<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --
ACT OF 1934.
For the quarterly period ended June 30, 1999
-------------
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ___________ to ___________.
Commission file number 333-69207
---------
Careside, Inc.
--------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 23-2863507
-------- ----------
<S> <C>
(State or other jurisdiction of incorporation or organization) (IRS employer identification no.)
</TABLE>
6100 Bristol Parkway, Culver City, CA 90230
--------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (310) 338-6767
--------------
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days Yes No X
------- ---------
The number of shares outstanding of the Registrant's common Stock, par
value $.01 per share, was 7,084,340 as of August 10, 1999
<PAGE>
CARESIDE, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
Part I Financial Information
<S> <C> <C>
Item 1. Financial Statements (unaudited)
--------------------------------
Balance Sheets at December 31, 1998 and June 30, 1999.................................. 3
Statements of Operations for the three and six months ended
June 30, 1998 and 1999................................................................ 4
Statements of Cash Flows for the six months ended
June 30, 1998 and 1999................................................................ 5
Notes to Financial Statements.......................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk............................. 10
Part II Other Information
Item 2. Changes in Securities and Use of Proceeds.............................................. 11
Item 6. Exhibits and Reports on Form 8-K....................................................... 12
Signatures.............................................................................................. 15
</TABLE>
-2-
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
CARESIDE, INC.
(a development-stage company)
BALANCE SHEETS
(in thousands, except shares and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
ASSETS
------
December 31, 1998 June 30, 1999
------------------ --------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............................................. $ 3,926.6 $ 12,423.3
Inventories........................................................... - 112.7
Prepaid expenses and other............................................ 82.1 155.7
---------- ----------
Total current assets............................................... 4,008.7 12,691.7
PROPERTY AND EQUIPMENT, net............................................. 3,386.5 4,926.1
DEFERRED OFFERING COSTS................................................. 498.4 -
DEPOSITS................................................................ 17.7 17.7
---------- ----------
$ 7,911.3 $ 17,635.5
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt..................................... $ 187.0 $ 2,200.6
Accounts payable...................................................... 1,369.9 1,868.7
Accrued expenses...................................................... 160.4 234.7
---------- ----------
Total current liabilities.......................................... 1,717.3 4,304.0
---------- ----------
LONG-TERM DEBT.......................................................... 2,044.9 750.3
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized,
none issued and outstanding at December 31, 1998,
162,914 Series A Convertible Preferred issued and
outstanding at June 30, 1999...................................... - 1.6
Common stock, $.01 par value, 50,000,000 shares authorized,
5,084,281 issued and outstanding at December 31, 1998,
7,084,281 issued and outstanding at June 30, 1999................. 50.8 70.8
Additional paid-in capital........................................... 21,003.5 34,790.3
Deficit accumulated during development stage......................... (16,905.2) (22,281.5)
---------- ----------
Total stockholders' equity......................................... 4,149.1 12,581.2
---------- ----------
$ 7,911.3 $ 17,635.5
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
CARESIDE, INC.
(s development-stage company)
STATEMENTS OF OPERATIONS
(in thousands, except shares and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
For the Period
Three Months Ended Six Months Ended From Inception
June 30, June 30, (July 10, 1996)
------------------------- ------------------------- Through
1998 1999 1998 1999 June 30, 1999
----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
OPERATING EXPENSES:
Research and development....... $ 2,229.0 $ 1,626.6 $ 3,699.0 $ 3,856.3 $ 19,611.6
Sales and marketing............ 74.0 117.7 127.0 269.2 518.2
General and administrative..... 116.0 277.1 287.0 535.0 1,832.2
---------- ---------- ---------- ---------- ----------
Operating Loss............... (2,419.0) (2,021.4) (4,113.0) (4,660.5) (21,962.0)
INTEREST INCOME.................... 97.5 27.8 115.5 69.9 517.5
INTEREST EXPENSE................... - (381.1) - (782.8) (834.3)
---------- ---------- ---------- ---------- ----------
NET LOSS........................... (2,321.5) (2,374.7) (3,997.5) (5,373.4) (22,278.8)
DIVIDENDS ON SERIES A
PREFERRED STOCK.............. - (2.8) - (2.8) (2.8)
---------- ---------- ---------- ---------- ----------
NET LOSS TO COMMON
STOCKHOLDERS................. $ (2,321.5) $ (2,377.5) $ (3,997.5) $ (5,376.2) $(22,281.6)
========== ========== ========== ========== ==========
BASIC NET LOSS PER SHARE........... $ (0.48) $ (0.44) $ (0.96) $ (1.02)
========== ========== ========== ==========
SHARES USED IN COMPUTING
BASIC NET LOSS PER SHARE.......... 4,807,144 5,414,010 4,168,019 5,250,086
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
CARESIDE, INC.
(a development-stage company)
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Period
From Inception
(July 10, 1996)
Six Months Ended June 30, Through
------------------------------------ June 30,
1998 1999 1999
----------------- ---------------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Loss.................................................... $(3,997.5) $(5,373.4) $(22,278.8)
Adjustments to reconcile net loss to net cash used in
operating activities -
Depreciation............................................... 108.6 514.5 1,039.9
Imputed interest on notes payable.......................... - 289.8 298.1
Amortization of debt discount.............................. - 309.2 330.2
Change in assets and liabilities-
Increase in inventories.................................... - (112.7) (112.7)
Decrease (increase) in prepaid expenses and other.......... (279.9) 96.0 (155.7)
Decrease (increase) in deposits............................ 80.1 - (2.5)
Increase in accounts payable............................... 560.8 498.9 1,868.8
Increase (decrease) in accrued expenses.................... (17.0) 109.9 289.9
--------- --------- ---------
Net cash used in operating activities................... (3,544.9) (3,667.8) (18,722.8)
--------- --------- ---------
INVESTING ACTIVITIES:
Purchases of property and equipment......................... (371.9) (2,223.7) (5,462.4)
--------- --------- ---------
FINANCING ACTIVITIES:
Net borrowings (repayments) on line of credit............... - - -
Proceeds from issuance of notes............................. - 1,500.0 5,041.1
Deferred offering costs..................................... - - (690.3)
Proceeds from the issuance of common stock.................. 10,317.7 12,978.4 32,196.2
Payment on note payable..................................... - (90.2) (90.2)
Payment of stock subscription............................... - - 99.0
Cash received from SmithKline Beecham Corporation in
connection with the asset purchase......................... - - 52.7
--------- --------- ---------
Net cash provided by financing activities............... 10,317.7 14,388.2 36,608.5
--------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS.................... 6,400.9 8,496.7 12,423.3
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD................. 1,237.1 3,926.6 -
--------- --------- ---------
CASH & CASH EQUIVALENTS, END OF PERIOD....................... $ 7,638.0 $12,423.3 $12,423.3
========= ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
CARESIDE, INC.
(a development-stage company)
NOTES TO FINANCIAL STATEMENTS
Note 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements for the three and six
months ended June 30, 1999 of Careside, Inc. (the "Company") have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In
management's opinion, all adjustments, consisting of normal recurring
adjustments, which are necessary for a fair presentation of the financial
position and results of operations, have been made. The results of operations
for the three and six months ended June 30, 1999 are not necessarily indicative
of the results expected for the entire year. These financial statements should
be read in conjunction with the financial statements and notes related thereto
included in the Company's Registration Statement on Form S-1 (File No. 333-
69207). Certain prior period amounts have been reclassified to conform to the
current period presentation.
Note 2: STOCKHOLDERS' EQUITY
In June 1999, the Company completed its initial public offering (the
"IPO") of its units (the "Units"), each unit consisting of one share of the
Company's common stock, $.01 par value per share (the "Common Stock"), and one
redeemable common stock purchase warrant (the "Warrant") to purchase an
additional share of Common Stock. Two million Units were sold in the IPO at a
price of $7.50 per unit. The net proceeds to the Company after underwriters'
fees and expenses were $12.4 million. The Company effected a 1 for 5.2 reverse
stock split of the Common Stock immediately prior to the IPO. All references in
the accompanying financial statements to the number of shares and per share
amounts have been restated to show the effect of this reverse stock split. Upon
consummation of the IPO, $1 million of debt plus accrued interest was converted
into 162,914 shares of the Company's Series A Convertible Preferred Stock
("Series A Preferred Stock").
Note 3: INCOME TAXES
As of December 31, 1998, the Company had approximately $2,148,000 and
$225,000 of net operating loss and research and development credit
carryforwards, respectively, for federal income tax purposes, which expire on
various dates between 2011 and 2013. As of December 31, 1998, the Company had
capitalized approximately $12.9 million of research and development expenses for
federal income tax purposes.
The availability of the net operating loss carryforward to reduce U.S.
federal taxable income is subject to various limitations under the Internal
Revenue Code of 1986 (the "Code"), as amended, in the event of an ownership
change as defined in Section 382 of the Code. The Company experienced a change
in ownership interest in excess of 50% as defined under the Code upon the
consummation of the IPO. The Company does not believe that this change in
ownership significantly impacts the Company's ability to utilize its net
operating loss and tax credit carryforwards as of December 31, 1998.
Note 4: INVENTORIES
At June 30, 1999, inventories consisted of raw materials to be
utilized in the manufacturing of disposable test cartridges.
Note 5: NET LOSS PER COMMON SHARE
Basic loss per share was computed by dividing net loss applicable to
common shareholders by the weighted average number of shares of Common Stock
outstanding during the period. Dilutive loss per share has not been presented,
since the impact on loss per share using the treasury stock method is anti-
dilutive to the Company's losses.
-6-
<PAGE>
Note 6: RECENT PRODUCT DISTRIBUTION AND SUPPLY AGREEMENT
In July 1999, the Company entered into a Product Distribution and
Supply Agreement (the "CDC Agreement") with CDC Technologies, Inc. ("CDC") to
provide the Company with the right to electronically connect the hematology
testing device manufactured by CDC with the CareSide Analyzer and to distribute
CDC's hematology devices. An additional 20 FDA approved hematology tests will
be available for use in the Careside Analyzer System in professional
laboratories as a result of the CDC Agreement. The CDC Agreement is effective
as of May 20, 1999. There is no financial impact of this transaction.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FORWARD-LOOKING STATEMENTS - CAUTIONARY STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q,
including statements regarding the anticipated development and expansion of the
Company's business and expenditures, the intent, belief or current expectations
of the Company, its directors or its officers, primarily with respect to the
future operating performance of the Company and other statements contained
herein regarding matters that are not historical facts, are "forward-looking
statements" (as such term is defined in the Private Securities Litigation Reform
Act of 1995). Because such statements include risks and uncertainties, actual
results may differ materially from those expressed or implied by such forward-
looking statements. Factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements include, but
are not limited to, those discussed in other filings, including those contained
in the Company's Registration Statement on Form S-1 (File No. 333-69207), made
by the Company with the Securities and Exchange Commission.
GENERAL
The Company is the developer of the Careside Analyzer System, a
proprietary blood testing system. It is designed to decentralize laboratory
operations and provides a solution to the limitations of central blood testing
laboratories. The Careside Analyzer System consists of a desktop testing
instrument called the CareSide Analyzer, disposable test cartridges and an
optional hematology device which has been developed and is manufactured by a
third party. The Careside Analyzer System performs blood tests at the same
location as the patient, or what is commonly called near patient testing. It
provides rapid test results within 10 to 15 minutes from the time the blood is
drawn from the patient, in contrast to the traditional method of sending blood
samples to hospital or commercial laboratories and waiting between 4 and 24
hours to obtain test results. Such centralized laboratories are burdened by
transportation time and volume processing steps. In addition, the Careside
Analyzer System is expected to be cost competitive and will offer a
comprehensive test menu, which the Company believes represents more than 80% of
all routine blood tests ordered on an out-patient basis. These include all of
the most commonly ordered blood tests, as well as blood tests required for
critical care testing, including chemistry, electrochemistry, coagulation and
immunochemistry tests within a single testing instrument and hematology testing
in an optional separate but integrated instrument. As of June 30, 1999, the
CareSide Analyzer and 31 tests were cleared for marketing by the FDA or are
exempt and can be marketed for professional laboratory use. An additional 21
FDA approved hematology tests will be available through the CDC Agreement in
July 1999. The Company believes that no other product for decentralized blood
testing currently in the market offers nearly as broad a menu of tests or
combines these test categories.
The Company has no products available for sale and does not expect to
have any products commercially available until the fourth quarter of 1999. The
Company has incurred losses and expects to incur increasing losses for the
foreseeable future as the Company launches its products and its product
development expenditures continue. The Company's revenue for the immediate
future will be limited to interest income and other miscellaneous income.
The following is a discussion of the financial condition and results
of operations for the Company for the three and six months ended June 30, 1999
and 1998. It should be read in conjunction with the Interim
-7-
<PAGE>
Financial Statements of the Company, the Notes thereto and other financial
information included elsewhere in this report.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
Research and Developments Expenses. Research and development expenses
decreased to approximately $1.6 million for the three months ended June 30, 1999
from $2.2 million for the three months ended June 30, 1998. This decrease of
$0.6 million, or 27%, was primarily attributable to completion of the
development work associated with producing the CareSide Analyzer and a lower
level of staffing associated with new test development.
Sales and Marketing Expenses. Sales and marketing expenses increased
to $118,000 for the three months ended June 30, 1999 from $74,000 for the three
months ended June 30, 1998. This increase of $44,000, or 59%, is primarily
attributable to increases in sales and marketing efforts associated with the
anticipated launch of the CareSide Analyzer System and increases in sales and
marketing staff.
General and Administrative Expenses. General and administrative
expenses increased to $277,000 for the three months ended June 30, 1999 from
$116,000 for the three months ended June 30, 1998. This increase of $161,000,
or 139%, is primarily attributable to increases in legal costs and compensation
related to adding a Chief Financial Officer.
Net Interest Income (Expense). Interest income decreased to
approximately $28,000 for the three months ended June 30, 1999 compared to
$98,000 for the three months ended June 30, 1998. This decrease of $70,000, or
71%, is attributable to lower average balances of cash and cash equivalents
during 1999, given the proceeds from the IPO completed in June 1999 were
available for investment for a limited portion of the second quarter ended June
30, 1999. Interest expense increased to $381,000 in 1999 from $0 in 1998 due to
equipment lease financing and interest payable on the bridge loan (the "Bridge
Loan") issued to the Company by S.R. One, Limited ("S.R. One") and the non-cash
interest charge associated with the costs of warrants granted to S.R. One in
connection with the conversion of outstanding debt into shares of Series A
Convertible Preferred Stock.
Net Loss. Net loss increased $53,000 during the three months ended
June 30, 1999, or 2%, to $2.4 million for the three months ended June 30, 1999
from $2.3 million for the three months ended June 30, 1998. This increase
reflects the increase in interest expense offset by decreases in research and
development expenses.
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Research and Development Expenses. Research and development expenses
increased to approximately to $3.9 million for the first half of 1999 from $3.7
million for the first half of 1998. This increase of $157,000, or 4%, was
primarily attributable to efforts to complete the production of the CareSide
Analyzer in the first quarter of 1999 and to support additional test submissions
to the FDA.
Sales and Marketing Expenses. Sales and marketing expenses increased
to $269,000 for the first half of 1999 from $127,000 for the first half of 1998.
This increase of $142,000, or 112%, is primarily attributable to preliminary
sales and marketing efforts to launch the CareSide Analyzer System and increases
in sales and marketing staff.
General and Administrative Expenses. General and administrative
expenses increased to $535,000 for the first half of 1999 from $287,000 for the
first half of 1998. This increase of $248,000, or 86%, is primarily
attributable to increases in legal costs and compensation related to adding a
Chief Financial Officer.
Net Interest Income (Expense). Interest income decreased to
approximately $70,000 for the six months ended June 30, 1999 from $116,000 for
the six months ended June 30, 1998. This decrease of $46,000, or
-8-
<PAGE>
39%, is attributable to lower average balances of cash and cash equivalents
during 1999. Interest expense increased to approximately $783,000 for the six
months ended June 30, 1999 from $0 for the six months ended June 30, 1998 due to
a non-cash interest charge associated with the Bridge Loan Warrants (as defined
herein) and interest payable on the Bridge Loan and equipment lease financing.
Net Loss. The net loss increased $1.4 million, or 34%, to
approximately $5.4 million for the six months ended June 30, 1999 from $4.0
million during the six months ended June 30, 1998. This increase was
attributable to increases in operating and interest expense.
The Company expects that results of operations in the future will
fluctuate significantly from period to period. Such fluctuations may result from
numerous factors, including the amount and timing of revenues earned from sales,
proceeds from existing or future collaborative distribution relationships or
joint ventures, if any, the cost of preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims and other intellectual property rights,
the status of competing products and technologies and the timing and
availability of financing for the Company. In the near term, the Company
believes that comparisons of its quarterly and annual historical results may not
be meaningful and should not be relied upon as an indication of future
performance.
INCOME TAXES
As of December 31, 1998, the Company had approximately $2,148,000 and
$225,000 of net operating loss and research and development credit
carryforwards, respectively, for federal income tax purposes, which expire on
various dates between 2011 and 2013. As of December 31, 1998, the Company had
capitalized approximately $12.9 million of research and development expenses for
federal income tax purposes.
The availability of the net operating loss carryforward to reduce U.S.
federal taxable income is subject to various limitations under the Code, as
amended, in the event of an ownership change as defined in Section 382 of the
Code. The Company experienced a change in ownership interest in excess of 50%
as defined under the Code upon the consummation of the IPO. The Company does
not believe that this change in ownership significantly impacts the Company's
ability to utilize its net operating loss and tax credit carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through the sales of
its capital stock. On June 21, 1999, the Company completed an IPO of two million
Units. Each Unit included one share of Common Stock and one Warrant. The IPO
transaction substantially increased cash available to the Company and is
reflected in the financial statements included elsewhere in this document. As
of June 30, 1999, the Company had cash and cash equivalents of approximately
$12.4 million and working capital of approximately $8.5 million. The Company
expects that such amounts will be used primarily to complete product development
and to launch its product, to purchase manufacturing equipment and expand the
Company's facilities and build inventory and provide working capital. As of
June 30, 1999, the Company has a material commitment for capital expenditures
relating to completion of the automated assembly line for producing its test
cartridges. The Company estimates that its current liquidity, sales revenue
expected after 1999 and equipment lease financing proceeds (under the Company's
current equipment lease facility) will be sufficient to fund the Company's
operating expenses and capital requirements for at least the next 12 months.
The Company's operating expenses will increase as it approaches market launch of
its product in the fourth quarter of 1999. The Company also expects that the
development of additional tests will require research expenditures at a level
comparable to past spending for test development. Sales and marketing
activities will require hiring and training approximately 15 additional staff in
1999. Initiation of manufacturing activities will require hiring approximately
20 staff and capital expenditures to purchase the equipment needed for the
automated assembly line. The estimate of the period for which the Company
expects its available sources of cash sufficient to meet its funding needs is a
forward looking statement that involves risks and uncertainties. The Company's
future expenditures and capital requirements will depend on numerous factors,
including, without limitation, the progress of its market launch, development
programs, the time and costs involved in obtaining regulatory approvals, the
cost of filing, prosecuting, defending and enforcing any patent claims and other
intellectual property rights, competing technological and market developments,
changes in or termination of existing
-9-
<PAGE>
collaborative arrangements, the ability of the Company to establish, maintain
and avoid termination of collaborative arrangements and the purchase of capital
equipment and acquisitions of compounds, technologies or businesses. The
Company's cash requirements are expected to continue to increase significantly
each year as it expands its activities and operations. There can be no assurance
that the Company will ever be able to generate product revenue or achieve or
sustain profitability.
YEAR 2000 COMPLIANCE
The Company has identified Year 2000 risks in the following
categories: internal business operations software; software utilized within the
CareSide Analyzer; and software used by the Company's external suppliers and
distributors. A review of the Company's non-information technology systems did
not identify any material risks.
With respect to internal operations, most of the Company's computers
and software programs have been recently acquired. The Company has relied on
the efforts of computer and software vendors to make their latest hardware and
software releases Year 2000 compliant. As a result, no incremental material
compliance cost is expected to be incurred in this area. Management of the
Company has contacted vendors to confirm the status of their software that the
Company uses. In addition, the Company has utilized Year 2000 test software to
evaluate compliance.
With respect to the CareSide Analyzer, all development work has
occurred since the widespread recognition of the Year 2000 problem. The Company
designed its products and the software encoded in its system to be Year 2000
compliant. The Company plans to issue software updates for the CareSide
Analyzer on a routine basis to add additional tests to the menu. If an
unforeseen Year 2000 issue arises, the Company could distribute compliant
software to its customers at little or no incremental cost as part of these
routine updates. In the future, it will also be necessary to link the CareSide
Analyzer with customer systems. If these systems are Year 2000 compliant,
management's time addressing Year 2000 issues on the CareSide Analyzer's
interface with customer systems will be minimal. If they are not, management's
time may be more significant. As the specific customers are not known at this
time, it is not possible to measure the opportunity cost.
Regarding the Company's critical suppliers, the worst scenario that
the Company might encounter would be a short-term disruption of supply if a
vendor were impacted by an unforeseen Year 2000 failure. The Company inquires
regularly regarding its suppliers' Year 2000 compliance programs. To date, the
Company believes that its suppliers either are or will be Year 2000 compliant.
The Company expects to establish appropriate contingency plans by the third
quarter of 1999 in the event certain key suppliers are not Year 2000 compliant.
These contingency plans could include utilizing alternative suppliers or
building inventory of critical parts as appropriate. The Company does not
anticipate any incremental material costs if it is required to implement its
contingency plans.
The Company expects sales of its product to begin in the fourth
quarter of 1999. This may include sales pursuant to the Company's distribution
and supply agreement with SmithKline Beecham Clinical Laboratories ("SBCL").
Based on inquiries of SBCL, if the distribution of the Company's product does
commence before the Year 2000, the Company does not believe that Year 2000
problems encountered by SBCL would impact the Company's ability to distribute
its product. Distribution of the Company's products by other third parties is
not anticipated before the year 2000.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable
-10-
<PAGE>
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Sale of Unregistered Securities; Changes in Securities
Upon consummation of the IPO, S.R. One, pursuant to a Securities
Conversion Agreement, dated as of June 14, 1999, between S.R. One and the
Company (the "Conversion Agreement"), converted $1 million, plus accrued
interest thereon, of the $3 million principal amount of the Bridge Loan into
162,914 shares of Series A Preferred Stock. The remaining $2 million of the
Bridge Loan matures in December 1999. The annual interest rate on the remaining
$2 million Bridge Loan increased to 10% on July 1, 1999. Pursuant to the
Conversion Agreement, S.R. One has the option to convert all or any portion of
the remaining Bridge Loan, plus accrued interest thereon, into shares of Series
A Preferred Stock at a conversion price of $6.375 per common share.
As part of the conversion of a portion of the Bridge Loan described
above, the warrant ("Bridge Warrant") issued by the Company to S.R. One in
connection with the Bridge Loan was modified such that it will be exercisable in
all events for 235,294 shares of Common Stock. The Bridge Warrant will become
exercisable on December 16, 1999.
In June 1999, the Company granted stock options to purchase an
aggregate of 10,815 shares of Common Stock under the Company's 1996 Incentive
and Non-Qualified Stock Option Plan to five of the Company's non-employee
directors. The per share exercise price of these stock options is $7.50.
The Company believes that the transactions described above were exempt
from registration under Sections 3(a)(9) and 3(b) of the Securities Act of 1933,
as amended (the "Securities Act") because the securities issued were either (1)
exchanged by the Company with an existing securityholder exclusively where no
commission or other remuneration was paid or given directly or indirectly for
soliciting such exchange or (2) issued pursuant to a compensatory benefit plan
pursuant to Rule 701 under the Securities Act. In addition, recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access
through their relationship with the Company, to information about the Company.
Use of Proceeds
On June 15, 1999, the Company's Registration Statement on Form S-1
(File No. 33-69207) (the "Registration Statement") was declared effective by the
Securities and Exchange Commission, which Registration Statement related to the
Company's initial public offering of up to 2,000,000 Units (not including the
over-allotment option granted to the underwriters). The Registration Statement
also related to the shares of Common Stock and Warrants included in such
2,000,000 Units, warrants to purchase up to 200,000 Units granted to the
representatives of the underwriters of the Company in the IPO, and 2,200,000
Shares of Common Stock underlying the Warrants included in all of the Units. The
managing underwriters of the IPO were Paulson Investment Company, Inc.,
Millennium Financial Group, Inc. and marion bass securities corporation. Two
million Units were sold at a public offering price of $7.50 per share, for an
aggregate offering price of $15.0 million. Expenses of the IPO were $2.6
million, including an underwriting discount of $920,000 and other offering
expenses of $1.7, for net proceeds to the Company of $12.4 million. As of June
30, 1999, the net proceeds of the IPO have been invested in short term interest
bearing investments.
-11-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of Careside, Inc.
3.2 Certificate of Designations of Series A Convertible Preferred Stock
3.3 Amended and Restated Bylaws of Careside, Inc.
4.1* Specimen Stock Certificate
4.1a Specimen Warrant Certificate
4.1b Specimen Unit Certificate
4.2* Placement Agent Warrant Agreement dated as of January 31, 1997 by and between Careside, Inc. and Spencer Trask
Securities Incorporated (including Form of Warrant)
4.3* Placement Agent Warrant Agreement dated as of March 6, 1998 by and between Careside, Inc. and Spencer Trask Securities
Incorporated (including Form of Warrant)
4.4* Securities Purchase Agreement dated as of December 17, 1998 by and between S.R. One, Limited and Careside, Inc.
(including Form of Note) (as amended)
4.5* Warrant Issued to S.R. One, Limited dated December 17, 1998
4.6 Warrant Agreement dated June 21, 1999, by and between Careside, Inc. and Paulson Investment Company, Inc.
4.7 Warrant Agreement dated June 21, 1999, by and between Careside, Inc. and American Stock Transfer & Trust Company, as
Warrant Agent
4.8 Warrant issued to S.R. One, Limited dated June 21, 1999
4.9 New Note issued to S.R. One, Limited dated June 21, 1999
10.1* Registration Rights Agreement dated as of November 7, 1996, by and among SmithKline Beecham Diagnostic Systems Co.,
SmithKline Beecham Corporation and Careside, Inc.
10.2* Registration Rights Agreement dated as of December 4, 1996, by and among Careside, Inc., Exigent Partners, L.P., W.
Vickery Stoughton, Thomas H. Grove, Kenneth B. Asarch, William S. Knight, Donald S. Wong, Ashok K. Sawhney and Philip B.
Smith
10.3* Amendment No. 1 to Registration Rights Agreement dated as of January 31, 1997, by and among Careside, Inc., Exigent
Partners, L.P., W. Vickery Stoughton, Thomas H. Grove, Kenneth B. Asarch, William S. Knight, Donald S. Wong, Ashok K.
Sawhney and Philip B. Smith
10.4* Registration Rights Agreement dated as of December 4, 1996, by and between Careside, Inc. and Spencer Trask Securities
Incorporated
10.5* Registration Rights Agreement dated as of January 31, 1997, by and among Careside, Inc. and the Investors signatory
thereto
10.6* Stockholders Agreement dated as of December 4, 1996, by and among Careside, Inc., SmithKline Beecham Corporation,
SmithKline Beecham Diagnostic Systems Co., Spencer Trask Securities Incorporated, Exigent Partners, L.P., W. Vickery
Stoughton, Thomas H. Grove, Kenneth B. Asarch, William S. Knight, Donald S. Wong, Ashok K. Sawhney, Philip B. Smith and
each Investor signatory thereto
10.7* Consulting Agreement by and between Careside, Inc. and Cedar Capital Investors dated August 8, 1997
10.8* Employment Agreement dated as of March 3, 1997, between Careside, Inc. and W. Vickery Stoughton
10.9* Employment Agreement dated as of March 3, 1997, between Careside, Inc. and Thomas H. Grove
10.10* Employment Agreement dated as of July 30, 1998, between Careside, Inc. and James R. Koch
10.11* 1996 Incentive and Non-Qualified Stock Option Plan, as amended and restated
10.12* 1996 Key Executive Stock Option Plan, as amended and restated
10.13* 1998 Incentive and Non-Qualified Stock Option Plan
10.14* 1998 Director Stock Option Plan
</TABLE>
-12-
<PAGE>
<TABLE>
<S> <C>
10.15* Standard Industrial/Commercial Single-Tenant Lease-NET dated as of October 14, 1996, by and between Fox Hills Business
Park, a California Limited Partnership and Careside, Inc.
10.16* Agreement dated as of April 13, 1999, by and between Fuji Photo Film Co., Ltd. and Careside, Inc.+
10.17* Agreement dated as of December 12, 1995, by and between United Medical Manufacturing Company and SmithKline Beecham
Corporation and assignment
10.18* Product Development and Supply Agreement dated as of July 18, 1997, by and between Careside, Inc. and UMM Electronics,
Inc.
10.19* Agreement executed December 7, 1995 and February 28, 1996, by and between SmithKline Beecham Corporation and Hauser,
Inc. and assignment
10.20* Agreement Number CP032284 Cost Type executed December 5 and 17, 1996 by and between Battelle Memorial Institute and
Careside, Inc.
