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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 31, 1996
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 1-9767 94-2579751
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
9162 Eton Avenue, Chatsworth, California 91311
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (818) 709-1244
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ITEM 5. OTHER EVENTS.
On December 31, 1996, the Registrant completed a sale of equity
securities for approximately $3 million in a private placement to an investment
fund (the "Fund"). Specifically, the Registrant sold (i) 3,000 shares of a new
Series A Convertible Preferred Stock ("Preferred Stock") with a liquidation
value of $1,000 per share and (ii) a warrant (the "Warrant") to purchase 84,270
shares of the Registrant's common stock ("Common Stock") at an exercise price
of $3.56 per share. The Warrant exercise price was based on the average
closing price of the Common Stock for the five trading days immediately
preceding the closing of the sale.
Each share of Preferred Stock is convertible into a number of shares
of Common Stock equal to (i) the liquidation value of a share of Preferred
Stock divided by (ii) a variable conversion price (discussed below). Any
shares of Preferred Stock not voluntarily converted during the three years
following their initial sale will be automatically converted into Common Stock
on December 31, 1999. The Preferred Stock (i) is non-voting, (ii) is not
entitled to any preferred dividends and (iii) is not subject to any mandatory
or optional redemption provisions. As long as any of the shares of Preferred
Stock are outstanding, the Registrant may not pay dividends on, or repurchase
any shares of, the Common Stock (except for the payment of dividends solely in
shares of Common Stock and certain repurchases of Common Stock, including the
repurchase of up to $2.1 million from Boehringer Mannheim Corporation under
an existing contractual requirement) without the written consent of the
holders of a majority of the outstanding shares of Preferred Stock.
The conversion price of the Preferred Stock (the "Conversion Price")
is fixed at $3.56 per share of Common Stock until April 1, 1997. Based on the
current Conversion Price, each share of Preferred Stock is convertible into
approximately 281 shares of Common Stock, and the Registrant would issue
approximately 843,000 shares of Common Stock if the Fund elected to convert all
the outstanding shares of Preferred Stock. Commencing April 1, 1997, the
Conversion Price will be equal to the lower of (i) 85% of the average closing
bid price of the Common Stock for the five consecutive trading days immediately
preceding the conversion date (but in no event less than $1.50) or (ii) $3.56.
The Registrant has agreed to file with the Securities and Exchange Commission a
registration statement for resale of the shares of Common Stock issuable upon
conversion of the Preferred Stock and exercise of the Warrant, and the
Conversion Price is subject to certain adjustments in the event that the
registration statement is not declared effective by May 30, 1997.
Furthermore, if the Registrant obtains additional financing prior to
July 1, 1997 through a private placement of equity securities (or debt
securities convertible into or coupled with equity securities), the Fund will
have the right to exchange some or all of the Preferred Stock and Warrants then
owned by it for the new securities offered by the Registrant at an exchange
price equal to the purchase price of such new securities.
-2-
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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.
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC.
Date: January 15, 1997 By: /s/ Martin S. McDermut
-----------------------------------
Martin S. McDermut
Chief Financial Officer
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Exhibit Index
<TABLE>
<CAPTION>
No. Document
- --- --------
<S> <C>
4 Certificate of Designations of Series A Convertible Preferred
Stock filed by Registrant on December 31, 1996 with the
Secretary of State of the State of Delaware;
10.1 Securities Purchase Agreement dated as of December 31, 1996 by
and between the Registrant and Thermo Amex Convertible growth
Fund I, L.P.;
10.2 Registration Rights Agreement dated as of December 31, 1996 by
and between the Registrant and Thermo Amex Convertible growth
Fund I, L.P.;
10.3 Common Stock Purchase Warrant dated as of December 31, 1996 by
and between the Registrant and Thermo Amex Convertible growth
Fund I, L.P.;
</TABLE>
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INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
CERTIFICATE OF DESIGNATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
(Pursuant to Section 151 of the General Corporation Law
of the State of Delaware)
International Remote Imaging Systems, Inc., a Delaware corporation
(the "Corporation"), in accordance with the provisions of Section 103 of the
General Corporation Law of the State of Delaware (the "DGCL"), DOES HEREBY
CERTIFY:
That pursuant to authority vested in the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation, the Pricing
Committee of the Board of Directors of the Corporation, at a meeting held on
December 30, 1996, adopted a resolution providing for the creation of a series
of the Corporation's Preferred Stock, $.01 par value, which series is
designated "Series A Convertible Preferred Stock", which resolution is as
follows:
RESOLVED, that pursuant to authority vested in the Board of Directors
of the Corporation by the Certificate of Incorporation, the Board of Directors
through its duly authorized Pricing Committee does hereby provide for the
creation of a series of the Preferred Stock, $.01 par value (hereafter called
the "Preferred Stock"), of the Corporation, and to the extent that the voting
powers and the designations, preferences and relative, participating, optional
or other special rights thereof and the qualifications, limitations or
restrictions of such rights have not been set forth in the Certificate of
Incorporation, as amended, of the Corporation, does hereby fix the same as
follows:
SERIES A CONVERTIBLE PREFERRED STOCK
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series A Convertible Preferred Stock" (the "Series A
Convertible Preferred Stock"), and the number of shares constituting the Series
A Convertible Preferred Stock shall be 3,000, and shall not be subject to
increase.
SECTION 2. STATED CAPITAL. The amount to be represented in stated
capital at all times for each share of Series A Convertible Preferred Stock
shall be $1,000.
SECTION 3. RANK. All Series A Convertible Preferred Stock shall rank
(i) senior to the Common Stock, $.0l par value (collectively the "Common
Stock"), of the Corporation, now or hereafter issued, as to payment or
distribution of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and (ii) on a parity with or
senior to any additional series of preferred stock of any class which the Board
of Directors or the stockholders
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may from time to time authorize, as to distributions of assets upon
liquidation, dissolution, or winding up of the Corporation, whether voluntary
or involuntary.
SECTION 4. DIVIDENDS AND DISTRIBUTIONS. (a) The holders of shares of
Series A Convertible Preferred Stock shall not be entitled to receive any
dividends, except as otherwise provided herein.
(b) Unless the Corporation shall have first obtained the written
consent of the holders of a majority of the Series A Convertible Preferred
Stock at the time outstanding, so long as any shares of Series A Convertible
Preferred Stock are outstanding, the Corporation shall not pay or declare and
set apart for such payment any dividend or distribution on shares of Common
Stock or Junior Stock (as defined herein) (other than (1) dividends on shares
of Common Stock solely in the form of additional shares of Common Stock or (2)
dividends on Junior Stock solely in the form of shares of Common Stock or
additional shares of Junior Stock) or recapitalize the shares of Common Stock
into other securities or property or change the par value thereof.
(c) Unless the Corporation shall have first obtained the written
consent of the holders of a majority of the Series A Convertible Preferred
Stock at the time outstanding, so long as any shares of Series A Convertible
Preferred Stock are outstanding, neither the Corporation nor any subsidiary of
the Corporation shall redeem, repurchase or otherwise acquire in any one
transaction or series of related transactions any shares of Common Stock or
Junior Stock if the aggregate purchase price or cost of the shares so
repurchased, redeemed or otherwise acquired since the initial issuance of
shares of Series A Convertible Preferred Stock (such date of initial issuance
being referred to herein as the "Issuance Date") exceeds $100,000; provided,
however, that this limitation shall not apply to (i) purchases of Common Stock
for a cumulative purchase price of up to $2.1 million from Boehringer Mannheim
Corporation pursuant to existing contractual requirements and (ii) exercise of
contractual repurchase rights to repurchase (at prices below then fair market
value) shares of Common Stock previously sold to employees pursuant to the
Corporation's Key Employee Stock Purchase Plan or other employee stock purchase
or option plan adopted by the Board of Directors and approved by the
Corporation's stockholders.
(d) Unless the Corporation shall have first obtained the written
consent of the holders of a majority of the Series A Convertible Preferred
Stock at the time outstanding, so long as any shares of Series A Convertible
Preferred Stock are outstanding, neither the Corporation nor any subsidiary of
the Corporation shall make any tender offer or exchange offer (a "Tender
Offer") for outstanding shares of Common Stock.
SECTION 5. LIQUIDATION PREFERENCE. In the event of a liquidation,
dissolution, or winding up of the Corporation, whether voluntary or
involuntary, the holders of Series A Convertible Preferred Stock shall be
entitled to receive out of the assets of the Corporation an amount per share of
Series A Convertible Preferred Stock equal to $1,000.00 (collectively, the
"Liquidation Preference"), and no more, before any payment shall be made or any
assets distributed to the holders of Common Stock or any other class or series
of the Corporation's capital stock junior as to liquidation or dividend rights
to the Series A Convertible Preferred Stock (collectively, the "Junior Stock");
provided, however, that such rights shall accrue to the holders of Series A
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Convertible Preferred Stock only in the event that the Corporation's payments
with respect to the liquidation preference of the holders of capital stock of
the Corporation ranking senior as to liquidation rights to the Series A
Convertible Preferred Stock (the "Senior Liquidation Stock") are fully met.
After the liquidation preferences of the Senior Liquidation Stock are fully
met, the entire assets of the Corporation available for distribution shall be
distributed ratably among the holders of the Series A Convertible Preferred
Stock and any other class or series of the Corporation's capital stock having
parity as to liquidation rights with the Series A Convertible Preferred Stock
(the "Parity Liquidation Stock") in proportion to the respective preferential
amounts to which each is entitled (but only to the extent of such preferential
amounts). After payment in full of the liquidation price of the shares of the
Series A Convertible Preferred Stock and the Parity Liquidation Stock, the
holders of such shares shall not be entitled to any further participation in
any distribution of assets by the Corporation.
SECTION 6. NO MANDATORY REDEMPTION. The shares of Series A
Convertible Preferred Stock shall not be subject to mandatory redemption by the
Corporation.
SECTION 7. NO SINKING FUND. The shares of Series A Convertible
Preferred Stock shall not be subject to the operation of a purchase, retirement
or sinking fund.
