SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
BELL NATIONAL CORPORATION
(Name of Issuer)
Common Stock, no par value
(Title of Class of Securities)
078142106
(CUSIP Number)
Jeffrey C. Everett
Holleb & Coff
55 East Monroe Street, Suite 4100
Chicago, Illinois 60603
(312) 807-4600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 4, 1998
(Date of Event which Requires this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box [ ].
Note. Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting persons's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 078142106
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Peter P. Gombrich
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2 (d) OR 2(a) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7. SOLE VOTING POWER
2,395,547
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
2,256,590
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,395,547
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.0
14. TYPE OF REPORTING PERSON*
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 078142106
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Theodore L. Koenig
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7. SOLE VOTING POWER
1,235,484
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
1,235,484
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,235,484
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.3
14. TYPE OF REPORTING PERSON*
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 078142106
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
William J. Ritger
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Unites States
7. SOLE VOTING POWER
15,440
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
15,440
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,440
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1
14. TYPE OF REPORTING PERSON*
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 078142106
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fred H. Pearson
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Unites States
7. SOLE VOTING POWER
107,220
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
107,220
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
107,220
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.9
14. TYPE OF REPORTING PERSON*
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 078142106
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Walter Herbst
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7. SOLE VOTING POWER
343,103
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
343,103
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9
14. TYPE OF REPORTING PERSON*
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 078142106
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AccuMed International, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
85,776
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
85,776
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
85,776
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7
14. TYPE OF REPORTING PERSON*
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 078142106
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Northlea Partners Ltd.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
7. SOLE VOTING POWER
107,220
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
107,220
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
107,220
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.9
14. TYPE OF REPORTING PERSON*
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 078142106
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Monroe Investments, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
a[ ]
b[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
7. SOLE VOTING POWER
172,552
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
172,552
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
172,552
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.4
14. TYPE OF REPORTING PERSON*
CO
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to the common stock, no par
value (the "Common Stock") of Bell National Corporation, a California
corporation (the "Issuer"). The principal executive offices of the Issuer
are located at 3600 Rio Vista Avenue, Suite A, Orlando FL 32805.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being jointly filed by (1) Peter P. Gombrich, (2)
Theodore L. Koenig, (3) William J. Ritger, (4) Fred H. Pearson, (5) Walter
Herbst, (6) AccuMed International, Inc. ("AccuMed"), (7) Northlea Partners
Ltd. ("Northlea"), and (8) Monroe Investments, Inc. ("Monroe"), pursuant to
the agreement which is attached to this statement as Exhibit 5. Mr.
Gombrich, Mr. Koenig, Mr. Ritger, Mr. Pearson, Mr. Herbst, AccuMed,
Northlea, and Monroe are sometimes collectively referred to herein as the
"Reporting Persons." This statement is filed to report the Reporting
Persons' exchange, pursuant to the Stock and Membership Interest Exchange
Agreement dated December 4, 1998 (the "Exchange Agreement") (as more
particularly described below), of all the units of membership interest (the
"Units") in InPath, LLC, ("InPath"), a Delaware limited liability company,
for shares of Common Stock, and warrants to purchase Common Stock, as more
particularly described below, and to report their execution and delivery of
a Stockholders Agreement dated December 4, 1998 (as more particularly
described below), pursuant to which they have agreed to vote their shares
of Common Stock in a common manner for certain purposes. As a result of
the Exchange Agreement and the Stockholders Agreement, the Reporting
Persons may be deemed the beneficial owners, individually or as members of
a group pursuant to Rule 13d-5(b)(1), of more than five percent of the
outstanding Common Stock.
Mr. Gombrich. Peter P. Gombrich is filing in his capacity as an
individual, as Trustee of the Inpath, LLC Voting Trust, and because he may
be a member of a group pursuant to Rule 13d-5(b)(1). Mr. Gombrich is
principally employed as Chairman and Chief Executive Officer of InPath and
as Chairman, Chief Executive Officer, and Secretary of the Issuer. InPath
is a biomedical device company whose principal business is developing
point-of-care cytology systems. The principal business of the Issuer is to
serve as a holding company for its wholly owned subsidiaries which, in
addition to InPath, are PFI National Corporation, Bell Savings and Loan
Association, and Pacific Coast Holdings Insurance Company. Except for
InPath, the Issuer's subsidiaries have no substantial assets or operations.