10.21* Joint Research and Development Agreement dated as of October 28, 1996 by and between Careside, Inc. and International
Technidyne Corporation
10.22 Collaborative Agreement dated as of May 20, 1999 by and between Careside, Inc. and CDC Technologies, Inc.+
10.23* Distribution and Supply Agreement dated as of November 7, 1996, by and between SmithKline Beecham Clinical Laboratories,
Inc. and Careside, Inc., as amended on February 12, 1999.+
10.24* Asset Purchase Agreement dated as of November 7, 1996, by and among SmithKline Beecham Clinical Laboratories, Inc.,
SmithKline Beecham Diagnostic Systems Co. and Careside, Inc.
10.25* Loan and Security Agreement dated as of October 1, 1996, by and between Careside, Inc. and SmithKline Beecham
Corporation
10.26* Placement Agency Agreement dated as of December 10, 1996, by and between Careside, Inc. and Spencer Trask Securities
Incorporated
10.27* Placement Agency Agreement dated as of January 29, 1998, by and between Spencer Trask Securities Incorporated and
Careside, Inc.
10.28* Investment Banking Agreement dated as of January 31, 1997, by and between Careside, Inc. and Spencer Trask Securities
Incorporated
10.29* Agreement of Limited Partnership of Exigent Partners, L.P. dated as of October 1996, by and between Kevin Kimberlin and
those persons listed on Schedule A attached thereto
10.30* The Lincoln National Life Insurance Company Standardized 401(k) Salary Reduction Plan and Trust Prototype Plan Adoption
Agreement Plan #008, effective January 1, 1997, by and between Careside, Inc., W. Vickery Stoughton and Thomas Grove
10.31* Employee Stock Purchase Plan
10.32* Registration Rights Agreement dated as of March 6, 1998, by and among Careside, Inc. and the Investors signatory thereto
10.33* Registration Rights Agreement dated as of March 6, 1998, by and between Careside, Inc. and Spencer Trask Securities
Incorporated
10.34* Registration Rights Agreement dated as of December 17, 1998, by and between Careside, Inc. and S.R. One, Limited
10.35* Waiver Letter Agreement dated as of May 25, 1999, by and between Careside, Inc. and Spencer Trask Securities
Incorporated
10.36* Letter Agreements between Advanced Medical Information Technologies, Inc. and Careside, Inc. dated January 11, 1999,
January 25, 1999 and February 19, 1999+
10.37 Securities Conversion Agreement dated as of June 14, 1999, between S.R. One, Limited and Careside, Inc.
</TABLE>
-13-
<PAGE>
<TABLE>
<S> <C>
10.38 Amended and Restated Registration Rights Agreement dated as of June 21, 1999, between S.R. One, Limited and Careside,
Inc.
27.1 Financial Data Schedule
</TABLE>
_____________
* Incorporated by reference to the exhibit of the same number filed with
Careside, Inc.'s Registration Statement on Form S-1 (File No. 333-69207)
+ Portions of these documents have been omitted pursuant to a request for
confidential treatment. The omitted material has been filed separately
with the Securities and Exchange Commission.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended June 30,
1999.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CARESIDE, INC.
Date: August 13, 1999 By: /s/ W. Vickery Stoughton
-----------------------------------------
W. Vickery Stoughton
Chairman and Chief Executive Officer
(Principal Executive Officer)
By: /s/ James R. Koch
-----------------------------------------
James R. Koch
Executive Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
-15-
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CARESIDE, INC.
______________
The Board of Directors of Careside, Inc. (the "Corporation") having
proposed this Amended and Restated Certificate of Incorporation pursuant to
Sections 242 and 245 of the Delaware General Corporation Law ("DGCL"), and the
majority of stockholders of the Corporation having given their consent hereto,
and written notice of such consent has been provided, all in accordance with
Sections 228, 242 and 245 of the DGCL, the Corporation's original Certificate of
Incorporation filed with the Delaware Secretary of State on July 10, 1996 under
the name Exigent Diagnostics, Inc., is hereby amended and restated in its
entirety as follows:
FIRST. The name of this corporation is:
CARESIDE, Inc.
SECOND. The registered office in the State of Delaware is located at
1201 Market Street, Suite 1600, in the City of Wilmington, County of New Castle
19801, and its registered agent at such address is PHS Corporate Services, Inc.
THIRD. The purpose or purposes of the corporation shall be to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH. The total number of shares of all classes of stock which the
corporation shall have the authority to issue is:
Fifty Million (50,000,000) shares of Common Stock, $0.01 par value per
share; and
Five Million (5,000,000) shares of Preferred Stock, $0.01 par value
per share.
FIFTH. The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of Article FOURTH, to provide for the
issuance from time to time of the shares of Preferred Stock in one or more
series, and by filing a certificate pursuant to the applicable law of the State
of Delaware, to establish from time to time the number of shares to be included
in a series, and to fix the designation, powers, preferences and rights of the
shares of
<PAGE>
such series, which may be different from the designations, powers, preferences
and rights of shares of any other series, and the qualifications, limitations or
restrictions thereof.
The authority of the Board with respect to such series shall include,
but not be limited to, determination of the following:
a. The number of shares constituting such series and the
distinctive designation of such series;
b. The dividend rate on the shares of such series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of such
series;
c. Whether such series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
d. Whether such series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
e. Whether or not the shares of such series shall be redeemable,
and, if so, the term and conditions of such redemption, including the date or
date upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different conditions
and at different redemption dates;
f. Whether such series shall have a sinking fund for the
redemption or purchase of shares of such series, and, if so, the terms and
amount of such sinking fund;
g. The rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of such series;
h. Any other relative rights, preferences and limitations of
such series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the common shares with respect to the
same dividend period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to holders
of shares of Preferred Stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of Preferred
-2-
<PAGE>
Stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
SIXTH. The election of directors need not be by written ballot,
unless the By-laws so provide.
SEVENTH. The Board of Directors shall be classified as follows:
(a) The number of directors constituting the entire Board shall
be not less than six nor more than ten (10) or, if a majority of the Board of
Directors so determines, twelve (12), as fixed from time to time by vote of a
majority of the entire Board, provided, however, that the number of directors
shall not be reduced so as to shorten the term of any director at the time in
office. Directors need not own any shares of capital stock of the Corporation.
(b) The Board of Directors shall be divided into three classes,
as nearly equal in numbers as the then total number of directors constituting
the entire Board permits with the term of office of one class expiring each
year. The term of office of those directors in the first class shall expire at
the next succeeding annual meeting, in the second class shall expire at the
second succeeding annual meeting and in the third class at the third succeeding
annual meeting. At each annual meeting of Stockholder's the successors to the
class of directors whose term shall then expire shall be elected to hold office
for a term expiring at the third succeeding annual meeting. Any vacancies in the
Board of Directors for any reason, and any directorships resulting from any
increase in the number of directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office, although less than a
quorum, and any directors so chosen shall hold office until the next election of
the class for which such directors shall have been chosen and until their
successors shall be elected and qualified. Notwithstanding the foregoing, and
except as otherwise required by law, whenever the holders of any one or more
series of Preferred Stock shall have the right, voting separately as a class, to
elect one or more directors of the Corporation, the terms of the director or
directors elected by such holders shall expire at the next annual meeting of
Stockholders held more than twelve months following election of such director.
(c) Notwithstanding any other provisions of this Certificate of
Incorporation or the By-laws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, this Certificate of
Incorporation or the By-laws of the Corporation), any director or the entire
Board of Directors of the Corporation may be removed at any time, but only for
cause and only by the affirmative vote of the holders of 80% or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the Stockholders called for that purpose.
-3-
<PAGE>
Notwithstanding any other provisions of this Amended and Restated
Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of capital stock required by law, this
Amended and Restated Certificate of Incorporation or any preferred stock
designation, the affirmative vote of at least 75% of the voting power of all of
the then-outstanding shares of capital stock of the Corporation, voting together
as a single class, shall be required to alter, amend or repeal this Section (c)
of Article SEVENTH.
EIGHTH. No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing, without
a meeting, to the taking of any action is specifically denied.
NINTH. Special meeting of stockholders may be called at any time by a
majority of Board of Directors or the Chairman and Chief Executive Officer of
the Corporation. At any time, upon the written request of any person who has
called a special meeting, it shall be the duty of the Secretary to fix the time
and place of the meeting, which shall be held not more than 60 days after
receipt of the request. If the Secretary neglects or refuses to fix the time or
place of the meeting, the person or persons calling the meeting may do so.
TENTH. All of the powers of this Corporation, insofar as the same
may be lawfully vested by this Certificate of Incorporation in the Board of
Directors, are hereby conferred upon the Board of Directors of this Corporation.
In furtherance and not in limitation of that power the Board of Directors shall
have the power to make, adopt, alter, amend and repeal from time to time By-laws
of this Corporation, subject to the right of the stockholders entitled to vote
with respect thereto adopt, alter, amend and repeal By-laws made by the Board of
Directors; provided, however, that By-laws shall not be adopted, altered,
amended or repealed by the stockholders of the Corporation except by the vote of
the holders of not less than eighty percent (80%) of the outstanding shares of
stock entitled to vote upon the election of directors.
ELEVENTH. The Corporation shall indemnify and advance expenses to the
fullest extent permitted by Section 145 of the General Corporation Law of
Delaware ("DGCL"), as amended from time to time, to each person who is or was a
director or officer of the Corporation and the heirs, executors and
administrators of such a person. Any expenses (including attorneys' fees)
incurred by each person who is or was a director or officer of the Corporation,
and the heirs, executors and administrators of such a person in connection with
defending any such proceeding in advance of its final disposition shall be paid
by the Corporation; provided, however, that if the DGCL requires, an advancement
of expenses incurred by an indemnitee in his capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking by or on
behalf of such indemnitee, to repay all amounts so advanced, if it shall
ultimately be determined that such indemnitee is not entitled to be indemnified
for such expenses under this
-4-
<PAGE>
Article or otherwise. Notwithstanding the aforementioned indemnification
provisions, the Corporation may, at the discretion of the Chief Executive
Officer of the Corporation, enter into indemnification agreements with directors
or officers.
TWELFTH. Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or in the
application of any receiver or receivers appointed for this corporation under
the provisions of Sec. 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
corporation under the provisions of Sec. 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or claims of creditors, and/or on all the stockholders or class of
stockholders of this corporation, as the case may be, and also on this
corporation.
THIRTEENTH. The books of the Corporation may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the board of directors or in
the bylaws of the Corporation.
FOURTEENTH. The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by Section 102(b)(7) of the
DGCL, as the same may be amended and supplemented.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Incorporation on this 18th day of June, 1999.
/s/ W. Vickery Stoughton
------------------------------------------
W. Vickery Stoughton
Chairman and Chief Executive Officer
-6-
<PAGE>
EXHIBIT 3.2
CARESIDE, INC.
CERTIFICATE OF DESIGNATIONS
SERIES A CONVERTIBLE PREFERRED STOCK
(Pursuant to Section 151 of the General
Corporation Law of the State of Delaware)
Careside, Inc., a corporation organized and existing under the laws of
the State of Delaware (hereinafter called the "Corporation"), hereby certifies
that pursuant to the authority contained in Article Fourth of the Corporation's
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of Delaware (the "DGCL") the following
resolution was duly adopted by the Board of Directors of the Corporation at a
meeting duly called and held on June 9, 1999, creating a series of its Preferred
Stock designated as Series A Convertible Preferred Stock (the "Series A
Preferred Stock").
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation (hereinafter called the "Board of
Directors") in accordance with the provisions of the Corporation's Certificate
of Incorporation, as amended to date (hereinafter called the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of Preferred
Stock designated Series A Convertible Preferred Stock and hereby states the
designation and number of shares, and fixes the relative rights, powers and
preferences thereof, and the limitations or restrictions thereof, as follows:
Section 1. Series A Preferred Stock. Of the Five Million (5,000,000)
------------------------
Preferred Shares that the Corporation has authority to issue, 162,914 are hereby
designated shares of Series A Preferred Stock, with a stated value of $7.50 per
share (the :Series A Stated Value").
Section 2. Dividends.
---------
(A) The holder of each share of Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors (in its sole
discretion and without any obligation so to declare dividends regardless of the
funds available for that purpose) out of funds legally available for that
purpose, cash dividends equal to ten percent (10%) of the Series A Stated Value
per annum per share. Dividends shall be cumulative and shall compound on an
annual basis on each anniversary date of the Original Issuance Date (as defined
below), until declared and paid, and shall be payable pro rata for partial year
periods. Except to the extent paid in conjunction with an Optional Redemption
(as defined below), no dividends shall be paid upon, or declared and set apart
for, any share of Series A Preferred Stock unless at the same time a like
<PAGE>
proportionate dividend shall be paid upon or declared and set apart for all
shares of Series A Preferred Stock then outstanding.
(B) No dividends or other distributions of any nature (other than
stock dividends payable in shares of the Common Stock (as defined herein)) shall
be declared and/or paid on any Common Shares, or any other shares ranking junior
to the Series A Preferred Stock unless and until all accrued and unpaid
dividends on the Series A Preferred Stock have been paid in full.
Section 3. Rights on Liquidation, Dissolution, Winding Up. In the event of
----------------------------------------------
any liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, the holders of shares of Series A Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its shareholders, whether from capital, surplus or
earnings, before any payment shall be made to the holders of any stock ranking
on liquidation junior to the Series A Preferred Stock (with respect to rights on
liquidation, dissolution or winding up, the shares of Series A Preferred Stock
shall rank senior to all other shares of capital stock of the Corporation,
including, without limitation, Common Shares) an amount equal to the Series A
Stated Value per share, plus all accrued and unpaid dividends thereon (the
"Liquidation Preference"). If upon any liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of shares of Series A
Preferred Stock the full amounts to which they respectively shall be entitled,
the holders of shares of Series A Preferred Stock shall share ratably in any
distribution of assets. In the event of any liquidation, dissolution or winding
up of the Corporation, after payment shall have been made to the holders of
shares of Series A Preferred Stock of the full amount to which they shall be
entitled as aforesaid, the holders of any class or classes of stock ranking on
liquidation junior to the Series A Preferred Stock shall be entitled, to the
exclusion of and without participation by the holders of shares of Series A
Preferred Stock, to share, according to their respective rights and preferences,
in all remaining assets of the Corporation available for distribution to its
shareholders.
Section 4. Optional Redemption.
-------------------
(A) At any time, subject to an Optional Redemption Notice (as defined
below), the Corporation may redeem all or any portion of the then outstanding
shares of Series A Preferred Stock (the "Optional Redemption"). In the event
the Corporation redeems a portion of the then outstanding Series A Preferred
Stock, the redemption shall be made pro rata among all of the holders of shares
of Series A Preferred Stock. The redemption of the Series A Preferred Stock
shall be at a per share redemption price (the "Optional Redemption Price") equal
to the sum of (x) the Corporation's initial public offering price per Unit (as
defined herein) (the "IPO Unit Price"), (y) all accrued and unpaid dividends per
share of outstanding Series A Preferred Stock, such dividends to accrue and be
computed through the date immediately preceding the Redemption Date (as defined
below) and (z) the greater of (A) $0.05 and (B) the difference
-2-
<PAGE>
between of the average Market Price (as defined herein) per share of the
Corporation's common stock, $0.01 par value per share (the "Common Stock"), on
the five (5) consecutive trading days immediately preceding the Redemption Date
and the exercise price of the warrants issuable upon conversion of the Series A
Preferred Stock. At any time, following the Original Issuance Date, the
Corporation may deliver to the holders of the Series A Preferred Stock a notice
(the "Optional Redemption Notice") by first-class certified mail, postage
prepaid, to holders of record of the outstanding shares of Series A Preferred
Stock to be redeemed at their respective addresses as the same shall appear on
the books of the Corporation. Such notice shall specify the date on which such
Series A Preferred Stock shall be redeemed (the "Optional Redemption Date"),
which date shall not be fewer than five (5) days thereafter or longer than
ninety (90) days thereafter. The total amount payable per share of Series A
Preferred Stock on the Optional Redemption Date is hereinafter referred to as
the "Optional Redemption Price."
As used herein, "Market Price" means, with respect to shares of Common
Stock, (a) if the shares are listed or admitted for trading on any trading on
any national securities exchange or included in The Nasdaq National Market or
Nasdaq SmallCap Market, the last reported sales price as reported on such
exchange or market; (b) if the shares are not listed or admitted for trading on
any national securities exchange or included in The Nasdaq National Market or
Nasdaq SmallCap Market, the average of the last reported closing bid and asked
quotation for the shares as reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or a similar service if NASDAQ is
not reporting such information; (c) if the shares are not listed or admitted for
trading on any national securities exchange or included in The Nasdaq National
Market or Nasdaq SmallCap Market or quoted by NASDAQ or a similar service, the
average of the last reported bid and asked quotation for the shares as quoted by
a market maker in the shares (or if there is more than one market maker, the bid
and asked quotation shall be obtained from two market makers and the average of
the lowest bid and highest asked quotation). In the absence of any available
public quotations for the Common Stock, the Board shall determine in good faith
the fair value of the Common Stock, which determination shall be set forth in a
certificate of the Secretary of the Corporation.
(B) The Optional Redemption Price for any shares of Series A Preferred
Stock redeemed pursuant to Section 4(A) on any Optional Redemption Date shall be
payable as follows: on such Optional Redemption Date, the Corporation shall pay
to each holder of shares of Series A Preferred Stock being redeemed the Optional
Redemption Price being paid to such holder for such Series A Preferred Stock in
cash. Simultaneously with its receipt of such cash payment, each holder of
Series A Preferred Stock shall deliver to the Corporation or its agent the
certificates representing the shares of Series A Preferred Stock being redeemed;
provided, that, upon the payment by the Corporation of the applicable Optional
Redemption Price, all rights in respect of the shares of Series A Preferred
Stock to be redeemed shall cease and terminate, and such shares shall no longer
be deemed to be outstanding, whether or not the certificates representing such
shares have been received by the Corporation.
-3-
<PAGE>
(C) Once redeemed pursuant to the provisions of this Section 4, shares
of Series A Preferred Stock shall be canceled and not subject to reissuance and
such redeemed shares shall, without any action on the part of the Corporation or
the shareholders of the Corporation, be eliminated from the authorized capital
of the Corporation.
(D) No shares of Series A Preferred Stock shall be entitled to the
benefit of a sinking fund or purchase fund.
Section 5. Voting.
------
(A) In addition to the rights otherwise expressly provided herein or
as provided by any applicable law, subject to the limitations set forth herein,
each share of Series A Preferred Stock shall entitle the holder thereof to one
(1) vote on all matters submitted to a vote of the holders of Common Stock of
the Corporation in the same manner and with the same effect as such holders of
Common Stock, voting together with the holders of Common Stock as one voting
group. Except as otherwise provided in the Corporation's Certificate of
Incorporation, its bylaws or by applicable law, and subject to the provisions of
Section 5(B) hereof, the holders of Series A Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of holders of Common Stock of the Corporation.
(B) The holders of Series A Preferred Stock shall vote as a separate
voting group on, and the affirmative vote of a majority of the outstanding
shares of Series A Preferred Stock shall be required to authorize, any action
which would:
(1) in any manner alter or change the designation or the powers,
preferences or rights, or the qualifications, limitations or restrictions of the
Series A Preferred Stock (including by merger, consolidation or otherwise,
except in a Fundamental Transaction (as defined in Section 6(F)(2)) in which the
provisions of Section 6(F)(3) are complied with);
(2) reclassify Common Shares, or any other shares of any class or
series of capital stock hereinafter created junior to the Series A Preferred
Stock into shares of any class or series of capital stock ranking, either as to
payment of dividends, distribution of assets (upon liquidation, dissolution,
winding up or otherwise) or redemption, prior to or on a parity with the Series
A Preferred Stock; or
(3) increase the authorized number of shares of Series A
Preferred Stock.
(C) If at any time any action is proposed by the Corporation which
requires the affirmative vote of the holders of the Series A Preferred Stock
pursuant to Section 5(B), the Chief Executive Officer (or any other officer) of
the Corporation shall call a special meeting of the holders of Series A
Preferred Stock for the purpose of voting on such proposed action. Such
-4-
<PAGE>
meeting shall be held at the earliest practicable date at such place as
specified in or determined in accordance with the By-laws of the Corporation.
Subject to the provisions of Section 228 of the Delaware General Corporation
Law, any action required or permitted to be taken at any special meeting of the
holders of Series A Preferred Stock may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of such action without a meeting
by less than unanimous written consent shall be given to those holders of Series
A Preferred Stock who have not consented in writing.
Section 6. Conversion into Units.
---------------------
The holders of shares of Series A Preferred Stock shall have the
following conversion rights:
(A) Subject to the limitations set forth below, each share of Series A
Preferred Stock shall be convertible at any time commencing six months after the
consummation of the Corporation's initial public offering of the Corporation's
units (the "Units"), each of which Unit consists of one share of Common Stock
and one warrant to purchase one share of Common Stock (the "Warrant"), unless
previously redeemed by the Corporation, into a number of Units equal to (i) the
number of shares of Series A Preferred Stock being converted, plus (ii) a number
of Units equal to the accrued and unpaid dividends in respect of such shares of
Series A Preferred Stock divided by the IPO Unit Price. Such conversion shall
be effected upon written notice to the Corporation that such holder is
exercising a conversion right pursuant to this Section 6(A) (the "Conversion
Notice"). The Conversion Notice shall be sent by the holder of the Series A
Preferred Stock to the Corporation by first class, certified mail, postage
prepaid. Conversion effected pursuant to this Section 6(A) shall be deemed to
have been effected on the date the aforesaid delivery is made, and such date is
referred to herein as the AConversion Date."
(B) Any shares of Series A Preferred Stock which have been converted
shall be canceled and all dividends on converted shares shall cease to accrue
and the certificates representing shares of Series A Preferred Stock so
converted shall represent the right to receive (i) such number of Units into
which such shares of Series A Preferred Stock are convertible, plus (ii) cash
payable for any fractional Unit. The Board shall at all times, so long as any
shares of Series A Preferred Stock remain outstanding, reserve a sufficient
number of authorized but unissued shares of Common Stock to be issued in
satisfaction of the aforesaid conversion rights and privileges.
(C) Following exercise of the conversion rights pursuant to Sections
6(A) or (B), the holder of any shares of Series A Preferred Stock so converted
shall promptly deliver to the Corporation during regular business hours, at the
office of any transfer agent of the
-5-
<PAGE>
Corporation for the Series A Preferred Stock, or at such other place as may be
designated by the Corporation, the certificate or certificates for the shares to
be converted, duly endorsed or assigned in blank or to the Corporation (if
required by it), or if the holder notifies the Corporation or its transfer agent
that such certificate or certificates have been lost, stolen or destroyed, upon
the execution and delivery of an agreement satisfactory to the Corporation to
indemnify the Corporation from any losses incurred by it in connection
therewith, accompanied by written notice stating the name or names (with
address) in which the certificate or certificates for the Common Stock and
Warrants included in Units are to be issued. As promptly as practicable
thereafter, the Corporation shall (x) issue and deliver to or upon the written
order of such holder, to the place designated by such holder, a certificate or
certificates for the number of full Common Shares and Warrants included in Units
to which such holder is entitled and a check or cash in respect of any
fractional interest in a Unit as provided in Section 6(D) hereof. Each person in
whose name the certificate or certificates for Common Shares and Warrants
included in Units are to be issued shall be deemed to have become a shareholder
of record on the applicable Conversion Date unless the transfer books of the
Corporation are closed on that date, in which event such holder shall be deemed
to have become a shareholder of record on the next succeeding date on which the
transfer books are open, but the number of Units into which each share of Series
A Preferred Stock shall be converted is that number which was in effect on the
applicable Conversion Date. Upon conversion of only a portion of the number of
shares covered by a certificate representing shares of Series A Preferred Stock
surrendered for conversion, or upon the written order of the holder of the
certificate so surrendered for conversion, the Corporation shall issue and
deliver, at the expense of the Corporation, a new certificate covering the
number of shares of Series A Preferred Stock, representing the unconverted
portion of the certificate so surrendered, which new certificate shall entitle
the holder thereof to dividends on the shares of Series A Preferred Stock,
represented thereby to the same extent as if the certificate theretofore
covering such unconverted shares had not been surrendered for conversion.
(D) No fractional Units shall be issued upon conversion of shares of
Series A Preferred Stock. If more than one share of Series A Preferred Stock
shall be surrendered for conversion at any one time by the same holder, the
number of full Units issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of Series A Preferred Stock so
surrendered. Instead of any fractional Units which would otherwise be issuable
upon conversion of any shares of Series A Preferred Stock, the Corporation shall
pay a cash adjustment in respect of such fractional interest in an amount equal
to the Fair Market Value of the Common Shares on the Conversion Date multiplied
by such fractional interest. Fractional interests shall not be entitled to
dividends, and the holders of fractional interests shall not be entitled to any
rights as shareholders of the Corporation in respect of such fractional
interests.
(E) The conversion rights for the Series A Preferred Stock shall be
subject to adjustment from time to time as follows:
-6-
<PAGE>
(1) If, at any time after the Original Issuance Date, the number of
Common Shares outstanding is increased by a stock dividend payable in Common
Shares or other distribution of Common Shares to holders of Common Shares or by
a subdivision or split-up of Common Shares, or the number of Common Shares
outstanding is decreased by a combination of the outstanding Common Shares, the
number of Units which the holder of Series A Preferred Stock would otherwise
have been entitled to upon exercise of the Conversion Right shall be
appropriately adjusted so that the holder of any Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
and kind of Units which such holder would have owned or have been entitled to
receive after the happening of such event had such Series A Preferred Stock been
converted immediately prior to the record date (or if no record date has been
established in connection with such event, the effective date) for such event.
An adjustment pursuant to this Section 6(E)(1) shall become effective
immediately after the record date in the case of a stock dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination.
(2) In case, at any time after the Original Issuance Date of any
reorganization of the Corporation, reclassification of the stock of the
Corporation (other than a change in par value or from par value to no par value
or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the merger or consolidation
of the Corporation into or with another corporation, or the merger or
consolidation of any other corporation into or with the Corporation, in which
such consolidation or merger the shareholders of the Corporation receive
distributions of cash or securities as a result of such consolidation or merger
(other than a consolidation or merger in which the Corporation is the continuing
corporation and which does not result in any change in the Common Shares), or in
the case of any share exchange pursuant to which all of the outstanding Common
Shares are converted into other securities or property (any such reorganization,
reclassification, merger, consolidation or share exchange being called a
"Fundamental Transaction"), the Corporation shall make appropriate provision or
cause appropriate provision to be made so that holders of each share of Series A
Preferred Stock then outstanding shall have the right thereafter to convert such
share of Series A Preferred Stock into the kind and amount of shares of stock
and other securities and property receivable upon such Fundamental Transaction
by a holder of the number of Units into which such share of Series A Preferred
Stock would have been converted immediately prior to the effective date of such
Fundamental Transaction. If in connection with any such Fundamental
Transaction, each holder of Common Shares is entitled to elect to receive either
securities, cash or other assets upon completion of such Fundamental
Transaction, the Corporation shall provide or cause to be provided to each
holder of Series A Preferred Stock the right to elect the securities, cash or
other assets into which the Series A Preferred Stock held by such holder shall
be convertible after completion of any such Fundamental Transaction on the same
terms and subject to the same conditions applicable to holders of the Common
Stock (including, without limitation, notice of the right to elect, limitations
on the period in which such election shall be made and the effect of failing to
exercise the election). The Corporation shall not effect any such Fundamental
Transaction unless the provisions of this paragraph have been
-7-
<PAGE>
complied with. The above provisions shall similarly apply to successive
Fundamental Transactions.
(3) All calculations under this Section 6(E) shall be made to the
nearest one-hundreth (1/100) of a Unit.
(4) In any case in which the provisions of this Section 6(E) shall
require that an adjustment shall become effective immediately after a record
date for an event, the Corporation may defer until the occurrence of such event
(i) issuing to the holder of any share of Series A Preferred Stock converted
after such record date and before the occurrence of such event the additional
Units issuable upon such conversion by reason of the adjustment required by such
event over and above the Units issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such holder any amount in cash in
lieu of a fractional Unit pursuant to Section 6(D); provided, however, that the
-------- -------
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional Units, and
such cash, upon the occurrence of the event requiring such adjustment.
(5) Whenever the number of Units into which the Series A Preferred
Stock is convertible shall be adjusted as provided herein, the Corporation shall
forthwith file, at the office of the transfer agent for the Series A Preferred
Stock or at such other place as may be designated by the Corporation, a
statement, signed by a senior officer and its independent certified public
accountants, showing in reasonable detail the facts requiring such adjustment
and the number of shares of Units into which the Series A Preferred Stock can be
converted after such adjustment. The Corporation shall also cause a copy of such
statement to be sent by mail, first class certified mail, return receipt
requested, postage prepaid, to each holder of shares of any Series A Preferred
Stock at his address appearing on the Corporation's records. Notwithstanding the
foregoing notice provisions, failure of the Corporation to give such notice or a
defect in such notice shall not affect the binding nature of such corporate
action of the Corporation.