SECTION 8. NO OPTIONAL REDEMPTION. The shares of Series A
Convertible Preferred Stock shall not be subject to redemption at the option of
the Corporation.
SECTION 9. CONVERSION.
(A) CONVERSION AT OPTION OF HOLDER. Holders of the Series A
Convertible Preferred Stock may, upon surrender of the certificates therefor,
convert any or all of their shares of Series A Convertible Preferred Stock into
fully paid and nonassessable shares of Common Stock and such other securities
and property as hereinafter provided. Each outstanding share of Series A
Convertible Preferred Stock may be converted at any time at the principal
executive offices of the Corporation, the office of any transfer agent for the
Series A Convertible Preferred Stock, the office of any transfer agent for the
Common Stock or at such other office or offices, if any, as the Board of
Directors may designate, initially into such number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) determined by dividing (x) the Conversion Amount by
(y) the lower of (1) the product of the Conversion Percentage times (B) the
arithmetic average of the Closing Price of the Common Stock on the five
consecutive trading days immediately preceding the Conversion Date (but in no
event less than $1.50 per share) (subject to equitable adjustments for stock
splits, stock dividends, combinations, recapitalizations, reclassifications and
similar events occurring on or after the date of filing of this Certificate of
Designations with the Secretary of State of the State of Delaware), or (2)
$3.56 per share (subject to equitable adjustments for stock splits, stock
dividends, combinations, recapitalizations, reclassifications and similar
events occurring on or after the date of filing of this Certificate of
Designations with the Secretary of State of the State of Delaware) (the
"Conversion Rate"). Notwithstanding the foregoing, if the Conversion Date is
prior to April 1, 1997, then the Conversion Price shall be $3.56 per share
(subject to equitable adjustments for stock splits, stock dividends,
combinations, recapitalizations, reclassifications and similar events
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occurring on or after the date of filing of this Certificate of Designations
with the Secretary of State of the State of Delaware). The "Conversion Price"
shall be equal to the Conversion Amount divided by the Conversion Rate, and the
Conversion Rate shall be equal to the Conversion Amount divided by the
Conversion Price.
(B) CERTAIN DEFINITIONS.
As used herein, the "Closing Price" of any security on any date
shall mean the closing bid price of such security on such date on the principal
securities exchange or market on which such security is traded.
As used herein, the "Conversion Amount" shall be equal to $1,000.00.
As used herein, "Conversion Date" shall mean the date on which the
notice of conversion is actually received by the Corporation, in case of a
conversion at the option of the holder pursuant to Section 9.
As used herein, "Conversion Percentage" shall mean 85 percent;
provided, however, that the Conversion Percentage shall decrease by one
percentage point for each ten business days between the 150th day after the
Issuance Date and the date on which the Registration Statement is declared
effective by the SEC; but in no event shall the Conversion Percentage be less
than 70% if the Corporation is proceeding in good faith to obtain the
effectiveness of the Registration Statement.
As used herein, "Registration Statement" shall mean the Registration
Statement required to be filed by the Corporation with the SEC pursuant to
Section 2(a) of the Registration Rights Agreement.
As used herein, "Registration Rights Agreement" shall mean the
Registration Rights Agreement between the Corporation and the original holder
of the Series A Convertible Preferred Stock.
As used herein, "SEC" shall mean the United States Securities and
Exchange Commission.
(C) OTHER PROVISIONS. Notwithstanding anything in this Section 9,
no change in the Conversion Amount shall be made that would result in a
Conversion Price of less than the par value of the Common Stock.
The right of the holders of Series A Convertible Preferred Stock to
convert their shares shall be exercised by delivering to the Corporation or its
agent, as provided above, a written notice, duly signed by or on behalf of the
holder, stating the number of shares of Series A Convertible Preferred Stock
being converted, and such holder shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such conversion at the close of
business on the date such notice of conversion is so delivered. Promptly, but
in no event later than ten business days after delivery of a notice of
conversion, such holder shall surrender for such purpose
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to the Corporation or its agent, as provided above, certificates representing
shares to be converted, duly endorsed in blank or accompanied by proper
instruments of transfer. The Corporation shall pay any tax arising in
connection with any conversion of shares of Series A Convertible Preferred
Stock except that the Corporation shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issue and
delivery upon conversion of shares of Common Stock or other securities or
property in a name other than that of the holder of the shares of the Series A
Convertible Preferred Stock being converted, and the Corporation shall not be
required to issue or deliver any such shares or other securities or property
unless and until the person or persons requesting the issuance thereof shall
have paid to the Corporation the amount of any such tax or shall have
established to the satisfaction of the Corporation that such tax has been paid.
The Corporation (and any successor corporation) shall take all action
necessary so that a number of shares of the authorized but unissued Common
Stock (or common stock in the case of any successor corporation) sufficient to
provide for the conversion of the Series A Convertible Preferred Stock
outstanding upon the basis hereinbefore provided is at all times reserved by
the Corporation (or any successor corporation), free from preemptive rights,
for such conversion, subject to the provisions of the next succeeding
paragraph. If the Corporation shall issue any securities or make any change in
its capital structure which would change the number of shares of Common Stock
into which each share of the Series A Convertible Preferred Stock shall be
convertible as herein provided, the Corporation shall at the same time also
make proper provision so that thereafter there shall be a sufficient number of
shares of Common Stock authorized and reserved, free from preemptive rights,
for conversion of the outstanding Series A Convertible Preferred Stock on the
new basis. If at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all of the
outstanding shares of Series A Convertible Preferred Stock, the Corporation
promptly shall seek such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
In case of any consolidation with, or merger of the Corporation into,
any other entity, or any merger of another entity into the Corporation (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the
Corporation), or in case of any sale or transfer of all or a majority of the
assets of the Corporation, or in the case of any share exchange pursuant to
which all of the outstanding shares of Common Stock are converted into other
securities or property, the Corporation shall make appropriate provision or
cause appropriate provision to be made so that each holder of shares of Series
A Convertible Preferred Stock then outstanding shall have the right thereafter
to convert such shares of Series A Convertible Preferred Stock into the kind
and amount of shares of stock and other securities and property receivable upon
such consolidation, merger, sale, transfer or share exchange by a holder of the
number of shares of Common Stock into which such shares of Series A Convertible
Preferred Stock could have been converted immediately prior to the effective
date of such consolidation, merger, sale, transfer or share exchange. In such
event, the Conversion Price shall be lowest of the amount determined pursuant
to Section 9(a) or the average Closing Price of the Common Stock for the five
trading days ending on the tenth trading day preceding the first public
announcement of the pricing terms of
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the consolidation, merger or other transaction or the average Closing Price of
the Common Stock for the five trading days ending on the tenth trading day
prior to the first public announcement, if any, that the Corporation was
considering a sale or other disposition of its business or was engaged in
acquisition discussions or had received an acquisition offer. In the event of a
Tender Offer, the Conversion Price shall be lowest of the amount determined
pursuant Section 9(a) or the average Closing Price of the Common Stock for the
five trading days ending on the tenth trading day preceding the first public
announcement of the pricing terms of the Tender Offer or the average Closing
Price of the Common Stock for the five trading days ending on the tenth trading
day prior to the first public announcement, if any, that the Corporation was
considering a sale or other disposition of its business or was engaged in
acquisition discussions or had received an acquisition offer; in such event,
the holders of the Series A Convertible Preferred Stock shall be entitled to
convert such shares into Common Stock on the condition that such shares of
Common Stock are purchased in the Tender Offer. If, in connection with any
such consolidation, merger, sale, transfer, or share exchange, each holder of
shares of Common Stock is entitled to elect to receive either securities, cash,
or other assets upon completion of such transaction, the Corporation shall
provide or cause to be provided to each holder of Series A Convertible
Preferred Stock an equivalent right 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 transaction unless the
provisions of this paragraph have been complied with. The above provisions
shall similarly apply to successive consolidations, mergers, sales, transfers,
share exchanges or Tender Offers.
If a holder shall have given a notice of conversion of shares of
Series A Convertible Preferred Stock, upon surrender of certificates
representing shares of Series A Convertible Preferred Stock for conversion, the
Corporation shall issue and deliver to such person at an address to be
specified by such person certificates for the Common Stock issuable upon such
conversion within five business days after such surrender of certificates. If a
holder shall have given a notice of conversion as provided herein and shall
have made the aforesaid surrender of certificates, the Corporation's obligation
to issue and deliver the certificates for Common Stock shall be absolute and
unconditional. If the Corporation fails to issue and deliver the certificates
for the Common Stock to the holder converting shares of Series A Convertible
Preferred Stock pursuant to the first sentence of this paragraph as and when
required to do so, in addition to any other liabilities the Corporation may
have hereunder and under applicable law, the Corporation shall pay or reimburse
such holder on demand for all out-of-pocket expenses including, without
limitation, fees and expenses of legal counsel incurred by such holders as a
result of such failure.
No fractional shares of Common Stock shall be issued upon conversion
of Series A Convertible Preferred Stock but, in lieu of any fraction of a share
of Common Stock which would otherwise be issuable in respect of the aggregate
number of such shares surrendered for conversion at one time by the same
holder, the Corporation at its option (a) may pay in cash an amount equal to
the product of (i) the arithmetic average of the Closing Price of a share of
Common Stock on the three consecutive trading days ending on the trading day
immediately preceding the Conversion Date and (ii) such fraction of a share or
(b) may issue an additional share of Common Stock.
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In case the Corporation shall issue rights or warrants on a pro rata
basis to all holders of the Common Stock entitling such holders to subscribe
for or purchase Common Stock or other securities, or if the Corporation shall,
by dividend or otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness or assets, the holders of Series A Convertible
Preferred Stock shall be entitled participate in the transaction or
distribution on a basis and with notice that the Board of Directors determines
to be fair to the holders of the Series A Convertible Preferred Stock and
appropriate in light of the basis on which holders of the Common Stock are to
participate in the transaction.
