(888) 776-4276
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DOUGLAS S. HARRINGTON, M.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHROMAVISION MEDICAL SYSTEMS, INC.
33171 PASEO CERVEZA
SAN JUAN CAPISTRANO, CALIFORNIA 92675
(888) 776-4276
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
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ROY J. SCHMIDT, JR., ESQ. JAMES R. TANENBAUM, ESQ.
GIBSON, DUNN & CRUTCHER LLP STROOCK & STROOCK & LAVAN LLP
333 SOUTH GRAND AVENUE 180 MAIDEN LANE
LOS ANGELES, CALIFORNIA 90071 NEW YORK, NEW YORK 10034
(213) 229-7000 (212) 806-5400
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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<TABLE>
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PROPOSED MAXIMUM
AGGREGATE OFFERING AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
<S> <C> <C>
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Common Stock................................................ $21,424,250 $5,956.00
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Preferred Stock Purchase Rights............................. -- --
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER 28, 1999
1,775,000 SHARES
[CHROMAVISION LOGO]
CHROMAVISION MEDICAL SYSTEMS, INC.
COMMON STOCK
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This prospectus relates to the public offering, which is not being
underwritten, of 1,775,000 shares of our common stock by some of our current
stockholders. These stockholders acquired the shares directly from us in a
private placement completed on September 24, 1999. We will not receive any
proceeds from the sale of these shares.
The selling stockholders may sell the shares at prices determined by the
prevailing market price for the shares or in negotiated transactions. The
selling stockholders may also sell the shares to or with the assistance of
broker-dealers, who may receive compensation in excess of their customary
commissions.
Our common stock is traded on the Nasdaq National Market under the symbol
"CVSN." On September 24, 1999, the last reported sale price of our common stock
was $11.8125 per share.
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BEFORE BUYING ANY SHARES YOU SHOULD READ THE DISCUSSION OF MATERIAL RISKS
OF INVESTING IN OUR COMMON STOCK IN "RISK FACTORS" BEGINNING ON PAGE 3.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 3
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
It is not complete and does not contain all of the information that you should
consider before investing in the shares. You should read the entire prospectus
carefully, and you should consider the information set forth under "Risk
Factors."
Some of the information in this prospectus contains forward-looking
statements, including statements relating to the anticipated operating results,
growth, financial resources, development of new products and markets, obtaining
and maintaining regulatory approval, commercial acceptance of new products,
expectations regarding competition from other companies and our ability to
manufacture and distribute our products. The forward-looking statements are
based on assumptions, including assumptions of future events. It is likely that
some of the assumptions will prove to be incorrect for reasons which include
those set forth under "Risk Factors." The actual results and our financial
position will vary from those projected or implied in the forward-looking
statements, and the variances may be material.
THE COMPANY
We develop, manufacture and market an automated cellular imaging system,
referred to as the ACIS(TM), which is designed to perform a wide variety of
diagnostic tests, including tests for cancer, infectious disease and genetic
screening. We have designed the ACIS technology to serve as a tool to assist,
rather than replace, the pathologist in generating accurate, quantitative and
reproducible results, eliminating the subjectivity associated with current
manual methods. On July 28, 1999, the U.S. Food and Drug Administration granted
clearance for the use of the ACIS to perform tests using a particular staining
method based upon a master validation protocol. The FDA clearance allows us to
introduce tests for the ACIS using that staining method without having to apply
for additional FDA clearance. Our current test menu for the ACIS includes five
tests scheduled to be introduced during the second half of 1999 and additional
tests that are in various stages of development.
The ACIS combines color-based imaging technology with a fully automated,
computer-controlled microscope system and is designed to improve the detection,
diagnosis and treatment of cellular disease. The ChromaVision ACIS uses
internally developed software to detect colored objects, such as stained cells,
dramatically better than the human eye and with greater accuracy and sensitivity
than automated systems that rely on form-, structure-, size- or shape-based
detection. The ACIS detects and counts cells based on color, form and structure.
The majority of slide-based tests currently being performed in laboratories
already use some form of color to assist in the analysis. The color on a
microscope slide is produced by the reaction between common laboratory reagents
and the cells of interest. The ACIS relies upon color as the primary means of
detecting disease and achieves greater sensitivity than existing methods through
its ability to discriminate among up to 256 levels of intensity of any chosen
color. The ACIS provides greater specificity than current alternative diagnostic
methods.
ChromaVision submitted data in its FDA filing showing that pathologists
using manual microscopy identified the existence of cancer cells in only 56% of
the bone marrow samples where early-stage cancer was present. ChromaVision's
ACIS, on the other hand, detected cancer cells in over 90% of these cases. The
ACIS provides greater specificity, which means the ability to find one diseased
cell among other cells, than current alternative diagnostic methods. It is
capable of correctly identifying one tumor cell in one hundred million normal
cells, allowing the ACIS to be used for the detection of rare events, such as
locating early stage cancer cells. The ACIS also is able to produce the same
result at a rate approaching 100% upon repeated examinations of the same slide.
In
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addition, the ACIS provides significant labor savings to its users, allowing
pathologists to be more productive.
We have pursued a novel regulatory strategy for the ACIS. This strategy was
developed with the FDA to use an approval program known as a master validation
protocol that recognizes a class of similar diagnostic tests. The FDA granted
clearance for the ACIS to be marketed for use with a class of cellular
diagnostic tests using the immunohistochemistry staining method. This strategy
eliminates the need to seek clearances for each immunohistochemistry staining
test to be performed on the ACIS, meaning that a large number of tests that use
this staining method can be developed and marketed.
The tests that we have targeted take advantage of particular capabilities
of the ACIS system, address large, attractive markets and are expected to
receive incremental reimbursement beyond the current third party payors
reimbursement for manual testing. We have five tests scheduled to be
commercialized by the end of 1999.
HOW TO CONTACT US
Our principal executive offices are located at 33171 Paseo Cerveza, San
Juan Capistrano, California 92675, and our telephone number is (888) 776-4276.
We were incorporated in 1996 in Delaware.
As used in this prospectus, the terms "we," "us," "our company," and
"ChromaVision" mean ChromaVision Medical Systems, Inc.
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RISK FACTORS
In addition to the other information in this prospectus, you should
carefully consider the following factors in evaluating an investment in the
shares of our common stock.
WE ARE A DEVELOPMENT STAGE ENTERPRISE WITH A HISTORY OF OPERATING LOSSES WHOSE
FUTURE PROFITABILITY IS UNCERTAIN.
We are a development stage enterprise, are only beginning to commercialize
the use of the ACIS and have a limited operating history. We will continue to be
considered a development stage company until we begin to realize significant
revenues. Since our inception in 1993 as a division of XL Vision, Inc., we have
incurred losses totaling approximately $28.4 million through June 30, 1999,
principally associated with the research and development of our ACIS technology,
the conduct of clinical trials, preparation of regulatory clearance filings and
other matters related to the commercialization of our system. We hope to begin
to realize commercial revenues in the second half of 1999, but will continue to
incur losses at least until 2001 or beyond. Delays in completing research and
clinical tests, receiving necessary regulatory clearances, establishing a
scaled-up manufacturing operation and developing marketing capabilities may
significantly limit or prevent our future profitability. We may not be able to
achieve profitable operations at any time in the future.
OUR BUSINESS IS HIGHLY DEPENDENT ON MARKET ACCEPTANCE OF THE ACIS, AND IT IS
UNCERTAIN WHETHER THE ACIS WILL ACHIEVE THAT ACCEPTANCE.
We have focused all of our efforts to date on the development of the ACIS
and specific diagnostic applications for the ACIS. Our business will depend on
the successful development and marketing of these specific applications in order
to establish a commercially viable market. The extent of market acceptance and
penetration the ACIS may achieve will depend on a number of variables including,
but not limited to, the following:
- the ability of the ACIS to perform as expected,
- our ability to develop a significant number of tests performed with the
ACIS,
- acceptance by patients, physicians, third party payors and laboratories
of the ACIS and the tests performed using it, and
- the amount of reimbursement by third party payors for tests performed
using the ACIS.
A viable commercial market for ACIS applications may not develop, the
ChromaVision ACIS may not perform as expected and adequate reimbursement for
tests performed using the ACIS may not be available.
WE WILL REQUIRE ADDITIONAL FINANCING, AND IT IS UNCERTAIN WHETHER THAT FINANCING
WILL BE AVAILABLE.
We currently estimate that our existing capital resources, together with
the net proceeds from the private placement, will enable us to sustain
operations for at least eighteen months. We have expended and will continue to
expend substantial funds for research and development, clinical trials,
manufacturing and marketing of our system. Our need for capital will be
accelerated if we are delayed in bringing applications to market or we fail to
achieve the level of revenues from applications in the time frame contemplated
by our business plan. We expect that we will need to seek additional funds
through equity or debt financings, collaborative arrangements with third parties
and from other sources. Additional financing may not be available on terms
acceptable to us, if at all. Our inability to obtain sufficient funds may
require us to delay, scale back or eliminate some or all of our development
activities, clinical studies and/or regulatory activities or to license to third
parties the
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right to commercialize products or technologies that we would otherwise seek to
commercialize ourselves.
AS A DEVELOPMENT STAGE COMPANY, WE HAVE LIMITED MANUFACTURING EXPERIENCE.
We may encounter significant delays and incur significant unexpected costs
in scaling-up our manufacturing operations. In addition, we may encounter delays
and difficulties in hiring and training the workforce necessary to manufacture
the ACIS in commercial quantities. We may not be able to manufacture the ACIS at
a cost or in quantities necessary to make the product commercially viable. The
failure to scale-up manufacturing operations successfully, in a timely and
cost-effective manner, could have a material adverse effect on our revenues and
income.
FDA REGULATIONS AND THOSE OF OTHER REGULATORY AGENCIES CAN CAUSE SIGNIFICANT
UNCERTAINTY, DELAY AND EXPENSE IN INTRODUCING NEW APPLICATIONS FOR THE ACIS AND
PRESENT A CONTINUING RISK TO OUR ABILITY TO OFFER APPLICATIONS.
Our products, services and manufacturing activities are subject to
extensive and rigorous government regulation in the United States and other
countries. In the United States, the Medical Device Amendments to the Federal
Food, Drug and Cosmetic Act, and other statutes and regulations, including
various state statutes and regulations, govern the testing, manufacture,
labeling, storage, recordkeeping, distribution, sale, marketing, advertising and
promotion of our products. Our products are subject to similar regulation in
other countries. Failure to comply with applicable requirements in the United
States or in foreign countries can result in fines, recall or seizure of
products, total or partial suspension of production, withdrawal of existing
product approvals or clearances, refusal to approve or clear new applications or
notices and criminal prosecution.
- FDA APPROVAL. Prior to commercial distribution in the United States, most
medical devices, including our products, must be approved or cleared by
the FDA. The process of obtaining required regulatory approval or
clearance can be lengthy, expensive and uncertain. Moreover, regulatory
clearance or approval, if granted, may include significant limitations on
the indicated uses for which a product may be marketed.
- MARKETING. The FDA actively enforces regulations prohibiting marketing of
products for other than research or investigational use without
compliance with applicable pre-market clearance provisions. The effect of
governmental regulation may be to delay for a considerable period of time
or to prevent the marketing and full commercialization of our tests and
to impose costly requirements on us. Additional tests to be performed
with the ACIS may not receive clearance by the FDA for manufacture and
distribution in the United States.
- SOFTWARE. The FDA also regulates computer software, such as our software
technology, that performs the functions of a regulated device or that is
closely associated with a given device, such as software for imaging or
other devices. The FDA is in the process of re-evaluating its regulation
of this software, and we cannot predict the extent to which the FDA will
regulate this software in the future. Should the FDA increase its
regulation, our software technology could become subject to more
extensive regulatory processes and clearance requirements. As a result,
we could be required to devote additional time, resources and effort in
the areas of software design, production and quality control to ensure
compliance. Compliance with more extensive regulatory processes may not
be achieved and we may not obtain the necessary clearances for this
software on a timely basis, if at all. Delay or failure to achieve any
required FDA clearance with respect to this software could have a
material adverse effect on our business, income and financial condition.