(6) In the event the Corporation shall propose to take any action of
the types described in Section 6(E)(1) or (2) hereof, the Corporation shall give
notice to each holder of shares of Series A Preferred Stock in the manner set
forth in this Section 6(E)(6), which notice shall specify the record date, if
any, with respect to any such action and the date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the number of
Units or cash or other securities into which the Series A Preferred will be
convertible. In the case of any action which would require the fixing of a
record date, such notice shall be given at least twenty (20) days prior to the
date so fixed, and in case of all other action, such notice shall be given at
least thirty (30) days prior to the taking of such proposed action. Failure to
give such notice, or any defect therein, shall not affect the legality or
validity of any such action.
-8-
<PAGE>
(7) The Corporation shall pay all documentary, stamp or other
transactional taxes attributable to the issuance or delivery of Units upon
conversion of shares of Series A Preferred Stock; provided, however, that the
-------- -------
Corporation shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the holder of the shares of Series
A Preferred Stock in respect of which such shares are being issued.
(8) The Corporation shall reserve and at all times from and after the
Original Issuance Date keep reserved free from preemptive rights, out of its
authorized but unissued Common Shares, solely for the purpose of effecting the
conversion of the shares of Series A Preferred Stock sufficient shares to
provide for the conversion of all outstanding shares of Series A Preferred
Stock.
(9) All Common Shares which may be issued in connection with the
conversion provisions set forth herein will, upon issuance by the Corporation,
be validly issued, fully paid and nonassessable and free from all taxes, liens
or charges with respect thereto.
(10) Once converted pursuant to the provisions hereof, shares of
Series A Preferred Stock so converted shall be canceled and not subject to
reissuance, and such converted shares shall, without any action on the part of
the Corporation or the shareholders of the Corporation, be eliminated from the
authorized capital of the Corporation.
(F) The term "Original Issuance Date" shall mean with respect to the
Series A Preferred Stock, June ___, 1999.
(G) The "Fair Market Value" of Common Shares on any day means: (a) if the
principal market for the Common Shares is The New York Stock Exchange, American
Stock Exchange or any other national securities exchange or The Nasdaq National
Market, the closing sales price of the Common Shares on such day as reported by
such exchange or market, or on a consolidated tape reflecting transactions on
such exchange or market, or (b) if the principal market for the Common Shares is
not a national securities exchange or The Nasdaq National Market and
transactions in the Common Shares are quoted on the National Association of
Securities Dealers Automated Quotations System, the mean between the closing bid
and the closing asked prices for the Common Shares on such day as quoted on such
System, or (c) if transactions in the Common Shares are not quoted on the
National Association of Securities Dealers Automated Quotations System, the
price therefor reported by the National Quotation Bureau, Inc.; provided that if
none of (a), (b) or (c) above is applicable, or if no trades have been made or
no quotes are available for such day, the Fair Market Value of the Common Shares
shall be determined, in good faith, by the Board of Directors of the
Corporation.
-9-
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by its Chairman of the Board of Directors and Chief
Executive Officer and attested by its Secretary this 18th day of June, 1999.
Attest:
/s/ W. Vickery Stoughton
---------------------------------------
Chairman of the Board of Directors and
Chief Executive Officer
/s/ Thomas G. Grove
- -------------------------------------
Secretary
-10-
<PAGE>
EXHIBIT 3.3
CARESIDE, INC.
AMENDED AND RESTATED BY-LAWS
----------------------------
ARTICLE I OFFICES
------------------
1.1 Registered Office: The registered office shall be in the City of
-----------------
Wilmington, County of New Castle, State of Delaware.
1.2 Other Offices: The corporation may also have offices at such other
-------------
places both within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II MEETINGS OF STOCKHOLDERS
------------------------------------
2.1 Place of Meetings: All meetings of the stockholders for the election
-----------------
of directors shall be held at such place either within or without the State of
Delaware as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
2.2 Date of Annual Meeting: Annual meetings of stockholders, commencing
----------------------
with the year 2000, shall be held on the first Wednesday of August, if not a
legal holiday, and if a legal holiday, then on the next secular day following,
at 10:00 o'clock A.M., or at such other date and time as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting, at which they shall elect by a plurality vote a board of directors, and
transact such other business as may properly be brought before the meeting.
2.3 Notice of Annual Meeting: Written notice of the annual meeting
------------------------
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
2.4 Stockholders List: The officer who has charge of the stock ledger of
-----------------
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholders, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced
<PAGE>
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
2.5 Special Meetings: Special meetings of the stockholders, for any
----------------
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the Chairman and Chief Executive
Officer and shall be called by the secretary at the request in writing of a
majority of the board of directors. Such request shall state the purpose or
purposes of the proposed meeting.
2.6 Notice of Special Meetings: Written notice of a special meeting
--------------------------
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than sixty nor more than
ninety days before the date of the meeting, to each stockholder entitled to vote
at such meeting.
2.7 Business Transacted at Meetings of Stockholders:
-----------------------------------------------
(a) Except as otherwise provided by or in these By-laws, or except as
permitted by the presiding officer of the meeting in the exercise of such
officer's sole discretion in any specific instance, the business which shall be
voted upon or discussed at any annual or special meeting of the stockholders
shall (i) have been specified in the written notice of the meeting (or any
supplement thereto) given by the Corporation, (ii) be brought before the meeting
at the direction of the Board of Directors, (iii) be brought before the meeting
by the presiding officer of the meeting unless a majority of the Directors then
in office object to such business being conducted at the meeting, or (iv) in the
case of an annual meeting of stockholders have been specified in a written
notice given to the Corporation by or on behalf of any stockholder who shall
have been a stockholder of record on the record date for such meeting and who
shall continue to be entitled to vote thereat (the "Stockholder Notice"), in
accordance with all of the requirements set forth below.
(b) Each Stockholder Notice must be delivered to, or mailed and
received at, the principal executive offices of the Corporation addressed to the
attention of the Chairman and Chief Executive Officers (i) in the case of an
annual meeting that is called for a date that is within 30 days before or after
the anniversary date of the immediately preceding annual meeting of
Stockholders, not less than 60 days nor more than 90 days prior to such
anniversary date, provided that a proposal submitted by a stockholder for
inclusion in the Corporation's proxy statement for an annual meeting which is
appropriate for inclusion therein and otherwise complies with Securities
Exchange Act of 1934 Rule 14a-8 (including timeliness), shall be deemed to have
also been submitted timely pursuant to these By-laws, and (ii) in the case of an
annual meeting that is called for a date that is not within 30 days before or
after the anniversary date of the immediately preceding annual meeting, not
later than the close of business on the fifth day following the earlier of the
day on which notice of the date of the meeting was mailed or public disclosure
of the meeting date (which shall include disclosure of the meeting date given to
a national securities exchange or the National Association of Securities Dealers
was made. Each such Stockholder Notice must set forth (A) the name and address
of the stockholder who intends to bring the business before the annual meeting
("Proposing Stockholder"); (B) the name and address of the beneficial owner, if
different than the Proposing Stockholder, of any
-2-
<PAGE>
of the shares owned of record by the Proposing Stockholder ("Beneficial Owner");
(C) the number of shares of each class and series of shares of the Corporation
which are owned of record and beneficially by the Proposing Stockholder and the
number which are owned beneficially by any Beneficial Owner; (D) any interest
(other than an interest solely as a stockholder) which the Proposing Stockholder
or a Beneficial Owner has in the business being proposed by the Proposing
Stockholder; (E) a description of all arrangements and understandings between
the Proposing Stockholder and any Beneficial Owner and any other person or
persons (naming such person or persons) pursuant to which the proposal in the
Stockholder Notice is being made; (F) a description of the business which the
Proposing Stockholder seeks to bring before the meeting, the reason for doing so
and, if a specific action is to be proposed, the text of the resolution or
resolutions which the Proposing Stockholder proposes that the Corporation adopt;
and (G) a representation that the Proposing Stockholder is at the time of giving
the Stockholder Notice, was or will be on the record date for the meeting, and
will be on the meeting date a holder of record of shares of the Corporation
entitled to vote at such meeting and intends to appear in person or by proxy at
the meeting to bring the business specified in the Stockholder Notice before the
meeting. The presiding officer of the meeting may, in such officer's sole
discretion, refuse to acknowledge any business proposed by a stockholder which
the presiding officer determines is not made in compliance with the foregoing
procedure.
2.8 Nomination of Directors by Stockholders;
---------------------------------------
(a) Nominations for the election of Directors may be made by the Board
of Directors, by a committee appointed by the Board of Directors with authority
to do so or by any stockholder of record entitled to vote in the election of
Directors who is a stockholder at the record date of the meeting and also on the
date of the meeting at which Directors are to be elected; provided, however,
that with respect to a nomination made by a stockholder, such stockholder must
provide timely written notice to the Chairman and Chief Executive Officer of the
Corporation in accordance with the following requirements:
(i) To be timely, a stockholder's notice must be delivered to, or
mailed and received at, the principal executive offices of the Corporation
addressed to the attention of the Chairman and Chief Executive Officer (1)
in the case of an annual meeting that is called for a date that is within
30 days before or after the anniversary date of the immediately preceding
annual meeting of stockholders, not less than 60 days nor more than 90 days
prior to such anniversary date, and (2) in the case of an annual meeting
that is called for a date that is not within 30 days before or after the
anniversary date of the immediately preceding annual meeting, or in the
case of a special meeting of stockholders called for the purpose of
electing Directors, not later than the close of business on the fifth day
following the day on which notice of the date of the meeting was mailed;
and
(ii) Each such written notice must set forth: (A) the name and
address of the stockholder who intends to make the nomination ("Nominating
Stockholder"); (B) the name and address of the beneficial owner, if
different than the Nominating Stockholder, of any of the shares owned of
record by the Nominating Stockholder ("Beneficial Holder"); (C)
-3-
<PAGE>
the number of shares of each class and series of shares of the Corporation
which are owned of record and beneficially by the Nominating Stockholder
and the number which are owned beneficially by any Beneficial Holder; (D) a
description of all arrangements and understandings between the Nominating
Stockholder and any Beneficial Holder and any other person or persons
(naming such person or persons) pursuant to which the nomination is being
made; (E) the name and address of the person or persons to be nominated;
(F) a representation that the Nominating Stockholder is at the time of
giving of the notice, was or will be on the record date for the meeting,
and will be on the meeting date a holder of record of shares of the
corporation entitled to vote at such meeting, and intends to appear in
person or by proxy at the meeting to nominate the person or persons
specified in the notice; and (G) the written consent of each nominee
nominated by the Nominating Stockholder to serve as a Director of the
Corporation if so elected. The presiding officer of the meeting may, in
such officer's sole discretion, refuse to acknowledge the nomination of any
person which the presiding officer determines is not made in compliance
with the foregoing procedure.
2.9 Quorum: The holders of a majority of the stock issued and outstanding
------
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.10 Vote Required: When a quorum is present at any meeting, the vote of
-------------
the holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
2.11 Voting: Unless otherwise provided in the certificate of
------
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
At all elections of the directors of the corporation each stockholder
having voting power shall be entitled to exercise the right to cumulative
voting, but only if so provided in the certificate of incorporation.
-4-
<PAGE>
2.12 Action Without Meeting: Unless otherwise provided in the certificate
----------------------
of incorporation, any action required to be taken at any annual or special
meeting of stockholders of the corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE III DIRECTORS
----------------------
3.1 Number of Directors: The number of directors which shall constitute
-------------------
the whole board shall be not less than six (6) nor more than ten (10), or if a
majority of the board of directors so determines, twelve (12). Thereafter,
within the limits above specified, the number of directors shall be determined
by resolution of the board of directors or by the stockholders at the annual
meeting. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 3.2 of these By-Laws, and in the
Certificate of Incorporation, each director elected shall hold office until his
successor is elected and qualified. Directors need not be stockholders.
3.2 Vacancies: Vacancies and newly created directorships resulting from
---------
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute.
3.3 Powers of Directors: The business of the corporation shall be managed
-------------------
by or under the direction of its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
3.4 Place of Meetings: The board of directors of the corporation may hold
-----------------
meetings, both regular and special, either within or without the State of
Delaware.
3.5 First Meeting: The first meeting of each newly elected board of
-------------
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
-5-
<PAGE>
special meetings of the board of directors or as shall be specified in a written
waiver signed by all of the directors.
3.6 Regular Meetings: Regular meetings of the board of directors may be
----------------
held without notice at such time and at such place as shall from time to time be
determined by the board.
3.7 Special Meetings: Special meetings of the board may be called by the
----------------
president without notice to each director; special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of two directors unless the board consists of only one director; in
which case special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of the sole director.
3.8 Quorum; Vote Necessary: At all meetings of the board, a majority of
----------------------
the directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
3.9 Action Without Meeting: Unless otherwise restricted by the
----------------------
certificate of incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
3.10 Telephonic Communications: Unless otherwise restricted by the
-------------------------
certificate of incorporation or these By-Laws, members of the board of
directors, or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
3.11 Committees of Directors: The board of directors may, by resolution
-----------------------
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
-6-
<PAGE>
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the By-Laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
3.12 Minute of Committees: Each committee shall keep regular minutes of
--------------------
its meetings and report the same to the board of directors when required.
3.13 Compensation of Directors: Unless otherwise restricted by the
-------------------------
Certificate of Incorporation or these By-Laws, the board of directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the board of directors
and may be paid a fixed sum for attendance at each meeting of the board of
directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
3.14 Removal of Directors: Methods and measures for removing any director
--------------------
or the entire board of directors are set forth in the Certificate of
Incorporation.
ARTICLE IV NOTICES
-------------------
4.1 Form: Whenever, under the provisions of the statutes or of the
----
certificate of incorporation or of these By-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
4.2 Waiver: Whenever any notice is required to be given under the
------
provisions of the statutes or of the certificate of incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
-7-
<PAGE>
ARTICLE V OFFICERS
-------------------
5.1 Officers Required: The officers of the corporation shall be chosen by
-----------------
the board of directors and shall be a chief executive officer, one or more
executive vice-presidents, a secretary and a treasurer. The board of directors
may also designate one or more persons as vice-presidents, and may choose one or
more assistant secretaries and assistant treasurers. Any number of offices may
be held by the same person, unless the Certificate of Incorporation or these By-
Laws otherwise provide.
5.2 Election by Directors: The board of directors at its first meeting
---------------------
after each annual meeting of stockholders shall elect the officers of the
Company.
5.3 Other Officers: The board of directors may appoint such other
--------------
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
5.4 Salaries: The salaries of all officers and agents of the corporation
--------
shall be fixed by the board of directors.
5.5 Term; Removal; Vacancy: The officers of the corporation shall hold
----------------------
office until their successors are chosen and qualify. Any officer elected or
appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy occurring
in any office of the corporation shall be filled by the board of directors.
5.6 Chief Executive Officer's General Duties: The chief executive officer
----------------------------------------
of the corporation shall preside at all meetings of the stockholders and the
board of directors, shall have general and active management of the business of
the corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
5.7 Chief Executive Officer's Execution of Contracts: The Chief Executive
------------------------------------------------
Officer shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation.
5.8 Vice-President's Duties: In the absence of the Chief Executive
-----------------------
Officer or in the event of his inability or refusal to act, the executive vice-
president (or in the event there be more than one executive vice-president, the
executive vice-presidents in the order designated by the directors, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the Chief Executive Officer, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the Chief Executive
Officer. The executive vice-presidents and the vice president
-8-
<PAGE>
shall otherwise perform such duties and have such other powers as the board of
directors may from time to time prescribe.
5.9 Secretary's Duties: The secretary shall attend all meetings of the
------------------
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
5.10 Assistant Secretary's Duties: The assistant secretary, or if there
----------------------------
be more than one, the assistant secretaries in the order determined by the board
of directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
5.11 Treasurer's General Duties: The treasurer shall have the custody of
--------------------------
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
5.12 Treasurer to Disburse Funds: He shall disburse the funds of the
---------------------------
corporation as may be ordered by the board of directors, taking proper vouchers
for such disbursements, and shall render to the president and the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the corporation.
5.13 Treasurer's Bond: If required by the board of directors, he shall
----------------
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging to the
corporation.
5.14 Assistant Treasurer's Duties: The assistant treasurer, or if there
----------------------------
shall be more than one, the assistant treasurers in the order determined by the
board of directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall
-9-
<PAGE>
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
ARTICLE VI
----------
6.1 Certificate of Stock: Every holder of stock in the corporation shall
--------------------
be entitled to have a certificate, signed by, or in the name of the corporation
by, the chairman or vice-chairman of the board of directors, or the president or
a vice-president and the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by him in the corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock, or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights or each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
6.2 Signatures: Any of or all the signatures on the certificate may be
----------
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
6.3 Lost Certificates: The board of directors may direct a new
-----------------
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may
-10-
<PAGE>
be made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
6.4 Transfer of Stock: Upon surrender to the corporation or the transfer
-----------------
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
6.5 Fixing Record Date: In order that the corporation may determine the
------------------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
6.6 Registered Stockholders: The corporation shall be entitled to
-----------------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VII GENERAL PROVISIONS
-------------------------------
7.1 Dividends: Dividends upon the capital stock of the corporation,
---------
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.
7.2 Reserves: Before payment of any dividend, there may be set aside out
--------
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
-11-
<PAGE>
7.3 Annual Statement: The board of directors shall present at each annual
----------------
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
7.4 Checks: All checks or demands for money and notes of the corporation
------
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
7.5 Fiscal Year: The fiscal year of the corporation shall be determined
-----------
by the Board of Directors.
7.6 Seal: The corporate seal shall have inscribed thereon the name of the
----
corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII INDEMNIFICATION
-----------------------------
8.1 Actions By Third Parties: The corporation shall 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 (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
8.2 Actions By or In the Right of the Corporation: The corporation shall
---------------------------------------------
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for
-12-
<PAGE>
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
8.3 Expenses of Successful Defense: To the extent that a director,
------------------------------
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections
8.l and 8.2 of these By-Laws, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
8.4 Determination That Indemnification Is Proper: Any indemnification
--------------------------------------------
under Sections 8.1 and 8.2 of these By-Laws, (unless ordered by a court) shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Sections 8.1 and 8.2 of these By-Laws. Such determination
shall be made (l) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
8.5 Advances: Expenses incurred in defending a civil or criminal action,
--------
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the board of
directors in the specific case upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this section.
8.6 Provisions Not Exclusive: The indemnification provided by this
------------------------
Article VIII shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under the Certificate of Incorporation
or any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
8.7 Insurance: The corporation may purchase and maintain insurance on
---------
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VIII.
-13-
<PAGE>
8.8 Constituent Corporation: For purposes of this Article VIII,
-----------------------
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify the
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article VIII with respect to the resulting or surviving corporation as
he would have with respect to such constituent corporation if its separate
existence had continued.
8.9 Other Enterprises; Fines; Services: For purposes of this Article
----------------------------------
VIII, references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interest of the corporation" as referred to in
this Article VIII.
8.10 Continuation of Indemnification and Advancement of Expenses: The
-----------------------------------------------------------
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
ARTICLE IX AMENDMENTS
----------------------
9.1 Amendments by Stockholders or Directors: These By-Laws may be
---------------------------------------
altered, amended or repealed or new By-Laws may be adopted by the stockholders
or by the board of directors in accordance with the Certificate of
Incorporation.
-14-
<PAGE>
EXHIBIT 4.1A
[LOGO OF CARESIDE APPEARS HERE]
NUMBER WARRANTS
============ ========
W-
============ ========
VOID AFTER 5 P.M. EASTERN DAYLIGHT TIME
ON
JUNE 16, 2004
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
CARESIDE, INC.
CUSIP 141728 11 3
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Warrants
("Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from Careside, Inc., a corporation incorporated under the laws of the
State of Delaware ("Company"), subject to the terms and conditions set forth
hereinafter and in the Warrant Agreement hereinafter more fully described (the
"Warrant Agreement"), one fully paid and nonassessable share of Common Stock,
$0.01 par value per share, of the Company ("Common Stock") upon presentation and
surrender of this Warrant Certificate with the instructions for the registration
and delivery of Common Stock filled in, at any time after July 16, 1999 and
prior to 5:00 P.M., Eastern Standard time, on June 16, 2004 or, if such Warrant
is redeemed as provided in the Warrant Agreement, at any time prior to the
effective time of such redemption, at the stock transfer office in New York, New
York of American Stock Transfer & Trust Company, Warrant Agent of the Company
("Warrant Agent"), or of its successor warrant agent or, if there be no
successor warrant agent, at the corporate offices of the Company, and upon
payment of the Exercise Price (as defined in the Warrant Agreement) and any
applicable taxes paid either in cash or by certified or official bank check,
payable in lawful money of the United States of America to the order of the
Company. Each Warrant entitles the holder to purchase one share of Common Stock
for $9.00. The number and kind of securities or other property for which the
Warrants are exercisable are subject to adjustment in certain events as set
forth in the Warrant Agreement, such as mergers, splits, stock dividends,
recapitalizations, asset sales, stock sales and similar events, to prevent
dilution. Subject to the terms of the Warrant Agreement, the Company may redeem
any or all outstanding and unexercised Warrants at any time, upon 30 days'
notice, if the Daily Price has exceeded $14.00 for 10 consecutive trading days
immediately preceding the date of notice of such redemption. The redemption
price shall be equal to $0.05 per Warrant. For purposes of the foregoing
sentence, the term "Daily Price" shall mean, for any relevant day, the closing
price on that day as reported by the principal exchange, national or quotation
system on which prices for the Common Stock are reported. Subject to the terms
of the Warrant Agreement, from and after the redemption date, the registered
holder shall have no rights with respect to the Warrants called for redemption
except for the right to receive $0.05 per Warrant upon surrender of this Warrant
Certificate. All Warrants not theretofore exercised or redeemed will expire on
June 16, 2004. The Company has agreed that it shall not redeem any Warrants
until December 16, 1999.
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of June 21, 1999, between the
Company and the Warrant Agent, to all of which terms, provisions and conditions
the registered holder of this Warrant Certificate consents by acceptance hereof.
The Warrant Agreement is incorporated herein by reference and made a part hereof
and reference is made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities of the Warrant
Agent, the Company and the holders of the Warrant Certificates. Copies of the
Warrant Agreement are available for inspection at the stock transfer office of
the Warrant Agent or may be obtained upon written request addressed to the
Company at 6100 Bristol Parkway, Culver City, California 90230, Attention: Chief
Financial Officer.
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but may make adjustment therefor in cash on the basis
of the current market value of any fractional interest as provided in the
Warrant Agreement.
The Company will not be required to honor the exercise of any Warrants if,
in the opinion of the Board of Directors, upon advice of counsel, the sale of
securities upon such exercise would be unlawful. For example, the Company would
not honor an exercise of Warrants if the sale of securities by the Company upon
exercise of Warrants would violate the securities laws of the United States, any
states thereof or other jurisdictions. The Company has agreed to use its best
efforts to cause a registration statement to continue to be effective during the
term of the Warrants with respect to such sales under the Securities Act of
1933, as amended, and to take such action under the federal securities laws, and
the laws of various states or other jurisdictions as may be required to cause
the sale of securities upon exercise of the Warrants to be lawful. Also, in
certain cases, the Company, may, but is not required to, purchase Warrants
submitted for exercise for a cash price equal to the difference between the
market price of the securities obtainable upon such exercise and the exercise
price of such Warrants.
This Warrant Certificate, with or without other Certificates, upon surrender
to the Warrant Agent, any successor warrant agent or, in the absence of any
successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatsoever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any matter submitted to shareholders at any meeting
thereof, or give or withhold consent to any merger, recapitalization, issuance
of stock, reclassification of stock, change of par value or change of stock to
no par value, consolidation, conveyance or otherwise) or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Warrant Agreement) or to receive dividends or subscription rights or otherwise
until the Warrants evidenced by this Warrant Certificate shall have been
exercised and the Common Stock purchasable upon the exercise thereof shall have
become deliverable as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Company's Common Stock or other
class of stock purchasable upon the exercise of the Warrants evidenced by this
Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate, by accepting the same, consents
and agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatsoever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.
The Company shall not be required to issue or deliver any certificate for
shares of Common Stock or other securities upon the exercise of Warrants
evidenced by this Warrant Certificate until any tax which may be payable in
respect thereof by the holder of this Warrant Certificate pursuant to the
Warrant Agreement shall have been paid, such tax being payable by the holder of
this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
Dated:
Attest:
/s/ Thomas H. Grove By:
SECRETARY /s/ W. Vickery Stoughton
CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
By:
AUTHORIZED SIGNATURE
<PAGE>
CARESIDE, INC.
ELECTION TO PURCHASE
TO: AMERICAN STOCK TRANSFER & TRUST COMPANY:
(1) The undersigned registered holder of the attached original, executed
Common Stock Purchase Warrant Certificate, hereby irrevocably elects to exercise
the undersigned's purchase rights under such Warrant with respect to __________
_____________shares of Common Stock, as defined in the Warrant Agreement, of
Careside, Inc., and herewith makes payment therefor in the amount of $__________
all at the price, in the manner and on the terms and conditions specified in the
within Warrant Agreement.
(2) Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other ?? as is specified below:
Name:__________________________ Date:______________________________
Address:_______________________
_______________________________ Signature
Tax Identification
Number:_______________________ _____________________________________
Notice: The signature on this Form of
Election to Purchase must correspond
with the name as written upon the
face of the Warrant Certificate in
every particular, without alteration
or enlargement or any charge
whatever.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of the attached
original, executed Common Stock Purchase Warrant Certificate, hereby sells,
assigns and transfers unto ____________________________________________________
whose address is ______________________________________________________________
_______________________________________________________________________________
all of the rights of the undersigned under the Warrant Agreement, with respect
to __________________________ shares of Common Stock of CARESIDE, INC. and, if
such shares shall not include all of the shares of Common Stock issuable as
provided in the Warrant Certificate, that a new Warrant Certificate of like
tenor for the number of shares not being transferred hereunder be issued in the
name of and delivered to the undersigned, and does hereby irrevocably constitute
and appoint American Stock Transfer & Trust Company, attorney, to register such
transfer on the books of CARESIDE, INC. maintained for the purpose, with full
power of substitution in the premises.
Name of Transferor:____________________________________________________________
Address of Transferor:_________________________________________________________
Tax Identification Number of Transferor:_______________________________________
Date:_________________________ Signature of Transferor:
Signature Guaranteed:
_________________________________ _____________________________________
Signatures must be guaranteed by Notice: The signature on this Form of
an eligible guarantor institution Assignment must correspond with the
(a bank, stockbroker, savings and name as written upon the face of the
loan association or credit union Warrant Certificate in every
with membership in an approved particular, without alteration or
signature guarantee medallion enlargement or any change whatever.
program) pursuant to Rule 17 Ad-15
of the Securities Exchange Act of
1934.
<PAGE>
EXHIBIT 4.1b
[LOGO]
NUMBER UNIT
[ ] CARESIDE [ ]
ORGANIZED UNDER UNIT CERTIFICATE SEE REVERSE
THE LAWS OF THE EACH UNIT CONSISTING OF ONE SHARE OF FOR CERTAIN
STATE OF COMMON STOCK, PAR VALUE $.01 PER SHARE, AND DEFINITIONS
DELAWARE ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT
CARESIDE, INC.
CUSIP 141728 20 4
THIS CERTIFIES THAT, FOR VALUE RECEIVED
UNIT
or registered assigns (the "Registered Holder") is the owner of the number of
Units specified above, each of which consists of one share of common stock, par
value $0.01 per share, of Careside, Inc. (the "Company") and one Redeemable
Common Stock Purchase Warrant to purchase one share of Common Stock (the
"Warrant"). On or prior to the Separation Time (as defined herein), this
Certificate may be combined, exchanged or transferred only as Units, and Common
Stock and Warrants evidenced by this Certificate may not be split up, exchanged
or traded separately. The Units shall automatically separate into shares of
Common Stock and Warrants as of the close of business on July 16, 1999 (the
"Separation Time"). The shares of Common Stock and Warrants comprising the Units
shall be separately tradeable commencing on the first day after the Separation
Time on which the American Stock Exchange is open for trading. The Warrants
comprising part of the Units are issued under and pursuant to a certain Warrant
Agreement dated as of June 21, 1999 (the "Warrant Agreement") between the
Company and American Stock Transfer & Trust Company, as Warrant Agent (the
"Warrant Agent"), and are subject to the terms and provisions contained therein
and on the face of the certificates covered thereby, to all of which terms and
provisions the holder of this Unit Certificate consents by acceptance hereof.
The Warrant Agreement provides for adjustment in the number of shares of Common
Stock to be delivered upon the exercise of Warrants evidenced hereby and to the
exercise price of such Warrants in certain events therein set forth. Subject to
the foregoing, the number of Warrants and the number of shares of Common Stock
comprising the Units are equal.
Copies of the Warrant Agreement are on file at the office of the Warrant
Agent at American Stock Transfer & Trust Company, 40 Wall Street, New York, New
York 10005, and are available to any Unit or Warrant holder upon written request
therefor and without cost to the requester.
This Unit Certificate is not valid unless countersigned by the Transfer
Agent and Registrar of the Company.
IN WITNESS WHEREOF, the Company has caused this Unit Certificate to be duly
executed manually or in facsimile by two of its officers thereunto duly
authorized.
Dated:
By: /s/ Thomas H. Grove By: /s/ W. Vickery Stoughton
SECRETARY CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
By:
AUTHORIZED SIGNATURE
<PAGE>
CARESIDE, INC.