Whenever the Corporation shall propose to take any of the actions
specified in the fourth paragraph of this Section 9(c), the Corporation shall
cause a notice to be mailed at least 20 days prior to the date on which the
books of the Corporation will close or on which a record will be taken for such
action, to the holders of record of the outstanding Series A Convertible
Preferred Stock on the date of such notice. Such notice shall specify the
action proposed to be taken by the Corporation and the date as of which holders
of record of the Common Stock shall participate in any such actions or be
entitled to exchange their Common Stock for securities or other property, as
the case may be. Failure by the Corporation to mail the notice or any defect
in such notice shall not affect the validity of the transaction.
(D) MANDATORY CONVERSION. On December 31, 1999 (the "Mandatory
Conversion Date") all of the shares of Series A Convertible Preferred Stock
then outstanding shall be automatically converted, in accordance with the
provisions of Section 9(a) and Section 9(c), into shares of Common Stock as if
as if the Mandatory Conversion Date were the Conversion Date as to all such
shares. Upon the surrender of certificates for shares of Series A Convertible
Preferred Stock by the holder, the Corporation shall issue and, within five
trading days after such surrender, deliver to or upon the order of such holder
that number of shares of Common Stock as shall be issuable in respect to the
conversion of the number of shares of Series A Convertible Preferred Stock
converted into Common Stock as shall be determined in accordance herewith.
SECTION 10. VOTING RIGHTS. Except as otherwise required by law or
expressly provided herein, shares of Series A Convertible Preferred Stock shall
not be entitled to vote on any matter.
The affirmative vote or consent of the holders of a majority of the
outstanding shares of the Series A Convertible Preferred Stock, voting
separately as a class, will be required for (1) any amendment, alteration, or
repeal, whether by merger or consolidation or otherwise, of the Corporation's
Certificate of Incorporation if the amendment, alteration, or repeal materially
and adversely affects the powers, preferences, or special rights of the Series
A Convertible Preferred Stock, or (2) the creation and issuance of any Senior
Liquidation Stock; provided, however, that any increase in the authorized
preferred stock of the Corporation or the creation and issuance of any stock
which is Junior Stock or any other capital stock of the Corporation ranking on
a parity with the Series A Convertible Preferred Stock shall not be deemed to
affect materially and adversely such powers, preferences, or special rights.
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SECTION 11. OUTSTANDING SHARES. For purposes of this Certificate of
Designations, all shares of Series A Convertible Preferred Stock shall be
deemed outstanding except (i) from the date of delivery of notice of conversion
of shares of Series A Convertible Preferred Stock into Common Stock in
accordance with the provisions hereof, all shares of Series A Convertible
Preferred Stock converted into Common Stock and (ii) from the date of
registration of transfer, all shares of Series A Convertible Preferred Stock
held of record by the Corporation or any subsidiary or Affiliate (as defined
herein) of the Corporation. For the purposes of this Certificate of
Designations, "Affiliate" means any person directly or indirectly controlling
or controlled by or under direct or indirect common control with the
Corporation. "Control" is the power to direct the management and policies of a
person, directly or through one or more intermediaries, whether through the
ownership of voting securities, by contract, or otherwise.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, International Remote Imaging Systems, Inc. has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by its as of the 31st day of December, 1996.
By: [SIG]
--------------------------------
Name:
Title:
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below, by and between INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a
Delaware corporation, with headquarters located at 9162 Eaton Avenue,
Chatsworth, California 91311 (the "Company"), and the undersigned purchaser
(the "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, shares (the "Preferred Shares") of the
Company's newly created Series A Convertible Preferred Stock, $.01 par value
(the "Preferred Stock"), and certain warrants of the Company (the "Warrants")
to purchase shares of the Company's Common Stock, $.01 par value (the "Common
Stock"), subject to acceptance of this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO PURCHASE THE PREFERRED SHARES AND THE
WARRANTS; PURCHASE PRICE.
(A) PURCHASE. The Company hereby agrees to issue to the
Buyer on the date hereof (the "Closing Date") 3,000 Preferred Shares for a
purchase price of $1,000 per share and Warrants of the Company, in the form
attached hereto as Annex I, to purchase an aggregate of 84,270 shares of
Common Stock, for a purchase price of $.01 per Warrant. The shares of Common
Stock issuable from time to time upon conversion of the Preferred Shares are
referred to herein as the "Conversion Shares." The shares of Common Stock
issuable from time to time upon exercise of the Warrants are referred to herein
as the "Warrant Shares." The Conversion Shares and the Warrant Shares are
referred to herein collectively as the "Common Shares." The Preferred Shares,
the Warrants and the Common Shares are referred to herein collectively as the
"Securities."
(B) FORM OF PAYMENT. Simultaneously with the execution
of this Agreement on the Closing Date, the Buyer is paying the purchase price
for the Preferred Shares and the Warrants by delivering good funds in United
States Dollars to the Company against delivery by the Company of certificates
for the Preferred Shares and the Warrants registered in the name of the Buyer
or its nominee and duly executed by the Company.
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2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
(a) The Buyer is acquiring the Preferred Shares and the
Warrants, and if acquired, will acquire the Common Shares for its own account
and not with a view to the distribution thereof in contravention of the
Securities Act of 1933, as amended (the "1933 Act");
(b) The Buyer is an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3);
(c) All subsequent offers and sales of the Securities by
the Buyer shall be made pursuant to registration of the Securities being
offered and sold under the 1933 Act or pursuant to an exemption from
registration;
(d) The Buyer understands that the Preferred Shares and
the Warrants are being offered and sold, and the Common Shares are being
offered, to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein, in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Preferred Shares and the Warrants and to receive an offer of the Common Shares;
(e) The Buyer and its advisors have been furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Preferred Shares and the
Warrants and the offer of the Common Shares which have been requested by the
Buyer. The Buyer and its advisors have been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory answers to
any such inquiries. Without limiting the generality of the foregoing, the
Buyer has had the opportunity to obtain and to review the Company's (1) Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, (2) Quarterly
Reports on Form 10-Q for the Company's three subsequent fiscal quarters
(including a report on Form 12b-25), (3) preliminary prospectus, dated
September 30, 1996, (4) definitive Proxy Statement for the Company's 1996
Annual Meeting of Stockholders, (5) certain reports on Form 8-K, in each case
as filed with the Securities and Exchange Commission (the "SEC") and (6) a
draft amended Annual Report on Form 10-KA for 1995 and draft amended Quarterly
Reports on Form 10-QA for the first three quarter of fiscal year 1996, to be
filed with the SEC shortly (such materials, the "Reports"). The Buyer
understands that its investment in the Securities involves a high degree of
risk;
(f) The Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities; and
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<PAGE> 3
(g) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding
agreement of the Buyer enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC. The Company
represents and warrants to, and covenants and agrees with, the Buyer as
follows:
(A) CONCERNING THE SECURITIES. The Securities have been
duly authorized, and the Preferred Shares and the Warrants, when issued and
paid for in accordance with this Agreement, and the Common Shares, when issued
upon conversion or exercise of the Preferred Shares and the Warrants will be
duly and validly issued, fully paid and nonassessable and will not subject the
holder thereof to personal liability by reason of being such holder. There are
no preemptive rights of any stockholder of the Company, as such, to acquire any
of the Common Shares. The Common Stock is listed for trading on the American
Stock Exchange, Inc. (the "AMEX"), and no suspension of trading in the Common
Stock is in effect.
(B) SECURITIES PURCHASE AGREEMENT; REGISTRATION RIGHTS
AGREEMENT; PREFERRED SHARES; WARRANTS. This Agreement, the Registration
Rights Agreement, the form of which is attached hereto as Annex II (the
"Registration Rights Agreement"), the Preferred Shares, the Warrants and the
Common Shares have been duly and validly authorized by the Company; the
certificates for the Preferred Shares are in due and proper form and will
represent the shares purported to be represented thereby upon their execution
by the Company; and this Agreement has been duly executed and delivered on
behalf of the Company; and this Agreement is and the Registration Rights
Agreement and the Warrants, when executed and delivered by the Company, will
be, valid and binding agreements of the Company enforceable in accordance with
their respective terms, subject as to enforceability to general principles of
equity and to bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally.
(C) NON-CONTRAVENTION. The execution and delivery of
this Agreement, the Registration Rights Agreement, the Preferred Shares and the
Warrants by the Company and the consummation by the Company of the issuance of
the Preferred Shares, the Warrants and the other transactions contemplated by
this Agreement, the Registration Rights Agreement and the terms of the Warrants
do not and will not conflict with or result in a breach by the Company of any
of the terms or provisions of, or constitute a default under, the certificate
of incorporation or bylaws of the Company, or any indenture, mortgage, deed of
trust or other material agreement or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, or any applicable
law, rule or regulation or any applicable decree, judgment or order of any
court, United States federal or state regulatory body, administrative agency or
other governmental body having jurisdiction over the Company or any of its
properties or assets.
(D) APPROVALS. No authorization, approval or consent of
or filing with any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders of the Company is
required to be obtained by the Company for the
3
<PAGE> 4
issuance and sale of the Securities as contemplated by this Agreement and the
Warrants, other than (1) approval of the listing of the Common Shares by the
AMEX, (2) the requirements of any applicable blue sky laws and (3) the filing
of a Form 8-K with the SEC.
(E) SEC REPORTING STATUS AND FILINGS. The Company has
filed with the SEC all reports and other information required to be filed under
Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"). Since September 30, 1996, the Company has not filed, and no
event has occurred that requires the Company to file, any reports or other
information with the SEC pursuant to Sections 13(a), 14 and 15(d) of the 1934
Act other than the reports and other information identified in Section 2(e)
hereof and as set forth in Schedule 3(e).
(F) INFORMATION PROVIDED. The information provided by or
on behalf of the Company to the Buyer and referred to in Section 2(e) of this
Agreement (taken as a whole and subject to the Amendments) does not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(G) ABSENCE OF CERTAIN CHANGES. Since December 31, 1995,
there has been no material adverse change and no material adverse development
in the business, properties, operations, condition (financial or other),
results of operations or prospects of the Company, except as disclosed in the
documents referred to in Section 2(e) hereof. As disclosed in the Company's
Quarterly Report on Form 10-Q for its third fiscal 1996 quarter, the Company
reported a substantial loss in the third quarter and expects to report a
substantial loss in the fourth quarter. During the third quarter the Company
also announced a significant reduction and reorganization of its workforce. The
Company will need additional cash to satisfy its capital obligations, including
those to Boehringer Mannheim Corporation and its bank.