- MANUFACTURING. Manufacturers of medical diagnostic devices are subject to
strict federal regulations regarding validation and the quality of
manufacturing, including periodic FDA
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inspections of the manufacturing facilities. Our manufacturing operations,
including any expansion of these operations, will continue to be required to
comply with these and all other applicable regulations, and with applicable
regulations imposed by other governments. Our failure to comply with
quality regulation system regulations could result in civil or criminal
penalties or enforcement proceedings being imposed on us, including the
recall of a product or a "cease distribution" order requiring us to stop
placing our products in service or selling our products, as the case may
be. Similar results could occur if we were to violate foreign regulations.
We are required to be in quality regulation system compliance. We cannot
assure you that we will be able to maintain compliance with quality
regulation system requirements. The failure to comply with the FDA's
quality system regulation could have a material adverse effect on our
ability to defend against product liability lawsuits. Furthermore, failure
to attain or maintain compliance with the applicable manufacturing
requirements of various regulatory agencies would have a material adverse
effect on our business, income and financial condition.
Changes in existing regulations or adoption of new regulations could affect
the timing of, or prevent us from obtaining, future regulatory clearance.
Additional regulations may be adopted or current regulations may be amended in a
manner that will materially adversely affect our profitability.
CONSTANT PRESSURE TO CONTROL HEALTHCARE COSTS COULD RESULT IN THIRD PARTY PAYORS
LIMITING REIMBURSEMENT FOR TESTS PERFORMED WITH THE ACIS, WHICH WOULD RESTRICT
PRICING, PROFITABILITY AND DEMAND FOR THE TESTS.
The continued success of the ACIS depends upon its ability to replace or
augment existing diagnostic procedures, most, if not all of which, are deemed to
be eligible expenses and are covered by the medical insurance industry.
Historically, insurance carriers generally have been slow in adopting new
procedures as eligible expenses and, specifically, have been slow in agreeing to
cover other types of automated microscopy diagnostic procedures. Insurance
carriers may not deem the ChromaVision ACIS related procedures to be
reimbursable expenses at any time in the future.
From time to time, Congress has considered restructuring the delivery and
financing of healthcare services in the United States. We cannot predict what
form of legislation, if any, may be implemented or the effect of this
legislation on our business. It is possible that future legislation will contain
provisions which may adversely affect our business, operating results and
financial condition. It is also possible that future legislation could result in
modifications to the nation's public and private healthcare insurance systems,
which could negatively affect reimbursement policies, or encourage integration
or reorganization of the healthcare delivery system in a manner that could
negatively affect us. We cannot predict what legislation, if any, relating to
its business or to the healthcare industry may be enacted, including legislation
of third party reimbursement, or what effect any of this legislation may have on
our business.
OUR STRATEGY FOR THE DEVELOPMENT AND COMMERCIALIZATION OF THE ACIS PLATFORM
CONTEMPLATES COLLABORATIONS WITH THIRD PARTIES, MAKING US DEPENDENT ON THEIR
SUCCESS.
We have entered into and intend to continue to enter into corporate
collaborations for the development of new applications, clinical collaborations
with respect to tests using the ACIS and strategic alliances for the
distribution of the ACIS and the tests. We may, therefore, depend upon the
success of third parties in performing their responsibilities. We cannot assure
you that we will be able to enter into arrangements that may be necessary in
order to develop and commercialize our products, or that we will realize any of
the contemplated benefits from these arrangements. Furthermore, we cannot assure
you that any revenues or profits will be derived from our collaborative and
other arrangements.
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THE MEDICAL IMAGING TECHNOLOGY MARKET IS CHARACTERIZED BY RAPID TECHNOLOGICAL
CHANGE, FREQUENT NEW PRODUCT INTRODUCTIONS AND EVOLVING INDUSTRY STANDARDS.
The introduction of diagnostic tests embodying new technologies and the
emergence of new industry standards can render existing tests obsolete and
unmarketable in short periods of time. We expect competitors to introduce new
products and services and enhancements to existing products and services. The
life cycles of tests using the ACIS, and of the ACIS itself, are difficult to
estimate. Our future success will depend upon our ability to enhance our current
tests, to develop new tests, and to enhance and continue to develop the hardware
and software included in the ACIS, in a manner that keeps pace with emerging
industry standards. We cannot assure you that we will be successful in achieving
all of these objectives, that we will not experience difficulties that could
delay or prevent the successful development, introduction and marketing of these
tests, or that we will adequately meet the demands of the marketplace and
achieve market acceptance. Our inability to accomplish any of these endeavors
will have a material adverse effect on our business, operating results and
financial condition.
ANY BREAKDOWN IN THE PROTECTION OF OUR PROPRIETARY TECHNOLOGY, OR ANY
DETERMINATION THAT OUR PROPRIETARY TECHNOLOGY INFRINGES ON THE RIGHTS OF OTHERS,
COULD MATERIALLY AFFECT OUR BUSINESS.
Our commercial success will depend in part on our ability to protect and
maintain our proprietary technology and to obtain and enforce patents on our
technology. We rely primarily on a combination of copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to protect
our proprietary rights. We cannot assure you that our efforts will provide
meaningful protection for our proprietary technology. We have applied for
patents with the U.S. Patent & Trademark Office regarding specific aspects of
the ChromaVision ACIS software technology. We cannot assure you that any patent
applications we file or have filed will result in the issuance of patents or
that any patents issued to us will afford protection against competitors that
develop similar technology.
THE MEDICAL DEVICE INDUSTRY HAS BEEN THE SUBJECT OF EXTENSIVE LITIGATION
REGARDING PATENTS AND OTHER PROPRIETARY RIGHTS.
Any claims of infringement by third parties, with or without merit, could
be time-consuming, result in costly litigation, cause product shipment delays or
require us to enter into royalty or licensing agreements. These royalty or
licensing agreements, if required, may not be available on terms acceptable to
us, if at all. A determination that we are infringing the proprietary rights of
others could have a material adverse effect on our products, revenues and
income.
WE FACE SUBSTANTIAL EXISTING COMPETITION AND POTENTIAL NEW COMPETITION FROM
OTHERS PURSUING TECHNOLOGIES FOR IMAGING SYSTEMS.
We compete in a highly competitive industry. The current primary source of
competition for the ChromaVision ACIS is manual microscopic analysis. Other
technologies also compete with the ACIS. Our existing and potential competitors
may possess substantially greater resources than us. We cannot assure you that
we will be able to compete effectively with existing or potential competitors.
We are aware of at least six companies that are developing or have developed
similar products for applications that do not directly compete with the current
or intended use of the ACIS. These companies may adapt their systems for other
applications in order to compete directly with the ChromaVision ACIS.
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PRODUCT LIABILITY CLAIMS COULD SUBJECT US TO SIGNIFICANT MONETARY DAMAGE.
The manufacture and sale of the ChromaVision ACIS entails an inherent risk
of product liability arising from an inaccurate, or allegedly inaccurate, test
or diagnosis. Although we maintain product liability insurance and have not
experienced any material losses to date, the ACIS has not been widely used and
we cannot assure you that we will be able to maintain or acquire adequate
product liability insurance in the future. Any product liability claim against
us could have a material adverse effect on our revenues and income.
OUR ABILITY TO MAINTAIN OUR COMPETITIVE POSITION DEPENDS ON OUR ABILITY TO
ATTRACT AND RETAIN HIGHLY QUALIFIED MANAGERIAL, TECHNICAL AND SALES AND
MARKETING PERSONNEL.
We believe that our continued success depends to a significant extent upon
the efforts and abilities of our executive officers. The loss of any of our
executive officers or senior managers could have a material adverse effect on
our business, operating results and financial condition. We have no employment
agreements with these people other than agreements to pay severance benefits
under specific circumstances. Furthermore, our anticipated growth and expansion
will require the addition of highly skilled technical, management, financial,
sales and marketing personnel. Competition for personnel is intense, and our
failure to hire and retain talented personnel or the loss of one or more key
employees could have a material adverse effect on our business.
RAPID GROWTH MAY PLACE SIGNIFICANT DEMANDS ON OUR PERSONNEL.
We currently have limited management and administrative resources. If we
are successful in implementing our strategy, we may experience a period of rapid
growth and expansion which could place significant additional demands on our
management and administrative resources. Our management team's failure to manage
this potential growth effectively could have a material adverse effect on our
business.
SEVERAL AFFILIATED STOCKHOLDERS ARE IN A POSITION TO EXERT SUBSTANTIAL INFLUENCE
OVER THE DIRECTION AND POLICIES OF CHROMAVISION WHICH COULD ADVERSELY AFFECT THE
INTERESTS OF OTHER STOCKHOLDERS.
Safeguard Scientifics, Inc. beneficially owns in the aggregate
approximately 28% and XL Vision, Inc. beneficially owns in the aggregate
approximately 7% of the outstanding shares of our common stock. As a result,
these stockholders may be able to prevent corporate transactions such as
mergers, consolidations or a sale of substantially all of our assets which might
be favorable from the standpoint of us or the other stockholders.
WE HAVE ADOPTED A STOCKHOLDER RIGHTS PLAN AND OTHER ARRANGEMENTS WHICH COULD
INHIBIT A CHANGE IN CONTROL AND PREVENT A STOCKHOLDER FROM RECEIVING A FAVORABLE
PRICE FOR HIS OR HER SHARES.
Our board of directors has adopted a stockholders rights plan providing for
discounted purchase rights to its stockholders upon specified acquisitions of
our common stock. The exercise of these rights is intended to inhibit specific
changes of control of our company. Our certificate of incorporation provides for
the issuance of shares of preferred stock in amounts, in series and with rights,
preferences and privileges as the board of directors determines. The issuance of
preferred stock could have the effect of making it more difficult for a party to
acquire control of our company. Also, we have entered into agreements with
Douglas Harrington, M.D., our Chief Executive Officer and President, and Kevin
O'Boyle, our Senior Vice President of Operations and Chief Financial Officer,
under which they could receive substantial payments in connection with a change
of control of our company. Each of these arrangements could have the effect of
preventing stockholders from disposing of their shares at a favorable price in
connection with an acquisition of our company.
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OUR BUSINESS COULD BE MATERIALLY ADVERSELY IMPACTED BY OUR OWN FAILURE, OR THAT
OF OUR SUPPLIERS OR THIRD PARTY PAYORS, TO CORRECT THE PROBLEMS WHICH COULD
ARISE AS A RESULT OF THE YEAR 2000 ISSUE.
We have made substantial efforts to assess and solve all so-called "Y2K"
issues in our business. Although we have not yet fixed all of the problems we
are aware of in our own operations, we believe that our biggest risk is the
failure of key suppliers or third party payors to fix their problems. Any
resulting interruption in the supply of important components of our products,
disruption of payment from third party payors or any unexpected problems in our
own operations could have a material adverse effect on our business.
WE HAVE NEVER PAID CASH DIVIDENDS ON OUR COMMON STOCK.
We currently intend to retain future earnings for use in our business and,
therefore, do not expect to declare or pay any cash or other dividends in the
foreseeable future.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements concerning our
operations, economic performance and financial condition, including, in
particular, our business strategy and means to implement the strategy, our
goals, the markets we intend to compete in and the likelihood of our success in
developing and expanding our business. These statements are based on a number of
assumptions and estimates which are inherently subject to significant risks and
uncertainties, many of which are beyond our control and reflect future business
conditions which are subject to change. A variety of factors, some of which are
set forth under "Risk Factors" in this prospectus, could cause actual results to
differ materially from those anticipated and reflected in our forward-looking
statements.
Consequently, all of the forward-looking statements made or incorporated by
reference in this prospectus are qualified by these cautionary statements, and
you are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis, judgment, belief or expectation
only as of the date of this prospectus. We undertake no obligation to publicly
revise these forward-looking statements to reflect events or circumstances that
arise after the date of this prospectus or to publicly release the results of
any revisions to the forward-looking statements that may be made to reflect
events or circumstances after the date of this prospectus. In addition to the
disclosure contained in this prospectus, you should carefully review any
disclosure of risks and uncertainties contained in other documents we file or
have filed from time to time with the Securities and Exchange Commission
according to the Securities Exchange Act of 1934, as amended.