The Registered Holder hereby is entitled, at any time after the close of
business on July 16, 1999, to exchange the Units represented by this Unit
Certificate for Common Stock Certificate(s) representing one share of Common
Stock for each Unit represented by this Unit Certificate and Warrant
Certificate(s) representing one Warrant for each Unit represented by this Unit
Certificate upon surrender of this Unit Certificate to the Unit Agent at its
Corporate Office specified in the Warrant Agreement together with any
documentation required by such Agent.
REFERENCE IS MADE TO THE WARRANT AGREEMENT REFERRED TO ON THE FRONT SIDE
HEREOF AND THE PROVISIONS OF SUCH WARRANT AGREEMENT SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS THOUGH FULLY SET FORTH ON THE FACE OF THIS CERTIFICATE.
COPIES OF THE WARRANT AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE
WARRANT AGENT, AMERICAN STOCK TRANSFER & TRUST COMPANY.
The following abbreviations, when used in the inscription on the face of
this certificate shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM- as tenants in common
TEN ENT- as tenants by the entireties
JT TEN- as joint tenants with
right of survivorship and
not as tenants in common
COM PROP- as community property
UNIF GIFT MIN ACT-_______________Custodian____________________
(Cust) (Minor)
under Uniform Gifts to Minors
Act ___________________________________
(State)
UNIF TRF MIN ACT-_______________Custodian (until age__________)
(Cust)
_________________under Uniform Transfers
(minor)
to Minors Act _____________________________
(State)
For Value Received,_____________________ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF
ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________________________________Unit(s)
represented by the within Certificate, and do(es) hereby irrevocably constitute
and appoint________________________________________Attorney to transfer the said
Unit(s) on the books of the within named Company with full power of substitution
in the premises.
Dated,_____________ X______________________________________
X______________________________________
NOTICE THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THIS
UNIT CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
SIGNATURE(S) GUARANTEED :____________________________________________
THE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM). PURSUANT TO SEC RULE 17 Ad-15.
<PAGE>
EXHIBIT 4.6
CARESIDE, INC.
PURCHASE WARRANT
Issued To:
PAULSON INVESTMENT COMPANY, INC.
Exercisable To Purchase
200,000 Units
of
CARESIDE, Inc.
Void after June 15, 2004
<PAGE>
This is to certify that, for value received and subject to the terms and
conditions set forth below, the Warrantholder (hereinafter defined) is entitled
to purchase, and the Company (hereinafter defined) promises and agrees to sell
and issue to the Warrantholder, at any time on or after the first anniversary of
the Effective Date (hereinafter defined) and on or before the fifth anniversary
of the Effective Date, up to 200,000 Units (hereinafter defined) at the Exercise
Price (hereinafter defined).
This Warrant Certificate is issued subject to the following terms and
conditions:
1. Definitions of Certain Terms. Except as may be otherwise clearly
required by the context, the following terms have the following meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Cashless Exercise" means an exercise of Warrants in which, in lieu of
payment of the Exercise Price, the Holder elects to receive a lesser number
of Securities such that the value of the number of Securities that such
Holder agrees not to receive, as determined by the closing price of such
Securities on the date of exercise or, if such date is not a trading day, on
the prior trading day, is equal to the Exercise Price with respect to such
exercise. A Holder may only elect a Cashless Exercise if the Securities
issuable by the Company on such exercise are publicly traded securities.
(c) "Closing Date" means the date on which the Offering is closed.
(d) "Commission" means the Securities and Exchange Commission.
(e) "Common Stock" means the common stock, $.01 par value per share, of the
Company.
(f) "Company" means Careside, Inc., a Delaware corporation.
(g) "Company's Expenses" means any and all expenses payable by the Company
or the Warrantholder, (subject to the terms, conditions and limitations set
forth in the Underwriting Agreement), in connection with the offering
described in Section 6 hereof, except Warrantholder's Expenses .
(h) "Effective Date" means the date on which the Company's Registration
Statement is declared effective by the Commission.
(i) "Exercise Price" means the price at which the Warrantholder may purchase
one Unit upon exercise of Warrants as determined from time to time pursuant
to the provisions hereof. The initial Exercise Price is $9.00.
(j) "Offering" means the initial public offering of Units made pursuant to
the Registration Statement.
2
<PAGE>
(k) "Participating Underwriter" means any underwriter participating in the
sale of the Securities pursuant to the Registration Statement.
(l) "Registration Statement" means the Company's registration statement on
Form S-1 (File No. 333-69207), including, without limitation, all pre-
effective and post-effective amendments and supplements thereto.
(m) "Rules and Regulations" means the rules and regulations of the
Commission adopted under the Act.
(n) "Securities" means the securities obtained or obtainable upon exercise
of the Warrant or securities obtained or obtainable upon exercise, exchange,
or conversion of such securities.
(o) "Underwriting Agreement" means the underwriting agreement dated June 15,
1999 between the Company and the underwriters listed on Schedule I thereto
entered into in connection with the Offering.
(p) "Unit" means one share of Common Stock and one Unit Warrant.
(q) "Unit Warrant" means a warrant to purchase one share of Common Stock
issued pursuant to the Warrant Agreement.
(r) "Warrant" means the warrant evidenced by this Warrant Certificate or any
certificate obtained upon transfer or partial exercise of the Warrant
evidenced by any such certificate.
(s) "Warrant Agreement" means that certain Warrant Agreement, dated as of
June 21, 1999, by and between the Company and American Stock Transfer & Trust
Company.
(t) "Warrantholder" means a record holder of the Warrant or Securities. The
initial Warrantholder is Paulson Investment Company, Inc.
(u) "Warrantholder's Expenses" means the sum of (i) the aggregate amount of
cash payments made to an underwriter, underwriting syndicate, or agent in
connection with an offering described in Section 6 hereof multiplied by a
fraction, the numerator of which is the aggregate sales price of the
Securities sold by such underwriter, underwriting syndicate, or agent in such
offering and the denominator of which is the aggregate sales price of all of
the securities sold by such underwriter, underwriting syndicate, or agent in
such offering and (ii) all out-of-pocket expenses of the Warrantholder,
except for the fees and disbursements of one firm retained as legal counsel
for the Warrantholder that will be paid by the Company.
2. Exercise of Warrants. All or any part of the Warrant may be exercised
commencing on the first anniversary of the Effective Date and ending at 5 p.m.
Eastern Standard time on the fifth
3
<PAGE>
anniversary of the Effective Date by surrendering this Warrant Certificate,
together with appropriate instructions, duly executed by the Warrantholder or by
its duly authorized attorney, at the office of the Company, 6100 Bristol
Parkway, Culver City, California 90230, or at such other office or agency as the
Company may designate. The date on which such instructions are received by the
Company shall be the date of exercise. If the Holder has elected a Cashless
Exercise, such instructions shall so state. Upon receipt of notice of exercise,
the Company shall immediately instruct its transfer agent to prepare
certificates for the Securities to be received by the Warrantholder upon
completion of the Warrant exercise. When such certificates are prepared, the
Company shall notify the Warrantholder and deliver such certificates to the
Warrantholder or as per the Warrantholder's instructions immediately upon
payment in full by the Warrantholder, in lawful money of the United States, of
the Exercise Price payable with respect to the Securities being purchased, if
any. If the Warrantholder shall represent and warrant that all applicable
registration and prospectus delivery requirements for sale of the Securities
received upon exercise of the Warrant have been complied with, upon sale of such
Securities the certificates for the Securities shall not bear a legend with
respect to the Act.
If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of payment of the Exercise Price.
3. Adjustments in Certain Events. The number, class, and price of the
Securities are subject to adjustment from time to time upon the happening of
certain events as follows:
(a) If the outstanding shares of Common Stock are divided into a greater
number of shares or a dividend in stock is paid on the Common Stock, the
number of shares of Securities for which the Warrant is then exercisable will
be proportionately increased and the Exercise Price will be proportionately
reduced; and, conversely, if the outstanding shares of Common Stock are
combined into a smaller number of shares of Common Stock, the number of
Securities for which the Warrant is then exercisable will be proportionately
reduced and the Exercise Price will be proportionately increased. The
increases and reductions provided for in this subsection 3(a) will be made
with the intent and, as nearly as practicable, the effect that neither the
percentage of the total equity of the Company obtainable on exercise of the
Warrants nor the price payable for such percentage upon such exercise will be
affected by any event described in this subsection 3(a).
(b) In case of any change in the Common Stock through merger, consolidation,
reclassification, reorganization, partial or complete liquidation, sale of
substantially all the capital stock or assets of the Company, or other change
in the capital structure of the Company, then, as a condition of such change,
lawful and adequate provision will be made so that the Warrantholder will
have the right thereafter to receive upon the exercise of the
4
<PAGE>
Warrant the kind and amount of shares of stock or other securities or
property to which such Warrantholder would have been entitled if, immediately
prior to such event, such Warrantholder had held the number of shares of
Common Stock obtainable upon the exercise of the Warrant (without regard to
the Cashless Exercise provisions hereof). In any such case, appropriate
adjustment will be made in the application of the provisions set forth herein
with respect to the rights and interest thereafter of the Warrantholder, to
the end that the provisions set forth herein will thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the exercise of the Warrant. The Company
will not permit any change in its capital structure to occur unless the
issuer of the shares of stock or other securities to be received by the
holder of this Warrant Certificate, if not the Company, agrees to be bound by
and comply with the provisions of this Warrant Certificate.
(c) When any adjustment is required to be made in the number of shares of
Common Stock, other securities, or the property purchasable upon exercise of
the Warrant, the Company will (i) promptly determine the new number of such
shares or other securities or property purchasable upon exercise of the
Warrant, (ii) prepare and retain on file a statement describing in reasonable
detail the method used in arriving at the new number of such shares or other
securities or property purchasable upon exercise of the Warrant and (iii)
cause a copy of such statement to be mailed to the Warrantholder within
thirty (30) days after the date of the event giving rise to the adjustment.
(d) No fractional shares of Common Stock or other securities will be issued
in connection with the exercise of the Warrant, but the Company will pay, in
lieu of fractional shares, a cash payment therefor on the basis of the mean
between the bid and asked prices of the Common Stock in the over-the-counter
market or the closing price on a national securities exchange on the day
immediately prior to exercise.
(e) If securities of the Company or securities of any subsidiary of the
Company are distributed pro rata to holders of Common Stock, such number of
securities will be distributed to the Warrantholder or his assignee upon
exercise of his rights hereunder as such Warrantholder or assignee would have
been entitled to if this Warrant had been exercised prior to the record date
for such distribution. The provisions with respect to adjustment of the
Common Stock provided in this Section 3 will also apply to the securities to
which the Warrantholder or his assignee is entitled under this subsection
3(e).
(f) Notwithstanding anything herein to the contrary, there will be no
adjustment made hereunder on account of the sale of the Common Stock or other
Securities purchasable upon exercise of the Warrant.
4. Reservation of Securities. The Company agrees that the number of shares
of Common Stock or other Securities sufficient to provide for the exercise of
the Warrant (and of the warrants received upon exercise of the Warrant) upon the
basis set forth above will at all times during the term of the Warrant be
reserved for exercise.
5
<PAGE>
5. Validity of Securities. All Securities delivered upon the exercise of
the Warrant will be duly and validly issued in accordance with their terms, and
the Company will pay all documentary and transfer taxes, if any, in respect of
the original issuance thereof upon exercise of the Warrant.
6. Registration of Securities Issuable On Exercise of Warrant.
(a) The Company will register the Securities with the Commission on the
Registration Statement so as to allow the unrestricted sale of the Securities
to the public from time to time commencing on the first anniversary of the
Effective Date and ending at 5:00 p.m. Eastern Daylight time on the fifth
anniversary of the Effective Date (the "Registration Period"). The Company
will also file such applications and other documents necessary to permit the
sale of the Securities to the public during the Registration Period in those
states in which the Units were qualified for sale in the Offering or such
other states as the Company and the Warrantholder agree.
(b) Subject to the terms and conditions of the Underwriting Agreement, the
Company will pay all of the Company's Expenses and each Warrantholder will
pay its pro rata share of the Warrantholder's Expenses relating to the
registration, offer, and sale of the Securities.
(c) The Company will file such post-effective amendments and supplements as
may be necessary to maintain the currency of the Registration Statement until
the end of the Registration Period. In addition, if the Warrantholder
participating in the registration is advised by counsel that the Registration
Statement, in its reasonable opinion, is deficient in any material respect,
the Company will use its best efforts to cause the Registration Statement to
be amended to eliminate the concerns raised.
(d) The Company will furnish to the Warrantholder the number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably
request in order to facilitate the disposition of Securities owned by it.
7. Indemnification in Connection with Registration.
(a) With respect to any Securities that are registered, the Company will
indemnify and hold harmless each selling Warrantholder, any person who
controls any selling Warrantholder within the meaning of the Act, and any
Participating Underwriter against any losses, claims, damages, or
liabilities, joint or several, to which any Warrantholder, controlling
person, or Participating Underwriter may be subject under the Act or
otherwise, and it will reimburse each Warrantholder, each controlling
person, and each Participating Underwriter for any legal or other expenses
reasonably incurred by the Warrantholder, controlling person, or
Participating Underwriter in connection with investigating or defending any
such loss, claim, damage, liability, or action, insofar as
6
<PAGE>
such losses, claims, damages, or liabilities, joint or several (or actions
in respect thereof), arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained, on the effective
date thereof, in the Registration Statement, 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; provided, however, that the
Company will not be liable in any case to the extent that any loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, in reliance upon and in conformity with written
information furnished by or on behalf of a Warrantholder for use in the
preparation thereof; provided further, however, that the indemnification
included in this subsection 7(a) with respect to any Registration Statement
which contains a preliminary prospectus shall not inure to the benefit of
any Warrantholder, controlling person or Participating Underwriter on
account of any such loss, claim, damage or liability arising from the sale
of the Warrants by such Warrantholder, controlling person or Participating
Underwriter to any person if a copy of the prospectus contained in a
Registration Statement which is first filed with the Commission pursuant to
Rule 424(b) under the Act, as amended or supplemented (the "Prospectus"),
shall not have been delivered or sent to such person within the time
required by the Act, and the untrue statement or alleged untrue statement
or omission or alleged omission made in such preliminary prospectus was
corrected in the Prospectus, provided the Company has delivered sufficient
quantities of the Prospectus to the Warrantholders, controlling persons or
Participating Underwriters. The indemnity agreement contained in this
subsection 7(a) will not apply to amounts paid to any claimant in
settlement of any suit or claim unless such payment is first approved by
the Company, such approval not to be unreasonably withheld.
(b) Each selling Warrantholder will indemnify and hold harmless the
Company, and each of its directors and officers who have signed the
Registration Statement or other filing with respect thereto or any
amendment or supplement thereto, and any person who controls the Company
within the meaning of the Act in connection therewith, against any losses,
claims, damages, or liabilities to which the Company or any such director,
officer, or controlling person may become subject under the Act or
otherwise, and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability, or action, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in
said Registration Statement or other filing related thereto, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in said
Registration Statement or other filing, or amendment or supplement, in
reliance upon and in conformity with written information furnished by such
7
<PAGE>
Warrantholder for use in the preparation thereof; provided, however, that
the indemnity agreement contained in this subsection 7(b) will not apply to
amounts paid to any claimant in settlement of any suit or claim unless such
payment is first approved by the Warrantholder, such approval not to be
unreasonably withheld.
(c) Promptly after receipt by an indemnified party under subsections 7(a)
or 7(b) above of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party, notify the indemnifying party of the commencement
thereof; but the omission to notify the indemnifying party will not relieve
it from any liability that it may have to any indemnified party otherwise
than under subsections 7(a) and 7(b).
(d) If any such action is brought against any indemnified party and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and assume, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, the defense thereof, with counsel satisfactory to such
indemnified party; and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
8. Restrictions on Transfer. This Warrant Certificate and the Warrant may
not be sold, transferred, assigned or hypothecated for a one-year period after
the Effective Date except to underwriters of the Offering or to individuals who
are either a partner or an officer of such an underwriter or by will or by
operation of law. The Warrant may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates evidencing the
same aggregate number of Warrants.
9. No Rights as a Shareholder. Except as otherwise provided herein, the
Warrantholder will not, by virtue of ownership of the Warrant, be entitled to
any rights of a shareholder of the Company but will, upon written request to the
Company, be entitled to receive such quarterly or annual reports as the Company
distributes to its shareholders.
10. Notice. Any notices required or permitted to be given hereunder will
be in writing and may be served personally or by mail; and if served will be
addressed as follows:
If to the Company:
Careside, Inc.
6100 Bristol Parkway
Culver City, California 90230
Attn: Chief Executive Officer
8
<PAGE>
If to the Warrantholder:
at the address furnished by the Warrantholder to the Company for the
purpose of notice.
Any notice so given by mail will be deemed effectively given 48 hours after
mailing when deposited in the United States mail, registered or certified mail,
return receipt requested, postage prepaid and addressed as specified above. Any
party may, by written notice to the other, specify a different address for
notice purposes.
11. Applicable Law. This Warrant Certificate will be governed by and
construed in accordance with the laws of the State of New York, without
reference to conflict of laws principles thereunder. All disputes relating to
this Warrant Certificate shall be tried before the courts of Oregon located in
Multnomah County, Oregon to the exclusion of all other courts that might have
jurisdiction.
9
<PAGE>
Dated as of June 21, 1999
CARESIDE, INC.
/s/ W. Vickery Stoughton
By: W. Vickery Stoughton
Chief Executive Officer
Agreed and Accepted as of June 21, 1999
PAULSON INVESTMENT COMPANY, INC.
/s/ Lorraine Maxfield
By: Lorraine Maxfield
Senior Vice President -- Research
10
<PAGE>
EXHIBIT 4.7
WARRANT AGREEMENT
between
CARESIDE, INC.
and
AMERICAN STOCK TRANSFER
& TRUST COMPANY
Dated as of June 21, 1999
<PAGE>
This Agreement, dated as of June 21, 1999, is between Careside, Inc., a
corporation (the "Company'), and American Stock Transfer & Trust Company, a New
York corporation (the "Warrant Agent").
WHEREAS, the Company, at or about the time that it is entering into this
Agreement, proposes to issue and sell up to 2,300,000 units ("Units") to public
investors (the "Offering"), which amount includes Units issuable upon the
exercise of the option granted to the representatives of the several
underwriters of the Offering (the "Representatives") to purchase up to 300,000
Units (solely to cover over-allotments in the sale of the Units). Each Unit
consists of one share of the Company's common stock, $0.01 par value per share,
("Common Stock"), and one Warrant (a "Warrant" and collectively, the
"Warrants"), with each Warrant being exercisable to purchase one share of Common
Stock for $9.00, upon the terms and conditions and subject to adjustment in
certain circumstances, all as set forth in this Agreement;
WHEREAS, the Company proposes to issue to the Representatives, in
connection with the Offering, warrants to purchase up to 200,000 additional
Units, with the terms of such warrants set forth in a separate agreement between
the Company and Paulson Investment Company, Inc. entered into on the date
hereof;
WHEREAS, the Company wishes to retain the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing to so act, in connection with the
issuance, transfer, exchange and replacement of the certificates evidencing the
Warrants to be issued under this Agreement (the "Warrant Certificates") and the
exercise of the Warrants; and
WHEREAS, the Company and the Warrant Agent wish to enter into this
Agreement to set forth the terms and conditions of the Warrants and the rights
of the holders thereof ("Warrantholders") and to set forth the respective rights
and obligations of the Company and the Warrant Agent, and whereas, each
Warrantholder is an intended beneficiary of this Agreement with respect to the
rights of Warrantholders herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent
The Company appoints the Warrant Agent to act as agent for the Company in
accordance with the instructions in this Agreement, and the Warrant Agent
accepts such appointment.
Section 2. Date, Denomination and Execution of Warrant Certificates
The Warrant Certificates (and the Form of Election to Purchase and the Form
of Assignment to be printed on the reverse thereof) shall be in registered form
only and shall be substantially of the tenor and purport recited in Exhibit A
hereto, and may have such letters,
2
<PAGE>
numbers or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law, or with any rule
or regulation made pursuant thereto, or with any rule or regulation of any stock
exchange on which the Common Stock or the Warrants may be listed or any
automated quotation system, or to conform to usage. After July 16, 1999, each
Warrant Certificate shall entitle the registered holder thereof, subject to the
provisions of this Agreement and of the Warrant Certificate, to purchase, on or
before the close of business on June 16, 2004 (the "Expiration Date"), one fully
paid and nonassessable share of Common Stock for each Warrant evidenced by such
Warrant Certificate, subject to adjustments as provided in Section 6 hereof, for
$9.00 (the "Exercise Price"). Each Warrant Certificate issued as a part of a
Unit offered to the public as described in the recitals, above, shall be dated
June 21, 1999; each other Warrant Certificate shall be dated the date on which
the Warrant Agent receives valid issuance instructions from the Company or a
transferring holder of a Warrant Certificate or, if such instructions specify
another date, such other date.
For purposes of this Agreement, the term "close of business" on any given
date shall mean 5:00 p.m., Eastern Standard time, on such date; provided,
however, that if such date is not a business day, it shall mean 5:00 p.m.,
Eastern Standard time, on the next succeeding business day. For purposes of this
Agreement, the term "business day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in New York are authorized or
obligated by law to be closed.
Each Warrant Certificate shall be executed on behalf of the Company by the
Chairman of the Board or its President or a Vice President, either manually or
by facsimile signature printed thereon, and have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
Each Warrant Certificate shall be manually countersigned by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any Warrant Certificate shall cease
to be such officer of the Company before countersignature by the Warrant Agent
and issue and delivery thereof by the Company, such Warrant Certificate,
nevertheless, may be countersigned by the Warrant Agent, issued and delivered
with the same force and effect as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company.
Section 3. Subsequent Issue of Warrant Certificates
Subsequent to their original issuance, no Warrant Certificates shall be
reissued except (i) Warrant Certificates issued upon transfer thereof in
accordance with Section 4 hereof, (ii) Warrant Certificates issued upon any
combination, split-up or exchange of Warrant Certificates pursuant to Section 4
hereof, (iii) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 5 hereof,
(iv) Warrant Certificates issued to reflect any adjustment or change in the
Exercise Price or the number or kind of shares purchasable thereunder pursuant
to Section 6 hereof and (v) Warrant Certificates issued upon the partial
exercise of Warrant Certificates pursuant to Section 7
3
<PAGE>
hereof. The Warrant Agent is hereby irrevocably authorized to countersign and
deliver, in accordance with the provisions of said Sections 4, 5, 6 and 7, the
new Warrant Certificates required for purposes thereof, and the Company,
whenever required by the Warrant Agent, will supply the Warrant Agent with
Warrant Certificates duly executed on behalf of the Company for such purposes.
Section 4. Transfers and Exchanges of Warrant Certificates
The Warrant Agent will keep or cause to be kept books for registration of
ownership and transfer of the Warrant Certificates issued hereunder. Such
registers shall show the names and addresses of the respective holders of the
Warrant Certificates and the number of Warrants evidenced by each such Warrant
Certificate.
The Warrant Agent shall, from time to time, register the transfer of any
outstanding Warrants upon the books to be maintained by the Warrant Agent for
that purpose, upon surrender of the Warrant Certificate evidencing such
Warrants, with the Form of Assignment duly filled in and executed with such
signature guaranteed by a banking institution or NASD member and such supporting
documentation as the Warrant Agent or the Company may reasonably require, to the
Warrant Agent at its stock transfer office in New York, New York at any time on
or before the Expiration Date, and upon payment to the Warrant Agent for the
account of the Company of an amount equal to any applicable transfer tax.
Payment of the amount of such tax may be made in cash, or by certified or
official bank check, payable in lawful money of the United States of America to
the order of the Company.
Upon receipt of a Warrant Certificate, with the Form of Assignment duly
filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered
Warrant Certificate and countersign and deliver to the transferee a new Warrant
Certificate for the number of full Warrants transferred to such transferee;
provided, however, that in case the registered holder of any Warrant Certificate
shall elect to transfer fewer than all of the Warrants evidenced by such Warrant
Certificate, the Warrant Agent in addition, shall promptly countersign and
deliver to such registered holder a new Warrant Certificate or Certificates for
the number of full Warrants not so transferred.
Any Warrant Certificate or Certificates may be exchanged at the option of
the holder thereof for another Warrant Certificate or Certificates of different
denominations, of like tenor and representing in the aggregate the same number
of Warrants, upon surrender of such Warrant Certificate or Certificates, with
the Form of Assignment duly filled in and executed, to the Warrant Agent, at any
time or from time to time after the close of business on the date hereof and
prior to the close of business on the Expiration Date. The Warrant Agent shall
promptly cancel the surrendered Warrant Certificate and deliver the new Warrant
Certificate pursuant to the provisions of this Section 4.
Section 5. Mutilated, Destroyed, Lost or Stolen Warrant Certificates
4
<PAGE>
Upon receipt by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of any
Warrant Certificate, and in the case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to them of all
reasonable expenses incidental thereto, and, in the case of mutilation, upon
surrender and cancellation of the Warrant Certificate, the Warrant Agent shall
countersign and deliver a new Warrant Certificate of like tenor for the same
number of Warrants.
Section 6. Adjustments of Number and Kind of Shares Purchasable and Exercise
Price
The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
occurrence, after the date hereof, of any of the following events:
A. In case the Company shall (i) pay a dividend in, or make a distribution
of, shares of capital stock on its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of such shares or (iii)
combine its outstanding shares of Common Stock into a smaller number of such
shares, the total number of shares of Common Stock purchasable upon the exercise
of each Warrant outstanding immediately prior thereto shall be adjusted so that
the holder of any Warrant Certificate thereafter surrendered for exercise shall
be entitled to receive at the same aggregate Exercise Price the number of shares
of capital stock (of one or more classes) which such holder would have owned or
have been entitled to receive immediately following the happening of any of the
events described above had such Warrant been exercised in full immediately prior
to the record date with respect to such event. Any adjustment made pursuant to
this Subsection shall, in the case of a stock dividend or distribution, become
effective as of the record date therefor and, in the case of a subdivision or
combination, be made as of the effective date thereof. If, as a result of an
adjustment made pursuant to this Subsection, the holder of any Warrant
Certificate thereafter surrendered for exercise shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company (whose determination shall be conclusive and shall be
evidenced by a Board resolution filed with the Warrant Agent) shall determine
the allocation of the adjusted Exercise Price between or among shares of such
classes of capital stock.
B. In the event of a capital reorganization or a reclassification of the
Common Stock (except as provided in Subsection A. above or Subsection E. below),
any Warrantholder, upon exercise of Warrants, shall be entitled to receive, in
substitution for the Common Stock to which such Warrantholder would have become
entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that such Warrantholder would have been
entitled to receive at the same aggregate Exercise Price upon such
reorganization or reclassification if such Warrants had been exercised
immediately prior to the record date with respect to such event; and in any such
case, appropriate provision (as determined by the Board of Directors of the
Company, whose determination shall be conclusive and shall be evidenced by a
certified Board resolution filed with the Warrant Agent) shall be made for the
application
5
<PAGE>
of this Section 6 with respect to the rights and interests thereafter of the
Warrantholders (including but not limited to the allocation of the Exercise
Price between or among shares of classes of capital stock), to the end that this
Section 6 (including the adjustments of the number of shares of Common Stock or
other securities purchasable and the Exercise Price thereof) shall thereafter be
reflected, as nearly as reasonably practicable, in all subsequent exercises of
the Warrants for any shares or securities or other property (or cash) thereafter
deliverable upon the exercise of the Warrants.
C. Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant is adjusted as provided in this Section
6, the Company will promptly file with the Warrant Agent a certificate signed by
the Chairman or Co-Chairman of the Board or the President or a Vice President of
the Company and by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary of the Company setting forth the number and kind of
securities or other property purchasable upon exercise of a Warrant, as so
adjusted, stating that such adjustments in the number or kind of shares or other
securities or property conform to the requirements of this Section 6, and
setting forth a brief statement of the facts accounting for such adjustments.
Promptly after receipt by the Warrant Agent of such certificate, the Company, or
the Warrant Agent at the Company's request, will deliver, by first-class,
postage prepaid mail, a brief summary of such certificate (to be supplied by the
Company if delivered by the Warrant Agent at the Company's request) to the
registered holders of the outstanding Warrant Certificates; provided, however,
that failure to file or to give any notice required under this Subsection, or
any defect therein, shall not affect the legality or validity of any such
adjustments under this Section 6; and provided, further, that, where
appropriate, such notice may be given in advance and included as part of the
notice required to be given pursuant to Section 12 hereof.
D. In case of any consolidation of the Company with, or merger of the
Company into, another corporation (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Common
Stock), or in case of any sale or conveyance to another corporation of the
capital stock or assets of the Company as an entirety or substantially as an
entirety, the surviving corporation formed by such consolidation or merger or
the corporation which shall have acquired such capital stock or assets, as the
case may be, shall execute and deliver to the Warrant Agent a supplemental
warrant agreement providing that the holder of each Warrant then outstanding
shall have the right thereafter (until the expiration of such Warrant) to
receive, upon exercise of such Warrant, solely the kind and amount of shares of
stock and other securities and property (or cash) receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock for which such Warrant would have been exercised immediately prior
to such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided in this Section. The above
provision of this Subsection shall similarly apply to successive consolidations,
mergers, sales or transfers.