(H) ABSENCE OF LITIGATION. Except as set forth in the
Reports and except for a potential dispute relating to the purchase of
Perceptive Scientific Instruments, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company or any of its subsidiaries, threatened
against or affecting the Company or any of its subsidiaries, wherein an
unfavorable decision, ruling or finding would have a material adverse effect on
the properties, business, condition (financial or other), results of operations
or prospects of the Company and its subsidiaries taken as a whole or the
transactions contemplated by this Agreement or any of the documents
contemplated hereby or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(A) TRANSFER RESTRICTIONS. The Buyer acknowledges that:
(1) the Preferred Shares and the Warrants have not been and are not being
registered under the 1933 Act and, except as provided in the Registration
Rights Agreement, the Common Shares have not been and are not being registered
under the 1933 Act, and may not be transferred unless (A) subsequently
registered thereunder or (B) the Buyer shall have delivered to the Company an
opinion of counsel,
4
<PAGE> 5
reasonably satisfactory in form, scope and substance to the Company, to the
effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; (2) any sale of the Securities
made in reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any such resale of Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Common Shares (other than pursuant to the
Registration Rights Agreement) or the Preferred Shares or the Warrants under
the 1933 Act or to comply with the terms and conditions of any exemption
thereunder (other than pursuant to Section 4(d) hereof and pursuant to the
Registration Rights Agreement).
(B) RESTRICTIVE LEGEND. The Buyer acknowledges and
agrees that the Preferred Shares and the Warrants and, until (but not after)
such time as the Common Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the certificates for the
Common Shares, shall bear a restrictive legend in substantially the following
form and be subject to equivalent stop transfer instructions:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may nor be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under the Securities
Act of 1933, as amended, or an opinion of counsel that
registration is not required under said Act.
(C) REGISTRATION RIGHTS AGREEMENT. The parties hereto
agree to enter into the Registration Rights Agreement immediately following the
execution of this Agreement.
(D) FORM 8-K. The Company agrees to file with the SEC a
Form 8-K with respect to the Securities and to provide a copy thereof to the
Buyer promptly after such filing. The Buyer agrees to cooperate with the
Company in connection with such filings and, upon request of the Company, to
provide all information relating to the Buyer reasonably required for such
filings.
(E) AMEX LISTING; REPORTING STATUS. The Company will
promptly (and in any event no later than 10 days after the date hereof) file a
listing application for the Common Shares with the AMEX and promptly file such
additional listing applications with the AMEX as may be necessary from time to
time for any additional shares of Common Stock as a result of adjustments made
for stock splits, stock dividends, combinations, recapitlatizations,
reclassifications and similar events. So long as the Buyer beneficially owns
any of the Preferred Shares, the Warrants or the Common Shares, the Company
shall file all reports required to be filed with the SEC pursuant to Section 13
or 15(d) of the 1934 Act and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.
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<PAGE> 6
(F) USE OF PROCEEDS. The Company will use the proceeds
from the sale of the Securities for the repurchase of shares of its Common
Stock from Boehringer Mannheim Corporation pursuant to existing contractual
commitments, for the repayment of $500,000 in bank debt and for the Company's
internal working capital and not for the purpose of any investment in or loan
to any other corporation, partnership, enterprise or other person; provided,
however, that the proceeds may be used for loans to companies which are
wholly-owned subsidiaries of the Company at all times when such loans are
outstanding.
(G) BLUE SKY LAWS. On or before the Closing Date, the
Company shall take such action as shall be necessary to qualify, or to obtain
an exemption for, the Preferred Shares and the Warrants for sale to the Buyer
pursuant to this Agreement and the Common Shares for issuance to the Buyer on
conversion or exercise of the Preferred Shares and the Warrants under such of
the securities or "blue sky" laws of jurisdictions in the United States as
shall be applicable to the sale of the Preferred Shares and the Warrants to the
Buyer pursuant to this Agreement and the issuance of the Common Shares to the
Buyer on conversion or exercise of the Preferred Shares and the Warrants. The
Company shall furnish copies of all filings, applications, orders and grants or
confirmations of exemptions relating to such securities or blue sky, laws on or
prior to the Closing Date.
(H) CERTAIN EXPENSES. The Company shall pay or reimburse
the Buyer for all legal fees and expenses of counsel to the Buyer for the
preparation and negotiation of, and closing under, this Agreement up to an
amount of $15,000. The obligations of the Company under the provisions of this
Section 4(h) shall be in addition to the obligation of the Company for expenses
under the Registration Rights Agreement.
(I) CERTAIN ISSUANCES OF SECURITIES. The Company will
not issue any shares of Common Stock or shares of any series of preferred stock
or other securities convertible into Common Stock of the Company for less than
the greater of the book or market value of such Common Stock, if such issuance
would be integrated as a transaction with the offer and sale of the Preferred
Shares and the Warrants to the Buyer and the conversion or exercise thereof for
purposes of the "Stockholder Approval" requirement under of the rules of the
AMEX and require such "Stockholder Approval" or a waiver thereof from the AMEX,
unless the Company obtains such "Stockholder Approval" or such waiver thereof
from the AMEX, as and to the extent required under of the rules of the AMEX.
(J) EXCHANGE RIGHT OF THE BUYER. The Buyer understands
that the Company is seeking additional private financing in the form of capital
stock, debt securities containing equity features, debt securities issued
together with equity securities or other equity securities (any of the
foregoing that may within six months from the Closing Date be issued pursuant
to an exemption from registration under the 1933 Act being referred to herein
as "New Securities"). At such time as the material terms of the New Securities
are believed to have been finalized, the Company will give the Buyer immediate
notice of such terms, and the Buyer will thereupon have ten days to provide
notice of whether it wishes to elect to exchange some or all of the Preferred
Shares and Warrants then owned by it for New Securities at the time of the
issuance of such New Securities at an exchange price equal to the purchase
price of the New Securities so acquired, and on the additional terms and
conditions applicable generally to such New Securities. If the Buyer
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<PAGE> 7
does not give such notice, then it shall have no further rights to receive the
New Securities that were the subject of the Company's notice, unless the
material terms of such New Securities are materially changed, in which case it
shall be entitled to a new notice and opportunity to participate.
(K) AMENDMENT TO SHAREHOLDER RIGHTS PLAN. The Company
will not adopt any shareholder rights plan (or so-called "poison pill") which
does not grandfather the ownership of the Securities by the Buyer and its
affiliates.
(L) LIMITATIONS ON CONVERSIONS. The parties recognize
that the number of Conversion Shares could exceed 20% of the Company's
outstanding stock, possibly making full conversion of the Preferred Shares a
violation of Section 713 of the American Stock Exchange Company Guide. The
Buyer agrees (on behalf of itself and any assignees) that it will not convert
any Preferred Shares to the extent that such conversion would violate Section
713. Any notice(s) of conversion of Preferred Shares purporting to convert into
a number of Common Shares in excess of the amount permitted under Section 713
(the Notice(s)") shall be deemed to be applicable to only that number of
Preferred Shares which can be converted without such a violation. The balance
of the Preferred Shares covered by the Notice(s) shall only be converted at
such time as that conversion would not cause a violation of Section 713.
Unless within thirty (30) days of the receipt of the Notice (or such other time
period as may be agreed by the Buyer) the Company has formulated a reasonable
approach to permit the conversion (a "Conversion Plan") of the excess Preferred
Shares covered by the Notice (the "Unconverted Preferred Shares") within six
months from the receipt of the Notice, the Company shall redeem any Unconverted
Preferred Shares not covered by such Conversion Plan in exchange for the fair
market value (at the time of the redemption) of the common stock into which
such shares would have been convertible at the time of the relevant Notice (a
"Redemption"). If the Company does formulate a Conversion Plan, then the
Company shall nonetheless undertake a Redemption of any remaining Unconverted
Preferred Shares at the earlier of such time as (i) six months have elapsed
since the receipt of the Notice; or (ii) the Company shall have ceased to
pursue the original Conversion Plan or any replacement Conversion Plan
formulated promptly after the prior Conversion Plan was abandoned. The
foregoing provisions shall also be applicable to any mandatory conversion of
the Preferred Shares.
5. TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE.
Promptly following the closing hereunder, the Company will irrevocably
instruct its transfer agent to issue certificates for the Common Shares from
time to time upon conversion or exercise of the Preferred Shares and the
Warrants in such amounts as specified from time to time to the transfer agent
by the Buyer, such certificates to bear the restrictive legend specified in
Section 4(b) of this Agreement prior to registration of the Common Shares under
the 1933 Act, registered in the name of the Buyer or its nominee and in such
denominations to be specified by the Buyer in connection with each such
conversion or exercise. The Company warrants that no instruction other than
such instructions referred to in this Section 5 and stop transfer instructions
to give effect to Section 4(a) hereof prior to registration of the Common
Shares under the 1933 Act will be given by the Company to the transfer agent
and that the Common Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent
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<PAGE> 8
provided in this Agreement. Nothing in this Section 5 shall affect in any way
the Buyer's obligations and agreement to comply with all applicable securities
laws upon resale of the Securities. If the Buyer provides the Company with an
opinion of counsel reasonably satisfactory in form, scope and substance to the
Company that registration of a resale by the Buyer of any of the Securities in
accordance with clause (1)(B) of Section 4(a) of this Agreement is not required
under the 1933 Act, the Company shall permit the transfer of such Securities
and, in the case of the Common Shares, instruct the Company's transfer agent to
issue upon transfer and deliver to or upon the order of the Buyer promptly, but
in no event later than three business days after receipt of such opinion, one
or more share certificates in such name or names and in such denominations as
specified by the Buyer. The provisions of Section 3(n) of the Registration
Rights Agreement shall supersede this Section 5(a) once said Section 3(n)
becomes applicable.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The Company
understands that the Buyer's obligation to purchase the Preferred Shares and
the Warrants on the Closing Date is conditioned upon:
(a) Delivery by the Company to the Buyer of the Preferred
Shares and the Warrants in accordance with this Agreement;
(b) The accuracy on the Closing Date of the
representations and warranties of the Company contained in this Agreement as if
made on the Closing Date and the performance by the Company on or before the
Closing Date of all covenants and agreements of the Company required to be
performed on or before such Closing Date; and
(c) Receipt by the Buyer on the Closing Date of an
opinion of counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer.