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SELLING STOCKHOLDERS
We are registering all 1,775,000 shares covered by this prospectus on
behalf of the selling stockholders named in the table below. We issued all of
the shares to the selling stockholders in a private placement transaction. We
have registered the shares to permit the selling stockholders and their
pledgees, donees, transferees or other successors-in-interest that receive their
shares from a selling stockholder as a gift, partnership distribution or other
non-sale related transfer after the date of this prospectus to resell the shares
when they deem appropriate.
The following table sets forth the name of each of the selling
stockholders, the number of shares owned by each of the selling stockholders as
of September 24, 1999, the number of shares that may be offered under this
prospectus and the number of shares of our common stock owned by each of the
selling stockholders after this offering is completed. None of the selling
stockholders has had a material relationship with us within the past three years
other than as a result of the ownership of the shares or other securities of
ChromaVision. The number of shares in the column "Number of Shares Being
Offered" represent all of the shares that each selling stockholder may offer
under this prospectus. We do not know how long the selling stockholders will
hold the shares before selling them and we currently have no agreements,
arrangements or understandings with any of the selling stockholders regarding
the sale of any of the shares. The shares offered by this prospectus may be
offered from time to time by the selling stockholders named below.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
-------------------- SHARES BEING --------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
--------------------------- ------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Caduceus Capital Trust........................... 90,000 * 90,000 0 0
Caduceus Capital II L.P. ........................ 40,000 * 40,000 0 0
Closefire Ltd. .................................. 30,000 * 30,000 0 0
Coutts & Co. .................................... 2,582 * 2,582 0 0
Jayvee & Co. c/o the GBC CDN Growth Fund......... 257,000 1.3% 70,000 187,000 *
MAS Funds -- Small Cap Value Portfolio........... 242,060 1.2% 242,060 0 0
Merlin Biomed International Ltd. ................ 30,000 * 30,000 0 0
Merlin Biomed L.P. .............................. 40,000 * 40,000 0 0
MSDW SICAV Global Small Cap Equity Fund.......... 1,898 * 1,898 0 0
MSDW SICAV Small Cap Equity Fund................. 18,145 * 18,145 0 0
Narragansett..................................... 77,000 * 77,000 0 0
Narragansett Offshore Ltd. ...................... 23,000 * 23,000 0 0
Pharma/wHealth FLP............................... 55,000 * 55,000 0 0
Pogue Capital International Ltd. ................ 70,000 * 70,000 0 0
Putnam OTC & Emerging Growth Fund................ 492,900 2.5% 492,900 0 0
Putnam Variable Trust -- Putnam VT OTC & Emerging
Growth Trust................................... 7,100 * 7,100 0 0
Roybec & Co. .................................... 140,000 * 140,000 0 0
Roycan & Co. .................................... 117,500 * 60,000 57,500 *
Van Kampen American Value Fund................... 235,315 1.2% 235,315 0 0
Alan J. Weber.................................... 50,000 * 50,000 0 0
</TABLE>
- -------------------------
* Less than 1%
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders.
9
<PAGE> 12
BUSINESS
INDUSTRY OVERVIEW
A critical aspect in diagnosing many cancers, infectious diseases and
genetic disorders is the detection of abnormal cells or cells and organisms with
specific characteristics. This diagnosis is made during a microscopic
examination generally performed manually by a trained technologist or
pathologist on biological specimens taken from patients, also called manual
microscopy. Estimates place the number of diagnostic procedures performed in the
United States at over one billion per year. These procedures are performed in
approximately 14,200 clinical laboratories in the United States and numerous
clinical laboratories worldwide, as well as in hospitals, doctors' offices and
research laboratories. Diagnostic and biotechnology companies have responded to
the opportunities presented by this large market by developing a growing number
of highly specific and increasingly sensitive reagents, used to identify, often
in color, targeted cellular characteristics of biological specimens.
Manual microscopy works well for simple diagnoses and for cases where
disease is obvious. However, manual microscopy is highly laborious and
subjective, particularly when identifying "rare events" such as finding a few
cancer cells in a patient sample containing millions of cells. Among the factors
contributing to this subjectivity is the lack of a standardized methodology for
both the handling and the staining of the specimen. Once slides are prepared and
stained, current diagnostic testing relies on the human eye which, even with the
aid of a microscope, has limited ability to discriminate between slight color
variations associated with the staining process or to detect differences in the
form and structure of cells. As a result, examining cells under this method can
result in variations in reportable results, ranging from modest and probably
insignificant differences to cases of incorrect diagnoses. Healthcare providers
are increasingly seeking more efficient and more accurate methods of disease
diagnosis in order to improve patient care and eliminate unnecessary and costly
examinations and procedures.
CHROMAVISION'S ACIS
Product Description and Benefits
The ACIS is able to find specific types of diagnostic cells, count them and
determine the amount of critically relevant substances on or in the cells by
measuring color intensity at a level of discrimination far exceeding the
capabilities of manual microscopy. It then produces high resolution color
digital images of the targeted cells, creating a permanent visual archive of the
results for use in diagnosis or monitoring of numerous medical conditions. The
ACIS is designed to enable a laboratory technician to operate the system using
simple "point and click" commands to scan up to 100 patient samples with fully
automated, walk-away operation. The system automatically scans the slides,
initially at low magnification to identify targeted cells using color
characteristics. The ACIS then re-images the targeted cells at a higher power
and, using additional color criteria and pattern recognition software, confirms
the significance of the targeted cell. Unlike other existing technologies, the
end result of slide analysis on the ACIS is the automated location of abnormal
cells, quantification of those cells and an image of the abnormal cells
displayed on the computer monitor. The system stores the digital images of the
targeted cells for scoring and review by the technologist and pathologist at a
later time. Once the image is reviewed and accepted, the digital images serve as
a permanent record of the patient's sample and test results. The digital image
also can be sent electronically for remote review and consultation.
The visual aspect of the ACIS system has many advantages including enabling
the healthcare practitioner to see the actual intact cells containing the
diagnostic information needed to guide therapy, rather than just a numeric value
indicating size or quantity. In competing technologies,
10
<PAGE> 13
creation of this numeric value destroys the actual specimen being analyzed which
prevents further visual review of the specimen and can lead to false positive
and false negative results.
The increased sensitivity of the ACIS allows us to address tests that
require rare event detection, such as diagnostic tests for cancer and infectious
diseases. Newer therapeutic treatments require more accurate and objective
information to guide therapeutic options. It will no longer be enough to
interpret a test result as positive or negative. Physicians will need to know
how positive or negative a specific sample is, in order to arrive at an accurate
clinical decision. We believe that the ACIS will enable us to provide this
information accurately, objectively and quickly.
We offer our customers an entire testing system, including an intelligent,
automated microscope, specialized proprietary software, particular staining and
slide preparation techniques, training and service. The hardware of the ACIS
system includes a computer with a modem and monitor, a digital camera and an
Olympus microscope. Ancillary equipment may include a ChromaVision-supplied
cover slipper, auto-stainer, slide preparation equipment, hand held bar-code
reader, printer and reagents.
The ACIS is designed to identify many different stains and staining
characteristics of cells, thereby enabling the system to be used for a
significant number of clinical tests for conditions including cancer, infections
and genetic abnormalities. The ACIS system is designed to be easily adapted to
work with a significant number of existing FDA approved reagents and stains
allowing each new follow-on test for the ACIS to be developed with significant
savings in time and resources.
The ACIS technology has been designed to complement the skills of
pathologists by assisting them in generating more accurate, specific and
reproducible results and eliminating the subjectivity associated with current
manual methods. We expect that the ACIS will enable healthcare providers to
improve the accuracy and consistency of patient diagnoses, enhance overall
patient outcomes and lower healthcare costs.
Regulatory Status
On July 28, 1999, the FDA granted a broad 510(k) clearance for the use of
the ACIS to perform multiple tests using a staining method called
immunohistochemistry. Immunohistochemistry is widely used in the diagnosis or
monitoring of numerous medical conditions, including cancer and infectious
diseases. This method involves the use of antibodies and stains to create color
reactions enabling the identification of suspected tumor- or virus-producing
cells.
The master validation protocol approval process uses a prototype
application to demonstrate the method to be used for validation and indicates
how follow-on applications will be validated. Then, as new applications using
that method are developed, they are internally validated and documented at our
company according to FDA guidelines. This process of validation significantly
accelerates the development and commercialization of new applications as well as
dramatically decreases the time and cost associated with achieving regulatory
compliance.
Testing Menu
The FDA clearance of the ACIS for performing tests using a particular
staining method is expected to enable us to commercialize new tests quickly
without further FDA filings. We have developed five tests for the ACIS that are
scheduled for introduction during the second half of 1999. We are continuing to
develop a pipeline of new tests, some of which have already been successfully
evaluated in feasibility studies. The following is a description of the five
tests scheduled to be commercialized by the end of 1999.
- MICROMETASTASES IN BONE MARROW. This is a test for early detection of
cancer that involves finding minute quantities of cancer cells in bone
marrow. The presence of these cells, which
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<PAGE> 14
have spread from the primary tumor, has been shown to be an early
indicator of cancer. Testing for small quantities of cancer cells also
can be used to monitor the progress of the disease and to provide
required information in connection with stem cell and bone marrow
transplants. This test takes advantage of the enhanced sensitivity of the
ACIS. Clinical trials with respect to this test have been completed, and
it is ready for commercial release.
- HER2/NEU. This is a test that measures excess quantities of the HER2/neu
protein, which is associated with more aggressive breast cancer, faster
disease progression and shorter overall survival. Candidates for the new
cancer drug Herceptin(R), which has recently been approved by the FDA and
developed and marketed by Genentech, Inc., are required to be tested for
overexpression of HER2/neu. Currently, the test is performed using manual
microscopy, and a pathologist or laboratory assigns a score to the result
in order to determine if Herceptin will be prescribed. This subjective
procedure produces a significant variation of results among individual
laboratories and pathologists. HER2/neu testing performed using the ACIS
in conjunction with the recently released HercepTest(TM) developed by
DAKO Corporation has achieved greater than 90% reproducibility and is
expected to substantially improve the standardization of test results. We
have a joint development and marketing agreement with DAKO Corporation
for a tissue-based testing system, which includes HercepTest. Clinical
trials with respect to this test have been completed, and it is ready for
commercial release.
- CYTOMEGALOVIRUS ANTIGENEMIA (CMV). This is a quantitative test for CMV,
an infectious disease that can cause blindness or death in newborns or
immune-compromised patients, such as AIDS or transplant patients.
Currently, our test is in clinical trials at the University of Texas MD
Anderson Cancer Center and the University of California at Los Angeles.
- ESTROGEN AND PROGESTERONE RECEPTORS (ER/PR). These are two tests which
are always performed concurrently on a patient specimen and are used to
determine the appropriate therapy and prognosis for breast cancer
patients by using proteins which bind specifically to estrogen and/or
progesterone. When present in breast and other cancers, ER and PR predict
response to hormonal therapy and prognosis. Currently, our ER/PR test is
in clinical trials at the University of Southern California.
- MICROMETASTASES IN TISSUE. This is a test similar to micrometastases in
bone marrow that also is used to detect early stage cancer. Currently,
our micrometastases in tissue test is in clinical trials at the
University of Vermont.
We believe that the ACIS has the potential to become a valuable tool in the
detection and treatment of a large number of additional diseases and medical
conditions.
CORPORATE STRATEGY
Our goal is to establish the ACIS as the preferred imaging platform for
diagnostic applications in the healthcare industry. To implement this strategy,
we intend to:
- take advantage of the flexibility of both the ACIS platform and the
nature of its FDA clearance to develop and commercialize numerous cancer
and infectious disease tests, including five tests scheduled for
introduction during the second half of 1999;
- continue to build a direct sales and marketing organization which will be
focused on educating the pathology community about the benefits of the
ACIS system;
- offer the ACIS to customers on a fee-per-use basis in which the fee is
based on the number of tests run on the system, thus avoiding capital
expenditure issues that can make generating sales difficult;
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<PAGE> 15
- establish higher reimbursement levels for tests performed using the ACIS
under established incremental payment codes applicable to computerized
image analysis; and
- continue to collaborate with leaders in the pathology community to assist
us in developing new tests for the ACIS and enhance our marketing and
distribution capabilities.
There is considerable uncertainty as to whether these strategies can be
implemented successfully, and we cannot assure investors that we will be
successful in doing so.