The Warrant Agent shall not be under any responsibility to determine the
correctness of any provision contained in any such supplemental warrant
agreement relating to either the
6
<PAGE>
kind or amount of shares of stock or securities or property (or cash)
purchasable by holders of Warrant Certificates upon the exercise of their
Warrants after any such consolidation, merger, sale or transfer or of any
adjustment to be made with respect thereto, but subject to the provisions of
Section 20 hereof, may accept as conclusive evidence of the correctness of any
such provisions, and shall be protected in relying upon, a certificate of a firm
of independent certified public accountants (who may be the accountants
regularly employed by the Company) with respect thereto.
E. Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Warrant Agreement.
F. The Company may retain a firm of independent public accountants of
recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee of
said Board, and not disapproved by the Warrant Agent, to make any computation
required under this Section, and a certificate signed by such firm shall, in the
absence of fraud or gross negligence, be conclusive evidence of the correctness
of any computation made under this Section.
G. For the purpose of this Section, the term "Common Stock" shall mean (i)
the class of stock designated as Common Stock in the Amended and Restated
Articles of Incorporation of the Company, or (ii) any other class of stock
resulting from successive changes or reclassification of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time as a result of an
adjustment made pursuant to this Section, the holder of any Warrant thereafter
surrendered for exercise shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, thereafter the number of
such other shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in this
Section, and all other provisions of this Agreement, with respect to the Common
Stock, shall apply on like terms to any such other shares.
H. The Company may, from time to time and to the extent permitted by law,
reduce the exercise price of the Warrants by any amount for a period of not less
than 20 days. If the Company so reduces the exercise price of the Warrants, it
will give not less than 15 days' notice of such decrease, which notice may be in
the form of a press release, and shall take such other steps as may be required
under applicable law in connection with any offers or sales of securities at the
reduced price.
Section 7. Exercise and Redemption of Warrants
Unless the Warrants have been redeemed as provided in this Section 7, the
registered holder of any Warrant Certificate may exercise the Warrants evidenced
thereby, in whole at
7
<PAGE>
any time or in part from time to time after July 16, 1999 and at or prior to the
close of business on the Expiration Date, subject to the provisions of Section
8, at which time the Warrant Certificates shall be and become wholly void and of
no value. Warrants may be exercised by their holders or redeemed by the Company
as follows:
A. Exercise of Warrants shall be accomplished upon surrender of the
Warrant Certificate evidencing such Warrants, with the Form of Election to
Purchase on the reverse side thereof duly filled in and executed, to the Warrant
Agent at its stock transfer office in New York, New York, together with payment
to the Company of the Exercise Price (as of the date of such surrender) of the
Warrants then being exercised. Payment of the Exercise Price may be made by
wire transfer of good funds, or by certified or bank cashier's check, payable in
lawful money of the United States of America to the order of the Company. No
adjustment shall be made for any cash dividends, whether paid or declared, on
any securities issuable upon exercise of a Warrant. Subject to the terms and
conditions of Section 11, the Company shall pay any and all transfer tax
incurred as a result of any exercise of the Warrants.
B. Upon receipt of a Warrant Certificate, with the Form of Election to
Purchase duly filled in and executed, accompanied by payment of the Exercise
Price of the Warrants being exercised, the Warrant Agent shall promptly request
from the transfer agent with respect to the securities to be issued and deliver
to or upon the order of the registered holder of such Warrant Certificate, in
such name or names as such registered holder may designate, a certificate or
certificates for the number of full shares of the securities to be purchased,
together with cash made available by the Company pursuant to Section 8 hereof in
respect of any fraction of a share of such securities otherwise issuable upon
such exercise. If the Warrant is then exercisable to purchase property other
than securities, the Warrant Agent shall take appropriate steps to cause such
property to be delivered to or upon the order of the registered holder of such
Warrant Certificate. In addition, if it is required by law and upon instruction
by the Company, the Warrant Agent will deliver to each Warrantholder a
prospectus which complies with the provisions of Section 10 of the Securities
Act of 1933, as amended, and the Company agrees to supply the Warrant Agent with
sufficient number of prospectuses to effectuate that purpose.
C. In case the registered holder of any Warrant Certificate shall exercise
fewer than all of the Warrants evidenced by such Warrant Certificate, the
Warrant Agent shall promptly countersign and deliver to the registered holder of
such Warrant Certificate, or to his duly authorized assigns, a new Warrant
Certificate or Certificates evidencing the number of Warrants that were not so
exercised.
D. Each person in whose name any certificate for securities is issued upon
the exercise of Warrants shall for all purposes be deemed to have become the
holder of record of the securities represented thereby as of, and such
certificate shall be dated, the date upon which the Warrant Certificate was duly
surrendered in proper form and payment of the Exercise Price was made; provided,
however, that if the date of such surrender and payment is a date on which the
stock transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares as of, and the certificate for such
8
<PAGE>
shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the
Expiration Date) and the Warrant Agent shall be under no duty to deliver the
certificate for such shares until such date. The Company covenants and agrees
that it shall not cause its stock transfer books to be closed for a period of
more than 20 consecutive business days except upon consolidation, merger, sale
of all or substantially all of its assets, dissolution or liquidation or as
otherwise provided by law.
E. The Warrants outstanding at the time of a redemption may be redeemed at
the option of the Company, in whole, at any time, or in part, from time to time,
and on a pro rata basis (except as provided in Paragraph J below), if at the
time notice of such redemption is given by the Company as provided in Paragraph
F below, the Daily Price has exceeded $14.00 for the 10 consecutive trading days
immediately preceding the date of such notice, at a price equal to $0.05 per
Warrant (the "Redemption Price"). For the purpose of the foregoing sentence,
the term "Daily Price" shall mean, for any relevant day, the closing bid price
or closing price, as the case may be, on that day as reported by the principal
exchange, national market or quotation system on which prices for the Common
Stock are reported. On the redemption date the holders of record of redeemed
Warrants shall be entitled to payment of the Redemption Price upon surrender of
such redeemed Warrants to the Company at the principal office of the Warrant
Agent in New York, New York. Notwithstanding anything herein to the contrary,
the Company shall not redeem any Warrants prior to December 16, 1999. Holders
of record may exercise the Warrants at any time prior to the close of business
on the date of redemption.
F. Notice of redemption of Warrants shall be given at least 30 days prior
to the redemption date by mailing, by registered or certified mail, return
receipt requested, a copy of such notice to the Warrant Agent and to all of the
holders of record of Warrants at their respective addresses appearing on the
books or transfer records of the Company or such other address designated in
writing by the holder of record to the Warrant Agent not less than 40 days prior
to the redemption date.
G. With respect to Warrants called for redemption by the Company, from and
after such redemption date, all rights of the Warrantholders shall terminate
(except the right to receive the Redemption Price), but only if (a) no later
than one day prior to the redemption date the Company shall have irrevocably
deposited with the Warrant Agent as paying agent a sufficient amount to pay on
the redemption date the Redemption Price for all Warrants called for redemption
and (b) the notice of redemption shall have stated the name and address of the
Warrant Agent and the intention of the Company to deposit such amount with the
Warrant Agent no later than one day prior to the redemption date.
H. The Warrant Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Warrant Agent for the redemption of Warrants
to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.
I. Any amounts deposited with the Warrant Agent that are not required for
redemption of Warrants may be withdrawn by the Company. Any amounts deposited
with the
9
<PAGE>
Warrant Agent that shall be unclaimed after six months after the redemption date
may be withdrawn by the Company, and thereafter the holders of the Warrants
called for redemption for which such funds were deposited shall look solely to
the Company for payment. The Company shall be entitled to the interest, if any,
on funds deposited with the Warrant Agent and the holders of redeemed Warrants
shall have no right to any such interest.
J. If the Company fails to make a sufficient deposit with the Warrant
Agent as provided above, the holder of any Warrants called for redemption may at
the option of the holder (a) by written notice to the Company within 60 days
after the redemption date declare the notice of redemption a nullity as to such
holder, at which time the deposit made by the Company with the Warrant Agent
shall be distributed, on a pro rata basis, to all other Warrantholders or (b)
maintain an action against the Company for the Redemption Price. If the holder
brings such an action, the Company will pay reasonable attorneys' fees of the
holder. If the holder fails to bring an action against the Company for the
Redemption Price within 60 days after the redemption date, the holder shall be
deemed to have elected to declare the notice of redemption to be a nullity as to
such holder and such notice shall be without any force or effect as to such
holder. Except as otherwise specifically provided in this Paragraph J, a notice
of redemption, once mailed by the Company as provided in Paragraph F shall be
irrevocable.
Section 8. Fractional Interests
The Company shall not be required to issue any Warrant Certificate
evidencing a fraction of a Warrant or to issue fractions of shares of securities
on the exercise of the Warrants. If any fraction (calculated to the nearest
one-hundredth) of a Warrant or a share of securities would, except for the
provisions of this Section, be issuable upon the exercise of any Warrant, the
Company shall, at its option, either purchase such fraction for an amount in
cash equal to the current value of such fraction computed on the basis of the
Daily Price on the trading day immediately preceding the day upon which such
Warrant Certificate was surrendered for exercise in accordance with Section 7
hereof or issue the required fractional Warrant or share. By accepting a
Warrant Certificate, the holder thereof expressly waives any right to receive a
Warrant Certificate evidencing any fraction of a Warrant or to receive any
fractional share of securities upon exercise of a Warrant, except as expressly
provided in this Section 8.
Section 9. Reservation of Equity Securities
The Company covenants that it will at all times reserve and keep available,
free from any preemptive rights, out of its authorized and unissued equity
securities, solely for the purpose of issue upon exercise of the Warrants, such
number of shares of equity securities of the Company as shall then be issuable
upon the exercise of all outstanding Warrants ("Equity Securities"). The
Company covenants that all Equity Securities which shall be so issuable shall,
upon such issue, be duly authorized, validly issued, fully paid and
nonassessable.
The Company covenants that if any Equity Securities, required to be
reserved for the
10
<PAGE>
purpose of issue upon exercise of the Warrants hereunder, require registration
with or approval of any governmental authority under any federal or state law
before such shares may be issued upon exercise of Warrants, the Company will use
all commercially reasonable efforts to cause such securities to be duly
registered, or approved, as the case may be, and, to the extent practicable,
take all such action in anticipation of and prior to the exercise of the
Warrants, including, without limitation, filing any and all post-effective
amendments to the Company's Registration Statement on Form S-1 (Registration No.
333-69207) necessary to permit a public offering of the securities underlying
the Warrants at any and all times during the term of this Agreement; provided,
further, that in no event shall such securities be issued, and the Company is
authorized to refuse to honor the exercise of any Warrant, if such exercise
would result, in the opinion of the Company's Board of Directors, upon advice of
counsel, in the violation of any law; and provided further that, in the case of
a Warrant exercisable solely for securities listed on a securities exchange or
for which there are at least two independent market makers, in lieu of obtaining
such registration or approval, the Company may elect to redeem Warrants
submitted to the Warrant Agent for exercise for a price equal to the difference
between the aggregate low asked price, or closing price, as the case may be, of
the securities for which such Warrant is exercisable on the date of such
submission and the Exercise Price of such Warrants; in the event of such
redemption, the Company will pay to the holder of such Warrants the above-
described redemption price in cash within 10 business days after receipt of
notice from the Warrant Agent that such Warrants have been submitted for
exercise.
Section 10. Reduction of Exercise Price Below Par Value
Before taking any action that would cause an adjustment pursuant to Section
6 hereof reducing the portion of the Exercise Price required to purchase one
share of capital stock below the then par value (if any) of a share of such
capital stock, the Company will use its best efforts to take any corporate
action which, in the opinion of its counsel, may be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
such capital stock.
Section 11. Payment of Taxes
The Company covenants and agrees that it will pay when due and payable any
and all federal and state documentary stamp and other original issue taxes which
may be payable in respect of the original issuance of the Warrant Certificates,
or any shares of Common Stock or other securities upon the exercise of Warrants.
The Company shall not, however, be required (i) to pay any tax which may be
payable in respect of any transfer involved in the transfer and delivery of
Warrant Certificates or the issuance or delivery of certificates for Common
Stock or other securities in a name other than that of the registered holder of
the Warrant Certificate surrendered for purchase or (ii) to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
any Warrant Certificate until any such tax shall have been paid, all such tax
being payable by the holder of such Warrant Certificate at the time of
surrender.
11
<PAGE>
Section 12. Notice of Certain Corporate Action
In case the Company, after the date hereof, shall propose (i) to offer to
the holders of Common Stock, generally, rights to subscribe to or purchase any
additional shares of any class of its capital stock, any evidences of its
indebtedness or assets, or any other rights or options or (ii) to effect any
reclassification of Common Stock (other than a reclassification involving merely
the subdivision or combination of outstanding shares of Common Stock) or any
capital reorganization, or any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is required, or
any sale, transfer or other disposition of its property and assets substantially
as an entirety, or the liquidation, voluntary or involuntary dissolution or
winding-up of the Company, then, in each such case, the Company shall file with
the Warrant Agent and the Company, or the Warrant Agent on its behalf, shall
mail (by first-class, postage prepaid mail) to all registered holders of the
Warrant Certificates notice of such proposed action, which notice shall specify
the date on which the books of the Company shall close or a record be taken for
such offer of rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up shall take place
or commence, as the case may be, and which shall also specify any record date
for determination of holders of Common Stock entitled to vote thereon or
participate therein and shall set forth such facts with respect thereto as shall
be reasonably necessary to indicate any adjustments in the Exercise Price and
the number or kind of shares or other securities purchasable upon exercise of
Warrants which will be required as a result of such action. Such notice shall be
filed and mailed in the case of any action covered by clause (i) above, at least
ten days prior to the record date for determining holders of the Common Stock
for purposes of such action or, if a record is not to be taken, the date as of
which the holders of shares of Common Stock of record are to be entitled to such
offering; and, in the case of any action covered by clause (ii) above, at least
20 days prior to the earlier of the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up is expected to
become effective and the date on which it is expected that holders of shares of
Common Stock of record on such date shall be entitled to exchange their shares
for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up. Notwithstanding
anything to the contrary in this Section, the Company shall not be required to
deliver such notice if, in the reasonable opinion of the Company's Board of
Directors, based on advice of counsel, such notification would violate any
federal or state securities laws.
Failure to give any such notice or any defect therein shall not affect the
legality or validity of any transaction listed in this Section 12.
Section 13. Disposition of Proceeds on Exercise of Warrant Certificates, etc.
The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all moneys received by
the Warrant Agent for the purchase of securities or other property through the
exercise of such Warrants.
12
<PAGE>
The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its stock transfer
office. Copies of this Agreement may be obtained upon written request addressed
to the Warrant Agent at its stock transfer office in New York, New York.
Section 14. Warrantholder Not Deemed a Shareholder
No Warrantholder, as such, shall be entitled to vote, receive dividends or
be deemed the holder of Common Stock or any other securities of the Company
which may at any time be issuable on the exercise of the Warrants represented
thereby for any purpose whatsoever, nor shall anything contained herein or in
any Warrant Certificate be construed to confer upon any Warrantholder, as such,
any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger,
conveyance or otherwise), or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 12 hereof), or to receive
dividend or subscription rights, or otherwise, until such Warrant Certificate
shall have been exercised in accordance with the provisions hereof and the
receipt of the Exercise Price and any other amounts payable upon such exercise
by the Warrant Agent.
Section 15. Right of Action
All rights of action with respect to this Agreement are vested in the
respective registered holders of the Warrant Certificates; and any registered
holder of any Warrant Certificate, without the consent of the Warrant Agent or
of any other holder of a Warrant Certificate, may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise in respect of,
his right to exercise the Warrants evidenced by such Warrant Certificate, for
the purchase of shares of the Common Stock in the manner provided in the Warrant
Certificate and in this Agreement.
Section 16. Agreement of Holders of Warrant Certificates
Every holder of a Warrant Certificate by accepting the same consents and
agrees with the Company, the Warrant Agent and with every other holder of a
Warrant Certificate that:
A. the Warrant Certificates are transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in this Agreement;
and
B. the Company and the Warrant Agent may deem and treat the person in
whose name the Warrant Certificate is registered as the absolute owner of the
Warrant (notwithstanding any notation of ownership or other writing thereon made
by anyone other than the Company or the Warrant Agent) for all purposes whatever
and neither the Company
13
<PAGE>
nor the Warrant Agent shall be affected by any notice to the contrary.
Section 17. Cancellation of Warrant Certificates
In the event that the Company shall purchase or otherwise acquire any
Warrant Certificate or Certificates after the issuance thereof, such Warrant
Certificate or Certificates shall thereupon be delivered to the Warrant Agent
and be canceled by it and retired. The Warrant Agent shall also cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, split-up, combination or exchange. Warrant
Certificates so canceled shall be delivered by the Warrant Agent to the Company
from time to time, or disposed of in accordance with the instructions of the
Company.
Section 18. Concerning the Warrant Agent
The Company agrees to pay to the Warrant Agent from time to time, on
written demand of the Warrant Agent, reasonable compensation for all services
rendered by it hereunder and also its reasonable expenses, including counsel
fees, and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder. The
Warrant Agent agrees to use its best efforts to submit in advance a written
estimate of any costs in excess of $2,500 which it expects to incur in its
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Warrant Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Warrant Agent, arising out of or in connection
with the acceptance and administration of this Agreement.
Section 19. Merger or Consolidation or Change of Name of Warrant Agent
Any corporation into which the Warrant Agent may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. In case at the time such successor
to the Warrant Agent shall succeed to the agency created by this Agreement, any
of the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrant Certificates so countersigned;
and in case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time
14
<PAGE>
any of the Warrant Certificates shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignature under its prior name and
deliver Warrant Certificates so countersigned; and in case at that time any of
the Warrant Certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
Section 20. Duties of Warrant Agent
The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Warrant Certificates, by their acceptance thereof, shall be
bound:
A. The Warrant Agent may consult with counsel satisfactory to it (who may
be counsel for the Company or the Warrant Agent's in-house counsel), and the
opinion of such counsel shall be full and complete authorization and protection
to the Warrant Agent as to any action taken, suffered or omitted by it in good
faith and in accordance with such opinion; provided, however, that the Warrant
Agent shall have exercised reasonable care in the selection of such counsel.
Fees and expenses of such counsel, to the extent reasonable, shall be paid by
the Company, subject to the provisions of Section 18 hereof.
B. Whenever in the performance of its duties under this Agreement, the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman or Co-Chairman of the Board
or the President or a Vice President or the Secretary of the Company and
delivered to the Warrant Agent; and such certificate shall be full authorization
to the Warrant Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
C. The Warrant Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
D. The Warrant Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature on the Warrant Certificates and such
statements or recitals as describe the Warrant Agent or action taken or to be
taken by it) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
E. The Warrant Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Warrant
15
<PAGE>
Certificate; nor shall it be responsible for the making of any change in the
number of shares of Common Stock for which a Warrant is exercisable required
under the provisions of Section 6 or responsible for the manner, method or
amount of any such change or the ascertaining of the existence of facts that
would require any such adjustment or change (except with respect to the exercise
of Warrant Certificates after actual notice of any adjustment of the Exercise
Price); nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of Common Stock will, when issued, be validly issued, fully
paid and nonassessable.
F. The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or take any other action likely to involve expense
unless the Company or one or more registered holders of Warrant Certificates
shall furnish the Warrant Agent with reasonable security and indemnity for any
costs and expenses which may be incurred. All rights of action under this
Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrants or the production thereof at any
trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable benefit of
the registered holders of the Warrant Certificates, as their respective rights
or interests may appear.
G. The Warrant Agent and any stockholder, director, officer or employee of
the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
H. The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman or Co-Chairman of the Board or President or a Vice President or the
Secretary or the Controller of the Company, and to apply to such officers for
advice or instructions in connection with the Warrant Agent's duties, and it
shall not be liable for any action taken or suffered or omitted by it in good
faith in accordance with instructions of any such officer.
I. The Warrant Agent will not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
J. The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys, agents or employees and the Warrant Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys, agents or employees or for any loss to the Company resulting from
such neglect or misconduct; provided, however, that reasonable care shall have
been exercised in the selection and continued employment of such attorneys,
agents
16
<PAGE>
and employees.
K. The Warrant Agent will not incur any liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken, or any
failure to take action, in reliance on any notice, resolution, waiver, consent,
order, certificate, or other paper, document or instrument reasonably believed
by the Warrant Agent to be genuine and to have been signed, sent or presented by
the proper party or parties.
L. The Warrant Agent will act hereunder solely as agent of the Company in
a ministerial capacity, and its duties will be determined solely by the
provisions hereof. The Warrant Agent will not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own negligence, bad faith or willful conduct.
Section 21. Change of Warrant Agent
The Warrant Agent may resign and be discharged from its duties under this
Agreement upon 30 days' prior notice in writing mailed, by registered or
certified mail, to the Company. The Company may remove the Warrant Agent or any
successor warrant agent upon 30 days' prior notice in writing, mailed to the
Warrant Agent or successor warrant agent, as the case may be, by registered or
certified mail. If the Warrant Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Warrant Agent and shall, within 15 days following such appointment, give
notice thereof in writing to each registered holder of the Warrant Certificates.
If the Company shall fail to make such appointment within a period of 15 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Warrant Agent,
then the Company agrees to perform the duties of the Warrant Agent hereunder
until a successor Warrant Agent is appointed. After appointment and execution
of a copy of this Agreement in effect at that time, the successor Warrant Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed; but
the former Warrant Agent shall deliver and transfer to the successor Warrant
Agent, within a reasonable time, any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed necessary
for the purpose. Failure to give any notice provided for in this Section,
however, or any defect therein shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be.
Section 22. Issuance of New Warrant Certificates
Notwithstanding any of the provisions of this Agreement or the several
Warrant Certificates to the contrary, the Company may, at its option, issue new
Warrant Certificates in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Exercise Price or the number or kind
of shares purchasable under the several Warrant Certificates made in accordance
with the provisions of this Agreement.
17
<PAGE>
Section 23. Notices
Notice or demand pursuant to this Agreement to be given or made on the
Company by the Warrant Agent or by the registered holder of any Warrant
Certificate shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:
Careside, Inc.
6100 Bristol Parkway
Culver City, California 90230
Attn: Chief Executive Officer
Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the Company or by the holder of any Warrant
Certificate to or on the Warrant Agent shall be sufficiently given or made if
sent by first-class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Warrant Agent with the Company) as
follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Any notice or demand authorized to be given or made to the registered
holder of any Warrant Certificate under this Agreement shall be sufficiently
given or made if sent by first-class or registered mail, postage prepaid, to the
last address of such holder as it shall appear on the registers maintained by
the Warrant Agent.
Section 24. Modification of Agreement
The Warrant Agent may, without the consent or concurrence of the
Warrantholders, by supplemental agreement or otherwise, concur with the Company
in making any changes or corrections in this Agreement that the Warrant Agent
shall have been advised by counsel (who may be counsel for the Company) are
necessary or desirable to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest error herein
contained, or to make any other provisions in regard to matters or questions
arising hereunder and which shall not be inconsistent with the provisions of the
Warrant Certificates and which shall not adversely affect the interests of the
Warrantholders. As of the date hereof, this Agreement contains the entire and
only agreement, understanding, representation, condition, warranty or covenant
between the parties hereto with respect to the matters herein, supersedes any
and all other agreements between the parties hereto relating to such matters,
and may be modified or amended only by a written agreement signed by both
parties hereto pursuant to the authority granted by the first sentence of this
Section.
Section 25. Successors
18
<PAGE>
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 26. New York Contract
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.
Section 27. Termination
This Agreement shall terminate as of the close of business on the
Expiration Date, or such earlier date upon which all Warrants shall have been
exercised or redeemed, except that the Warrant Agent shall account to the
Company as to all Warrants outstanding and all cash held by it as of the close
of business on the Expiration Date.
Section 28. Benefits of this Agreement
Nothing in this Agreement or in the Warrant Certificates shall be construed
to give to any person or corporation other than the Company, the Warrant Agent,
and their respective successors and assigns hereunder and the registered holders
of the Warrant Certificates any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrant Agent, their respective successors and assigns
hereunder and the registered holders of the Warrant Certificates.
Section 29: Descriptive Headings
The descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 30. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute one and
the same instrument.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
CARESIDE, INC.
By:/s/ W. Vickery Stoughton
-----------------------------
W. Vickery Stoughton
Chief Executive Officer
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:/s/ Herbert Lemmer
-----------------------------
Vice President
20
<PAGE>
Exhibit A
VOID AFTER 5 P.M. EASTERN DAYLIGHT TIME ON June 16, 2004
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
W_____ _________ Warrants
CUSIP: 141728113
CARESIDE, INC.
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Warrants
("Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from Careside, Inc., a corporation incorporated under the laws of the
State of Delaware ("Company"), subject to the terms and conditions set forth
hereinafter and in the Warrant Agreement hereinafter more fully described (the
"Warrant Agreement"), one fully paid and nonassessable share of Common Stock,
$0.01 par value per share, of the Company ("Common Stock") upon presentation and
surrender of this Warrant Certificate with the instructions for the registration
and delivery of Common Stock filled in, at any time after July 16, 1999 and
prior to 5:00 P.M., Eastern Standard time, on June 16, 2004 or, if such Warrant
is redeemed as provided in the Warrant Agreement, at any time prior to the
effective time of such redemption, at the stock transfer office in New York, New
York, of American Stock Transfer & Trust Company, Warrant Agent of the Company
("Warrant Agent"), or of its successor warrant agent or, if there be no
successor warrant agent, at the corporate offices of the Company, and upon
payment of the Exercise Price (as defined in the Warrant Agreement) and any
applicable taxes paid either in cash, or by certified or official bank check,
payable in lawful money of the United States of America to the order of the
Company. Each Warrant entitles the holder to purchase one share of Common Stock
for $9.00. The number and kind of securities or other property for which the
Warrants are exercisable are subject to adjustment in certain events as set
forth in the Warrant Agreement, such as mergers, splits, stock dividends,
recapitalizations, asset sales, stock sales and and similar events, to prevent
dilution. Subject to the terms of the Warrant Agreement, the Company may redeem
any or all outstanding and unexercised Warrants at any time, upon 30 days'
notice, if the Daily Price has exceeded $14.00 for 10 consecutive trading days
immediately preceding the date of notice of such redemption. The redemption
price shall be equal to $0.05 per Warrant. For purposes of the foregoing
sentence, the term "Daily Price" shall mean, for any relevant day, the closing
price on that day as reported by the principal exchange, national or quotation
system on which prices for the Common Stock are reported. Subject to the terms
of the Warrant Agreement, from and after the redemption date, the
21
<PAGE>
registered holder shall have no rights with respect to the Warrants called for
redemption except for the right to receive $0.05 per Warrant upon surrender of
this Warrant Certificate. All Warrants not theretofore exercised or redeemed
will expire on June 16, 2004. The Company has agreed that it shall not redeem
any Warrants until December 16, 1999.
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of June 21, 1999, between the
Company and the Warrant Agent, to all of which terms, provisions and conditions
the registered holder of this Warrant Certificate consents by acceptance hereof.
The Warrant Agreement is incorporated herein by reference and made a part hereof
and reference is made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities of the Warrant
Agent, the Company and the holders of the Warrant Certificates. Copies of the
Warrant Agreement are available for inspection at the stock transfer office of
the Warrant Agent or may be obtained upon written request addressed to the
Company at 6100 Bristol Parkway, Culver City, California 90230, Attention:
Chief Financial Officer.
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but may make adjustment therefor in cash on the basis
of the current market value of any fractional interest as provided in the
Warrant Agreement.
The Company will not be required to honor the exercise of any Warrants if,
in the opinion of the Board of Directors, upon advice of counsel, the sale of
securities upon such exercise would be unlawful. For example, the Company would
not honor an exercise of Warrants if the sale of securities by the Company upon
exercise of Warrants would violate the securities laws of the United States, any
states thereof or other jurisdictions. The Company has agreed to use its best
efforts to cause a registration statement to continue to be effective during the
term of the Warrants with respect to such sales under the Securities Act of
1933, as amended, and to take such action under the federal securities laws, and
the laws of various states or other jurisdictions as may be required to cause
the sale of securities upon exercise of the Warrants to be lawful. Also, in
certain cases, the Company, may, but is not required to, purchase Warrants
submitted for exercise for a cash price equal to the difference between the
market price of the securities obtainable upon such exercise and the exercise
price of such Warrants.
This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
22
<PAGE>
No holder of this Warrant Certificate, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatsoever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any matter submitted to shareholders at any meeting
thereof, or give or withhold consent to any merger, recapitalization, issuance
of stock, reclassification of stock, change of par value or change of stock to
no par value, consolidation, conveyance or otherwise) or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Warrant Agreement) or to receive dividends or subscription rights or otherwise
until the Warrants evidenced by this Warrant Certificate shall have been
exercised and the Common Stock purchasable upon the exercise thereof shall have
become deliverable as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Company's Common Stock or other
class of stock purchasable upon the exercise of the Warrants evidenced by this
Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate, by accepting the same, consents
and agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatsoever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.