7. GOVERNING LAW; MISCELLANEOUS.
(a) This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware.
(b) This Agreement may be executed in counterparts and by
the parties hereto on separate counterparts, all of which together shall
constitute one and the same instrument. A facsimile transmission of this
Agreement bearing a signature on behalf of a party hereto shall be legal and
binding on such party.
(c) The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
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<PAGE> 9
(e) No failure or delay by any party in exercising any
right or remedy under this Agreement or otherwise, and no course of dealing
between the parties, shall operate as a waiver thereof or amendment of this
Agreement, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or exercise of any other right
or power.
(f) Neither this Agreement nor any term thereof
(including this paragraph) may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in a writing signed by the party to be charged with enforcement.
(g) Any notices required or permitted to be given under
the terms of this Agreement shall be sent by mail or delivered personally
(which shall include telephone line facsimile transmission) or by courier and
shall be effective five days after being placed in the mail, if mailed, or upon
receipt, if delivered personally or by courier, in each case addressed to a
party at such party's address shown in the introductory paragraph or on the
signature page of this Agreement, as the case may be (facsimile number
818-700-9661, in the case of the Company, and as set forth on the signature
page hereof, in the case of the Buyer), or such other address as a party shall
have provided by notice to the other party in accordance with this provision.
The Buyer hereby designates as its address and telephone line facsimile
transmission number for any notice required or permitted to be given to the
Buyer pursuant to the Certificate of Designations or the Registration Rights
Agreement the address and telephone line facsimile transmission -number set
forth on the signature page hereof, until the Buyer shall by notice to the
Company designate another address or telephone line facsimile transmission
number for such purpose.
(h) This Agreement constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement contains minor corrections and
modifications to a prior version of this Agreement executed by the parties
hereto and is the final and controlling version of the agreement among the
parties hereto. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Company by one of its officers thereunto duly authorized as of the date set
forth below.
Date:
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
By: [SIG]
--------------------------------------
Print name:
Title:
9
<PAGE> 10
BUYER SIGNATURE PAGE AND QUESTIONNAIRE
The undersigned Buyer hereby executes the Securities Purchase
Agreement with International Remote Imaging Systems, Inc. and hereby authorizes
this signature page to be attached to a counterpart of such document executed
by a duly authorized officer of International Remote Imaging Systems, Inc.
Number of Preferred Shares (at THERMO AMEX CONVERTIBLE GROWTH FUND I, L. P.
$1,000 per share): 3,000 By: Thermo Amex Finance, L.P.,
its general partner
By: Thermo Amex Management Company, Inc.,
Number of Warrants: (at $.01 its general partner
per Warrant): 84,270 By: /s/ DOMINIQUE LAHAUSSOIS
----------------------------------------
Dominique Lahaussois, its President
Number of shares of common stock of International Remote Imaging Systems, Inc.
beneficially owned (meaning shares owned or controlled or which the
Purchaser has the right to acquire or vote) by the Buyer, other than the
Securities being purchased pursuant hereto: None
If the Buyer or any of its officers has held any position, office or other
material relationship within the past three years with International
Remote Imaging Systems, Inc., please identify below: None
Buyer's Address: Suite 1B, 4 Lafayette Court, Greenwich, CT 06830
Buyer's Telephone Number: 203-861-9215
Buyer's Fax Number: 203-861-6882
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<PAGE> 11
SCHEDULE 3(e)
International Remote Imaging Systems, Inc. ("IRIS")
SEC Filings Since September 30, 1996
Form 8-K filed 10/2/96 --
to report a press release announcing an amendment to a series of
agreements with Boehringer Mannheim Corporation and its affiliates;
Form 8-K filed 10/2/96 --
to report a press release announcing that IRIS had filed a registration
statement with the SEC for a public offering of 3,000,000 shares of its
common stock, par value $.01;
Form 8-K/A filed 10/10/96 --
to amend the Form 8-K relating to IRIS's acquisition of Perceptive
Scientific Instruments, Inc. to include certain previously omitted
historical and pro forma financial information required pursuant to
Items 7(a)(4) and 7(b)(2) of Form 8-K;
Form 8-K filed 10/31/96 --
to report a press release announcing a restructuring of IRIS's
workforce;
Form 12b-25 filed 11/15/96 --
to report the late filing of Form 10-Q for the quarter ended 9/30/96;
Form 10-Q filed 11/19/96 --
for the quarter ended 9/30/96; and
Response filed 12/26/96 to SEC Comment Letter dated 11/27/96.
<PAGE> 1
Exhibit 10.2
Annex II
to
Securities
Purchase
Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 31, 1996
(this "Agreement"), is made by and between INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation (the "Company"), and THERMO AMEX
CONVERTIBLE GROWTH FUND I, L.P. (the "Initial Investor").
W I T N E S S E T H:
WHEREAS, in connection with the Securities Purchase Agreement, dated
the date hereof, between the Initial Investor and the Company (the "Purchase
Agreement"), the Company has issued to the Initial Investor shares (the
"Preferred Shares") of its Series A Convertible Preferred Stock, convertible
into the Company's Common Stock, $.01 par value (the "Common Stock") and
warrants (the "Warrants") of the Company to purchase shares of Common Stock
(the "Common Stock"); and
WHEREAS, in the Purchase Agreement the Company agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute
(collectively, the "Securities Act"), and applicable state securities laws with
respect to the shares of Common Stock issuable or issued from time to time upon
conversion of the Preferred Shares or exercise of the Warrants (the "Underlying
Shares");
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall
have the following meanings:
(i) "Investor" means the Initial Investor and any
transferee or assignee who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 hereof.
(ii) "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
Registration Statement or statements in compliance with the Securities
Act and pursuant to Rule 415 under the Securities Act or any
<PAGE> 2
successor rule providing for offering securities on a continuous basis
("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "Registrable Securities" means the Underlying
Shares.
(iv) "Registration Statement" means a registration
statement of the Company under the Securities Act.
(b) Capitalized terms defined in the introductory
paragraph or the recitals to this Agreement shall have the respective meanings
therein provided.
2. REGISTRATION.
(a) MANDATORY REGISTRATION. The Company shall prepare,
and on or prior to the date which is 90 days after the date of the closing
under the Purchase Agreement (the "Closing Date"), file with the SEC a
Registration Statement on Form S-3 covering at least 1,200,000 shares of Common
Stock as Registrable Securities, and which Registration Statement shall state
that, in accordance with Rule 415 under the Securities Act, such Registration
Statement also covers such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Preferred Shares or
exercise of the Warrants to prevent dilution resulting from stock splits, stock
dividends or similar transactions or by reason of changes in the conversion
price of the Preferred Shares or the exercise price of the Warrants in
accordance with the respective terms thereof. If at any time the number of
shares of Common Stock included in the Registration Statement required to be
filed as provided in the first sentence of this Section 2(a) shall be
insufficient to cover the number of shares of Common Stock issuable on
conversion of the Preferred Shares and the exercise in full of the unexercised
Warrants, then promptly, but in no event later than 30 days after such
insufficiency shall occur, the Company shall file with the SEC any required
additional Registration Statement on Form S-3 (which shall not constitute a
post-effective amendment to the Registration Statement required to be filed
pursuant to the first sentence of this Section 2(a)) or other applicable form
covering such number of shares of Common Stock as shall be sufficient to
correct such insufficiency; provided, however, that the Company shall not be
required to file more than one such additional Registration Statement per
calendar quarter. For all purposes of this Agreement (other than Section 2(c)
hereof) each such additional Registration Statement shall be deemed to be the
Registration Statement required to be filed by the Company pursuant to Section
2(a) of this Agreement, and the Company and the Investors shall have the same
rights and obligations (other than Section 2(c) hereof) with respect to such
additional Registration Statement as they shall have with respect to the
initial Registration Statement required to be filed by the Company pursuant to
this Section 2(a). The Company shall promptly, but in any event within thirty
(30) days of its receipt of written notice, comply with the request of
Investors holding a majority in interest of the Registrable Securities that the
Company file an amendment to the plan of distribution of the Registration
Statement, including, but not limited to, a request for an underwritten public
offering; provided, however, that the Company shall not file more than one such
amendment to the plan of distribution of the Registration Statement per
calendar year.
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<PAGE> 3
(b) CERTAIN OFFERINGS. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering shall have the right to select
one legal counsel and an investment banker or bankers and manager or managers
to administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company. The Investors who
hold the Registrable Securities to be included in such underwriting shall pay
all underwriting discounts and commissions and other fees and expenses of such
investment banker or bankers and manager or managers so selected in accordance
with this Section 2(b) (other than fees and expenses relating to registration
of Registrable Securities under federal or state securities laws, which are
payable by the Company pursuant to Section 5 hereof) with respect to their
Registrable Securities and the fees and expenses of such legal counsel so
selected by the Investors.