Mr. Gombrich's business address is that of InPath, 900 North Franklin
Street, Suite 210, Chicago, Illinois 60610. The Issuer's business address
is 3600 Rio Vista Avenue, Suite A, Orlando, Florida 32805.
Mr. Koenig. Theodore L. Koenig is filing in his capacity as Trustee
of The EAG Trust, The CMC Trust, The MDG Trust, and the MSD Trust, and
because he may be a member of a group pursuant to Rule 13d-5(b)(1). Mr.
Koenig is principally employed as an attorney, and his business address is
that of the law firm of which he is a member, Holleb & Coff, 55 East Monroe
Street, Suite 4100, Chicago, Illinois 60603.
Mr. Ritger. William J. Ritger is filing because he may be a member
of a group pursuant to Rule 13d-5(b)(1). Mr. Ritger is principally
employed in the business of providing research services concerning equity
securities. He conducts this employment at The Research Works, Inc., 623
Ocean Avenue, Sea Girt, New Jersey 08750. The principal of The Research
Works, Inc. is to provide equity securities research services.
Mr. Pearson. Fred H. Pearson is filing because he may be a member of
a group pursuant to Rule 13d-5(b)(1). Mr. Pearson is principally employed
as an insurance executive. He conducts this employment at Cameron General
Corporation, whose business address is 10 South LaSalle Street, Chicago,
Illinois 60603. Cameron General Corporation is an insurance holding
company.
<PAGE>
Mr. Herbst. Walter Herbst is filing because he may be a member of a
group pursuant to Rule 13d-5(b)(1). Mr. Herbst is principally employed as
chairman of the product development firm Herbst Lazar Bell. He conducts
this employment at the firm's business address, which is 355 North Canal
Street, Chicago, Illinois, 60606.
AccuMed International, Inc., a Delaware corporation, is filing
because it may be a member of a group pursuant to Rule 13d-5(b)(1).
AccuMed's principal business is cytology-related products. AccuMed's
principal business and principal office are located at 900 North Franklin
Street, Suite 401, Chicago, Illinois 60610.
The name, business address, and present principal occupation of each
of the directors and executive officers of AccuMed are set forth in
Appendix I which is attached hereto and incorporated herein by reference.
Northlea Partners Ltd., a Colorado limited partnership, is filing
because it may be a member of a group pursuant to Rule 13d-5(b)(1).
Northlea's principal business is to serve as a family investment vehicle.
The address of Northlea's principal business and principal office are at
2365 NW 41 Street, Boca Raton, Florida 33431.
Dr. John H. Abeles. Dr. John H. Abeles is general partner of
Northlea. Dr. Abeles is principally employed as President of MedVest,
Inc., a medical consulting concern, and as General Partner of Northlea.
Dr. Abeles conducts this employment at the business address of Medvest,
Inc. and Northlea, which is 2365 NW 41 Street, Boca Raton, Florida 33431.
Monroe Investments, Inc., an Illinois corporation, is filing because
it may be a member of a group pursuant to Rule 13d-5(b)(1). Monroe is
principally engaged in the business of making strategic investments
providing growth capital to various ventures. Monroe's principal business
and principal office are located at the office of Mr. Koenig at 55 East
Monroe Street, Suite 4100, Chicago, Illinois 60603.
The sole shareholder and sole director of Monroe is Mr. Koenig. As
Monroe's President, Secretary, and Treasurer, Mr. Koenig is Monroe's only
officer.
During the last five years, none of Mr. Gombrich, Mr. Koenig, Mr.