COLLABORATIONS
We have and will continue to use collaborations to assist in further
developing our test menu and enhancing our marketing and distribution
capabilities. We collaborate with researchers at prestigious hospitals, centers
of excellence and major laboratories that assist with clinical studies.
Currently, eight of our tests are undergoing clinical trials at the following
institutions:
- Alfigen, the Genetics Institute
- Cambridge University
- Genzyme Genetics
- Mayo Clinic -- Rochester
- UCLA
- University of Pittsburgh
- University of Texas MD Anderson Cancer Center
- University of Vermont and State Agricultural College
- USC Kenneth Norris Cancer Center
We also enter into application-specific collaborations that will focus on
integrating reagents with the ChromaVision ACIS platform in a manner which
provides an entire testing system to the customer. We have entered into
agreements with two companies for the application of their tests on the ACIS.
In October 1998, we entered into an agreement to jointly develop, market
and sell a tissue-based system with DAKO Corporation. The introductory
application will be HercepTest, an FDA-cleared diagnostic that is used to
identify breast cancer patients likely to respond to the recently cleared drug
Herceptin developed by Genentech. DAKO has primary responsibility for account
management, reagents, autostainers and contract management, and we have primary
responsibility for providing our expertise with respect to the ACIS. In
addition, in October 1997, we entered into an exclusive, worldwide distribution
and development agreement with Sigma Diagnostics, Inc. for a potential screening
test for Down syndrome, known as Triple Plus(TM).
The development of new tests to be performed using the ACIS is important to
our success. In order to mitigate the risk that any one test will not be
successfully developed, we maintain a pipeline of tests in a prioritized cue so
that if any one test is not successfully developed, we can move other tests up
in priority. As an example of this, the clinical trials for Triple Plus have
taken longer than expected and some preliminary data indicate that the test may
not be as strong a predictor of Down syndrome as had been expected. While we are
still evaluating the data and the implications for the commercial release of the
test, we are concentrating more of our efforts on other tests that presently
show more promise.
13
<PAGE> 16
SALES AND MARKETING
The ACIS will be offered under an arrangement in which the customer pays
only on the basis of the number of tests performed. Because we will continue to
own the ACIS, there is no need for a large initial capital expenditure by any
clinical customer. Rather than selling the systems, our fee-per-use strategy
removes any capital equipment acquisition barrier to new system sales, shortens
our sell-cycle and yields very attractive margins over time. The customer will
be charged on a fee-per-use basis determined by the specific test being run. The
anticipated fee-per-use charges for the five tests scheduled for release in 1999
range from approximately $50 to $140, although those prices could change based
on a number of facts, including the amount of third-party reimbursements for the
tests. The customer will also be committed to minimum monthly payments for the
use of ACIS. Systems may be sold to research centers that do not offer tests
commercially and in foreign countries where the fee-per-use payment model is not
feasible because of the structure of the healthcare system.
As of July 31, 1999, our sales and marketing organization consisted of
seventeen people, including five direct sales people and four field service
specialists in the United States and five direct sales people and two field
service specialists in Europe. We have entered into an agreement with an
independent distributor to market the ACIS in Italy and are in discussions with
potential distributors for the Scandinavian and the Benelux countries. The
direct sales force is marketing the ACIS in the rest of Western Europe.
There is a high level of interest in micrometastases in Europe, and we have
entered into agreements with two prominent academicians: Ingo J. Diel, M.D.,
Associate Professor of Medicine at University Hospital at Heidelberg, and Klaus
Pantel, M.D., Ph.D., Associate Professor of Medicine and Head of the
Micrometastases Research Laboratory at the University of Munich Institute of
Immunology. Both of them will be studying the detection of micrometastases using
the ACIS and will be working with us to increase awareness and acceptance of the
ACIS technology within the medical and scientific communities in Europe.
Our customers include pathologists and clinical laboratories. Our targeted
customers can be classified into four groups:
- UNIVERSITY MEDICAL CENTERS. These medical centers include transplant and
oncology centers and research centers of excellence as well as AIDS
specialty, pre-natal specialty and women's hospitals.
- COMMERCIAL LABORATORIES. These laboratories which have a national
presence or specialized focus include Quest Diagnostics Incorporated,
Specialty Laboratories Inc., Impath Inc., BIS Laboratories and Laboratory
Corporation of America.
- PHARMACEUTICAL COMPANIES. These companies benefit by using the ACIS in
the drug development process. In addition, the ACIS may assist in
directing the treatment protocol for patients to pharmaceutical
companies' new therapeutics, such as the HercepTest and Herceptin.
- RESEARCH INSTITUTIONS. These institutions include the governmental
sanctioned groups such as The National Cancer Institute, The National
Institutes for Health and the Center for Disease Control as well as
cancer cooperative groups such as the American College of Obstetrics and
Gynecology.
ACIS systems have been placed in research settings and clinical trial sites
in the United States and in Europe. These placements have allowed us to assess
the performance of the system, customer training programs and technical service
capabilities.
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<PAGE> 17
REIMBURSEMENT STRATEGY
Our reimbursement strategy is to pursue the use of specific existing
medical billing codes, known as CPT codes, that qualify for reimbursement to
hospital laboratories and to pathologists from Medicare and from private
carriers at rates incrementally above that for manual microscopy. These CPT
codes are established by the American Medical Association and each code is
associated with a specific medical service. The U.S. Healthcare Finance
Administration, known as HCFA, has established predetermined payment amounts for
the Medicare program based on these specific codes. Private insurers also use
the CPT codes to make decisions with regard to reimbursement. The codes that we
have identified relate specifically to the use of image analysis in the testing
process and are not available to providers who use only manual microscopy to
analyze patent specimens. A number of independent reimbursement consultants, the
reimbursement directors at a major U.S. cancer center and two national
independent laboratories, the American Medical Association CPT coding committee
and HCFA have reviewed the ACIS testing process and acknowledged that these
incremental codes should apply for the reimbursement of tests using the ACIS.
To date, we have only limited experience with reimbursement and, while we
have received assurances from experts that higher reimbursement will be
available for our tests, there remains significant uncertainty. Reimbursement at
these levels may not be achieved.
INTELLECTUAL PROPERTY
We file patent applications to protect technology, innovations and
improvements that we consider important to the development of our business. We
have filed ten patent applications with the U.S. Patent and Trademark Office
regarding specific aspects of the ChromaVision ACIS software technology. In July
1999, we were issued a notice of allowance on the method of "scoring" cells
performed by the ACIS. We also rely on trade secrets and proprietary know-how
that we seek to protect in part through confidentiality agreements with our
employees and consultants. Litigation may be necessary in order to enforce any
patents that are issued from these applications, to protect trade secrets or
know-how we own or to determine the enforceability, scope and validity of the
proprietary rights of others.
COMPETITION
Although the predominant method of cell-based diagnostics today is
traditional manual microscopic analysis performed by pathologists, there are
companies engaged in the development of cell-based diagnostic imaging systems
that could compete with the ACIS. Our company is often compared to companies
manufacturing automated microscope systems because the hardware components are
similar. Some of these companies use form-, structure-, size- or shape-based
detection together with color for cell identification, but these companies'
products do not discriminate among as many variations of the same color as the
ACIS. We believe that our proprietary color-based image analysis, the multi-use
potential of the ACIS, the significant speed and specificity of our tests and
ACIS' proprietary software distinguish our company from these other companies.
Additional sources of competition include alternative diagnostic testing
methods such as flow cytometry, polymerase chain reaction, referred to as PCR,
and fluorescent in-situ hybridization, referred to as FISH. Flow cytometry
involves separating individual cells in blood and analyzing them based on
results obtained by passing a beam of light through the cells at very high
speed. PCR involves rapidly replicating small quantities of genetic material to
permit analysis by detecting color or electrical charge. Both methods have the
disadvantages of destroying the patient sample in the process of analysis and
yielding a large number of false positive results. The pathologist has to draw
conclusions from data produced by the flow cytometry or PCR process, as opposed
to actually seeing the cells of interest. Flow cytometry has not proven to be
specific enough for applications such as
15
<PAGE> 18
micrometastases, which involves finding a very small number of cancer cells in a
large population of cells. FISH involves using fluorescent antibodies to tag
genetic material, either DNA or RNA, and analyzing the result by counting the
points of light. Because fluorescence emits a very weak signal, use of the FISH
method is very slow as compared to the ACIS, is tedious and requires substantial
pathologist time to both define areas of interest within the specimen and then
manually count the fluorescent signals emitted.
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<PAGE> 19
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information as of August 1, 1999 regarding
our executive officers and directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Douglas S. Harrington, M.D. ............ 46 Chief Executive Officer, President and Director
Kenneth D. Bauer, Ph.D. ................ 47 Vice President and Chief Science Officer
Kevin C. O'Boyle........................ 42 Senior Vice President of Operations and Chief
Financial Officer
Diethart Reichardt...................... 56 Vice President of International Business
Development and Operations
Michael G. Schneider.................... 48 Vice President of Manufacturing and Service
Patricia Sisson......................... 45 Senior Vice President of Marketing, Sales and
Strategic Planning
Jose de la Torre-Bueno, Ph.D. .......... 50 Vice President of Research and Development
John S. Scott, Ph.D. ................... 48 Chairman of the Board of Directors
Richard C.E. Morgan..................... 54 Director
Mary Lake Polan, M.D., Ph.D. ........... 55 Director
Charles A. Root......................... 66 Director
Thomas R. Testman....................... 62 Director
</TABLE>
Douglas S. Harrington, M.D. has been a Director of ChromaVision since 1996.
Dr. Harrington has served as ChromaVision's Chief Executive Officer since
December 1996 and President since December 1998. Prior to joining ChromaVision,
Dr. Harrington served as Chairman and President of Strategic Business Solutions,
Inc., a privately held company specializing in the commercialization of
biotechnology, and as a principal in Douglas S. Harrington and Associates, a
strategic consulting firm. From 1992 to 1995, Dr. Harrington served as President
of Nichols Institute, a publicly traded health care laboratory services
provider, now part of Quest Diagnostics, Inc., a publicly traded laboratory
services provider. Prior to 1992, Dr. Harrington held various management
positions within Nichols Institute including Vice President of Operations and
Medical Director. Dr. Harrington currently sits on the board of directors,
advisory boards, or scientific advisory boards of several other related health
care and medical device companies. Dr. Harrington also is Associate Professor of
Clinical and Anatomic Pathology at the University of Nebraska Medical Center and
has authored over 80 peer-reviewed publications. He received his Bachelor of
Arts degree with distinction and a medical degree from the University of
Colorado. Professional affiliation memberships include the American Medical
Association, the American Society of Clinical Pathology, the College of American
Pathologists and the International Academy of Pathology. Dr. Harrington is a
Director of Pacific Biometrics, Inc. and Merge Technologies, Inc.
Kenneth D. Bauer, Ph.D. has been Vice President and Chief Science Officer
since August 1997. From 1992 until he joined us, Dr. Bauer was Senior Scientist
in the Immunology Division and head of Cytometry for Genentech, Inc. a publicly
traded biotechnology company. Prior to Genentech, Bauer was Associate Professor
of Pathology at Northwestern University Medical School and Director of the
Quantitative Cytology Laboratory at the Northwestern Memorial Hospital in
Chicago, Illinois. He has authored more than 90 scientific publications and
served as Associate Editor of Cytometry for the Journal of the Society of
Analytical Cytology for ten years. Dr. Bauer has been a member of the scientific
advisory boards for several public companies and served on scientific review
sections for the National Institutes of Health, Department of Energy, and
National Aeronautics and Space Administration. He is currently an Adjunct
Professor of Pathology and Laboratory Medicine at the
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<PAGE> 20
University of Pennsylvania School of Medicine and a subcommittee member of the
National Committee for Clinical Laboratory Standards.
Kevin C. O'Boyle has been Vice President and Chief Financial Officer of
ChromaVision since December 1996 and Senior Vice President of Operations since
January 1999. From 1990 to 1994, Mr. O'Boyle was the Chief Financial Officer and
from 1994 to 1996, he was Senior Vice President of Operations for Albert Fisher
North America, a publicly traded international food processor and distributor.