The Company shall not be required to issue or deliver any certificate for
shares of Common Stock or other securities upon the exercise of Warrants
evidenced by this Warrant Certificate until any tax which may be payable in
respect thereof by the holder of this Warrant Certificate pursuant to the
Warrant Agreement shall have been paid, such tax being payable by the holder of
this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
23
<PAGE>
Dated: , 1999.
CARESIDE, INC.
By:_______________________
Chief Executive Officer
Attest:_____________________
Secretary
Countersigned
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:___________________________
Authorized Officer
24
<PAGE>
Form of Election to Purchase
TO: AMERICAN STOCK TRANSFER & TRUST COMPANY:
(1) The undersigned registered holder of the attached original, executed
Common Stock Purchase Warrant Certificate, hereby irrevocably elects to exercise
undersigned's purchase rights under such Warrant with respect to __________
shares of Common Stock, as defined in the Warrant Agreement, of Careside, Inc.,
and herewith makes payment therefor in the amount of $______________, all at the
price, in the manner and on the terms and conditions specified in the within
Warrant Agreement.
(2) Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other names as is specified below:
Name:
Address:
Tax Ident. No.:
Signature
Date:
Notice: The signature on this Form of Election to Purchase must correspond with
the name as written upon the face of the Warrant Certificate in every
particular, without alteration or enlargement or any change whatever.
25
<PAGE>
Form of Assignment
FOR VALUE RECEIVED, the undersigned registered holder of the attached
original, executed Common Stock Purchase Warrant Certificate, hereby sells,
assigns and transfers unto ______________________, whose address is ___________,
all of the rights of the undersigned under the Warrant Agreement, with respect
to ________ shares of Common Stock of CARESIDE, INC. and, if such shares shall
not include all of the shares of Common Stock issuable as provided in the
Warrant Certificate, that a new Warrant Certificate of like tenor for the number
of shares not being transferred hereunder be issued in the name of and delivered
to the undersigned, and does hereby irrevocably constitute and appoint American
Stock Transfer & Trust Company, attorney, to register such transfer on the books
of CARESIDE, INC. maintained for the purpose, with full power of substitution in
the premises.
Name of Transferor:
Address of Transferor:
Tax Ident. No. of Transferor:
Signature of Transferor
Date:
Notice: The signature on this Form of Assignment must correspond with the name
as written upon the face of the Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
26
<PAGE>
EXHIBIT 4.8
WARRANT CERTIFICATE
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND SUCH SHARES AND
ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM EXCEPT UPON THE
CONDITIONS SPECIFIED IN THIS WARRANT, AND NO TRANSFER OF THIS WARRANT OR SUCH
SHARES SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE
BEEN COMPLIED WITH.
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE HEREOF ARE
SUBJECT TO ALL THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT,
DATED AS OF DECEMBER 4,1996, AMONG CARESIDE, INC. AND ITS STOCKHOLDERS, A COPY
OF WHICH THE COMPANY WILL FURNISH TO THE HOLDER OF THIS WARRANT UPON REQUEST AND
WITHOUT CHARGE.
WARRANT CERTIFICATE NO. SR-2
to Purchase Shares of Common Stock of
CARESIDE, INC.
June 21, 1999
THIS CERTIFIES THAT, for good and valuable consideration comprised of,
inter alia, the surrender of Warrant Certificate SR-1 which is hereby cancelled,
- ----------
the receipt and sufficiency of which is hereby acknowledged, S.R.One, Limited, a
Pennsylvania Business Trust, or its permitted assigns (the "Holder"), is the
registered owner of this Warrant Certificate (the "Warrant"), subject to the
terms and conditions hereinafter set forth.
This Warrant is issued pursuant to the Securities Purchase Agreement
dated as of December 17, 1998, between the Holder and the Company (the
"Securities Purchase Agreement"), pursuant to which the Company agreed to issue
and sell to the Holder, and the Holder agreed to purchase promissory notes, each
with a detachable warrant to purchase shares of the Company's Common Stock, and
as modified by the Securities Conversion Agreement dated as of June 14, 1999
between the Holder and the Company (the "Securities Conversion Agreement")
pursuant to which one-third of the promissory notes were converted into shares
of Series A Convertible Preferred Stock of the Company. Capitalized terms used
and not defined herein have the meanings set forth in the Securities Conversion
Agreement.
<PAGE>
1 Grant. This Warrant grants to the Holder the right to purchase, on or
-----
after the earlier of (i) December 17, 1999 or (ii) six months after the
completion of the Initial Public Offering of the Units and until 5:30 p.m., New
York time, on the earlier of (a) the seventh anniversary of the date of issuance
of this Warrant or (b) four years from the closing of an Initial Public
Offering, an aggregate number of shares of Common Stock ("Warrant Shares")
determined by dividing One Million Five Hundred Thousand Dollars ($1,500,000) by
either (i) $ 1.40, or (ii) if an Initial Public Offering of the Units has
occurred, eighty-five percent (85%) of the price per Unit at which the Unit is
first sold to the public in the Initial Public Offering (before discounts and
commissions) (the "Unit Price").
2 Exercise of Warrant.
-------------------
2.1. Exercise. This Warrant shall be exercisable at any time in whole
--------
and not in part. The aggregate exercise price for the purchase of the Warrant
Shares ("Exercise Price") shall be equal to eighty-five percent (85%) of the
Unit Price multiplied by the number of Warrant Shares. This Warrant may be
exercised by surrender of this Warrant with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price multiplied
by the number of Warrant Shares, at the Company's principal offices located at
6100 Bristol Parkway, Culver City, CA 90230. The Exercise Price shall be payable
by certified or official bank check or wire transfer of immediately available
funds. For purposes hereof, "Exercise Date" shall mean the date on which all
deliveries required to be made to the Company upon exercise of this Warrant
pursuant to this Section 2.1 shall have been made.
2.2. Issuance of Certificates for Warrant Shares. Upon the exercise of
-------------------------------------------
the Warrants, the issuance of certificates for Warrant Shares shall be made
forthwith (and in any event such issuance shall be made within ten (10) business
days after the Exercise Date) without charge to the Holder including, without
limitation, any tax which may be payable in respect of the issuance thereof, and
such certificates shall (subject to the provisions of Section 3 hereof) be
issued in the name of, or in such names as may be directed by, the Holder
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the Holder, and
the Company shall not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
3 Transfer of Securities. The Holder, by acceptance of this Warrant
----------------------
Certificate, covenants and agrees that it is acquiring this Warrant and, upon
exercise hereof, the Warrant Shares, for its own account, as an investment and
not with a view to distribution thereof. The Warrant Shares have not been
registered under the Securities Act of 1933, as amended (the "Act") or any state
securities laws and no transfer of any Warrant Shares shall be permitted unless
the Company has received notice of such transfer, at the address of its
principal office, in the form of the Assignment attached hereto, accompanied by
an opinion of counsel reasonably satisfactory
-2-
<PAGE>
to the Company that an exemption from registration of such Warrants Shares under
the Act is available for such transfer. Upon any exercise of this Warrant,
certificates representing the Warrant Shares and any of the other securities
issuable upon exercise of this Warrant shall bear the following legend:
The securities represented by this certificate have not
been registered under the Securities Act of 1933
("Act") or any state securities laws for public resale,
and may not be offered or sold except pursuant to (i)
an effective registration statement under the Act and
such laws or (ii) an opinion of counsel satisfactory to
the issuer that an exemption from such registration is
available.
Any purported transfer of this Warrant or any Warrant Shares not in compliance
with the provisions of this Section 3 shall be null and void.
4 Adjustments to Unit Price and Number of Securities.
--------------------------------------------------
4.1. Computation of Adjusted Unit Price. Except as hereinafter
----------------------------------
provided, in case the Company shall at any time after the date hereof issue or
sell any shares of Common Stock, including, without limitation, shares held in
the Company's treasury and shares of Common Stock issued upon the exercise of
any options, rights or warrants to subscribe for shares of Common Stock and
shares of Common Stock issued upon the direct or indirect conversion or exchange
of securities for shares of Common Stock, for a consideration per share less
than the Unit Price, then forthwith upon such issuance or sale, the Unit Price
shall (until another such issuance or sale) be reduced to an amount equal to (i)
the sum of (A) the number of shares of Common Stock outstanding immediately
prior to such issuance or sale multiplied by the then existing Unit Price, and
(B) the aggregate amount of the consideration, if any, received by the Company
upon such issuance or sale, divided by (ii) the total number of shares of Common
Stock outstanding immediately after such issuance or sale; provided, however,
that in no event shall the Unit Price be adjusted pursuant to the computations
in this Section 4.1 to an amount in excess of the Unit Price in effect
immediately prior to such computation, except in the case of a combination of
outstanding shares of Common Stock, as provided by Section 4.3 hereof.
For the purposes of any computation to be made in accordance with this
Section 4.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of
Common Stock for a consideration part or all of which shall be cash, the amount
of the cash consideration therefor shall be deemed to be the amount of cash
received by the Company for such shares (or, if shares of Common Stock are
offered by the Company for subscription, the subscription price, or, if shares
of Common Stock are sold to underwriters or dealers for public offering without
a
-3-
<PAGE>
subscription offering, the public offering price, before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith) plus any amounts payable to security
holders or any affiliate thereof, including without limitation employment
agreement, royalty, consulting agreement, covenant not to compete agreement
pursuant to any or contingent payment right or similar arrangement, agreement or
understanding, whether oral or written; all such amounts shall be valued at the
aggregate amount payable thereunder whether such payments are absolute or
contingent and irrespective of the period or uncertainty of payment, the rate of
interest, if any, or the contingent nature thereof except if the payment of such
amounts has been approved by the Holder.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as determined in good faith by the Board of
Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the record
date for the determination of stockholders entitled to receive such dividend or
other distribution and shall be deemed to have been issued without
consideration.
(iv) The reclassification of securities of the Company
other than shares of Common Stock into securities including shares of Common
Stock shall be deemed to involve the issuance of such shares of Common Stock for
a consideration other than cash immediately after the opening of business on the
day following the record date for the determination of security holders entitled
to receive such shares, and the value of the consideration allocable to such
shares of Common Stock shall be determined as provided in subsection (ii) of
this Section 4. 1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
then outstanding options, rights, warrants and upon the conversion or exchange
of then outstanding convertible or exchangeable securities.
(vi) No adjustment shall be made to the Unit Price then in
effect upon the exercise of any warrant or conversion of any Series A
Convertible Preferred Stock ("Preferred Stock") issued pursuant to the
Securities Purchase Agreement or Securities Conversion Agreement or the
conversion or exchange of convertible or exchangeable securities outstanding as
of the date of execution of the Securities Conversion Agreement.
-4-
<PAGE>
4.2. Options, Rights, Warrants and Convertible and Exchangeable
----------------------------------------------------------
Securities. In case the Company shall at any time after the date hereof grant or
- ----------
issue options, rights or warrants to subscribe for shares of Common Stock, or
issue any securities convertible into or exchangeable for shares of Common
Stock, where the aggregate consideration per share is less than the Unit Price
in effect immediately prior to the issuance of such options, rights or warrants,
or such convertible or exchangeable securities, the Unit Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 4.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under such options, rights or warrants shall be deemed
to be issued and outstanding at the time such options, rights or warrants were
issued.
(b) The aggregate consideration for any such options, rights or
warrants shall be equal to the minimum purchase price per share provided for in
such options, rights or warrants at the time of issuance, plus the
consideration, if any, received by the Company for such options, rights or
warrants.
(c) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities.
(d) The aggregate consideration for any such convertible or
exchangeable securities shall be equal to the consideration received by the
Company for such securities, plus the total consideration, if any, receivable by
the Company upon the conversion or exchange thereof.
(e) If any change shall occur in the exercise price per share
provided for in any of such options, rights or warrants or in the price per
share at which such convertible or exchangeable securities are convertible or
exchangeable, such options, rights or warrants or convertible or exchangeable
securities, as the case may be, shall be deemed to have expired or terminated on
the date when such price change became effective in respect of shares not
theretofore issued pursuant to the exercise or conversion or exchange thereof,
and the Company shall be deemed to have issued upon such date new options,
rights or warrants or convertible or exchangeable securities at the new price in
respect of the number of shares issuable upon the exercise of such options,
rights or warrants or the conversion or exchange of such convertible or
exchangeable securities.
(f) In case there has been any adjustment hereunder in the Unit
Price by reason of the offer, issue or sale of any subscription or purchase
rights or options or any convertible or exchangeable securities or obligations
and the purchase, conversion or exchange
-5-
<PAGE>
privilege so created thereafter terminates unexercised or changes, such Unit
Price shall as of the date of such termination or change be adjusted to reflect
such termination or change.
4.3. Subdivision and Combination. In case the Company shall at any
---------------------------
time subdivide or combine the outstanding shares of Common Stock, the Unit Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
4.4. Adjustment in Number of Securities. Upon each adjustment of the
----------------------------------
Unit Price pursuant to the provisions of this Section 4, the number of Warrant
Shares issuable on exercise of this Warrant shall be adjusted to the nearest
full amount by multiplying a number equal to the Unit Price in effect
immediately prior to such adjustment by the number of Warrant Shares issuable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product so obtained by the adjusted Unit Price.
4.5. Definition of Common Stock. For the purpose of this Agreement,
--------------------------
the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Certificate of Incorporation of the Company as may be amended after
the date hereof, or (ii) any other class of stock resulting from successive
changes or modifications of such Common Stock consisting solely of changes in
par value, or from par value to no par value, or from no par value to par value.
4.6. Merger or Consolidation. In the event there is proposed any
-----------------------
consolidation of the Company with, or merger of the Company with or into,
another corporation, other than a merger or consolidation in which the Company
is the surviving corporation and after which at least fifty percent (50%) of the
outstanding voting securities of the Company are owned by the stockholders of
the Company immediately prior to such merger or consolidation, subject to its
obligations of confidentiality, the Company shall provide the Holder with not
less than 30 days' prior written notice of the proposed effective date of such
merger or consolidation (the "Effective Date"). The Holder shall be entitled to
exercise its Warrants at any time up to the third business day prior to the
Effective Date, and this Warrant shall, if not so exercised, terminate and be of
no further force and effect on the Effective Date (or such later date on which
the merger or consolidation becomes effective). Any such exercise by the Holder
may be conditioned upon and made subject to the consummation of the merger or
consolidation.
4.7. No Adjustment of Exercise Price in Certain Cases. No adjustment
------------------------------------------------
of the Exercise Price shall be made:
(a) Upon the issuance or sale of this Warrant or the other
warrants pursuant to the Securities Purchase Agreement and the Securities
Conversion Agreement or the shares of Common Stock issuable upon the exercise of
this Warrant or such other warrants.
-6-
<PAGE>
(b) Upon the issuance or conversion, sale of shares of Preferred
Stock or the issuance of warrants upon conversion of shares of Preferred stock
or upon the issuance of shares of Common Stock pursuant to exercise of such
warrants.
(c) If the amount of said adjustment shall be less than two
cents (24) per Warrant Share; provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least two cents (24) per security issuable upon exercise of the Warrants.
4.8. Dividends and Other Distributions. In the event that the Company
---------------------------------
shall at any time prior to the exercise of this Warrant declare a dividend
(other than a dividend consisting solely of shares of Common Stock) or otherwise
distribute to its stockholders any assets, property, rights, evidence of
indebtedness, securities (other than shares of Common Stock), whether issued by
the Company or by another, or any other thing of value, the Holder of this
Warrant shall thereafter be entitled, in addition to the shares of Common Stock
or other securities and property receivable upon the exercise thereof, to
receive, upon the exercise of this Warrant, the same property, assets, rights,
evidences of indebtedness, securities or any other thing of value that they
would have been entitled to receive at the time of such dividend or distribution
if this Warrant had been exercised immediately prior to such dividend or
distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Section 4.8.
5 Exchange and Replacement of Warrant. Upon receipt by the Company of
-----------------------------------
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it, and reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor, in lieu thereof.
6 Elimination of Fractional Interests. The Company shall not be required
-----------------------------------
to issue certificates representing fractions of shares of Common Stock upon the
exercise of this Warrant, but instead shall pay cash in lieu of such fractional
interests to the Holder based on the Fair Market Value of the Common Stock as
determined in good faith by the Board of Directors of the Company. For this
purpose, the "Fair Market Value" of a share of Common Stock on any day means:
(a) if the principal market for the Common Stock is The New York Stock Exchange,
American Stock Exchange or any other national securities exchange or The Nasdaq
National Market, the closing sales price of the Common Stock on such day as
reported by such exchange or market, or on a consolidated tape reflecting
transactions on such exchange or market, or (b) if the principal market for the
Common Stock is not a national securities exchange or The Nasdaq National Market
and the Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System, the mean between the closing bid and the closing
asked
-7-
<PAGE>
prices for the Common Stock on such day as quoted on such System, or (c) if the
Common Stock is not quoted on the National Association of Securities Dealers
Automated Quotations System, the price therefor reported by the National
Quotation Bureau, Inc.; provided that if none of (a), (b) or (c) above is
applicable, or if no trades have been made or no quotes are available for such
day, the Fair Market Value of the Common Stock shall be determined, in good
faith, by the Board of Directors of the Company.
7 Reservation and Listing of Securities. The Company shall at all
-------------------------------------
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of this Warrant, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of this Warrant and payment of the Exercise Price therefor,
all shares of Common Stock and other securities issuable upon such exercise
shall be duly and validly issued, fully paid, nonassessable and not subject to
the preemptive rights of any stockholder.
8 Notices to Warrant Holder. Nothing contained in this Agreement
-------------------------
shall be construed as conferring upon the Holder the right to vote or to consent
or to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of this Warrant and its exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company or
any option right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale, of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date, or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing
-8-
<PAGE>
the transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in connection
with the declaration or payment of any such dividend, or the issuance of any
convertible or exchangeable securities, or subscription rights, options or
warrants, or any proposed dissolution, liquidation, winding up or sale.
9 Notices. All notices, requests, consents and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested
in accordance with Section 5.8 of the Securities Conversion Agreement.
10 Supplements and Amendments. The Company and the Holder may from
--------------------------
time to time supplement or amend this Warrant in writing in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provision herein or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Holder may deem necessary or desirable.
11 Successors. All the covenants and provisions of this Warrant
----------
shall be binding upon and inure to the benefit of the Company, the Holder and
their respective successors and assigns hereunder.
12 Governing Law: Submission to Jurisdiction. This Warrant shall be
-----------------------------------------
governed by, and construed in accordance with, the laws of the State of
Delaware.
13 Entire Agreement. The Securities Purchase Agreement, the
----------------
Securities Conversion Agreement, this Warrant and the promissory note issued
contemporaneously with this Warrant pursuant to the Securities Conversion
Agreement, contain the entire understanding between the parties hereto and
supersede all prior agreements and understandings, written or oral, with respect
to the subject matter hereof and thereof.
14 Severability. If any provision of this Warrant shall be held to
------------
be invalid and unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Warrant.
15 Captions. The caption headings of the Sections of this Warrant
--------
are for convenience of reference only and are not intended, nor should they be
construed, as a part of this Warrant and shall be given no substantive effect.
16 Benefits of this Agreement. Nothing in this Warrant shall be
--------------------------
construed to give to any person or corporation other than the Company and the
Holder of the Warrant or Warrant Shares any legal or equitable right, remedy or
claim under this Warrant; and this Warrant shall be for the sole and exclusive
benefit of the Company and the Holder.
-9-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, as of the day and year first above written.
CARESIDE, INC.
By: /s/ James Koch
------------------------------------
Name: James Koch
Title: Chief Financial Officer
-10-
<PAGE>
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 2.1
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase shares of Common Stock.
In accordance with the terms of Section 2 of Warrant No. S.R.-2 dated
as of June 21, 1999 issued by Careside, Inc. to S.R.One, Limited, the
undersigned requests that a certificate for such securities be registered in the
name of _____________________ whose address is ___________________________ and
that such Certificate be delivered to ____________________ whose address is
_____________________________________.
Dated:
Signature:____________________________
Print Name:___________________________
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant.)
(Insert Social Security or Other Identifying
Number of Holder)
-11-
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the Holder if such Holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED __________________ here sells, assigns and
transfers unto _____________________________________________________________
(Please print name and address of transferee)
this Warrant, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _______________ Attorney, to transfer
this Warrant on the books of Careside, Inc. with full power of substitution.
Dated:
Signature:________________________
Print Name:______________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate.)
_________________________________
(Insert Social Security or Other Identifying
Number of Holder)
-12-
<PAGE>
EXHIBIT 4.9
NEW NOTE
--------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM.
PROMISSORY NOTE
$2,000,000 Philadelphia, PA
June 21, 1999
FOR VALUE RECEIVED, CARESIDE, INC., a Delaware corporation with
offices at 6100 Bristol Parkway, Culver City, California 90230 ("Maker")
promises to pay to the order of S.R. One, Limited, a Pennsylvania Business
Trust, ("Payee"), or to such other person or at such other place as Payee may
designate from time to time in writing, the principal amount of Two Million
Dollars ($2,000,000) in lawful money of the United States of America, together
with such interest as may be payable as hereinafter provided. This Note is
issued pursuant to the Securities Purchase Agreement dated December 17, 1998
between Maker and Payee (the "Securities Purchase Agreement") and as modified by
the Securities Conversion Agreement, dated as of June 14, 1999, between Maker
and Payee (the "Securities Conversion Agreement"). This note represents the
remaining balance under those certain notes dated December 28, 1998 and January
13, 1999 each in the original principal amount of $1,500,000 (the "Original
Notes"). Simultaneously with the issuance of this Note, $1,000,000 of the
principal amount under the Original Notes, together with accrued interest
thereon, was converted into preferred stock of Maker (the "Conversion"). In
connection with the Conversion, Maker and Payee agreed to certain changes to the
terms of the Original Notes. The Original Notes having been surrendered and
canceled, this Note is being issued as an amendment and restatement of the
Original Notes insofar as they represent the portion of the principal and
interest thereunder not converted to preferred stock (the "Remaining Balance").
Interest on the Remaining Balance accrued but not paid prior to the date hereof
shall be due and owing pursuant to this Note.
1. Maturity. The principal amount outstanding under the Note will
--------
be due and payable at the earliest to occur of (i) the closing of a private
equity financing of at least $8,000,000, or (ii) December 17, 1999 ("Maturity").
2. Interest Payments. Interest payable on the outstanding principal
-----------------
will be calculated at the rate of eight percent (8%) per annum from the date
hereof through and including June 30, 1999. Commencing July 1, 1999 interest
shall be calculated at the rate of ten percent (10%) per annum. In either case,
interest shall be payable in cash on a quarterly basis on the last business day
of each calendar quarter, or on Maturity if other than the last day of a
calendar
<PAGE>
quarter, commencing with the last business day of the calendar quarter which
includes the date hereof.
3. Optional Prepayment.
-------------------
(a) From and after the date hereof, provided demand for
repayment has not been made, Maker shall have the privilege at any time and from
time to time of prepaying this Note in whole or in part (each, a "Prepayment"),
provided that Maker sends a notice (each, a "Prepayment Notice") to Payee at
least 15 days prior to the date of such prepayment (each, a "Prepayment Date").
There shall be no premium or penalty in connection with any Prepayment. Each
Prepayment shall be applied first against accrued interest, if any, and then
against principal outstanding in the inverse order of the maturity of the
installments thereof. Each Prepayment Notice shall set forth the Prepayment Date
and the amount of the Prepayment, specifying the amount thereof being applied
against accrued interest and the amount thereof being applied against principal.
4. Conversion. All of any portion of the remaining principal, plus
----------
accrued interest thereon, shall be convertible at the option of Payee,
exercisable after December 1, 1999, into shares of Series A Convertible
Preferred Stock determined on the same basis as the terms set forth in the
Securities Conversion Agreement.
5. Security. The indebtedness outstanding under this Note will
--------
be unsecured. Maker covenants that it will not create, incur, assume or permit
any mortgage, pledge, lien, security interest or other preferential arrangement,
charge or encumbrance of any nature upon or with respect to the assets of the
Maker except for mortgages, pledges, liens, security interests or other
preferential arrangements, charges or encumbrances on the assets of the Maker
incurred, assumed or permitted pursuant to any lease financing for up to
$3,000,000 undertaken by the Maker.
6. Seniority. The indebtedness outstanding under this Note will be
---------
considered senior debt and will not be subordinated to any other indebtedness of
the Maker except insofar as Maker has granted security to Finova Technology
Finance, Inc. in connection with equipment lease financing obtained from such
lender.
7. Events of Default. The occurrence of one or more of the
-----------------
following events (after the expiration of any stated notice or cure period)
shall constitute an event of default ("Event of Default") hereunder:
(a) Maker shall fail to make any payment due to Payee under this
Note within ten (10) days after the same shall become due and payable, whether
at Maturity, by acceleration or otherwise;
-2-
<PAGE>
(b) If Maker becomes insolvent, bankrupt or generally fails to
pay its debts as such debts become due; is adjudicated insolvent or bankrupt;
admits in writing its inability to pay its debts; or shall suffer a custodian,
receiver or trustee for it or substantially all of its property to be appointed
and if appointed without its consent, not be discharged within ninety (90) days;
makes an assignment for the benefit of creditors; or suffers proceedings under
any law related to bankruptcy, insolvency, liquidation or the reorganization,
readjustment or the release of debtors to be instituted against it, and if
contested by it, not dismissed or stayed within ninety (90) days; if proceedings
under any law related to bankruptcy, insolvency, liquidation, or the
reorganization, readjustment or the release of debtors is instituted or
commenced by Maker; if any order for relief is entered relating to any of the
foregoing proceedings; if Maker shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts; or if Maker shall by
any act or failure to act indicate its consent to, approval of or acquiescence
in any of the foregoing;
(c) Maker fails to perform in accordance with any other terms or
conditions in this Note, Securities Purchase Agreement or the Securities
Conversion Agreement between Maker and Payee and Maker has failed to cure the
same within thirty (30) days following its receipt of written notice of said
Event of Default hereunder or of a default thereunder;
(d) Maker sells or otherwise transfers substantially all of its
assets, discontinues its business, voluntarily or involuntarily dissolves, or
more than fifty percent (50%) of the voting power of the equity of Maker is
transferred to a single acquirer or group of acquirers acting in concert in a
single transaction or series of related transactions.
8. Remedies. Upon the occurrence of any Event of Default, at the
--------
option of Payee:
(a) the entire unpaid principal sum outstanding hereunder plus
any and all interest accrued thereon plus all other sums due and payable to
Payee hereunder shall become immediately due and payable; and
(b) Payee may exercise any and all other rights and remedies at
law or in equity.
9. Remedies Cumulative, etc.
-------------------------
(a) No right or remedy conferred upon or reserved to Payee
hereunder or now or hereafter existing at law or in equity is intended to be
exclusive of any other right or remedy, and each and every such right or remedy
shall be cumulative and concurrent, and in addition to every other such right or
remedy, and may be pursued singly, concurrently, successively or otherwise, at
the sole discretion of Payee, and shall not be exhausted by any one exercise
thereof but may be exercised as often as occasion therefor shall occur.
-3-
<PAGE>
(b) Maker agrees that any action or proceeding against it to
enforce this Note may be commenced in state or federal court in any county in
the State of Delaware.
10. No Setoff. Maker shall not be permitted to set off any
---------
obligation owed to Payee hereunder against any obligations owed by Payee to
Maker, if any, unless such obligation setting off payments hereunder has been
finally determined to be owed to Maker and such determination is not appealable
by Payee.
11. Costs and Expenses. Following the occurrence of any Event of
------------------
Default, Maker shall pay upon demand all costs and expenses (including all
attorneys' fees and expenses) incurred by Payee in the exercise of any of its
rights, remedies or powers to enforce this Note and any amount thereof not paid
promptly following demand therefor shall be added to the principal sum hereunder
and shall bear interest as set forth in Section 2 hereof, from the date of such
demand until paid in full.
12. Notices. All notices required to be given to any of the parties
-------
hereunder shall be in writing and shall be deemed to have been sufficiently
given for all purposes when presented personally to such party or sent by
certified or registered mail, return receipt requested, to such party at its
address set forth below:
If to Maker: CARESIDE, INC.
-----------
6100 Bristol Parkway
Culver City, CA 90230
Attn: President and
Chief Executive Officer
Facsimile No.: 310-338-6789
With a copy to: Pepper Hamilton LLP
--------------
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Attn: Julia D. Corelli, Esq.
If to Payee: S.R. One, Limited
-----------
4 Towers Bridge
200 Barr Harbor Drive
Suite 250
West Conshohocken, PA 19428
Attn: Ms. Brenda Gavin
Facsimile No.: ____________
Such notice shall be deemed to be given when received if delivered
personally or three (3) business days after the date mailed to a recipient in
the same country as the sender, or
-4-
<PAGE>
seven (7) business days to any other recipient. Any notice mailed shall be sent
by certified or registered mail. Any notice of any change in such address shall
also be given in the manner set forth above. Whenever the giving of notice is
required, the giving of such notice may be waived in writing by the party
entitled to receive such notice.
13. Severability. In the event that any provision of this Note is
------------
held to be invalid, illegal or unenforceable in any respect or to any extent,
such provision shall nevertheless remain valid, legal and enforceable in all
such other respects and to such extent as may be permissible. Any such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Note, but this Note shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
14. Successors and Assigns. This Note inures to the benefit of Payee
----------------------
and binds Maker, and its respective successors and assigns, and the words
"Payee" and "Maker" whenever occurring herein shall be deemed and construed to
include such respective successors and assigns.