Ritger, Mr. Pearson or Mr. Herbst has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has
been a party to a proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to such laws. Mr. Gombrich,
Mr. Koenig, Mr. Ritger, Mr. Pearson, and Mr. Herbst is each a citizen of
the United States.
During the last five years, none of AccuMed, Northlea, or Monroe,
nor, to the best of their knowledge, any director or executive officer of
any of them listed in Appendix I hereto, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has
been a party to a proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to such laws.
As a result of the Stockholders Agreement (as more particularly
described below), the Reporting Persons may be deemed to be members of a
group, within the meaning of Rule 13d-5(b)(1), consisting of the Reporting
Persons and certain other parties to the Stockholders Agreement. Such
other parties to the Stockholders Agreement (collectively, the "Non-InPath
Parties") are: Alexander M. Milley, Robert C. Shaw, Cadmus Corporation,
Milley Management Incorporated, and Winchester National, Inc. The
Reporting Persons disclaim membership in any such group consisting of
themselves and the Non-InPath Parties, or in any other group within the
meaning of Rule 13d-5(b)(1), and have so indicated by checking the box at
2(b) on their respective cover pages of this Schedule 13D. The Reporting
<PAGE>
Persons have identified the Non-InPath Parties in order to comply with Rule
13d-1(k)(2) should the Reporting Persons be deemed members of a group with
the Non-InPath Parties despite the Reporting Persons' disclaimer of being
members of such a group. Except for the names of the Non-InPath Parties,
the Reporting Persons, on the date of this statement, cannot be certain of
any of the other information required by Item 2 of Schedule 13D as relates
to the Non-InPath Parties.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Stock and Membership Interest Exchange Agreement,
dated as of December 4, 1998 (the "Exchange Agreement"), by and among the
Issuer, InPath, and each of the Reporting Persons, on December 4, 1998,
each of the Reporting Persons exchanged the Units of InPath owned by it for
shares of Common Stock and warrants to purchase shares of Common Stock (the
"Warrants"). In total, pursuant to the Exchange Agreement the Reporting
Persons received 4,288,790 shares of Common Stock and Warrants to purchase
3,175,850 shares of Common Stock. Upon exercise or redemption of the
Warrants, the holders will beneficially own in the aggregate 50% of the
shares of Common Stock on a fully diluted basis. The Warrants are not
presently exercisable as more fully described below. The amount of Units
exchanged by each Reporting Person was as follows:
Mr. Gombrich, individually 52,616
Mr. Gombrich, as Trustee of InPath, LLC Voting Trust 3,240
Mr. Koenig, as Trustee of The EAG Trust 6,428
Mr. Koenig, as Trustee of The CMC Trust 6,428
Mr. Koenig, as Trustee of The MDG Trust 6,428
Mr. Koenig, as Trustee of The MSD Trust 5,500
Mr. Ritger 360
Mr. Pearson, as Trustee of Fred H. Pearson's Trust 2,500
Mr. Herbst, as Trustee of the Sandra Herbst Trust 8,000
AccuMed 2,000
Northlea 2,500
Monroe 4,000
ITEM 4. PURPOSE OF TRANSACTION.
The purposes of the Reporting Persons' acquisition of the Common
Stock pursuant to the Exchange Agreement were to acquire control of the
Issuer, to provide working capital for the business of InPath through
utilization of the Issuer's funds, and to create a vehicle for further
growth of the InPath business.
The Exchange Agreement.
The Warrants received pursuant to the Exchange Agreement, when
exercised, will permit the Reporting Persons to acquire, in the aggregate,
3,175,850 shares of Common Stock. The Warrants are not exercisable as of
the date of filing this statement, and will only become exercisable after
the earlier of the date of the meeting of the Issuer's stockholders
contemplated by Section 7.4(b) of the Exchange Agreement (described below),
and March 30, 1999, or such later date to which the Chief Executive Officer
of InPath may agree for the holding of such meeting. The Issuer does not
have sufficient shares of Common Stock authorized to permit exercise of the
Warrants at this time.