From 1984 to 1990, Mr. O'Boyle served as the Vice President and Controller of
American Cablesystems, a publicly traded cable television firm. He previously
held various accounting positions on the audit and tax staff with Pannell, Kerr
& Forster, a public accounting firm.
Diethart Reichardt has been Vice President of International Business
Development and Operations of ChromaVision since January 1998. Previously, Mr.
Reichardt spent more than twenty years with Allergan, Inc., a publicly traded
provider of therapeutic eye care. Mr. Reichardt held various senior management
positions including Corporate Vice President and head of the Global Optical,
Consumer and Over-the-Counter Division.
Michael G. Schneider has been Vice President of Manufacturing and Service
since June 1996. From 1995 to May 1996, Mr. Schneider was Vice President of
Manufacturing at Kodak Health Imaging Systems, Inc. From 1993 to 1995, Mr.
Schneider was Director of Worldwide Service at Kodak's Customer Service
Division. From 1990 to 1993, Mr. Schneider was Manager of Services Support at
Kodak's Health Science Division. Mr. Schneider has twenty-four years of
experience in manufacturing and service management.
Patricia Sisson has been Vice President of Marketing of ChromaVision since
December 1997 and Senior Vice President of Sales, Marketing and Strategic
Planning since January 1999. From 1995 to 1997, Ms. Sisson was Vice President of
Marketing at Quest Diagnostics, Inc. From 1986 to 1995, Ms. Sisson served as
Vice President of Marketing at Nichols Institute and Vice President of Marketing
and Sales for Nichols Institute Diagnostics, a reference laboratory. In
addition, Ms. Sisson spent more than a decade with Beckman Instruments, Inc. in
product and marketing management roles. Ms. Sisson is a licensed medical
technologist certified by the American Society of Clinical Pathology.
Jose de la Torre-Bueno, Ph.D. has been Vice President of Research and
Development since February 1999 and Senior Applications Engineer since July
1998. Prior to joining us, Dr. Torre-Bueno was engaged as a consultant to Tower
Technologies in Encinitas, California. In 1982, he founded American Innovision,
an image analysis company that configured complete application systems, designed
and built software and hardware. He acted as Owner, President, and VP of
Research and Development for American Innovision until its sale to Oncor
Instrument Systems in 1992. He remained with Oncor for three years after the
sale as Senior Scientist and Research and Development Manager. Dr. Torre-Bueno
has been an inventor on two issued patents and one pending patent, and has
assigned the rights for two additional inventions to ChromaVision.
John S. Scott, Ph.D. has been a Director of ChromaVision since 1996. Dr.
Scott is Chairman of the Board and Chief Executive Officer of XL Vision, Inc., a
technology and business incubator of highly differentiated, high-value imaging
technology businesses. Dr. Scott has been Chairman of ChromaVision's board since
March 1996. Prior to founding XL Vision, Inc., from 1991 until July 1993, Dr.
Scott was President of Lenzar Electro-Optics, Inc., a manufacturer of imaging
devices. Dr. Scott has a Ph.D. in both physics -- turbulence and particle
acceleration, associated space-borne instrumentation, plasma physics and
electro-optical sensor system development -- and astrophysics. He has designed
and developed scanners for a wide range of media types including intelligence
imagery, microfiche, microfilm, fingerprint cards, aerial photos, voter
registration cards, and medical x-rays.
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<PAGE> 21
Richard C.E. Morgan has been a Director of ChromaVision since 1996. Mr.
Morgan is Managing Partner of Amphion Capital Management LLC, a private equity
and venture capital firm and the successor to Wolfensohn Partners, L.P. Mr.
Morgan served as Managing General Partner of Wolfensohn Partners, L.P. from 1986
to 1998. Mr. Morgan is also Chairman of Axcess, Inc., a public company that
manufactures and distributes RFID security systems, and chairman of Quidel
Corp., a manufacturer and distributor of rapid diagnostic tests. From 1990 to
1996, Mr. Morgan was the Chairman of MediSense, Inc., a manufacturer and
distributor of blood glucose biosensors. Mr. Morgan is also a Director of
Celgene Corp. and Indigo N.V.
Mary Lake Polan, M.D., Ph.D. has been a Director of ChromaVision since
1998. Dr. Polan is Professor and Chairman of the Gynecology and Obstetrics
Department at Stanford University. From 1985 to 1990, she served as Associate
Professor at Yale University School of Medicine. Dr. Polan also has held
professorial positions at Hunan Medical College in the People's Republic of
China and Pahlavi University in Shiraz, Iran. Dr. Polan has served on committees
of the Institute of Medicine, the National Institutes of Health, and the United
States Department of Health and Human Services. Dr. Polan is a Director of
American Home Products Corp. and Quidel Corp. and holds board positions at
numerous other medical corporations. Dr. Polan is currently Chair of the
Scientific Advisory Board on Women's Health and Hygiene at the Proctor & Gamble
Company.
Charles A. Root has been a Director of ChromaVision since 1996. Mr. Root
served as Executive Vice President of Safeguard Scientifics, Inc., a company
that develops and operates emerging growth information technology companies,
from 1986 until his retirement in 1998. Mr. Root is a Director of Tangram
Enterprise Solutions, Inc.
Thomas R. Testman has been a Director of ChromaVision since 1998. Mr.
Testman is a business consultant. Mr. Testman retired from his position as
Managing Partner with Ernst & Young, an international auditing, accounting and
consulting services firm in October 1992 after 30 years of continuous service.
During his tenure, he held the position of National Director of Management
Consulting Services, was Western Regional Director of Health Care Services, and
engaged in management consulting during various periods. During 1998, Mr.
Testman served as interim Chief Executive Officer for Techniclone Corporation, a
cancer drug developer, and in 1997 served as Interim Chief Executive Officer for
Covenant Care, Inc., a skilled nursing care company. He also formerly served as
a Director of Nichols Institute, a publicly held laboratory company that was
sold to Corning, Inc. in 1994. Mr. Testman is a Director of Techniclone
Corporation and Minimed, Inc. and serves as a Director of six privately held
health care companies.
19
<PAGE> 22
PLAN OF DISTRIBUTION
The selling stockholders may sell the shares from time to time. The selling
stockholders will act independently of us in making decisions regarding the
timing, manner and size of each sale. The sales may be made through the
automated quotation system of the Nasdaq National Market on the facilities of
any national exchanges on which the common stock is then traded or, at prices
and at terms then prevailing or at prices related to the then current market
price, or in privately negotiated transactions. The selling stockholders may
effect these transactions by selling the shares to or through broker-dealers.
The shares may be sold by one or more of, or a combination of, the following:
- a block trade in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal
to facilitate the transaction,
- purchases by a broker-dealer as principal and resale by a broker-dealer
for its account under this prospectus,
- an exchange distribution in accordance with the rules of an exchange,
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and
- in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. If the plan of
distribution involves an arrangement with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, the amendment or supplement
will disclose:
- the name of each selling stockholder and of the participating
broker-dealer(s),
- the number of shares involved,
- the price at which the shares were sold,
- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable,
- that a broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, and
- other facts material to the transaction.
In addition, upon being notified by a selling stockholder that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus. In effecting sales, broker-dealers engaged by the selling
stockholders may arrange for other broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
these transactions, broker-dealers may engage in short sales of the shares in
the course of hedging the positions they assume with selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out short positions. The selling stockholders may enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer the shares under this prospectus. The selling stockholders also may
loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
loaned shares, or upon a default the broker-dealer may sell the pledged shares
under this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
20
<PAGE> 23
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
selling stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended, in connection with
sales of the shares. Accordingly, any commission, discount or concession
received by them and any profit on the resale of the shares purchased by them
may be deemed to be underwriting discounts or commissions under the Securities
Act. Because selling stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the selling stockholders will be
subject to the prospectus delivery requirements of the Securities Act. In
addition, any securities covered by this prospectus which qualify for sale under
Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather
than under this prospectus. The selling stockholders have advised us that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities. There is
no underwriter or coordinating broker acting in connection with the proposed
sale of shares by the selling stockholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in some
states the shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of
1934, as amended, any person engaged in the distribution of the shares may not
simultaneously engage in market making activities with respect to our common
stock for a period of two business days prior to the commencement of the
distribution. In addition, each selling stockholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of our common stock by the
selling stockholders. We will make copies of this prospectus available to the
selling stockholders and have informed them of the need to deliver copies of
this prospectus to purchasers at or prior to the time of any sale of the shares.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against specific liabilities,
including liabilities arising under the Securities Act. The selling stockholders
have agreed to indemnify specific persons, including broker-dealers and agents,
against specific liabilities in connection with the offering of the shares,
including liabilities arising under the Securities Act.
LEGAL MATTERS
Gibson, Dunn & Crutcher, LLP, Los Angeles, California, will pass on the
validity of our common stock being registered.
EXPERTS
The balance sheets of ChromaVision Medical Systems, Inc. (a development
stage enterprise) as of December 31, 1997 and 1998, and the related statements
of operations, stockholders' equity (deficit) and cash flows of ChromaVision
Medical Systems, a development stage enterprise and a division of XL Vision,
Inc., for the period from January 1, 1996 through March 27, 1996, and
ChromaVision Medical Systems, Inc. for the period from March 28, 1996
(incorporation) through December 31, 1996, and for the years ended December 31,
1997 and 1998 and for the cumulative
21
<PAGE> 24
development stage from April 1, 1993 (inception) through December 31, 1998, have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You can inspect and
copy the Registration Statement on Form S-3 of which this prospectus is a part
(File No. 333- ), as well as reports, proxy statements and other information
filed by us, at the public reference facilities maintained by the Securities and
Exchange Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Securities and Exchange
Commission: 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
You can obtain copies of this material from the Public Reference Room of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. You can call the Securities and Exchange Commission
at 1-800-732-0330 for information regarding the operations of its Public
Reference Room. The Securities and Exchange Commission also maintains a World
Wide Web site at http:\\www.sec.gov that contains reports, proxy and information
statements, and other information regarding registrants like our company that
file electronically.
The Securities and Exchange Commission allows this prospectus to
"incorporate by reference" other information that we file with the Commission,
which means that we can disclose important information to you by referring to
those documents. The information incorporated by reference is an important part
of this prospectus, and information that we file later with the Securities and
Exchange Commission will automatically update and replace this information. We
incorporate by reference the documents listed below and any future filings made
by us with the Securities and Exchange Commission under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 until we have sold all of the
securities that we have registered:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 1998, including information in our Proxy Statement in connection with
our 1999 Annual Meeting of Stockholders;
2. Our Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1999 and June 30, 1999;
3. Our Current Reports on Form 8-K filed on March 12, 1999 and July 2,
1999;
4. The description of our common stock contained in our Registration
Statement on Form 8-A filed June 19, 1997, and all amendments filed for the
purposes of updating that description.
The reports and other documents that we file after the date of this
prospectus will update and supersede the information in this prospectus.
If you make a request for this information in writing or by telephone, we
will provide you without charge, a copy of any or all of the information
incorporated by reference in the registration statement of which this prospectus
is a part. Requests for this information should be submitted in writing to:
ChromaVision Medical Systems, Inc., 33171 Paseo Cerveza, San Juan Capistrano,
California 92675, (888) 776-4276, Attn: President.
22
<PAGE> 25
- ------------------------------------------------------
- ------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. THE SELLING STOCKHOLDERS ARE OFFERING TO SELL, AND
SEEKING OFFERS TO BUY SHARES OF CHROMAVISION MEDICAL SYSTEMS, INC. COMMON STOCK
ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS,
REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF THE
CHROMAVISION COMMON STOCK.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................. 1
Risk Factors........................ 3
Forward-Looking Statements.......... 8
Selling Stockholders................ 9
Use of Proceeds..................... 9
Business............................ 10
Management.......................... 17
Plan of Distribution................ 20
Legal Matters....................... 21
Experts............................. 21
Where You Can Find More
Information....................... 22
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
1,775,000 SHARES
[CHROMAVISION LOGO]
CHROMAVISION
MEDICAL SYSTEMS, INC.