(c) PIGGY-BACK REGISTRATIONS. If at any time the Company
shall determine to prepare and file with the SEC a Registration Statement
relating to an offering for its own account or the account of others under the
Securities Act any of its equity securities, other than on Form S-4 or Form S-8
or their then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans, the
Company shall send to each Investor who is entitled to registration rights
under Section 2(a) hereof written notice of such determination and if, within
twenty (20) days after receipt of such notice, such Investor shall so request
in writing, the Company shall include in such Registration Statement all or any
part of the Registrable Securities such Investor requests to be registered,
except that if, in connection with any underwritten public offering for the
account of the Company or others the managing underwriter(s) thereof shall
impose a limitation on the number of shares of Common Stock (which limitation
may be the exclusion of all shares of Common Stock proposed to be included for
all selling stockholders) which may be included in the Registration Statement
because, in such underwriter(s)' judgment, such limitation is necessary to
effect an orderly public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion, if any, of
the Registrable Securities with respect to which such Investor has requested
inclusion hereunder. Any exclusion of Registrable Securities shall be made pro
rata among the Investors seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be included by
such Investors; provided, however, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding
securities the holders of which are not entitled by right to inclusion of
securities in such Registration Statement; and provided further, however, that,
after giving effect to the immediately preceding proviso, any exclusion of
Registrable Securities shall be made pro rata with holders of other securities
having the right to include such securities in the Registration Statement based
on the number of securities they own or have the current right to acquire
(except that any person that has exercised demand registration rights with
respect to that Registration Statement shall have priority with respect to any
shares included in such Registration Statement to the extent required by its
agreement with the Company). No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any registration
required under Section 2(a) hereof. The obligations of the Company under
Section 2(a) hereof may be waived by Investors holding a majority in interest
of the Registrable Securities.
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(d) ELIGIBILITY FOR FORM S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for
registration of the sale by the Initial Investor and any Investor of the
Registrable Securities and the Company shall file all reports required to be
filed by the Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3.
(e) NO DELAY OF REGISTRATION. No Investor shall
have any right to take any action to restrain, enjoin or otherwise delay the
filing or effectiveness of any Registration Statement on the basis of any
controversy which might arise with respect to the interpretation or
implementation of this Agreement.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall:
(a) use its reasonable best efforts to cause the
Registration Statement to become effective as soon as reasonably possible after
such filing, and keep the Registration Statement effective pursuant to Rule 415
at all times until the later of (1) in the case of any Registrable Securities,
the earlier of (i) such date as is three years after the Closing Date and (ii)
the date on which all Registrable Securities have been sold by the Investors
under circumstances in which the buyers may resell such Registrable Securities
without registration under the Securities Act and, (2) in the case of
Registrable Securities issued or issuable upon exercise of the Warrants, the
later of (i) the date which is three years after the date such Registration
Statement is first ordered effective by the SEC (but in no event later than the
date on which all Registrable Securities that are Warrant Shares have been sold
by the Investors under circumstances in which the buyers may resell the
Registrable Securities that are issued or issuable upon exercise of the
Warrants without registration under the Securities Act), in case the Warrants
have been exercised in full on a net exercise basis and (ii) the date which is
three years after the latest exercise of the Warrants for cash (but in no event
later than the date on which all Registrable Securities that are issued or
issuable upon exercise of the Warrants have been sold by the Investors under
circumstances in which the buyers may resell the Registrable Securities that
are issued or issuable upon exercise of the Warrants without registration under
the Securities Act); provided, however, that the Company shall not be required
to keep the Registration Statement effective if the Company shall have obtained
and delivered to all Investors an opinion of counsel, in form reasonably
satisfactory to a majority in interest of such Investors, to the effect that
all Registrable Securities may be immediately sold to the public without
registration thereof and without limitation or restriction of any kind, whether
pursuant to Rule 144(k) or similar rule (the "Termination Date"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any 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, in light of the circumstances in
which they were made, not misleading; provided, however, that, subject to the
conditions set forth in Section 4(a) below, each Investor may notify the
Company in writing that it wishes to exclude all or a portion of its
Registrable Securities from such Registration Statement;
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(b) prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
until the Termination Date, and, during such period, comply with the provisions
of the Securities Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until such time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement;
(c) furnish to each Investor whose Registrable Securities
are included in the Registration Statement and its legal counsel, (1) promptly
after the same is prepared and publicly distributed, filed with the SEC or
received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, each letter written by or on behalf of the
Company to the SEC or the staff of the SEC and each item of correspondence from
the SEC or the staff of the SEC relating to such Registration Statement (other
than any portion of any thereof which contains information for which the
Company has sought confidential treatment) and (2) such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;
(d) use reasonable best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or blue sky laws of such jurisdictions as the Investors
who hold a majority in interest of the Registrable Securities being offered
reasonably request, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof at all times until the Termination Date, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times until the Termination Date and (iv) take
all other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (I)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any such jurisdiction, (IV) provide any undertakings that cause more
than nominal expense or burden to the Company or (V) make any change in its
charter or by-laws, which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the Company and its
stockholders;
(e) with respect to an underwritten offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering;
(f) as promptly as practicable after becoming aware of
such event, notify each Investor of the happening of any event of which the
Company has knowledge, as a result of
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which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
use its reasonable best efforts promptly to prepare a supplement or amendment
to the Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to each Investor
as such Investor may reasonably request; provided, however, that the Company
may on no more than three occasions per calendar year defer the filing of an
amendment or supplement to the Registration Statement for a period not in
excess of 40 days after the occurrence of event as aforesaid, if the Board of
Directors determines that such delay is necessary to prevent the premature
disclosure of information which would be detrimental to the Company's business
interests (and the Company shall give the Investors notice of such permitted
delay without specifying the reasons therefor);
(g) as promptly as practicable after becoming aware of
such event, notify each Investor who holds Registrable Securities being sold
(or, in the event of an underwritten offering, the managing underwriters) of
the issuance by the SEC of any stop order or other suspension of effectiveness
of the Registration Statement at the earliest possible time;
(h) permit a single firm of counsel designated as selling
stockholders' counsel by the Investors who hold a majority in interest of the
Registrable Securities being sold to review the Registration Statement and all
amendments and supplements thereto a reasonable period of time prior to their
filing with the SEC;
(i) make generally available to its security holders as
soon as practicable, but not later than ninety (90) days after the close of the
period covered thereby, an earning statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement;
(j) at the request of the Investors who hold a majority
in interest of the Registrable Securities being sold, furnish on the date that
Registrable Securities are delivered to an underwriter for sale in connection
with the Registration Statement (i) a letter, dated such date, from the
Company's independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given in
an underwritten public offering, addressed to the underwriters and the
Investors;
(k) make available for inspection by any Investor, any
underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by any such
Investor or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate document and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
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enable each Inspector to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request for purposes of such due diligence;
provided, however, that each Inspector shall hold in confidence and shall not
make any disclosure (except to an Investor) of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any
confidential information in such Records to any Inspector until and unless such
Inspector shall have entered into confidentiality agreements (in form and
substance satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(k). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided to the Company pursuant to Section 4(e) hereof unless (i)
disclosure of such information is necessary to comply with federal or state
securities law, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (iv) such
information has been made generally available to the public other than
disclosure in violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information;
(l) use its reasonable best efforts either to (i) cause
all Registrable Securities covered by the Registration Statement to be listed
on a national securities exchange and on each additional national securities
exchange on which similar securities issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the
rules of such exchange or (ii) secure designation of all the Registrable
Securities covered by the Registration Statement as a National Association of
Securities Dealers Automated Quotations System ("NASDAQ") "national market
system security" within the meaning of Rule 11Aa2-1 of the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
quotation of the Registrable Securities on the NASDAQ National Market System
(so long as the Company is able to meet the criteria therefor) or, if, despite
the Company's reasonable best efforts to satisfy the preceding clause (i) or
(ii), the Company is unsuccessful in satisfying the preceding clause (i) and
(ii), to secure listing on a national securities exchange or NASDAQ
authorization and quotation for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities;
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(m) provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement;
(n) cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriter, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates to be in
such denominations or amounts as the case may be, as the managing underwriter
or underwriters, if any, or the Investors may reasonably request and registered
in such names as the managing underwriter or underwriters, if any, or the
Investors may request;
(o) comply with the provisions of Rule 153 under the
Securities Act and any rule of similar effect; and
(p) take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of the Registrable
Securities pursuant to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that such
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least ten (10) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the Company
requires from each such Investor (the "Requested Information") if any of such
Investor's Registrable Securities are eligible for inclusion in the
Registration Statement. If within five (5) business days prior to the filing
date the Company has not received the Requested Information from an Investor (a
"Non-Responsive Investor"), then the Company may file the Registration
Statement without including Registrable Securities of such Non-Responsive
Investor.
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(c) In the event Investors holding a majority in interest
of the Registrable Securities being registered determine to engage the services
of an underwriter, each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and contribution
obligations with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the
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Registrable Securities, unless such Investor has notified the Company in
writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(d) Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3(f) or 3(g), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g); and
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Investors entitled hereunder to approve such arrangements, (ii)
completes and executes all questionnaires, powers of attorney, indemnities
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements (except that no Investor shall be required to
furnish any indemnification with respect to information concerning the
Company), and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and other fees and expenses of investment bankers and
any manager or managers of such underwriting and legal expenses of the
underwriters applicable with respect to its Registrable Securities, in each
case to the extent not payable by the Company pursuant to the terms of this
Agreement.
5. EXPENSES OF REGISTRATION. All expenses, other than
underwriting fees, discounts and commissions and other fees and expenses of
investment bankers and other than brokerage commissions, incurred in connection
with registrations, filings or qualifications pursuant to Section 3, including,
without limitation, all registration, listing, and qualification fees, printers
and accounting fees and the fees and disbursements of counsel for the Company
and, up to an amount of $5,000 of expenses incurred by the Investors (but
subject to any limitation imposed by blue sky laws and regulations) shall be
borne by the Company; provided, however, that the Investors shall bear the fees
and out-of-pocket expenses of the one legal counsel selected by the Investors
pursuant to Section 2(b) hereof.
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor who holds such Registrable
Securities, the directors, if any, of such Investor, the officers, if any, of
such Investor, each person, if any, who controls any Investor within the
meaning of the Securities Act or the Exchange Act, any underwriter (as defined
in the Securities Act) for the Investors, the directors, officers and partners
of such underwriter, and each person, if any, who controls any such underwriter
within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages, expenses or
liabilities (joint or several) incurred (collectively, "Claims") to which any
of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are
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based upon any of the following statements, omissions or violations in the
Registration Statement, or any post-effective amendment thereof, or any
prospectus included therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or 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, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation under the Securities Act, the Exchange
Act or any state securities law (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to the restrictions
set forth in Section 6(d) with respect to the number of legal counsel, the
Company shall reimburse the Investors and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and payable, for any
legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (I) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (II) with respect to any preliminary
prospectus shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable Securities that are
the subject thereof (or to the benefit of any person controlling such person)
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; and (III) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registration Securities by the Investors pursuant
to Section 9.