<PAGE>
Pursuant to Section 7.4(a) of the Exchange Agreement, the Issuer
must, promptly after December 4, 1998, but in no event later than March 30,
1999 or such later date as is approved by Mr. Gombrich, take all actions
necessary to incorporate a wholly owned subsidiary, to be named (if
available) Ampersand Medical Corporation ("Ampersand"), under the laws of
the State of Delaware.
Pursuant to Section 7.4(b) of the Exchange Agreement, promptly after
December 4, 1998, the Issuer must call a stockholder meeting to be held no
later than March 30, 1999 or such later date as is agreed upon by Mr.
Gombrich, for purposes which include (i) approving the merger of the Issuer
with and into Ampersand, with Ampersand as the surviving corporation; (ii)
authorizing additional shares of Common Stock in an amount at least
sufficient to permit the issuance of Common Stock issuable upon exercise of
the Warrants; (iii) authorizing shares of so-called "blank check" preferred
stock; (iv) electing a slate of directors of Mr. Gombrich, Dr. Abeles,
Denis O'Donnell, Alexander Milley and an additional director to be selected
by Mr. Gombrich and Mr. Milley; and (v) ratify the transactions
contemplated by the Exchange Agreement and certain other agreements entered
into by the Issuer on December 4, 1998.
Pursuant to Section 7.4(c) of the Exchange Agreement, the existing
members of the Issuer's Board of Directors must recommend that the Issuer's
stockholders vote in favor of each of the proposals listed above.
Pursuant to Section 7.4(e) of the Exchange Agreement, promptly after
December 4, 1998, the directors of the Issuer must appoint Mr. Gombrich,
Thomas R. Druggish, Denis M. O'Donnell, Alexander M. Milley and Robert C.
Shaw to the Issuer's Board of Directors, with Mr. Gombrich serving as
Chairman of the Board. Pursuant to Section 1.3(a) of the Agreement, the
Issuer must take such actions as may be necessary and appropriate so that
those persons shall be the directors of the Issuer at and as of December 4,
1998.
Pursuant to Section 7.4(f) of the Exchange Agreement, on December 4,
1998 the Board of Directors of the Issuer appointed Peter P. Gombrich and
Denis M. O'Donnell as directors of the Issuer and the following persons as
officers of the Issuer: (i) Mr. Gombrich, as Chairman, Chief Executive
Officer and Secretary; (ii) Leonard Prange, as President and Chief
Financial Officer; (iii) Richard Dominick, as Vice President and Chief
Technology Officer; (iv) David M. Doolittle, as Vice President and
Treasurer. Pursuant to Section 1.3(b) of the Agreement, the Issuer must
take such actions as may be necessary and appropriate so that those persons
shall be the officers of the Issuer with the stated positions, at and as of
December 4, 1998.
The Stockholders Agreement.
Pursuant to the Stockholders Agreement, dated as of December 4, 1998
(the "Stockholders Agreement"), by and among the Issuer, Alexander M.
Milley, Robert C. Shaw, Cadmus Corporation, a Massachusetts corporation,
Milley Management Incorporated, a Delaware corporation, and each of the
Reporting Persons, the Reporting Persons have agreed to certain matters
relating to their rights as owners of Common Stock. Pursuant to Section
1.01 of the Stockholders Agreement, the Reporting Persons have agreed to,
as soon as practicable after December 4, 1998, vote their shares of Common
Stock in favor of, and to take all other actions necessary to, elect as
directors of the Issuer, two directors designated by Mr. Gombrich, two
directors designated by Mr. Milley, and an additional director to be
selected by Mr. Gombrich and Mr. Milley. The Stockholders Agreement
provides further that at the first meeting of the Issuer's shareholders to
be held after December 4, 1998, the directors to be elected to the Issuer's
Board of Directors shall be Mr. Gombrich, Dr. Abeles, Denis M. O'Donnell,
Mr. Milley, and an additional director to be selected by Mr. Gombrich and
Mr. Milley.