COMMON STOCK
------------------------------
PRELIMINARY PROSPECTUS
------------------------------
SEPTEMBER , 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated fees and expenses payable by
ChromaVision Medical Systems, Inc. in connection with the issuance and
distribution of the securities registered:
<TABLE>
<S> <C>
Registration fee............................................ $ 5,956
Printing, duplicating and engraving expenses................ 25,000
Legal fees and expenses, other than Blue Sky................ 100,000
Transfer Agent and Registrar fees........................... 2,500
Accounting fees and expenses................................ 20,000
Blue sky fees and expenses.................................. 5,000
Miscellaneous............................................... 10,000
--------
Total............................................. $168,456
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") makes
provision for the indemnification of officers and directors in terms
sufficiently broad to indemnify our officers and directors under some
circumstances from liabilities, including reimbursement for expenses incurred,
arising under the Securities Act of 1933. Our charter and bylaws provide, in
effect, that, to the fullest extent and under the circumstances permitted by
Section 145 of the DGCL, we will indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is our director or officer or is or was
serving at our request as a director or officer of another corporation or
enterprise. We may, in our discretion, similarly indemnify our employees and
agents. The charter relieves our directors from monetary damages to our
stockholders or us for breach of such director's fiduciary duty as directors to
the fullest extent permitted by the DGCL. Under Section 102(b)(7) of the DGCL, a
corporation may relieve its directors from personal liability to such
corporation or its stockholders for monetary damages for any breach of their
fiduciary duty as directors except (1) for a breach of the duty of loyalty, (2)
for failure to act in good faith, (3) for intentional misconduct or knowing
violation of law, (4) for willful or negligent violation of specific provisions
in the DGCL imposing some requirements with respect to stock repurchases,
redemption and dividends, or (5) for any transactions from which the director
derived an improper personal benefit. Depending upon the character of the
proceedings, under Delaware law, we may indemnify against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with any action, suit or proceeding if the
person indemnified acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to our best interest, and, with respect to any
criminal action or proceeding, had no cause to believe his or her conduct was
unlawful. To the extent that directors or officers have been successful in the
defense of any action, suit or proceeding referred to above, we will be
obligated to indemnify him or her against expenses, including attorneys' fees,
actually and reasonably incurred in connection therewith. We will continue to
maintain our director and officer liability insurance policy in the amount of at
least $3 million.
ITEM 16. EXHIBITS.
See the Exhibit Index attached to this Registration Statement and
incorporated by reference.
II-1
<PAGE> 27
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Securities Act"), each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned registrant hereby undertakes that
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona tide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Juan Capistrano, State of California, on
September 28, 1999.
CHROMAVISION MEDICAL
SYSTEMS, INC.
Dated: September 28, 1999
By:/s/ DOUGLAS S. HARRINGTON, M.D.
------------------------------------
Douglas S. Harrington, M.D.,
Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Douglas S. Harrington, M.D. and Kevin C.
O'Boyle, and each of them, as his or her true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he or she might or could do
in person, lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C>
Dated: September 28, 1999 /s/ DOUGLAS S. HARRINGTON, M.D.
--------------------------------------------------------
Douglas S. Harrington, M.D.,
Chief Executive Officer, President and Director
(Principal Executive Officer)
Dated: September 28, 1999 /s/ KEVIN C. O'BOYLE
--------------------------------------------------------
Kevin C. O'Boyle,
Senior Vice President of Operations
and Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated: September 28, 1999 /s/ JOHN S. SCOTT, PH.D.
--------------------------------------------------------
John S. Scott, Ph.D.,
Chairman of the Board of Directors
Dated: September 28, 1999 /s/ RICHARD C.E. MORGAN
--------------------------------------------------------
Richard C.E. Morgan, Director
</TABLE>
II-3
<PAGE> 29
<TABLE>
<S> <C>
Dated: September 28, 1999 /s/ MARY LAKE POLAN, M.D., PH.D.
--------------------------------------------------------
Mary Lake Polan, M.D., Ph.D., Director
Dated: September 28, 1999 /s/ CHARLES A. ROOT
--------------------------------------------------------
Charles A. Root, Director
Dated: September 28, 1999 /s/ THOMAS R. TESTMAN
--------------------------------------------------------
Thomas R. Testman, Director
</TABLE>
II-4
<PAGE> 30
EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
5.1 Opinion of Gibson, Dunn & Crutcher LLP......................
10.1 Form of Stock Purchase Agreement, dated September 24, 1999
by and among ChromaVision Medical Systems, Inc. and the
purchaser...................................................
23.1 Consent of KPMG LLP.........................................
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit
5.1)........................................................
</TABLE>
<PAGE> 1
Exhibit 5.1
GIBSON, DUNN & CRUTCHER LLP
333 South Grand Avenue
Los Angeles, California 90071-3197
Telephone: (213) 229-7000
Telecopier: (213) 229-7520
September 28, 1999
(213) 229-7000 C 88689-00007
ChromaVision Medical Systems, Inc.
33171 Paseo Cerveza
San Juan Capistrano, California 92675-4824
Ladies and Gentlemen:
We have acted as counsel to ChromaVision Medical Systems, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing of the Registration Statement on Form S-3 (the "Registration Statement")
of the Company to be filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, for the registration
of 1,775,000 shares of the Common Stock, $0.01 par value per share (the "Common
Stock"), of the Company issued to certain selling stockholders (the "Shares").
This opinion is delivered to you in connection with the Registration Statement
on Form S-3 for the aforementioned sales.
In rendering the opinion set forth herein, we have made such
investigations of fact and law, and examined such documents and instruments, or
copies thereof established to our satisfaction to be true and correct copies
thereof, as we have deemed necessary under the circumstances.
Based upon the foregoing and such other examination of law and fact as
we have deemed necessary, and in reliance thereon, we are of the opinion that
the Shares are duly authorized, validly issued, fully paid and nonassessable.
The Company is a Delaware corporation. We are not admitted to practice
in Delaware. However, we are generally familiar with the Delaware General
Corporation Law and have made such review thereof as we consider necessary for
the purpose of this opinion. Subject to the foregoing, this opinion is limited
to Delaware, California and federal law.
<PAGE> 2
ChromaVision Medical Systems, Inc.
September 28, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus which is a part of the Registration Statement.
Very truly yours,
/s/ GIBSON, DUNN & CRUTCHER LLP
-------------------------------
GIBSON, DUNN & CRUTCHER LLP
<PAGE> 1
EXHIBIT 10.1
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the __ day of September, 1999, by
and among ChromaVision Medical Systems, Inc. (the "Company"), a corporation
organized under the laws of the State of Delaware, with its principal offices at
33171 Paseo Cerveza, San Juan Capistrano, California 92675-4824, and the
purchaser whose name and address is set forth on the signature page hereof (the
"Purchaser").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company, and the Purchaser agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the
terms and conditions of this Agreement, the Company has authorized the sale of
up to 1,775,000 shares (the "Shares") of common stock, par value $0.01 per share
(the "Common Stock"), of the Company.
SECTION 2. Agreement to Sell and Purchase the Shares. At the
Closing (as defined in Section 3), the Company will sell to the Purchaser, and
the Purchaser will buy from the Company, upon the terms and conditions
hereinafter set forth, the number of Shares (at the purchase price) shown below:
Price Per
Number to Be Share In Aggregate
Purchased Dollars Price
------------ --------- ----------
The Company proposes to enter into this same form of purchase
agreement with certain other investors (the "Other Purchasers") and expects to
complete sales of the Shares to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements." The term "Placement
Agent" shall mean Prudential Vector Healthcare Group.
SECTION 3. Delivery of the Shares at the Closing. The completion
of the purchase and sale of the Shares (the "Closing") shall occur as soon as
practicable following notification by the Securities and Exchange Commission
(the "Commission") to the Company of the Commission's willingness to declare
effective the registration statement to be filed by the Company pursuant to
Section 7.1 hereof (the "Registration Statement") at a place and time (the
"Closing Date") to be agreed upon by the Company and the Placement Agent. In the
absence of any such agreement, the Closing shall be held at the offices of
Stroock & Stroock & Lavan LLP,
<PAGE> 2
counsel to the Placement Agent, in New York, New York at 12:00 p.m. local time
on the fifth business day after the Company delivers written notice to the
Placement Agent of receipt of such notification from the Commission. The Company
will promptly notify the Purchasers by facsimile transmission or otherwise of
the date, place and time of the Closing.
At the Closing, the Company shall deliver to the Purchaser one or
more stock certificates registered in the name of the Purchaser, or in such
nominee name(s) as designated by the Purchaser in writing, representing the
number of Shares set forth in Section 2 above and bearing an appropriate legend
referring to the fact that the Shares were sold in reliance upon the exemption
from registration under the Securities Act of 1933, as amended (the "Securities
Act") provided by Section 4(2) thereof and Rule 506 thereunder. The Company will
promptly substitute one or more replacement certificates without the legend at
such time as the Registration Statement becomes effective. The name(s) in which
the stock certificates are to be registered are set forth in the Stock
Certificate Questionnaire attached hereto as part of Appendix I. The Company's
obligation to complete the purchase and sale of the Shares and deliver such
stock certificate(s) to the Purchaser at the Closing shall be subject to the
following conditions, any one or more of which may be waived by the Company: (a)
receipt by the Company of same-day funds in the full amount of the purchase
price for the Shares being purchased hereunder; (b) completion of the purchases
and sales under the Agreements with all of the Other Purchasers; and (c) the
accuracy of the representations and warranties made by the Purchasers and the
fulfillment of those undertakings of the Purchasers to be fulfilled prior to the
Closing. The Purchaser's obligation to accept delivery of such stock
certificate(s) and to pay for the Shares evidenced thereby shall be subject to
the following conditions: (a) the Commission has notified the Company of the
Commission's willingness to declare the Registration Statement effective on or
prior to the 60th day after the date such Registration Statement was filed by
the Company; and (b) the accuracy in all material respects of the
representations and warranties made by the Company herein and the fulfillment in
all material respects of those undertakings of the Company to be fulfilled prior
to Closing. The Purchaser's obligations hereunder are expressly not conditioned
on the purchase by any or all of the Other Purchasers of the Shares that they
have agreed to purchase from the Company.
SECTION 4. Representations, Warranties and Covenants of the
Company. The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1. Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and the Company is qualified to do business as a
foreign corporation in each jurisdiction in which qualification is required,
except where failure to so qualify would not have a Material Adverse Effect (as
defined herein) on the Company. The Company has three subsidiaries, ChromaVision
International, Inc., a Delaware corporation, ChromaVision SARL, incorporated in
France and ChromaVision GmbH, incorporated in Germany.
4.2. Authorized Capital Stock. Except as disclosed in or
contemplated by the
-2-
<PAGE> 3
Confidential Private Placement Memorandum dated August __, 1999 prepared by the
Company, including all Exhibits (except Exhibit [K]), supplements and amendments
thereto (the "Private Placement Memorandum"), the Company had authorized and
outstanding capital stock as set forth under the heading "Capitalization" in the
Private Placement Memorandum as of the date set forth therein; the issued and
outstanding shares of the Company's Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and conform in all material respects to the description thereof
contained in the Private Placement Memorandum. Except as disclosed in or
contemplated by the Private Placement Memorandum, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock. The
description of the Company's stock, stock bonus and other stock plans or
arrangements and the options or other rights granted and exercised thereunder,
set forth in the Private Placement Memorandum accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
4.3. Issuance, Sale and Delivery of the Shares. The Shares have
been duly authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform in all material respects to the description
thereof set forth in the Private Placement Memorandum. No preemptive rights or
other rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement. No stockholder of
the Company has any right (which has not been waived or has not expired by
reason of lapse of time following notification of the Company's intent to file
the Registration Statement) to require the Company to register the sale of any
shares owned by such stockholder under the Securities Act in the Registration
Statement. No further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the issuance and sale of the
Shares to be sold by the Company as contemplated herein.
4.4. Due Execution, Delivery and Performance of the Agreements.
The Company has full legal right, corporate power and authority to enter into
the Agreements and perform the transactions contemplated hereby. The Agreements
have been duly authorized, executed and delivered by the Company. The making and
performance of the Agreements by the Company and the consummation of the
transactions herein contemplated will not violate any provision of the
organizational documents of the Company and will not result in the creation of
any lien, charge, security interest or encumbrance upon any assets of the
Company pursuant to the terms or provisions of, or will not conflict with,
result in the breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which the Company or the Subsidiaries are a party or by which the Company or
the Subsidiaries or their respective properties may be bound or affected and in
each case which
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would have a material adverse effect on the condition (financial or otherwise),
properties, business, prospects or results of operations of the Company and its
Subsidiaries taken as a whole (a "Material Adverse Effect") or, to the Company's
knowledge, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or its Subsidiaries or their
respective properties. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body is
required for the execution and delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement, except for compliance with the
Blue Sky laws and federal securities laws applicable to the offering of the
Shares. Upon their execution and delivery, and assuming the valid execution
thereof by the respective Purchasers, the Agreements will constitute valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Company in Section 7.3
hereof may be legally unenforceable.