15. Entire Agreement. This Note embodies the entire understanding and
----------------
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersedes all prior agreements, understandings
and inducements, whether express or implied, oral and written.
16. Modification of Agreement. This Note may not be modified, altered
-------------------------
or amended, except by an agreement in writing signed by both Maker and Payee.
17. No Presentment, Etc. Maker hereby waives presentment, demand,
-------------------
notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, Event of Default or enforcement of this Note.
18. No Waiver. Payee shall not, by any act, delay, omission or
---------
otherwise, be deemed to have waived any of its rights or remedies hereunder,
unless such waiver shall be in writing and signed by Payee. A waiver on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy on any future occasion.
19. Governing Law. This Note shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
-5-
<PAGE>
IN WITNESS WHEREOF, Maker has duly executed this Promissory Note this
21st day of June 1999.
CARESIDE, INC.
By: /s/ James Koch
-----------------------------------
Name: James Koch
Title: Chief Financial Officer
-6-
<PAGE>
Exhibit 10.22
PRODUCT DISTRIBUTION AND SUPPLY AGREEMENT
This Distribution and Supply Agreement is made as of May 20, 1999, by and
between CARESIDE, INC., a Delaware corporation, having an office at 6100 Bristol
Parkway, Culver City, CA 90230 (hereinafter referred to as "CARESIDE") and CDC
Technologies, Inc., a Delaware corporation, having an office at One Great Hill
Road, Oxford, CT 06478 (hereinafter referred to as "CDC").
WITNESSETH:
IN CONSIDERATION of the mutual covenant and conditions contained herein, it is
agreed as follows:
I. CDC hereby appoints Careside to sell and distribute CDC products, Schedule 1
on a nonexclusive basis in the United States of America, in the human market
agrees to:
A. Sell CDC Products to Careside in accordance with current CDC distributor
policies and procedures to meet Careside requirements for resale. CDC
reserves the right to add or delete products and change the price shown
in Schedule 1. Prices are subject to change at any time with prior notice
of thirty (30) days by sending Careside a revised Distributor Price List
which shall become effective as of the date appearing thereon.
B. Conduct for Careside meetings of a technical and sales nature as mutually
agreed and reasonably requested.
C. Supply requested inventory levels for existing and new products
commensurate with market potential of such Products in the geographical
area covered by Careside.
D. Have CDC Products, upon shipment meet the applicable requirements of the
Federal Food, Drug and Cosmetic Act.
E. Establish reasonable credit limitations and modify these limits, as CDC
deems necessary. Payment terms will be 30 days from the date of invoice.
II. Careside hereby accepts said appointment represents that it has adequate
facilities and personnel to perform the service hereinafter indicated, and
agrees to :
A. Promote the sale of authorized CDC Products through Careside sales
organization.
B. Only buy CDC Product directly from CDC except when otherwise authorized
throughout the transfer of merchandise procedure and with the prior
written consent of CDC.
1
<PAGE>
Page 2
C. Comply with the current policies and procedures of CDC and to perform the
functions of a Distributor independently and not assign said functions in
whole or in part to other Distributors without CDC's prior written
consent.
D. Careside will be permitted to alter the CDC Products in accordance with
Schedule 2.
E. Provide CDC, at no charge, a report of sales of CDC Product by end user
name and address, monthly.
F. Comply with all published policies regarding minimum order quantities,
freight charge assessments, service charge assessments, and drop-ship
charges for stocked items.
G. Honor and properly present all registered and unregistered CDC trademarks
and trade names.
H. Comply with CDC policy with respect to return of merchandise making no
returns without the written authorization of CDC. Refer to CDC
representative any request for return of merchandise.
I. Accept the obligation to keep its accounts current and to pay all
invoices in accordance with CDC terms of sale. CDC may cancel this
agreement without prior notice for failure to comply with payment terms.
J. For the purpose of determining financial responsibility, furnish CDC with
current financial statements and/or sales data in form satisfactory to
CDC upon request.
III. CDC will warranty it's products for one year or until the expiration date
on reagents whichever is earlier from the date of sale.
IV. Careside agrees to ship all CDC Products with label integrity intact and
accompanied by the technical product information as provided by CDC.
Careside additionally agrees not to ship expired product, product damaged in
storage of handling, or improperly stored material. Careside agrees to be
responsible to the customer for all consequences and liabilities arising
from interface errors, the shipment of expired product, product damage in
storage or handling or improperly stored material. Careside agrees to
maintain proper in-house shelf life as established by CDC.
CDC will support it's products in accordance with it's warranty policy.
After the expiration of the warranty period CDC may directly sell a service
contract to Careside accounts or bill them directly for work performed
outside of warranty and service contracts.
2
<PAGE>
Page 3
V. This agreement is personal in nature and cannot be assigned or transferred
and shall automatically terminate upon the insolvency of Careside or by the
transfer of Careside's business or control thereof to parties other than
those in control at the time of the execution of this agreement.
VI.This agreement shall continue in force for two years until the termination
by either party hereto, with or without cause, on thirty (30) days notice in
writing to the other party.
VII.This agreement constitutes the entire agreement between the parties with
respect to sales of the authorized CDC Products.
VIII.During the term of this Agreement and for three (3) years after the
termination of this Agreement both parties agree to hold confidential
information in confidence for the disclosing party.
SCHEDULE 1
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Part # CDC Product Price
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
MD0800 MD800 *
- --------------------------------------------------------------------------------------------------
MD0700 MD700 *
- --------------------------------------------------------------------------------------------------
200104 HEMASET-3 *
- --------------------------------------------------------------------------------------------------
620001 TECHTROL L-1 *
- --------------------------------------------------------------------------------------------------
620002 TECHTROL L-2 *
- --------------------------------------------------------------------------------------------------
620003 TECHTROL L-3 *
- --------------------------------------------------------------------------------------------------
610500 PROBECLENZ *
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
* Omitted pursuant to a request for confidential treatment. The material has
been filed separately with the Securities and Exchange Commission.
SCHEDULE 2
Careside is permitted subject to CDC's written approval to attach an interface
to the CDC Hematology device and reagent kits. "Interface" shall mean the
intellectual property, including but not limited to hardware and software, that
functions as an interface between the Careside system and the CDC Hematology
device and reagent kits, including intellectual property, hardware and software,
that connects the CDC Hematology device and reagent system to the Careside
system to operate or control the operation of the CDC Hematology device and
reagent system and permits the Careside system to read and store data produced
by the CDC Hematology device and reagent system.
3
<PAGE>
Page 4
IN WITNESS WHEREOF, the Parties have executed this Agreement, by their duly
authorized representatives, as of the day and year first above written.
CDC TECHNOLOGIES, INC. CARESIDE, INC.
/s/Gino Pereira /s/W. Vickery Stoughton
_______________________ _______________________________________
Gino Pereira Name:W. Vickery Stoughton
Chief Financial Officer Title:Chief Executive Officer
5/25/99
4
<PAGE>
EXHIBIT 10.37
S. R. ONE, LIMITED
and
CARESIDE, INC.
============================================
SECURITIES CONVERSION AGREEMENT
============================================
Dated June 14, 1999
<PAGE>
THIS SECURITIES CONVERSION AGREEMENT (the "Agreement") is made this 14th
---------
day of June, 1999, by and between S.R. One, Limited, a Pennsylvania business
trust with its principal office located at 4 Towers Bridge, 200 Bar Harbor
Drive, West Conshohocken, PA 19428 ( "Investor"), and CARESIDE, INC., a Delaware
--------
corporation with its principal offices located at 6100 Bristol Parkway, Culver
City, California 90230 (the "Company").
-------
W I T N E S S E T H:
-------------------
WHEREAS, in connection with the Company's bridge financing pursuant to a
certain Securities Purchase Agreement, dated December 17, 1998 by and between
Investor and the Company (the "Securities Purchase Agreement"), Investor
purchased promissory notes of the Company in the aggregate principal amount of
$3,000,000 (the "Existing Notes"). As partial consideration for its
--------------
obligations under the Securities Purchase Agreement, S.R. One received a
detachable warrant to purchase shares of Common Stock of the Company (the
"Warrant Certificate SR-1"). In connection therewith, Investor was granted
- -------------------------
certain rights regarding the registration of the Common Stock under a
Registration Rights Agreement, dated December 17, 1998 by and between the
Company and Investor (the "Registration Rights Agreement").
-----------------------------
WHEREAS, the Company and Investor desire, simultaneously with the Closing
to exchange one-third of principal and interest under the Existing Notes for
shares of Series A Convertible Preferred Stock of the Company.
WHEREAS, in connection with the conversion of a portion of the Existing
Notes to Series A Convertible Preferred Stock, the Company and Investor desire
to exchange the Warrant Certificate SR-1 for an amended warrant (the "Warrant
-------
Certificate SR-2") and to amend and restate the Registration Rights Agreement.
- ----------------
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, do hereby agree as follows:
ARTICLE 1.
Definitions
-----------
Section 1.1. "Definitions. Capitalized terms used but not defined
-----------
herein shall have the meaning set forth in this Section 1.1.
1.1.1. "Closing" shall mean the date of consummation of the
-------
Company's Initial Public Offering.
1.1.2. "Common Stock" shall mean the common capital stock of the
------------
Company, $0.1 par value per share.
1.1.3. "Existing Notes" means the promissory notes originally
--------------
issued to Investor referenced in the recitals hereto.
1.1.4. "Governmental Entity" means any federal, state, local or
-------------------
foreign government or governmental body, or any political subdivision thereof,
including any Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
<PAGE>
1.1.5. "Initial Public Offering" means the first offering of the
-----------------------
Company's securities registered with the SEC under the Securities Act.
1.1.6. "Law" or "Regulation" means any applicable law, statute,
--- ----------
rule, ordinance, regulation, order, decree, edict or other requirement of any
Governmental Entity.
1.1.7. "Lien" means any mortgage, lien, security interest, pledge,
----
negative pledge, encumbrance, assessment, title retention agreement, restriction
or restraint on transfer, defect of title, charge in the nature of a lien or
security interest, or option (whether consensual, statutory or otherwise).
1.1.8. "New Note" means the promissory note delivered to Investor
--------
pursuant to Section 2.1.2 hereof and in the form of Exhibit B hereof.
---------
1.1.9. "Person" means an individual, a sole proprietorship, a
------
corporation, a partnership, a limited liability company or partnership, a joint
venture, an association, a trust, or any other entity or organization, including
a Governmental Entity.
1.1.10. "Registration Statement" means the Company's registration
----------------------
statement on Form S-1 which the Company has filed with the SEC, as amended, the
most recent draft copy of which is attached hereto as Exhibit E.
---------
1.1.11. "Regulation D" means Regulation D promulgated by the SEC
------------
under the Securities Act, as amended from time to time.
1.1.12. "SEC" means the United States Securities and Exchange
---
Commission or any successor Governmental Entity.
1.1.13. "Series A Convertible Preferred Stock" means the series of
------------------------------------
preferred stock of the Company, the terms and conditions of which are set forth
in the Certificate of Designations attached hereto as Exhibit A.
---------
1.1.14. "Securities Act" means the Securities Act of 1933, as
--------------
amended, and the Regulations promulgated thereunder or with respect thereto, or
any successor or substitute Laws.
1.1.15. "Shares" means shares of Common Stock of the Company issued
------
by the Company upon exercise of Warrant Certificate SR-2.
1.1.16. "Transaction" means the conversion of a portion of the
-----------
Existing Notes pursuant to Article 2 hereof, and the matters related thereto, as
---------
set forth herein.
1.1.17. "Unit" means a unit comprised of one share of Common Stock
----
of the Company and a warrant to purchase one share of Common Stock of the
Company.
1.1.18. "Warrant Certificate SR-1" means the detachable warrant
------------------------
originally issued with the SR-1 Notes to Investor referenced in the recitals
hereto.
-2-
<PAGE>
1.1.19. "Warrant Certificate SR-2" means the detachable warrant
------------------------
delivered to Investor pursuant to Section 2.2 hereof and in the form of
Exhibit C hereto.
- --------
ARTICLE 2.
Conversion of the SR-1 Note
---------------------------
Section 2.1.
2.1.1. Conversion. Simultaneously with the Closing, the Company
----------
shall convert one-third of the outstanding principal and accrued interest under
the Existing Notes into shares of Series A Convertible Preferred Stock. The
number of shares of Series A Convertible Preferred Stock received on conversion
shall be equal to the aggregate dollar amount of principal and interest being
converted, divided by 85% of the Initial Public Offering price per Unit. The
stated value of each share of Series A Convertible Preferred Stock shall be
equal to the Initial Public Offer price per Unit.
2.1.2. Issuance of New Note. Upon conversion, Investor shall
--------------------
deliver to the Company on or before Closing, one or more of the Existing Notes
and the Company shall deliver to Investor a new promissory note in the principal
amount equal to the remaining outstanding portion of the Existing Notes not
converted hereunder which shall be in the form of Exhibit B attached hereto.
---------
Section 2.2. Issuance of Warrant Certificate SR-2. In consideration of
------------------------------------
the conversion of a portion of the Existing Notes, Investor shall deliver to the
Company at the Closing the Warrant Certificate SR-1 in exchange for the Warrant
Certificate SR-2, which shall be is substantially in the form attached hereto as
Exhibit C.
- ---------
Section 2.3. Amended and Restated Registration Rights Agreement.
--------------------------------------------------
Simultaneously with the conversion of the aforementioned portion of the Existing
Notes, the Registration Rights Agreement shall be amended and restated,
substantially on the form attached hereto as Exhibit D (as modified by any
---------
amendment thereto herein after made).
ARTICLE 3.
Representations and Warranties
------------------------------
Section 3.1. Representations and Warranties of the Company. As a
---------------------------------------------
material inducement to the Investor to enter into this Agreement and to
consummate the Transaction, the Company hereby represents and warrants to the
Investor as follows, which representations and warranties shall survive the
Closing and the issuance and delivery of the New Note:
3.1.1. Organization and Standing. The Company is a corporation
-------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
3.1.2. Corporate Power and Authority; Enforceability. The
---------------------------------------------
Company has the requisite power and authority (corporate and otherwise) to
execute, deliver and perform this Agreement and to consummate the Transaction.
The execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the Transaction, have been duly authorized by all
necessary action (corporate or otherwise) on its part. This Agreement
constitutes a legal, valid and binding obligation of the
-3-
<PAGE>
Company, enforceable in accordance with its terms, except insofar as
enforceability is limited by bankruptcy, insolvency, moratorium and similar laws
affecting creditors' rights generally, and by general principles of equity.
3.1.3. Validity of Contemplated Transactions. The execution, delivery
-------------------------------------
and performance by the Company of this Agreement, and the consummation by it of
the Transaction, do not violate or contravene any provision of the Company's
charter or bylaws, or of any material contract to which the Company is a party.
3.1.4. Issuance of Shares. The shares of Series A Convertible Preferred
------------------
Stock issued upon conversion of Existing Notes, and any Shares issued and
delivered to, and paid for by the Investor pursuant to and in accordance with
exercise of Warrant Certificate SR-2 or conversion of Series A Convertible
Preferred Stock, (a) will have been validly issued, fully paid and non-
assessable, (b) will be free and clear of any Liens (other than Liens imposed by
the Securities Act), and (c) will have been issued without violation of any
preemptive or other right to purchase or restrict the transfer of Common Stock.
3.1.5. Accuracy and Completeness of the Financial Information. The
------------------------------------------------------
Company's financial information that has been provided to the Investor is
accurate and complete in all materials respects, except that the Company makes
no representations or warranties with respect to any projections of the
Company's future results of operations, financial condition or otherwise.
3.1.6. Compliance with all Laws. To the best of its knowledge, the
------------------------
Company is in compliance in all material respects with all Laws.
3.1.7. Registration Statement. The Registration Statement is
----------------------
true and correct in all material respects and does not contain any statement
that is misleading or omit any statement necessary to make the statements made
therein not misleading.
Section 3.2. Representations, Warranties and Covenants of the Investor. As a
---------------------------------------------------------
material inducement to the Company to enter into this Agreement and to
consummate the Transaction, the Investor hereby represents and warrants to the
Company as follows, which representations and warranties shall survive the
Closing and the issuance and delivery of the New Note:
3.2.1. Corporate Power and Authority; Enforceability. The Investor has
---------------------------------------------
the requisite power and authority (corporate and otherwise) to execute, deliver
and perform this Agreement and to consummate the Transaction. The execution,
delivery and performance by the Investor of this Agreement and the consummation
by the Investor of the Transaction, have been duly authorized by all necessary
action (corporate or otherwise) on its part. This Agreement constitutes a
legal, valid and binding obligation of the Investor, enforceable in accordance
with its terms, except insofar as enforceability is limited by bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights generally
and by general principles of equity.
3.2.2. Securities Act Representations. The Investor hereby represents
------------------------------
and warrants to the Company that:
(a) the Investor is an "accredited investor" within the
meaning of Regulation D;
-4-
<PAGE>
(b) the Investor (i) has such experience in financial and
business matters such that it is capable of evaluating the merits and risks of
purchasing the securities acquired hereunder, (ii) has been furnished any and
all materials which it has requested relating to the Company or the offering of
these securities and the Investor has been afforded the opportunity to ask
questions of the senior management and directors of the Company concerning the
terms and conditions of the offering and to obtain any additional information
necessary to verify the accuracy of the information provided to the Investor,
and (iii) is satisfied that the Investor has received adequate information with
respect to all matters that the Investor considers material to the Investor's
decision to make this investment;
(c) the Investor has purchased the securities to be
acquired hereunder for its own account and has not transferred, distributed or
resold such securities, or any part thereof;
(d) the Investor understands that the securities to be
acquired under this Agreement have not been registered under the Securities Act
or under the Laws of any jurisdiction, and that the Company does not contemplate
and, except as set forth herein, is under no obligation to so register such
securities;
(e) the Investor is aware that: (i) investment in the
Company involves a high degree of risk, lack of liquidity and substantial
restrictions on transferability of interest; (ii) no Governmental Entity has
made any finding or determination as to the fairness for investment by the
public, nor has it made any recommendation or endorsement of the securities to
be acquired hereunder; and (iii) such securities must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from registration under the Securities Act covering the sale of the Shares is
available;
(f) the Investor has sufficient financial resources
available to support the loss of all or a portion of the Investor's investment
in the Company, has no need for liquidity in the investment in the Company and
is able to bear the economic risk of the investment; and
(g) the Investor has received, reviewed and understands the
section entitled "Risk Factors" contained in the Registration Statement, and the
Investor further acknowledges that (i) prior to the execution of a definitive
underwriting agreement neither the Company nor any other Person has made any
commitment or agreement that said Registration Statement will become effective
or that the initial public offering described therein will occur at a particular
price or within a particular range of prices or occur at all; (ii) there can be
no assurance that the initial public offering described therein will occur at a
particular price or within a particular range of prices or occur at all; and
(iii) the securities to be acquired hereunder are not being offered pursuant to
such Registration Statement.
ARTICLE 4.
Related Matters
---------------
Section 4.1. Board Visitation Rights. Prior to consummation of the Initial
------------------------
Public Offering, but only for so long as the New Note remains outstanding or
Investor owns Warrant Certificate SR-2 or any Shares (i) the Company shall
provide the same advance written notice to Investor as it supplies to its
directors in advance of or at such meeting, at the same time and by the
-5-
<PAGE>
same means as they are provided to the Company's directors, and (ii) Investor
shall be entitled to have one representative attend all meetings of the
Company's Board of Directors.
ARTICLE 5.
Miscellaneous
-------------
Section 5.1. Entire Agreement. The Securities Purchase Agreement, the
----------------
Securities Conversion Agreement, the Amended and Restated Registration Rights
Agreement, and Warrant Certificate SR-2 and the New Note issued pursuant hereto
contain the entire understanding between the parties hereto and supersede all
prior agreements and understandings, written or oral, with respect to the
subject matter hereof.
Section 5.2. Expenses. All costs and expenses incurred in connection with
--------
this Agreement shall be paid by the Person incurring such expenses.
Section 5.3. Jurisdiction. The Company and the Investor hereby agree that
------------
any action, proceeding or claim against it arising out of, or relating in any
way to, this Agreement, the New Note or Warrant Certificate SR-2 shall be
brought and enforced in the courts of the State of California, and any Federal
court located in any county in the State of California in which the Company has
an office and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company and the Investor hereby irrevocably waive any
objection to such exclusivity based on the doctrine of inconvenient forum or
otherwise. Any such process or summons to be served upon either the Company or
the Investor (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
as set forth in Section 5.8 hereof. Such mailing shall be deemed personal
service and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company and the Investor, by its execution of this
Agreement and acceptance of the New Note and Warrant Certificate SR-2, agree
that the prevailing party(ies) in any such action or proceeding shall be
entitled to recover from the other party(ies) all of its/their reasonable legal
costs and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
Section 5.4. Binding Effect; Assignment; Benefit. This Agreement shall
-----------------------------------
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either of
the parties hereto without the prior written consent of the other party.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person, other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
Section 5.5. Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented only by a writing duly
authorized and executed by the parties hereto.
Section 5.6. Headings. The descriptive headings of the several Articles and
--------
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 5.7. Exhibits. All exhibits attached hereto are a material part of
--------
this Agreement and are hereby incorporated into this Agreement.
-6-
<PAGE>
Section 5.8. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be given to a Person either personally or by sending a
copy thereof by first class United States express mail, postage prepaid and
return-receipt requested, or by a nationally-recognized courier service
guaranteeing next-day delivery, charges prepaid, or by telecopier (with the
original sent by either of the foregoing manners), to such Person's address (or
to such Person's telecopier number). All notices shall be deemed to have been
given to the Person entitled thereto when received.
If to the Investor, to:
S.R. One, Limited
4 Towers Bridge
200 Barr Harbor Drive
Suite 250
West Conshohocken, Pennsylvania 19428
Attention: Ms. Brenda Gavin
Facsimile No.: __________________
If to the Company, to:
CARESIDE, Inc.
6100 Bristol Parkway
Culver City, CA 90230
Attention: President and Chief Executive Officer
Facsimile No.: 310.338.6789
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103-2799
Attention: Julia D. Corelli, Esq.
Facsimile No.: 215.981.4750
Notice of any change in any such address shall also be given in the manner
set forth above. Whenever the giving of notice is required, the giving of such
notice may be waived by the party entitled to receive such notice.
Section 5.9. Waiver. No provision of this Agreement may be waived except by
------
a written instrument signed by the party hereto sought to be bound. No failure
or delay by any party hereto in exercising any right or remedy hereunder or
under applicable Law will operate as a waiver thereof, and a waiver of a
particular right or remedy on one occasion will not be deemed a waiver of any
other right or remedy, or a waiver on any subsequent occasion (it being
understood that specific time frames for notice or actions to be taken shall be
binding on the parties).
-7-
<PAGE>
Section 5.10. Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
Section 5.11. Governing Law. This Agreement shall be construed and enforced
-------------
in accordance with the Laws of the State of Delaware without regard to
principles of conflicts of law applicable in such jurisdiction.
Section 5.12. Continuing Obligation. Except as otherwise specifically
---------------------
provided herein, neither termination nor expiration of this Agreement shall
relieve any party hereto from any obligation under this Agreement which accrued,
or arose from facts and circumstances in existence, prior thereto.
Section 5.13. Counterparts. This Agreement and any amendment or supplement
------------
hereto may be executed by the parties in separate counterparts, whether
originally or by facsimile, each of which when so executed and delivered, shall
be an original, but all such counterparts shall together constitute one and the
same agreement. The execution of this Agreement and any such amendment or
supplement by any party hereto will not become effective until counterparts
hereof have been executed by all the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written by their duly
authorized representative.
S.R. ONE, LIMITED
By: /s/ Donald F. Parman
-----------------------
Name: Donald F. Parman
Title: Vice President
CARESIDE, INC.
By: /s/ James Koch
-----------------------
James Koch
Chief Financial Officer
-8-
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. - Definitions................................................................ 1
Section 1.1. Definitions............................................ 1
ARTICLE 2. - Conversion of the SR-1 Note................................................ 3
Section 2.1. 2.1.1. Conversion..................................... 3
2.1.2. Issuance of New Note........................... 3
Section 2.2. Issuance of Warrant Certificate SR-2................... 3
Section 2.3. Amended and Restated Registration Rights Agreement..... 3
ARTICLE 3. - Representations and Warranties............................................. 3
Section 3.1. Representations and Warranties of the Company.......... 3
3.1.1. Organization and Standing...................... 3
3.1.2. Corporate Power and Authority; Enforceability.. 3
3.1.3. Validity of Contemplated Transactions.......... 4
3.1.4. Issuance of Shares............................. 4
3.1.5. Accuracy and Completeness of the Financial
Information.................................... 4
3.1.6. Compliance with all Laws....................... 4
3.1.7. Registration Statement......................... 4
Section 3.2. Representations, Warranties and Covenants of the
Investor............................................... 4
3.2.1. Corporate Power and Authority; Enforceability.. 4
3.2.2. Securities Act Representations................. 4
ARTICLE 4. - Related Matters............................................................ 5
Section 4.1. Board Visitation Rights................................ 5
ARTICLE 5. - Miscellaneous.............................................................. 6
Section 5.1. Entire Agreement....................................... 6
Section 5.2. Expenses............................................... 6
Section 5.3. Jurisdiction........................................... 6
Section 5.4. Binding Effect; Assignment;............................ 6
Section 5.5. Amendment and Modification............................. 6
Section 5.6. Headings............................................... 6
Section 5.7. Exhibits............................................... 6
Section 5.8. Notices................................................ 6
Section 5.9. Waiver................................................. 7
Section 5.10. Severability........................................... 7
</TABLE>
-i-
<PAGE>
<TABLE>
Page
----
<S> <C>
Section 5.11. Governing Law....................................... 8
Section 5.12. Continuing Obligation............................... 8
Section 5.13. Counterparts........................................ 8
</TABLE>
-ii-
<PAGE>
Exhibits
- --------
A. Form of Certificate of Designations
B. Form of New Note
C. Form of Warrant Certificate SR-2
D. Amended and Restated Registration Rights Agreement
E. Draft of Registration Statement (dated May 5, 1999)
-iii-
<PAGE>
EXHIBIT A
Form of Certificate of Designations
-----------------------------------
(See Exhibit 3.2 of the Company's Form 10Q.)
<PAGE>
EXHIBIT B
---------
Form of New Note
----------------
(See Exhibit 4.9 of the Company's Form 10Q.)
<PAGE>
EXHIBIT C
---------
Form of Warrant Certificate SR-2
--------------------------------
(See Exhibit 4.8 of the Company's Form 10Q.)
<PAGE>
EXHIBIT D
---------
Amended and Restated Registration Rights Agreement
--------------------------------------------------
(See Exhibit 10.38 of the Company's Form 10Q.)
<PAGE>
EXHIBIT E
---------
Draft of Registration Statement (dated May 5, 1999)
---------------------------------------------------
(Exhibit E Intentionally Omitted.)
<PAGE>
Exhibit 10.38
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is made this
21th day of June, 1999 (the "Effective Date") between Careside, Inc., a Delaware
corporation (the "Company") and S.R. One, Limited, a Pennsylvania Business Trust
("S.R. One").
W I T N E S S E T H:
-------------------
WHEREAS, the Company and S.R. One entered into a Securities Purchase
Agreement (the "Securities Purchase Agreement") dated December 17, 1998,
pursuant to which the Company agreed that it would borrow from S.R. One, and
S.R. One agreed to lend to the Company, the aggregate principal amount of
$3,000,000 (the "Existing Notes"); and, in connection thereof, the Company
issued to S.R. One Warrant Certificate SR-1 to acquire shares of Common Stock of
the Company, $.01 par value per share ("Common Stock") and granted to S.R. One
certain registration rights pursuant to a Registration Rights Agreement, dated
December 17, 1998 between the Company and S.R. One (the "Registration Rights
Agreement");
WHEREAS, pursuant to a Securities Conversion Agreement dated as of
June 14, 1999, between the Company and S.R. One (the "Securities Conversion
Agreement"), one-third of the Existing Notes will be exchanged for shares of
Series A Convertible Preferred Stock and Warrant Certificate SR-1 will be
exchanged for Warrant Certificate SR-2; and
WHEREAS, in connection with the conversion, the Company and S.R. One
desire to amend and restate the Registration Rights Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements made herein, and other good valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, the parties hereto
agree that the Registration Rights Agreement is hereby amended and restated to
be as follows:
1. Definitions. As used herein, unless the context otherwise requires,
-----------
the following terms have the following respective meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the Exchange
Act.
"Commission" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
<PAGE>
-2-
"Common Stock" has the meaning set forth in the first WHEREAS clause
of the Recitals.
"Conversion Shares" means the shares of Common Stock usable upon
conversion of shares of Series A Convertible Preferred Stock and upon exercise
of warrants received upon conversion of shares of Series A Convertible Preferred
Stock.
"Demand" has the meaning set forth in Section 2.1.1.