(b) In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to indemnify and
hold harmless, to the same extent and in the same manner set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any underwriter and any
other stockholder selling securities pursuant to the Registration Statement or
any of its directors, officers, partners or any person who controls such
stockholder or underwriter within the meaning of the Securities Act or the
Exchange Act (collectively and together with any Indemnified Person, an
"Indemnified Party"), against any claim to which any of them may become
subject,
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under the Securities Act, the Exchange Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and such
Investor will reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim as does not
exceed the amount of the net proceeds to such Investor as a result of the sale
of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer
of the Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then amended
or supplemented.
(c) The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same extent as
provided above, with respect to information such persons so furnished in
writing by such persons expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action) such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly notices, to assume
control of the defense thereof with counsel mutually satisfactory to the
Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right
to retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnifying Party and any other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities included in the Registration
Statement to which the Claim relates. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by
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periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. CONTRIBUTION. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6, (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation and (c) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such
seller from the sale of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available
to the Investors the benefits of Rule 144 promulgated under the Securities Act
or any other similar rule or regulation of the SEC that may at any time permit
the Investors to sell securities of the Company to the public without
registration ("Rule 144") the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon written request, (i) a written
statement by the Company that it has complied with the reporting requirements
of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company and (iii) such other information as may be
reasonably required to permit the Investors to sell such securities pursuant to
Rule 144 without registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees of all or
any portion of such securities only if: (a) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address of such
transferee or assignee and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) immediately
following such transfer or assignment the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, and (d) at or before the time the Company
received the written notice contemplated by clause (b) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained therein.
12
<PAGE> 13
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in particular instance and either retroactively or prospectively),
only with the written consent of the Company and Investors who hold a majority
in interest of the Registrable Securities. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when
personally delivered (by hand, by courier, by telephone line facsimile
transmission or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid (i) if to the
Company, at International Remote Imaging Systems, Inc., 9162 Eton Avenue,
Chatsworth, California 91311, Attention: General Counsel (telephone line
facsimile No. (818) 700-9661), and (ii) if to any Investor, at such address as
such Investor shall have provided in writing to the Company, or at such other
address as each such party furnishes by notice given in accordance with this
Section 11(b), and shall be effective, when personally delivered, upon receipt
and, when so sent by certified mail, four days after deposit with the United
States Postal Service.
(c) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State. In the event
that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
(e) This Agreement constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement contains minor corrections and
modifications to a prior version of this Agreement executed by the parties
hereto and is the final and controlling version of the agreement among the
parties hereto. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
13
<PAGE> 14
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) The Company acknowledges that any failure by the
Company to perform its obligations under this Agreement, including, without
limitation, the Company's obligations under Section 3(n), or any delay in such
performance could result in damages to the Investors, and the Company agrees
that, in addition to any other liability the Company may have by reason of any
such failure or delay, the Company shall be liable for all damages (including,
but not limited to, loss of profits as a result of the Company's failure to
deliver certificates for shares of capital stock of the Company to any Investor
on time) caused by any such failure or delay. So long as the Company files a
Registration Statement in a timely manner as required by Sections 2(a) and 3(a)
and uses its reasonable best efforts to obtain effectiveness of such
Registration Statement and otherwise complies with its obligations under this
Agreement with respect to such Registration Statement, the Company shall not be
deemed to be in breach of this Agreement by reason of delay in the
effectiveness of such Registration Statement arising from any review thereof by
the staff of the SEC, it being understood and agreed that in such case the
Company shall not be liable to any Investor for consequential damages under
this Section 11(i).
(j) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
By: [SIG]
----------------------------------------
Print name:
Title:
THERMO AMEX CONVERTIBLE GROWTH FUND I, L. P.
By: Thermo Amex Finance, L.P.,
its general partner
By: Thermo Amex Management Company, Inc.,
its general partner
By: _____________________________________
Dominique Lahaussois, its President
15
<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
By:________________________________________
Print name:
Title:
THERMO AMEX CONVERTIBLE GROWTH FUND I, L. P.
By: Thermo Amex Finance, L.P.,
its general partner
By: Thermo Amex Management Company, Inc.,
its general partner
By: /s/ DOMINIQUE LAHAUSSOIS
---------------------------------------
Dominique Lahaussois, its President
16
<PAGE> 1
Annex I
to
Securities
Purchase
Agreement
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT.
Right to Purchase 84,270
Shares of Common Stock of
International Remote Imaging
Systems, Inc.
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
COMMON STOCK PURCHASE WARRANT
INTERNATIONAL REMOTE IMAGING SYSTEMS, IN., a Delaware corporation (the
"Company"), hereby certifies that, for value received, Thermo Amex Convertible
Growth Fund I, L.P. or registered assigns (the "Holder"), is entitled, subject
to the terms set forth below, to purchase from the Company at any time or from
time to time after the date hereof, and before 5:00 p.m., Eastern time, on the
Expiration Date (as hereinafter defined), 84,270 fully paid and nonassessable
shares of Common Stock, $.01 par value per share, of the Company at a purchase
price per share equal to the Purchase Price (as hereinafter defined). The
number of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided in this Warrant.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Business Day" as used herein shall mean a
day on which the American Stock Exchange is open for business.
(b) The term "Common Stock" includes the Company's Common
Stock, $.01 par value per share, as authorized on the date hereof, and any
other securities into which or for which the Common Stock may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
(c) The term "Company" shall include International Remote
Imaging Systems, Inc., a Delaware corporation, and any corporation that shall
succeed to or assume the obligation of International Remote Imaging Systems,
Inc. hereunder.
<PAGE> 2
(d) The term "Expiration Date" means 5:00 p.m.,
California time, on December 31, 2001.
(e) The term "Purchase Price" shall mean $3.56.
1. EXERCISE OF WARRANT.
1.1 EXERCISE AT OPTION OF HOLDER. This Warrant may be
exercised by the Holder hereof in full or in part at any time or from time to
time during the exercise period specified in the first paragraph hereof until
the Expiration Date by surrender of this Warrant and the subscription form
annexed hereto duly executed by such Holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check
payable to the order of the Company in the amount obtained by multiplying (a)
the number of shares of Common Stock designated by the Holder in the
subscription form by (b) the Purchase Price then in effect. On any partial
exercise the Company will forthwith issue and deliver to or upon the order of
the Holder hereof a new Warrant or Warrants of like tenor, in the name of the
Holder hereof or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may request, providing in the aggregate on the face or faces
thereof for the purchase of the number of shares of Common Stock for which such
Warrant or Warrants may still be exercised.
1.2 NET ISSUANCE. Notwithstanding anything to the
contrary contained in Section 1.1, the Holder may elect to exercise this
Warrant in whole or in part by receiving shares of Common Stock equal to the
net issuance value (as determined below) of this Warrant, or any part hereof,
upon surrender of this Warrant at the principal office of the Company, without
the payment of any additional consideration, together with notice of such
election, in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where: X = the number of shares of Common Stock to be issued to the
Holder pursuant to this Section 1.2
Y = the number of shares of Common Stock as to which this
Warrant is to be exercised pursuant to this Section 1.2
A = the current fair market value of one share of Common Stock
calculated as of the last trading day immediately preceding
the exercise of this Warrant pursuant to this Section 1.2
B = the Purchase Price
As used herein, current fair market value of one share of Common Stock as of a
specified date shall mean the average of the closing bid prices of the Common
Stock on the principal securities market on which the Common Stock may at the
time be traded over a period of five Business Days consisting of the day as of
which the current fair market value of a share of Common Stock is being
determined (or if such day is not a Business Day, the Business Day next
preceding such day) and the four consecutive
2
<PAGE> 3
Business Days prior to such day. If on the date for which current fair market
value is to be determined the Common Stock is not eligible for trading on any
securities market, the current fair market value of one share of Common Stock
shall be the highest price per share which the Company could then obtain from a
willing buyer (not a current employee or director) for shares of Common Stock
sold by the Company, from authorized but unissued shares, as determined in good
faith by the Board of Directors of the Company, unless prior to such date the
Company has become subject to a merger, acquisition or other consolidation
pursuant to which the Common Stock is being exchanged for other securities or
property, in which case the current fair market value of the Common Stock shall
be deemed to be the value of the securities or property to be received by the
holders of the Company's Common Stock for each share thereof pursuant to the
Company's merger, acquisition or other consolidation.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
practicable after the exercise of this Warrant, and in any event within three
days thereafter, the Company at its expense (including the payment by it of any
applicable issue or stamp taxes) will cause to be issued in the name of and
delivered to the Holder hereof, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of fully paid and nonassessable shares of Common Stock to which such
Holder shall be entitled on such exercise, in such denominations as may be
requested by such Holder, plus, in lieu of any fractional share to which such
Holder would otherwise have been entitled, cash equal to such fraction
multiplied by the then current fair market value (as determined in accordance
with subsection 1.2) of one full share, together with any other stock or other
securities or any property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or otherwise. Upon
exercise of this Warrant as provided herein, the Company's obligation to issue
and deliver the certificates for Common Stock shall be absolute and
unconditional, irrespective of the absence of any action by the Holder to
enforce the same, any waiver or consent with respect to any provision thereof,
the recovery of any judgment against any person or any action to enforce the
same, any failure or delay in the enforcement of any other obligation of the
Company to the Holder, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder of any obligation to
the Company, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with such
exercise. If the Company fails to issue and deliver the certificates for the
Common Stock to the Holder pursuant to the first sentence of this paragraph as
and when required to do so, in addition to any other liabilities the Company
may have hereunder and under applicable law, the Company shall pay or reimburse
the Holder on demand for all out-of-pocket expenses including, without
limitation, fees and expenses of legal counsel incurred by the Holder as a
result of such failure.
3. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATION, ETC. In case at any time or from time to time, all the
holders of Common Stock shall have received, or (on or after the record date
fixed for the determination of stockholders eligible to receive) shall have
become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property
(including cash) by way of dividend, or
3
<PAGE> 4
(b) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock issued as a stock dividend or in a
stock-split (adjustments in respect of which are provided for in Section 5),
then and in each such case the Holder of this Warrant, on the exercise hereof
as provided in Section 1, shall be entitled to receive the amount of stock and
other securities and property (including cash) which such Holder would hold on
the date of such exercise if on the date hereof the Holder had been the holder
of record of the number of shares of Common Stock called for on the face of
this Warrant and had thereafter, during the period from the date hereof to and
including the date of such exercise, retained such shares and all such other or
additional stock and other securities and property (including cash) receivable
by the Holder as aforesaid during such period, giving effect to all adjustments
called for during such period by Section 4. If the Company shall reasonably
determine that it is impractical to hold property or securities pending the
exercise of this Warrant, then it need not hold such property or securities,
but shall instead deliver to the Holder on exercise an amount in cash in lieu
thereof equal to the fair market value of such property or securities on the
date of the distribution or other event.
4. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In
case at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person, or (c)
transfer all or substantially all of its properties or assets to any other
person under any plan or arrangement contemplating the dissolution of the
Company, then, in each such case, as a condition of such reorganization,
consolidation, merger, sale or conveyance, the Company shall give at least 20
days notice to the Holder of such pending transaction whereby the Holder shall
have the right to exercise this Warrant prior to any such reorganization,
consolidation, merger, sale or conveyance. Any exercise of this Warrant
pursuant to notice under this paragraph shall be conditioned upon the closing
of such reorganization, consolidation, merger, sale or conveyance which is the
subject of the notice and the exercise of this Warrant shall not be deemed to
have occurred until immediately prior to the closing of such transaction.
5. ADJUSTMENT FOR EXTRAORDINARY EVENTS. In the event that the
Company shall (i) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock, or (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 5.
The Holder of this Warrant shall thereafter, on the exercise hereof as provided
in Section 1, be entitled to receive that number of shares of Common Stock
determined by multiplying the number of shares of Common Stock which would be
issuable on such exercise as of immediately prior to such issuance by a fraction
of which (i) the numerator is the Purchase Price in effect
4
<PAGE> 5
immediately prior to such issuance and (ii) the denominator is the Purchase
Price in effect on the date of such exercise.
6. FURTHER ASSURANCES; CERTIFICATE OF ADJUSTMENT. The Company
will take all action that may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable shares of
stock, free from all taxes, liens and charges with respect to the issue thereof
(other than those imposed as a result of a transfer by Holder), on the exercise
of all or any portion of this Warrant from time to time outstanding. Whenever
the Purchase Price is adjusted, as herein provided, the Company shall promptly
deliver to the Holder of this Warrant a certificate signed by the Chairman or
President and Chief Financial Officer of the Company and by a firm of
independent public accountants setting forth the Purchase Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
7. NOTICES OF RECORD DATE, ETC. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend on, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to or
consolidation or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be
mailed to the Holder, at least ten days prior to such record date, a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character
of such dividend, distribution or right, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock shall
be entitled to exchange their shares of Common Stock for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up, and (iii) the amount and character of any stock or other
securities, or rights or options with respect thereto, proposed to be issued or
granted, the date of such proposed issue or grant and the persons or class of
persons to whom such proposed issue or grant is to be offered or made. Such
notice shall also state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), or a favorable vote of
stockholders, if either is required. Such notice shall be mailed at least ten
days prior to the date specified in such notice on which any such action is to
be taken or the record date, whichever is earlier.
8. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS.
The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of this Warrant, all shares of Common Stock from
time to time issuable on the exercise of this Warrant.
5
<PAGE> 6
9. TRANSFER OF WARRANT. This Warrant shall inure to the benefit
of the successors to and assigns of the Holder. This Warrant and all rights
hereunder, in whole or in part, is registrable at the office or agency of the
Company referred to below by the Holder hereof in person or by his duly
authorized attorney, upon surrender of this Warrant properly endorsed.
10. REGISTER OF WARRANTS. The Company shall maintain, at the
principal office of the Company (or such other office as it may designate by
notice to the Holder hereof), a register in which the Company shall record the
name and address of the person in whose name this Warrant has been issued, as
well as the name and address of each successor and prior owner of such Warrant.
The Company shall be entitled to treat the person in whose name this Warrant is
so registered as the sole and absolute owner of this Warrant for all purposes.
11. EXCHANGE OF WARRANT. This Warrant is exchangeable, upon the
surrender hereof by the Holder hereof at the office or agency of the Company
referred to in Section 10, for one or more new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the
number of shares of Common Stock which may be subscribed for purchase
hereunder, each of such new Warrants to represent the right to subscribe for
and purchase such number of shares as shall be designated by said Holder hereof
at the time of such surrender.
12. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
13. WARRANT AGENT. The Company may, by written notice to the
Holder, appoint an agent having an office in the United States of America, for
the purpose of issuing Common Stock on the exercise of this Warrant pursuant to
Section 1, exchanging this Warrant pursuant to Section 11, and replacing this
Warrant pursuant to Section 12, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
14. REMEDIES. The Company stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall
not entitle the Holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the Holder hereof to purchase Common Stock, and no mere
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of such Holder for the Purchase Price or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
16. NOTICES, ETC. All notices and other communications from the
Company to the registered Holder of this Warrant shall be mailed by first class
certified mail, postage prepaid, at such
6
<PAGE> 7
address as may have been furnished to the Company in writing by such Holder or
at the address shown for such Holder on the register of warrants referred to in
Section 10.
17. INVESTMENT REPRESENTATIONS. By acceptance of this Warrant,
the Holder represents to the Company that this Warrant is being acquired for
the Holder's own account and for the purpose of investment and not with a view
to, or for sale in connection with, the distribution thereof, nor with any
present intention of distributing or selling the Warrant or the Common Stock
issuable upon exercise of the Warrant. The Holder acknowledges that the Holder
has been afforded the opportunity to meet with the management of the Company
and to ask questions of, and receive answers from, such management and the
Company's counsel about the business and affairs of the Company and concerning
the terms and conditions of the offering of this Warrant, and to obtain any
additional information, to the extent that the Company possessed such
information or could acquire it without unreasonable effort or expense,
necessary to verify the accuracy of the information otherwise obtained by or
furnished to the Holder hereof in connection with the offering of this Warrant.
The Holder asserts that it may be considered to be a sophisticated investor, is
familiar with the risks inherent in speculative investments such as in the
Company, has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the investment in this
Warrant and the Common Stock issuable upon exercise of this Warrant, and is
able to bear the economic risk of the investment. By acceptance of this
Warrant, the Holder represents to the Company that it is an "accredited
investor" as that term is defined in Rule 501 of the General Rules and
Regulations under the 1933 Act. The Holder acknowledges and agrees that this
Warrant and, except as otherwise provided in the Registration Rights Agreement,
dated as of December 31, 1996, between the Company and Thermo Amex Convertible
Growth Fund I, L.P. (the "Registration Rights Agreement"), the Common Stock
issuable upon exercise of this Warrant (if any) have not been (and at the time
of acquisition by the Holder, will not have been or will not be), registered
7
<PAGE> 8
under the Securities Act or under the securities laws of any state, in reliance
upon certain exemptive provisions of such statutes. The Holder recognizes and
acknowledges that such claims of exemption are based, in part, upon the
representations of the Holder contained herein. The Holder further recognizes
and acknowledges that because this Warrant and, except as provided in the
Registration Rights Agreement, the Common Stock issuable upon exercise of this
Warrant (if any) are unregistered, they may not be eligible for resale, and may
only be resold in the future pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws, or pursuant
to a valid exemption from such registration requirements. Unless the shares of
Common Stock have theretofore been registered for resale under the Securities
Act, the Company may require, as a condition to the issuance of Common Stock
upon the exercise of this Warrant (i) in the case of an exercise in accordance
with Section 1.1 hereof, a confirmation as of the date of exercise of the
Holder's representations pursuant to this Section 17, or (ii) in the case of an
exercise in accordance with Section 1.2 hereof, an opinion (in form and
substance reasonably satisfactory to the Company) of counsel reasonably
satisfactory to the Company that the shares of Common Stock to be issued upon
such exercise may be issued without registration under the Securities Act.
18. LEGEND. Unless theretofore registered for resale under the
Securities Act, each certificate for shares issued 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, as amended. The
securities may not be sold, transferred or assigned in the absence of
an effective registration statement for the securities under the
Securities Act of 1933, as amended, or an opinion of counsel that
registration is not required under said Act.
19. MISCELLANEOUS. This Warrant and any terms hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement or such change, waiver, discharge
or termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of Delaware.
The headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect the meaning hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision hereof.
IN WITNESS WHEREOF, International Remote Imaging Systems, Inc. has
caused this Warrant to be executed on its behalf by one of its officers
thereunto duly authorized.
Dated: December 31, 1996 INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
By: [SIG]
---------------------------------------
Print name:
Title:
8
<PAGE> 9
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
1. The undersigned Holder of the attached original, executed
Warrant hereby elects to exercise its purchase right under such Warrant with
respect to shares of Common Stock, as defined in the Warrant, of International
Remote Imaging Systems, Inc., a Delaware corporation (the "Company").
2. The undersigned Holder (check one):
_____(a) elects to pay the aggregate purchase price for such shares
of Common Stock (the "Exercise Shares") (i) by lawful money
of the United States or the enclosed certified or official
bank check payable in United States dollars to the order of
the Company in the amount of $_________, or (ii) by wire
transfer of United States funds to the account of the
Company in the amount of $_________, which transfer has been
made before or simultaneously with the delivery of this Form
of Subscription pursuant to the instructions of the Company;
______(b) elects to receive shares of Common Stock having a value
equal to the value of the Warrant calculated in accordance
with Section 1.2 of the Warrant.
3. 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: ________________________________________________
________________________________________________
Dated: ________________________________________________
(Signature below must conform to name of Holder
as specified on the face of the Warrant)
Sign here: ________________________________________________
Address: ________________________________________________
9