4.5. Accountants. KPMG LLP have expressed their opinion with
respect to the consolidated financial statements to be incorporated by reference
from the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998 into the Registration Statement and the Prospectus which forms a part
thereof, are independent accountants as required by the Securities Act and the
rules and regulations promulgated thereunder (the "Rules and Regulations").
4.6. No Defaults. Except as to defaults, violations and breaches
which individually or in the aggregate would not be material to the Company and
its Subsidiaries, taken as a whole, neither the Company nor its Subsidiaries are
in violation or default of any provision of their certificate of incorporation
or bylaws, or other organizational documents, or in breach of or default with
respect to any provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which it is a party or by which it or any of its properties are bound; and
there does not exist any state of fact which, with notice or lapse of time or
both, would constitute an event of default on the part of the Company or the
Subsidiaries as defined in such documents, except such defaults which
individually or in the aggregate would not be material to the Company and its
Subsidiaries, taken as a whole.
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4.7. Contracts. The contracts described in the Private Placement
Memorandum as being in effect on the date hereof that are material to the
Company, are in full force and effect on the date hereof; and neither the
Company nor its Subsidiaries, nor to the Company's knowledge, is any other party
in breach of or default under any of such contracts which would have a Material
Adverse Effect.
4.8. No Actions. There are no legal or governmental actions,
suits or proceedings pending or, to the Company's knowledge, threatened to which
the Company or its Subsidiaries are or may be a part or of which property owned
or leased by the Company or its Subsidiaries are or may be the subject, or
related to environmental or discrimination matters, which actions, suits or
proceedings, individually or in the aggregate, might prevent or might reasonably
be expected to materially and adversely affect the transactions contemplated by
this Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business, prospects or results of
operations of the Company and its Subsidiaries, taken as a whole (a "Material
Adverse Change"); and no labor disturbance by the employees of the Company
exists, to the Company's knowledge, or is imminent which might reasonably be
expected to have a Material Adverse Effect. Neither the Company nor its
Subsidiaries are a party to or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body
administrative agency or other governmental body.
4.9. Properties. The Company and its Subsidiaries have good and
marketable title to all the properties and assets reflected as owned by them in
the consolidated financial statements included in the Private Placement
Memorandum, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except (i) those, if any, reflected in such consolidated financial
statements (including the notes thereto), or (ii) those which are not material
in amount and do not adversely affect the use made and promised to be made of
such property by the Company or its Subsidiaries. The Company and its
Subsidiaries hold their leased properties under valid and binding leases, with
such exceptions as are not materially significant in relation to their business.
Except as disclosed in the Private Placement Memorandum and except for the
property referred to in Section 4.11, each of the Company and its Subsidiaries
owns or leases all such properties as are necessary to its operations as now
conducted.
4.10. No Material Change. Since June 30, 1999 and except as
specifically contemplated by the Private Placement Memorandum, (i) neither the
Company nor its Subsidiaries have incurred any material liabilities or
obligations, indirect, or contingent, or entered into any material verbal or
written agreement or other transaction which is not in the ordinary course of
business or which could reasonably be expected to result in a material reduction
in the future earnings of the Company; (ii) neither the Company nor its
Subsidiaries have sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other calamity
not covered by insurance; (iii) neither the Company nor its Subsidiaries have
paid or declared any dividends or other distributions with respect to its
capital stock and the Company and its Subsidiaries are not in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital
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<PAGE> 6
stock of the Company or its Subsidiaries other than the sale of the Shares
hereunder and shares or options issued pursuant to employee equity incentive
plans or purchase plans approved by the Company's or the Subsidiaries' Board of
Directors, as the case may be, or indebtedness material to the Company or its
Subsidiaries (other than in the ordinary course of business); and (v) there has
not been a Material Adverse Change.
4.11. Intellectual Property. Except as specifically contemplated
by the Private Placement Memorandum, (i) to the Company's knowledge, the Company
has filed for or holds licenses or options for the inventions, patent
applications, patents, trademarks (both registered and unregistered),
tradenames, copyrights and trade secrets necessary for the conduct of the
Company's business as currently conducted and as the Private Placement
Memorandum indicates the Company contemplates conducting (collectively, the
"Intellectual Property"); and (ii) to the Company's knowledge (for each of the
following subsections (a) through (e)): (a) there are no third parties who have
any ownership rights to any Intellectual Property that is owned by, or has been
licensed to the Company for the product indications described in the Private
Placement Memorandum in the case of any business the Company has or intends to
conduct during the year ending September 31, 1999 that would preclude the
Company from conducting its business as currently conducted and as the Private
Placement Memorandum indicates the Company contemplates conducting; (b) there
are currently no sales of any products that would constitute an infringement by
third parties of any Intellectual Property owned, licensed or optioned by the
Company; (c) there is no pending or threatened action, suit, proceeding or claim
by others challenging the rights of the Company in or to any Intellectual
Property owned, licensed or optioned by the Company, other than non-material
claims; (d) there is no pending or threatened action, suit, proceeding or claim
by others challenging the validity or scope of any Intellectual Property owned,
licensed or optioned by the Company, other than non-material claims; and (e)
there is no pending or threatened action, suit, proceeding or claim by others
that the Company infringes or otherwise violate any patent, trademark,
copyright, trade secret or other proprietary right of others, other than
non-material claims.
4.12. Compliance. Neither the Company nor its Subsidiaries have
been advised, and neither has any reason to believe, that it is not conducting
its business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations; except where failure to be so in compliance would not have a
Material Adverse Effect.
4.13. Taxes. Each of the Company and its Subsidiaries has filed
all necessary federal, state and foreign income and franchise tax returns and
has paid or accrued all taxes shown as due thereon, and neither the Company nor
its Subsidiaries have knowledge of a tax deficiency which has been or might be
asserted or threatened against it which could have a Material Adverse Effect.
4.14. Transfer Taxes. On the Closing Date, all stock transfer or
other taxes (other
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<PAGE> 7
than income taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchaser hereunder will be, or will
have been, fully paid or provided for by the Company and all laws imposing such
taxes will be or will have been fully complied with.
4.15. Investment Company. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.
4.16. Offering Materials. The Company has not distributed and
will not distribute prior to the Closing Date any offering material in
connection with the offering and sale of the Shares other than the Private
Placement Memorandum or any amendment or supplement thereto. The Company has not
in the past nor will it hereafter take any action independent of the Placement
Agent to sell, offer for sale or solicit offers to buy any securities of the
Company which would bring the offer, issuance or sale of the Shares, as
contemplated by this Agreement, within the provisions of Section 5 of the
Securities Act, unless such offer, issuance or sale was or shall be within the
exemptions of Section 4 of the Securities Act.
4.17. Insurance. The Company maintains insurance of the type and
in the amount that the Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against by similarly situated
companies, all of which insurance is in full force and effect.
4.18. Contributions. At no time since its incorporation has the
Company, directly or indirectly, (i) made any unlawful contribution to any
candidate for public office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
4.19. Additional Information. The Company represents and warrants
that the information contained in the following documents, which the Placement
Agent has furnished to the Purchaser, or will furnish prior to the Closing, is
or will be true and correct in all material respects as of their respective
final dates:
(a) the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998;
(b) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1999;
(c) the Company's Proxy Statement for the 1999 Annual Meeting
of Stockholders;
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(d) the Registration Statement;
(e) the Private Placement Memorandum, including all addenda
and exhibits thereto (other than the Appendices); and
(f) the Registration Statement on Form 8-A describing the
common stock and the rights to purchase series C preferred
stock in the Registration Statement;
(g) all other documents, if any, filed by the Company with the
Securities and Exchange Commission since June 30, 1999
pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
4.20. Legal Opinions. Prior to the Closing, (a) Gibson, Dunn &
Crutcher LLP, counsel to the Company, will deliver its legal opinion to the
Placement Agent substantially in the form of Exhibit A hereto and (b) Fish &
Richardson P.C., special counsel to the Company, will deliver its legal opinion
to the Placement Agent substantially in the form of Exhibit B hereto, in each
case with such changes therein as such counsel rendering the opinion and the
Placement Agent may agree upon.
4.21. Certificate. At the Closing, the Company will deliver to
Purchaser a certificate executed by the Chairman of the Board or President and
the chief financial or accounting officer of the Company, dated the Closing
Date, in form and substance reasonably satisfactory to the Purchasers, to the
effect that the representations and warranties of the Company set forth in this
Section 4 are true and correct in all material respects as of the date of this
Agreement and as of the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions herein on its part to be performed
or satisfied on or prior to such Closing Date.
4.22. Year 2000 Compliance. The Company has reviewed its
operations to evaluate the extent to which the business or operations of the
Company will be affected by the Year 2000 Problem (as defined below). As a
result of such review, the Company has not noted any material Year 2000 Problems
which would prevent its products and systems from being capable of correctly
interpreting dates beyond the year 1999. Based on the Company's testing to date,
the Company has no reason to believe that Year 2000 Problems caused by its own
products or internal operations would have a Material Adverse Effect. The "Year
2000 Problem" as used herein means any significant risk that computer hardware
or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to January
1, 2000.
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SECTION 5. Representations, Warranties and Covenants of the
Purchaser. (a) The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares; (ii) the Purchaser is
acquiring the number of Shares set forth in Section 2 above in the ordinary
course of its business and for its own account for investment (as defined for
purposes of the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the
regulations thereunder) only and with no present intention of distributing any
of such Shares or any arrangement or understanding with any other persons
regarding the distribution of such Shares within the meaning of Section 2(11) of
the Securities Act of 1933; (iii) the Purchaser will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Shares except in compliance with the Act and the Rules and Regulations; (iv) the
Purchaser has completed or caused to be completed the Registration Statement
Questionnaire and the Stock Certificate Questionnaire, both attached hereto as
Appendix I, for use in preparation of the Registration Statement, and the
answers thereto are true and correct as of the date hereof and will be true and
correct as of the effective date of the Registration Statement; (v) the
Purchaser has, in connection with its decision to purchase the number of Shares
set forth in Section 2 above, relied solely upon the Private Placement
Memorandum and the documents included therein and the representations and
warranties of the Company contained herein; and (vi) the Purchaser is an
"accredited investor" within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act.
(b) The Purchaser hereby covenants with the Company not to make
any sale of the Shares without satisfying the prospectus delivery requirement
under the Securities Act, and the Purchaser acknowledges and agrees that such
Shares are not transferable on the books of the Company unless the certificate
submitted to the transfer agent evidencing the Shares is accompanied by a
separate officer's certificate: (i) in the form of Appendix II hereto, (ii)
executed by an officer of, or other authorized person designated by, the
Purchaser, and (iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement, the Securities Act and the Rules and
Regulations and any applicable state securities or blue sky laws and (B) the
requirement of delivering a current prospectus has been satisfied. The Purchaser
acknowledges that there may occasionally be times when the Company determines
the use of the prospectus forming a part of the Registration Statement should be
suspended until such time as an amendment or supplement to the Registration
Statement or the Prospectus has been filed by the Company and any such amendment
to the Registration Statement is declared effective by the Commission, or until
such time as the Company has filed an appropriate report with the Commission
pursuant to the Exchange Act. The Purchaser hereby covenants that it will not
sell any Shares pursuant to said prospectus during the period commencing at the
time at which the Company gives the Purchaser written notice of the suspension
of the use of said prospectus and
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ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to said prospectus. The Purchaser
further covenants to notify the Company promptly of the sale of all of its
Shares.
(c) The Purchaser further represents and warrants to, and
covenants with, the Company that (i) the Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Purchaser in Section 7.3 hereof may be
legally unenforceable.
SECTION 6. Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company and the Purchaser herein and in the
certificates for the Shares delivered pursuant hereto shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares being
purchased and the payment therefor.