"Demand Registration Period" means the period (i) commencing on the
earlier of one six (6) months after the effective date of the initial Public
Offering of the Units of the Company and the fifth (5th) anniversary of the
Effective Date, and (ii) ending on the date which is the earlier of three (3)
years after the effective date of the initial Public Offering or the seventh
(7th) anniversary of the Effective Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
promulgated thereunder, as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include reference to the comparable section, if any, of any such
subsequent similar federal statute.
"Investors" means the purchasers of Common Stock in the private
placements of Common Stock undertaken by the Company in 1997 and 1998.
"Participating Holder" has the meaning set forth in Section 2.1.4.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government or department or
agency of a government.
"Public Offering" has the meaning set forth in Section 2.1.7.
"Registrable Securities" means collectively the Conversion Shares and
Warrant Shares and any other securities issuable in connection therewith or in
replacement thereof by way of a dividend, distribution, recapitalization,
exchange, merger, consolidation or other reorganization. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold as permitted by, and in compliance
with, Rule 144 (or any successor provision) promulgated under the Securities Act
or (c) they shall have ceased to be outstanding.
<PAGE>
-3-
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration, filing and National Association of Securities Dealers, Inc. fees,
all listing fees, all fees and expenses of complying with securities or blue sky
laws (including, without limitation, reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications of the
Registrable Securities), all word processing, duplicating and printing expenses,
messenger and delivery expenses, the fees and disbursements of counsel for the
Company and counsel for S.R. One (comprised of not more than one outside law
firm) and of the Company's independent public accountants, including the
expenses of "comfort" letters required by or incident to such performance and
compliance, and any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
subsequent similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933, as amended,
shall include a reference to the comparable section, if any, of any such
subsequent similar federal statute.
"Series A Convertible Preferred Stock" means a series of preferred
stock of the Company, the terms and conditions of which are set forth in the
Securities Conversion Agreement.
"Units" means a unit comprised of one share of Common Stock and a
warrant to purchase one share of Common Stock.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of Warrant Certificate SR-2.
2. Registration Rights.
-------------------
2.1 Registration on Demand.
----------------------
2.1.1 Demand. At any time during the Demand Registration Period,
------
subject to Section 2.1.7, upon the written request (the "Demand") of S.R. One
that the Company effect the registration under the Securities Act of all or part
of the Registrable Securities, the Company shall cause to be filed, and shall
take all commercially reasonable actions to effect, as soon as practicable and
in any event, subject to the reasonable cooperation of S.R. One within 120 days
after the Demand is received from S.R. One, the registration under the
Securities Act, of the Registrable Securities which the Company has been so
requested to register by S.R. One.
<PAGE>
-4-
2.1.2 Registration of Other Securities. Whenever the Company shall
--------------------------------
effect a registration pursuant to this Section 2.1 in connection with an
underwritten offering by S.R. One of Registrable Securities, holders of
securities of the Company who have "piggyback" registration rights may include
all or a portion of such securities in such registration, offering or sale. If
the managing underwriter of any such offering shall inform the Company by letter
of its belief that the number or type of securities of the Company requested by
holders of the securities of the Company other than S.R. One to be included in
such registration would materially and adversely affect the underwritten
offering, then the Company shall include in such registration, to the extent of
the number and type of securities which the Company is so advised can be sold in
(or during the time of) such offering, first, all of the Registrable Securities
-----
specified by S.R. One in the Demand and second, for each holder of the Company's
------
securities other than S.R. One, the fraction of such holder's securities
proposed to be registered which is obtained by dividing (i) the number of the
securities of the Company that such holder proposes to include in such
registration by (ii) the total number of securities proposed to be included in
such registration by all holders other than S.R. One.
2.1.3 Registration Statement Form. Registrations under this Section
---------------------------
2.1 shall be on such appropriate registration form of the Commission as shall be
selected by the Company. The Company shall include in any such registration
statement all information which, in the opinion of counsel to the Company, is
required to be included.
2.1.4 Expenses. The Company shall pay the Registration Expenses in
--------
connection with the Demand registration effected pursuant to this Section 2.1,
other than underwriting discounts and selling commissions relating to the sale
or disposition of Registrable Securities. If a registration requested pursuant
to this Section 2.1 is withdrawn or otherwise not effected, other than at the
request of S.R. One (whether such request is for pricing or other reasons), the
Company shall pay the Registration Expenses in connection therewith. If the
registration pursuant to a Demand is withdrawn at the request of S.R. One and if
S.R. One elects not to have such registration count as its Demand registration
under this Section 2.1, S.R. One shall pay all the Registration Expenses of such
registration, other than the fees and expenses of counsel to Company or of any
other holder of Common Stock participating in the registration (a "Participating
Holder"). At no time shall S.R. One be required to pay the underwriting
discounts or selling commissions relating to the sale or disposition of shares
of Common Stock by other Persons, or the fees and expenses of any Participating
Holder's or the Company's counsel, except as required by Section 2.6.2 below.
2.1.5 Effective Registration Statement. A registration requested
--------------------------------
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective, (ii)
if after it has become effective, such registration is interfered with by any
stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason and has not thereafter become
effective, or (iii) in the case of an underwritten offering, if the conditions
to closing
<PAGE>
-5-
specified in the underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived.
2.1.6 Selection of Underwriters. In connection with each
-------------------------
underwritten offering, (a) the Company shall promptly select the managing
underwriter subject to the approval of S.R. One (which approval shall not be
unreasonably withheld, delayed or conditioned by S.R. One) and (b) S.R. One
shall promptly select the co-managing underwriter subject to the approval of the
Company (which approval shall not be unreasonably withheld, delayed or
conditioned by the Company).
2.1.7 Limitations on Registration on Demand.
-------------------------------------
(i) The Company shall not be required to file a registration
statement pursuant to this Section 2.1 which would become effective within (a)
180 days, or such shorter period as agreed to by the managing underwriter for
the Company's initial Public Offering, following the effective date (the "IPO
Effective Date") of a registration statement filed by the Company with the
Commission pertaining to an initial underwritten public offering of convertible
debt securities or equity securities for cash (a "Public Offering") for the
account of the Company, provided that no other holder of the Company's
securities shall have been permitted to participate in such initial Public
Offering, or (b) 120 days following the effective date of a registration
statement (other than a registration statement filed on Form S-8) filed by the
Company with the Commission pertaining to any subsequent Public Offering for the
account of the Company or another holder of securities of the Company if S.R.
One was afforded the opportunity to include all of its Registrable Securities in
such subsequent registration pursuant to Section 2.2.
(ii) In no event shall the Company be required to effect more
than one registration pursuant to this Section 2.1.
(iii) Notwithstanding the foregoing, if, in the good faith
determination of the Company's Board of Directors, a registration would
adversely affect certain activities of the Company to the material detriment of
the Company, then the Company may at its option direct that the effective date
of such registration be delayed for a period not in excess of 90 days in the
aggregate from the date of the Company's receipt of the Demand (the "Delay
Period"); provided, however, any action by a Person under a registration or
other agreement with the Company in connection with or triggered by a
registration under this Agreement shall not be considered an adverse effect for
purposes of this sentence; and provided further that if there shall occur any
such delay in a registration hereunder, then S.R. One shall be entitled to (a)
effect such registration no later than any other holder of registration rights,
or (b), if the Company shall effect a Public Offering during any such Delay
Period, sell, together with the Investors, all of their respective Registrable
Securities in connection with such Public Offering, whichever occurs first;
provided,
<PAGE>
-6-
however, that if the managing underwriter of such Public Offering does not agree
to include all (or such lesser amount as S.R. One shall, in its sole discretion,
agree to) of the number of S.R. One's Registrable Securities in such
registration, then the Company shall include in such registration, to the extent
of the number and type which the Company is so advised can be sold in (or during
the time of) such Public Offering first, all securities proposed by the Company
-----
to be sold for its own account, and second, for each of S.R. One and the
------
Investors, the fraction of such holder's securities proposed to be registered
which is obtained by dividing (i) the number of the securities of the Company
that such holder proposes to include in such registration by (ii) the total
number of securities proposed to be sold in such offering by such holders.
2.2 Piggyback Registration.
----------------------
2.2.1 Right to Include Registrable Securities. If the Company at any
---------------------------------------
time proposes to register any of its securities under the Securities Act by
registration on Forms S-1, S-2, S-3 or any successor or similar form(s) (except
registrations on such Forms or similar forms solely for registration of
securities in connection with (i) an employee benefit plan or dividend
reinvestment plan or a merger or consolidation or (ii) debt securities which are
not convertible into Common Stock), whether or not for sale for its own account,
it shall each such time give written notice to S.R. One of its intention to do
so at least 30 days prior to the anticipated filing date of a registration
statement with respect to such registration with the Commission; provided
however, that no such notice shall be required if the managing underwriters for
such registration shall have, in a writing delivered to the Company, provided
that no Common Stock held by the Company's stockholders may be sold pursuant to
the registration. Upon the written request of S.R. One made as promptly as
practicable and in any event within 10 business days after the receipt of any
such notice, which request shall specify the Registrable Securities intended to
be disposed of by S.R. One, the Company shall use commercially reasonable
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by S.R. One;
provided, however, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to S.R. One and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), without
prejudice, (provided, however, that S.R. One may request that such registration
be effected as a registration under Section 2.1 hereof) and (ii) in the case of
a determination to delay registering, shall be permitted to delay registering
any Registrable Securities for the same period as the delay in registering such
other securities; and provided further that S.R. One shall have the right to
have its Registrable Securities included in any Public Offering after the
Company's initial Public Offering (in accordance with Section
<PAGE>
-7-
2.2.2) if, and only if, any other holder of the Company's convertible debt
securities or equity securities shall have the right to have its securities
included in such Public Offering. No registration effected under this Section
2.2 shall relieve the Company of its obligation to effect any registration upon
demand under Section 2.1. The Company shall pay all Registration Expenses in
connection with registration of Registrable Securities requested pursuant to
Section 2.2, other than underwriting discounts and selling commissions relating
to the sale or disposition of Registrable Securities.
2.2.2 Priority in Piggyback Registrations. Notwithstanding anything
-----------------------------------
in Section 2.2.1 above to the contrary and except as provided in Section 2.1.7,
if the managing underwriter of any underwritten offering shall inform the
Company by letter of its belief that the number or type of Registrable
Securities requested to be included in such registration would materially and
adversely affect such offering, then the Company shall promptly notify S.R. One
of such fact. If the managing underwriter does not agree to include all (or
such lesser amount as S.R. One shall, in its sole discretion, agree to) of the
number of the Registrable Securities initially requested by S.R. One to be
included in such registration, then the Company shall include in such
registration, to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering first, all
-----
securities proposed by the Company to be sold for its own account, if the
Company initiated such registration, or by the holder of securities who
initiated such demand registration, if any, second, for each of S.R. One,
------
Spencer Trask Securities, Incorporated and the Investors, other than the
holder(s) of the securities who initiated such demand registration, if any, the
fraction of such holder's securities proposed to be registered which is obtained
by dividing (i) the number of the securities of the Company that such holder
proposes to include in such registration by (ii) the total number of securities
proposed to be sold in such offering by such holders, and third, for each
-----
remaining holder of the Company's securities, other than the holder of the
securities who initiated such demand registration and the holders listed above,
if any, the fraction of such holder's securities proposed to be registered which
is obtained by dividing (i) the number of the securities of the Company that
such holder proposes to include in such registration by (ii) the total number of
securities proposed to be sold in such offering by such holders.
2.3 Registration Procedures.
-----------------------
2.3.1 In connection with the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2, the
Company shall as promptly as practicable:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and thereafter use
commercially reasonable efforts to cause such registration statement to become
and remain effective;
<PAGE>
-8-
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration statement for 180
days or such shorter period as may be required for the disposition of all of
such Registrable Securities by the underwriters;
(iii) furnish to S.R. One such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such number of copies of such other documents as S.R. One may reasonably
request;
(iv) use commercially reasonable efforts (x) to register or qualify
all Registrable Securities and other securities covered by such registration
statement under such other securities or Blue Sky laws of such States of the
United States of America where an exemption is not available and as S.R. One
shall reasonably request, (y) to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and (z) to
take any other action which may reasonably be necessary or advisable to enable
S.R. One to consummate the disposition in such jurisdictions of the Registrable
Securities to be sold by S.R. One, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not, but for the requirements
of this paragraph (iv), be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or authorities as
may be necessary in the opinion of counsel to the Company and counsel to S.R.
One to consummate the disposition of such Registrable Securities in accordance
with their intended method of disposition;
(vi) furnish to S.R. One, (x) an opinion of outside counsel for the
Company, and (y) a copy of a "comfort" letter addressed to the Company and/or
any managing underwriter signed by the certified independent public accountants
who have certified the Company's financial statements included or incorporated
by reference in such registration statement, each covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of the accountant's
<PAGE>
-9-
comfort letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's counsel and in
accountant's comfort letters delivered to the underwriters in underwritten
public offerings of securities (and dated the dates such opinions and comfort
letters are customarily dated);
(vii) notify S.R. One when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or upon
the happening of any event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, in the light of the
circumstances under which they were made, and at the request of S.R. One to use
its best efforts to promptly prepare and furnish to S.R. One such number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security-holders, as soon as reasonably practicable, an earnings statement
meeting the requirements of Section 11(a) of the Securities Act, which the
Company shall be entitled to satisfy by complying with the requirements of Rule
158 promulgated thereunder, and promptly furnish a copy of the same to S.R. One;
(ix) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement; and
(x) use commercially reasonable efforts to list all
Registrable Securities covered by such registration statement on any national
securities exchange or over-the-counter market, if any, on which Registrable
Securities of the same class, and if applicable, series, covered by such
registration statement are then listed.
S.R. One agrees that upon receipt of any notice from the Company of
the happening of an event of the kind described in Section 2.3.1(vii), S.R. One
shall forthwith discontinue its disposition of Registrable Securities pursuant
to the registration statement relating to such Registrable Securities until S.R.
One's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.3.1(vii).
2.4 Underwritten Offerings.
----------------------
2.4.1 Requested Underwritten Offerings. If requested by the
--------------------------------
underwriters for any underwritten offering by S.R. One pursuant to a
registration requested under Section
<PAGE>
-10-
2.1, the Company shall enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Company, S.R. One and the underwriters, and to contain
such representations and warranties by the Company and S.R. One and such other
terms as are generally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.6
or as are generally prevailing in agreements of that type. S.R. One shall
cooperate with the Company in the negotiation of the underwriting agreement and
shall give consideration to the reasonable suggestions of the Company regarding
the form and substance thereof. S.R. One shall be a party to such underwriting
agreement. S.R. One shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding S.R. One, S.R. One's
Registrable Securities, S.R. One's intended method of distribution and any other
representations or warranties required by law or customarily given by selling
shareholders in an underwritten public offering or as reasonably required by the
managing underwriter of the offering of Registrable Securities.
2.4.2 Piggyback Underwritten Offerings. If the Company proposes to
--------------------------------
register any of its securities under the Securities Act as contemplated by
Section 2.2 and such securities are to be distributed by or through one or more
underwriters, subject to the priority and other provisions of Section 2.2.2, the
Company shall, if requested by S.R. One, arrange for such underwriters to
include all the Registrable Securities to be offered and sold by S.R. One among
the securities of the Company to be distributed by such underwriters. S.R. One
shall become a party to the underwriting agreement negotiated between the
Company and such underwriters. S.R. One shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding S.R.
One, S.R. One's Registrable Securities and S.R. One's intended method of
distribution or any other representations or warranties required by law or
customarily given by selling shareholders in an underwritten public offering or
as reasonably required by the managing underwriter of the offering of
Registrable Securities.
2.4.3 Holdback Agreements.
-------------------
(i) In connection with the initial Public Offering or any
registration of Registrable Securities in connection with an underwritten public
offering, S.R. One agrees if required by the underwriter or underwriters not to
effect any public or private sale or distribution, including any sale pursuant
to Rule 144 under the Securities Act, of any Registrable Securities, and not to
effect any such public or private sale or distribution of any other equity
security of the Company or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (in each case, other than as
part of such underwritten public offering) during the 365-day period, or such
shorter period set forth in the underwriting agreement with respect to such
offering as the managing underwriter of such offering shall reasonably require,
beginning on, the effective date of such registration
<PAGE>
-11-
statement, provided that (a) S.R. One has received written notice of such
registration at least 15 days prior to such effective date and (b), with respect
to any offering other than pursuant to a firm commitment underwriting, the
underwriters continue to actively market the Registrable Securities until the
earlier of the end of such lock-up period and the closing with respect to the
sale of all, or the final portion of, the Registrable Securities offered by S.R.
One; provided, however, that the restrictions imposed on S.R. One by this
Section 2.4.3(i) shall terminate on the earlier of the end of such lock-up
period and thirty (30) days after such closing.
(ii) If any registration of Registrable Securities shall be in
connection with an underwritten public offering, the Company agrees (x) if
required by the underwriter or underwriters, not to effect any public sale or
distribution of any of its equity securities or of any security convertible into
or exchangeable or exercisable for any equity security of the Company (other
than in connection with any employee stock option or other benefit plan which
has been duly adopted by the Company and which provides for the distribution to
participants in the plan of equity securities of the Company or securities
convertible or exchangeable or exercisable for equity securities of the Company,
or in connection with a merger or acquisition approved by the Board of Directors
of the Company) during the 365-day period, or such shorter period as the
managing underwriter of such offering shall reasonably require, beginning on the
effective date of such registration statement (except as part of such
registration) and (y) that any agreement entered into after the date of this
Agreement pursuant to which the Company issues or agrees to issue any privately
placed equity securities shall contain a provision under which holders of such
securities agree that, if required by the underwriter or underwriters, they will
not effect any public sale or distribution of any such securities during the
period referred to in the foregoing clause (x), including any sale pursuant to
Rule 144 under the Securities Act (except as part of such registration, if
permitted), if such holder is participating in the offering pursuant to such
registration.
2.5 Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of any registration statement under the Securities Act in
which S.R. One is a selling shareholder, the Company shall give S.R. One not
less than 30 days prior written notice of the preparation of such registration
statement and give S.R. One and its counsel and accountants the opportunity to
participate, at S.R. One's expense, in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto (provided that S.R. One shall
furnish the Company with comments on any such amendment or supplement as
promptly as the Company shall reasonably require), and give each of them such
access to its books and records, such opportunities to discuss the business of
the Company with officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of S.R.
One's counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. Any expenses incurred by S.R. One in connection with
<PAGE>
-12-
any such investigation shall be borne by S.R. One, other than the reasonable
fees and disbursements of S.R. One's outside counsel.
2.6 Indemnification.
---------------
2.6.1 Indemnification by the Company. In the event of any
------------------------------
registration of any securities of the Company under the Securities Act in which
S.R. One is or may be a selling shareholder, the Company shall, and hereby does,
indemnify and hold harmless, S.R. One, its directors, officers, employees,
agents and affiliates and, to the extent required by any underwriting agreement
entered into by the Company, each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person who
controls S.R. One or any such underwriter within the meaning of the Securities
Act, insofar as losses, claims, damages, or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (a) any untrue statement or alleged untrue statement of any
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus, or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading, or (b) any
violation by the Company, its directors, officers, employees or agents of this
Agreement or any law applicable to and in connection with such registration, and
the Company shall reimburse S.R. One and each such director, officer, agent or
affiliate, and, to the extent required by any underwriting agreement entered
into by the Company, underwriter and controlling Person for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding described in
clauses (a) or (b); provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by S.R. One, specifically stating that it is for use in
the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of S.R. One or any such
director, officer, agent or affiliate or controlling Person and shall survive
the transfer of such securities by S.R. One.
2.6.2 Indemnification by S.R. One. If any Registrable Securities are
---------------------------
included in any registration statement, S.R. One shall indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
2.6.1 above) the Company, each director of the Company, each officer of the
Company and each employee of the Company and, to the extent required by any
underwriting agreement entered into by S.R. One, each other Person who
participates as an underwriter in the offering or sale of such securities and
<PAGE>
-13-
each other Person who controls any such underwriter within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by S.R. One specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that in no event shall
the liability of S.R. One under this Section 2.6.2 exceed the amount of the
proceeds to S.R. One from the sale of the Registrable Securities in any such
registration.
2.6.3 Notice of Claims, Etc. Promptly after receipt by an
----------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 2.6,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, immediately give written notice to the latter of
the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 2.6, except to the extent that the indemnifying party is materially
prejudiced by such failure. The indemnified party shall be entitled to receive
the indemnification payments described in Section 2.6.6 after providing such
written notice to the indemnifying party. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that the indemnifying
parties may agree, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable out of pocket costs related to the indemnified party's cooperation
with the indemnifying party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties arises in respect of such claim after the assumption of the defense
thereof. No indemnifying party shall be liable for any settlement of any action
or proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Consent of the indemnified party
shall be required for the entry of any judgment or to enter into a settlement
only when such judgment or settlement does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect such claim or litigation.
<PAGE>
-14-
2.6.4 Contribution. If the indemnification provided for in this
------------
Section 2.6 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.6.1 or 2.6.2 hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Sections 2.6.1 or 2.6.2 hereof, the indemnified
party and the indemnifying party under Sections 2.6.1 or 2.6.2 hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on one hand and S.R. One on the other or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect the relative fault of the
Company on one hand and S.R. One on the other that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. No Person guilty of fraudulent misrepresentation
(within the meaning of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation. In
addition, no Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim, effected without such
Person's written consent, which consent shall not be unreasonably withheld. In
no event shall the liability of S.R. One under this Section 2.6.4 exceed the
amount of the proceeds to S.R. One from the sale of the Registrable Securities
in the related registration.
2.6.5 Other Indemnification. Indemnification and contribution
---------------------
similar to that specified in the preceding paragraphs of this Section 2.6 (with
appropriate modifications) shall be given by the Company and S.R. One with
respect to any required registration or other qualification of securities under
any federal or state law or regulation of any governmental authority other than
the Securities Act.
3. Rule 144. With a view to making available the benefits of certain
--------
rules and regulations of the Commission that may permit the sale of the
Registrable Securities to the public without registration after an initial
Public Offering, the Company agrees to:
(a) provide information and such other assistance requested by S.R.
One as is customarily provided by issuers in connection with sales of their
common stock by directors or affiliates under Rule 144, promulgated under the
Securities Act;
(b) make and keep public information available, as those terms are
understood and defined in Rule 144 promulgated under the Securities Act at all
times;
(c) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
<PAGE>
-15-
(d) deliver a written statement as to whether it has complied with
such requirements of this Section, to S.R. One
upon S.R. One's request.
4. Modification; Waivers. This Agreement may be modified or amended only
---------------------
with the written consent of each party hereto. No party shall be released from
its obligations hereunder without the written consent of the other party. The
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) by the party
entitled to enforce such term, but any such waiver shall be effective only if in
a writing signed by the party against which such waiver is to be asserted.
Except as otherwise specifically provided herein, no delay on the part of any
party hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party hereto of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
5. Entire Agreement. This Agreement represents the entire understanding
----------------
and agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
6. Severability. If any provision of this Agreement, or the application
------------
of such provision to any Person or circumstance, shall be held invalid, the
remainder of this Agreement or the application of such provision to other
Persons or circumstances, to the extent permitted by law, shall not be affected
thereby; provided, that the parties shall negotiate in good faith with respect
to an equitable modification of the provision or application thereof held to be
invalid.
7. Notices.
-------
(i) Any notice or communication to any party hereto shall be duly
given if in writing and delivered in person, receipt requested, or courier
guaranteeing next day delivery, or facsimile (with written confirmation of
receipt) to such other party's address or facsimile number set forth below.
If to Careside, Inc.:
6100 Bristol Parkway
Culver City, CA 90320
Attention: W. Vickery Stoughton
Facsimile: (310)338-6789
<PAGE>
-16-
with a copy to:
Julia D. Corelli, Esq.
Pepper Hamilton, LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103-2799
If to S.R. One:
S.R. One, Limited
Four Tower Bridge
200 Barr Harbor Drive
Suite 250
Conshohocken, Pennsylvania 19428
Attention: Mr. Peter Sears
Facsimile:
with a copy to:
(ii) All notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered or facsimiled
(with written confirmation of receipt); and the next business day after timely
delivery to the courier, if sent by courier guaranteeing next day delivery.
8. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and shall be binding upon the Company and S.R. One and their respective
successors and permitted assigns. S.R. One may assign its rights under this
Agreement to any Person to whom S.R. One transfers any of the Registrable
Securities or any interest therein without the necessity of obtaining any
consent to such assignment, provided that such Person becomes a party to that
certain stockholders agreement, by and among the Company, S.R. One and certain
other holders of the Common Stock. In the event that S.R. One assigns its
rights to a holder or holders of only a portion of the Registrable Securities,
then all references to S.R. One herein shall also be deemed to refer to such
other holder or holders, but in such event S.R. One shall have the sole right to
make all decisions by and give notices for such holder or holders under this
Agreement; provided, that if S.R. One no longer owns any Registrable Securities,
then all decisions and notices hereunder shall be made by the holders of not
less than a majority of the Registrable Securities outstanding and all other
holders of Registrable Securities shall be bound by any such decision.
<PAGE>
-17-
9. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which for all purposes shall be deemed to be an original
and all of which together shall constitute the same agreement.
10. Headings. The Section headings in this Agreement are for convenience
--------
of reference only, and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
11. Construction. This Agreement shall be governed, construed and
------------
enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to its principles of conflict of laws.
12. No Inconsistent Agreements. The Company has not previously, and shall
--------------------------
not hereafter, enter into any agreement with respect to its securities which is
inconsistent with the rights granted to S.R. One in this Agreement.
13. Recapitalizations, etc. In the event that any capital stock or other
----------------------
securities are issued in respect of, in exchange for, or in substitution of, any
Registrable Securities by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Registrable Securities or any other
similar change in the Company's capital structure, appropriate adjustments shall
be made in this Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights and obligations of the parties hereto under
this Agreement.
14. Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association in effect at
the time such arbitration is instituted. The arbitration panel shall be
composed of three arbitrators, one of whom shall be chosen by the Company, one
of whom shall be chosen by S.R. One, and one of whom shall be chosen by the two
arbitrators previously designated. If both or either of the Company and/or S.R.
One fails to choose an arbitrator within fourteen (14) calendar days after
receiving notice of commencement of arbitration or if the two arbitrators fail
to choose a third arbitrator within fourteen (14) calendar days of their
appointment, such arbitrators shall be chosen by the American Arbitration
Association. Unless the parties to the arbitration shall otherwise agree to a
different place of arbitration, the place of arbitration shall be Philadelphia,
PA. The arbitration award shall be final and binding upon the parties thereto
and may be entered in any court having jurisdiction. Each party shall bear (i)
its own expenses in connection with such arbitration and (ii) one-half of the
fees and expenses of the American Arbitration Association and all arbitrators.
No arbitration award shall contain any provision which is inconsistent with the
preceding sentence.
<PAGE>
-18-
15. Specific Performance. The parties hereto agree that the Registrable
--------------------
Securities of the Company cannot be purchased or sold in the open market and
that, for these reasons, among others, the holder or holders of the Registrable
Securities will be irreparably damaged in the event that this Agreement is not
specifically enforceable. Accordingly, in the event of any controversy
concerning the Registrable Securities which are the subject of this Agreement,
or any right or obligation to register such securities, such right or obligation
determined as part of an arbitration award described in Section 14 shall be
enforceable in a court of equity by specific performance. The rights granted in
this Section 15 shall be cumulative and not exclusive, and shall be in addition
to any and all other rights which the parties hereto may have hereunder, at law
or in equity. S.R. One consents to the jurisdiction of the federal courts of
the Commonwealth of Pennsylvania in any suit, action or proceeding brought
pursuant to this Section 15, waives any objection it may have to the laying of
venue in any such suit, action or proceeding in any of such court, and agrees
that service of any court paper may be made in such manner as may be provided
under applicable laws or court rules governing service of process.
16. Term. This Agreement shall continue in full force and effect until
----
the earlier of (i) ten (10) years after the last issuance of any Antidilution
Shares or Conversion Shares and (ii) the first date on which S.R. One and its
permitted assigns may sell all of the Registrable Securities held by them in a
ninety (90) day period pursuant to Rule 144 under the Securities Act.
<PAGE>
-19-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written and delivered by their respective duly
authorized officers.
CARESIDE, INC.
By: /s/ James Koch
------------------------------------
Name: James Koch
Title: Chief Financial Officer
S.R. One, Limited
By: /s/ Donald F. Parman
------------------------------------
Name: Donald F. Parman
Title: Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> JUN-30-1999 JUN-30-1998
<CASH> 12,423,300 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 112,700 0
<CURRENT-ASSETS> 12,691,700 0
<PP&E> 5,966,000 0
<DEPRECIATION> (1,040,000) 0
<TOTAL-ASSETS> 17,635,500 0
<CURRENT-LIABILITIES> 4,304,000 0
<BONDS> 0 0
0 0
1,600 0
<COMMON> 70,800 0
<OTHER-SE> 34,790,300 0
<TOTAL-LIABILITY-AND-EQUITY> 17,635,500 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 4,660,500 4,113,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 782,800 0
<INCOME-PRETAX> (5,373,400) (3,997,500)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (5,373,400) (3,997,500)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,376,200) (3,997,500)
<EPS-BASIC> (1.02) (0.96)
<EPS-DILUTED> (1.02) (0.96)
</TABLE>