SECTION 7. Registration of the Shares; Compliance with the
Securities Act.
7.1. Registration Procedures and Expenses. The Company shall:
(a) as soon as practicable, prepare and file with the
Commission the Registration Statement on Form S-3 relating
to the sale of the Shares by the Purchaser from time to
time through the automated quotation system of the Nasdaq
National Market or the facilities of any national
securities exchange on which the Company's Common Stock is
then traded or in privately-negotiated transactions;
(b) use its reasonable efforts subject to receipt of necessary
information from the Purchasers, to cause the Commission
to notify the Company of the Commission's willingness to
declare the Registration Statement effective within 60
days after the Registration Statement is filed by the
Company;
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<PAGE> 11
(c) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the
prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective
until the earlier of (i) twenty-four months after the
effective date of the Registration Statement or (ii) the
date on which the Shares may be resold by the Purchasers
without registration by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect;
(d) furnish to the Purchaser with respect to the Shares
registered under the Registration Statement (and to each
underwriter, if any, of such Shares) such reasonable
number of copies of prospectuses in order to facilitate
the public sale or other disposition of all or any of the
Shares by the Purchaser; provided, however, that the
obligation of the Company to deliver copies of
prospectuses to the Purchaser shall be subject to the
receipt by the Company of reasonable assurances from the
Purchaser that the Purchaser will comply with the
applicable provisions of the Securities Act and of such
other securities or blue sky laws as may be applicable in
connection with any use of such prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Purchaser;
provided, however, that the Company shall not be required
to qualify to do business or consent to service of process
in any jurisdiction in which it is not now so qualified or
has not so consented; and
(f) bear all expenses in connection with the procedures in
paragraphs (a) through (e) of this Section 7.1 and the
registration of the Shares pursuant to the Registration
Statement, other than fees and expenses, if any, of
counsel or other advisers to the Purchaser or the Other
Purchasers or underwriting discounts, brokerage fees and
commissions incurred by the Purchaser or the Other
Purchasers, if any.
7.2. Transfer of Shares After Registration. The Purchaser agrees
that it will not effect any disposition of the Shares or its right to purchase
the Shares that would constitute a sale within the meaning of the Securities
Act, except as contemplated in the Registration Statement referred to in Section
7.1, and that it will promptly notify the Company of any changes in the
information set forth in the Registration Statement regarding the Purchaser or
its Plan of Distribution.
7.3. Indemnification. For the purpose of this Section 7.3:
(i) the term "Purchaser/Affiliate" shall include the Purchaser
and any affiliate of such Purchaser; and
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(ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in
or relating to the Registration Statement referred to in
Section 7.1.
(a) The Company agrees to indemnify and hold harmless each of the
Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, including the prospectus, financial statements and schedules, and all
other documents filed as a part thereof, as amended at the time of effectiveness
of the Registration Statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
or pursuant to Rule 434, of the Rules and Regulations, or the prospectus, in the
form first filed with the Commission pursuant to Rule 424(b) of the Regulations,
or filed as part of the Registration Statement at the time of effectiveness if
no Rule 424(b) filing is required (the "Prospectus"), or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them, in light of the
circumstances under which they were made, not misleading, or arise out of or are
based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained in this Agreement, or any failure of the
Company to perform its obligations hereunder or under law, and will reimburse
each Purchaser and each such controlling person for any legal and other expenses
as such expenses are reasonably incurred by such Purchaser or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon (i) an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company: by or on behalf of the Purchaser expressly for use
therein, or (ii) the failure of such Purchaser to comply with the covenants and
agreements contained in Sections 5(b) or 7.2 hereof respecting sale of the
Shares, or (iii) the inaccuracy of any representations made by such Purchaser
herein or (iv) any statement or omission in any Prospectus that is corrected in
any subsequent Prospectus that was delivered to the Purchaser prior to the
pertinent sale or sales by the Purchaser.
(b) Each Purchaser will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses,
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<PAGE> 13
claims, damages, liabilities or expenses to which the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Purchaser) insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any failure to comply
with the covenants and agreements contained in Sections 5(b) or 7.2 hereof
respecting the sale of the Shares or (ii) the inaccuracy of any representation
made by such Purchaser herein or (iii) any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Purchaser expressly for use therein, and will
reimburse the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling person for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.
(c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3 promptly notify the indemnifying party
in writing thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 7.3 or to the extent it is not prejudiced as a result of such failure.
In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and
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approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 7.3 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by such indemnifying party in the case of paragraph
(a), representing all of the indemnified parties who are parties to such action)
or (ii) the indemnified party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of action, in each of which cases
the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the placement of Common Stock or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but the relative fault of the
Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The respective relative benefits
received by the Company on the one hand and each Purchaser on the other shall be
deemed to be in the same proportion as the amount paid by such Purchaser to the
Company pursuant to this Agreement for the Shares purchased by such Purchaser
that were sold pursuant to the Registration Statement bears to the difference
(the "Difference") between the amount such Purchaser paid for the Shares that
were sold pursuant to the Registration Statement and the amount received by such
Purchaser from such sale. The relative fault of such Selling Stockholders and
each Purchaser shall be determined by reference to, among other things, whether
the untrue or alleged statement of a material fact or the omission or alleged
omission to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company or
by such Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in paragraph (c) of this Section 7.3, any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
paragraph (c) of this Section 7.3 with respect to the notice of the threat or
commencement of any threat or action shall apply if a claim for contribution is
to be made under this paragraph (d); provided, however, that no additional
notice shall be required with respect to any threat or action for which notice
has
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<PAGE> 15
been given under paragraph (c) for purposes of indemnification. The Company and
each Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 7.3 were determined solely by pro rata allocation (even
if the Purchaser were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
7.3, no Purchaser shall be required to contribute any amount in excess of the
amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant
to this Section 7.3 are several and not joint.
7.4. Termination of Conditions and Obligations. The restrictions
imposed by Section 5 or this Section 7 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares upon the
passage of twenty-four months from the effective date of the Registration
Statement covering such Shares or at such time as an opinion of counsel
satisfactory in form and substance to the Company shall have been rendered to
the effect that such conditions are not necessary in order to comply with the
Securities Act.
7.5. Information Available. So long as the Registration Statement
is effective covering the resale of Shares owned by the Purchaser, the Company
will furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of
the Company's Annual Report to Stockholders, within 120
days after the end of each fiscal year of the Company),
one copy of (i) its Annual Report to Stockholders (which
Annual Report shall contain financial statements audited
in accordance with generally accepted accounting
principles by a national firm of certified public
accountants), (ii) if not included in substance in the
Annual Report to Stockholders, its Annual Report on Form
10-K, (iii) if not included in substance in its Quarterly
Reports to Shareholders, its quarterly reports on Form
10-Q, and (iv) a full copy of the particular Registration
Statement covering the Shares (the foregoing, in each
case, excluding exhibits);
(b) upon the reasonable request of the Purchaser, a reasonable
number of copies of the prospectuses to supply to any
other party requiring such prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares subject to appropriate
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<PAGE> 16
confidentiality limitations.
SECTION 8. Broker's Fee. The Purchaser acknowledges that the
Company intends to pay to the Placement Agent a fee in respect of the sale of
the Shares to the Purchaser. Each of the parties hereto hereby represents that,
on the basis of any actions and agreements by it, there are no other brokers or
finders entitled to compensation in connection with the sale of the Shares to
the Purchaser.
SECTION 9. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
ChromaVision Medical Systems, Inc.
33171 Paseo Cerveza
San Juan Capistrano, California
Attn: Kevin C. O'Boyle
with a copy to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue, Suite 4600
Los Angeles, CA 90071-3197
Attention: Roy Schmidt, Esq.
or to such other person at such other place as the Company
shall designate to the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the
end of this Agreement, or at such other address or
addresses as may have been furnished to the Company in
writing.
SECTION 10. Changes. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Purchaser.
SECTION 11. Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
SECTION 12. Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
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<PAGE> 17
SECTION 13. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
federal law of the United States of America.
SECTION 14. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
CHROMAVISION MEDICAL SYSTEMS, INC.
By
-----------------------------------------------
Print or Type:
Name of Purchaser
(Individual or Institution):
-----------------------------------------------
Name of Individual representing
Purchaser (if an Institution):
-----------------------------------------------
Title of Individual representing
Purchaser (if an Institution):
-----------------------------------------------
Signature by:
Individual Purchaser or Individual
representing Purchaser:
-----------------------------------------------
Address:
---------------------------
Telephone:
---------------------------
Telecopier:
---------------------------
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<PAGE> 18
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Page 14 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an Institution)
(iii) Title of Individual representing Purchaser (if an Institution)
(iv) Signature of Individual Purchaser or Individual representing
Purchaser
2. Appendix I - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire.
Appendix I - Registration Statement Questionnaire:
Provide the information requested by the Registration Statement
Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to:
Prudential Vector Healthcare Group
1751 Lake Cook Road, Suite 350
Deerfield, IL 60015
Attention: Barry M. Deutsch
B. Instructions regarding the transfer of funds for the purchase of Shares
will be sent by facsimile to the Purchaser by the Placement Agent at a
later date.
C. Upon the resale of the Shares by the Purchasers after the Registration
Statement covering the Shares is effective, as described in the Purchase
Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to the
buyer (prospectuses must be obtained from the Company at
the Purchaser's
<PAGE> 19
request); and
(ii) must send a letter in the form of Appendix II to the
Company so that the Shares may be properly transferred.
<PAGE> 20
Appendix I
(one of two)
CHROMAVISION MEDICAL SYSTEMS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares
are to be registered in (this is
the name that will appear on
your stock certificate(s)). You
may use a nominee name if
appropriate:
-----------------------
2. The relationship between the
Purchaser of the Shares and the
Registered Holder listed in
response to item 1 above:
3. The mailing address of the
Registered Holder listed in
response to item 1 above:
-----------------------
-----------------------
-----------------------
-----------------------
4. The Social Security Number or
Tax Identification Number of the
Registered Holder listed in
response to item 1 above:
-----------------------
<PAGE> 21
Appendix I
(two of two)
CHROMAVISION MEDICAL SYSTEMS, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
1. Pursuant to the "Selling Shareholder" section of the
Registration Statement, please state your or your organization's name exactly as
it should appear in the Registration Statement:
2. Please provide the number of shares that you or your
organization will own immediately after Closing, including those Shares
purchased by you or your organization pursuant to this Purchase Agreement and
those shares purchased by you or your organization through other transactions:
3. Have you or your organization had any position, office or
other material relationship within the past three years with the Company or its
affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships
below:
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-----------------------------------------------------------------
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<PAGE> 22
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly author-
ized by] _____________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she [said institution] is the Purchaser of the shares
evidenced by the attached certificate, and as such, sold such shares
on __________________________ in accordance with
[date]
Registration Statement number _____________________________________
[fill in the number of or otherwise
________________________________ and the requirement of delivering a
identify Registration Statement]
current prospectus by the Company has been complied with in connection with such
sale.
Print or Type:
Name of Purchaser
(Individual or
Institution): ______________________
Name of Individual
representing
Purchaser (if an
Institution) ______________________
Title of Individual
representing
<PAGE> 23
Purchaser (if an
Institution): ______________________
Signature by:
Individual Purchaser
or Individual repre-
senting Purchaser: ______________________
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
ChromaVision Medical Systems, Inc.
We consent to the use of our report dated February 4, 1999, incorporated herein
by reference in the Registration Statement on Form S-3 of ChromaVision Medical
Systems, Inc., relating to the balance sheets of ChromaVision Medical Systems,
Inc. (a development stage enterprise) as of December 31, 1997 and 1998, and the
related statements of operations, stockholders' equity (deficit) and cash flows
of ChromaVision Medical Systems, a development stage enterprise and a division
of XL Vision, Inc., for the period from January 1, 1996 through March 27, 1996,
and ChromaVision Medical Systems, Inc. for the period from March 28, 1996
(incorporation) through December 31, 1996, and for the years ended December 31,
1997 and 1998 and for the cumulative development stage from April 1, 1993
(inception) through December 31, 1998, and to the reference to our firm under
the heading "Experts" in the prospectus.
/s/ KPMG LLP
Orange County, California
September 28, 1999