<PAGE>
Pursuant to Section 1.02 of the Stockholders Agreement, the Reporting
Persons must, together with the other parties to the Stockholders
Agreement, after December 4, 1998, take all actions necessary to cause the
Issuer's Board of Directors to appoint the same persons to the same
positions as officers of the Issuer as provided for in Section 7.4(f) of
the Exchange Agreement described above.
Pursuant to Section 1.03 of the Stockholders Agreement, the Reporting
Persons must, together with the other parties to the Stockholders
Agreement, when presented at a meeting of shareholders or through a
solicitation for consents, vote their Common Stock and take all other
reasonable actions necessary to approve or authorize, among other actions,
each of the approvals or authorizations (i) through (iii) indicated above
which are called for by Section 7.4(b) of the Exchange Agreement.
Pursuant to Section 2.01 of the Stockholders Agreement, if a
shareholder or group of shareholders beneficially owning more than 50% of
the outstanding Common Stock held by parties to the Stockholders Agreement
("Majority Shareholders") should transfer shares that constitute more than
50% of the outstanding Common Stock, such Majority Shareholders may
require, subject to certain notice and other requirements, all, but not
less than all, of the other shareholders of the Issuer to participate in
such transfer at the same price and on the same terms and conditions
obtained by the Majority Shareholders.
Pursuant to Article III of the Stockholders Agreement, Majority
Shareholders or other shareholders of the Issuer may, subject certain
specified conditions, demand and obtain from the Issuer the Issuer's best
efforts to register shares of the Common Stock under the Securities Act of
1933.
Except as set forth above, there are no plans or proposals of the
Reporting Persons which relate to or would result in any of the events
described in paragraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) (i) Mr. Gombrich. On the date of this statement, the aggregate
number of shares of Common Stock of which Mr. Gombrich may be deemed a
beneficial owner is 2,395,547 (approximately 20.0% of the Common Stock
outstanding). This number includes (A) 2,256,590 shares of Common Stock
held as an individual and (B) 138,957 shares of Common Stock held as
Trustee of the InPath, LLC Voting Trust. On the date of this statement Mr.
Gombrich is also the beneficial owner of Warrants to purchase 1,773,902
shares of Common Stock. This number includes (A) Warrants to purchase
1,671,005 shares of Common Stock held as an individual and (B) Warrants to
purchase 102,897 shares of Common Stock held as Trustee of the InPath, LLC
Voting Trust. As explained under Item 4 above, the Warrants are not
exercisable at this time.
(ii) Mr. Koenig. On the date of this statement, the aggregate number
of shares of Common Stock of which Mr. Koenig may be deemed a beneficial
owner is 1,235,484 (approximately 10.3% of the Common Stock outstanding).
This number includes (A) 275,683 shares of Common Stock held as Trustee of
The EAG Trust, (B) 275,683 shares of Common Stock held as Trustee of The
CMC Trust, (C) 275,683 shares of Common Stock held as Trustee of The MDG
Trust, (D) 235,883 shares of Common Stock held as Trustee of The MSD Trust,
and (E) 172,552 shares of Common Stock owed by Monroe. On the date of this
statement Mr. Koenig is also the beneficial owner of Warrants to purchase
787,104 shares of Common Stock. This number includes (A) Warrants to
purchase 204,144 shares of Common Stock held as Trustee of The EAG Trust,
(B) Warrants to purchase 204,144 shares of Common Stock held as Trustee of
The CMC Trust, (C) Warrants to purchase 204,144 shares of Common Stock held
as Trustee of The MDG Trust, (D) Warrants to purchase 174,672 shares of
Common Stock held as Trustee of The MSD Trust, and (E) 127,034 Warrants to
purchase shares of Common Stock owned by Monroe. As explained under Item 4
above, the Warrants are not exercisable at this time.
<PAGE>
(iii) Mr. Ritger. On the date of this statement, the aggregate
number of shares of Common Stock of which Mr. Ritger may be deemed a
beneficial owner is 15,440 (approximately 0.1% of the Common Stock
outstanding). On the date of this statement Mr. Ritger is also the
beneficial owner of Warrants to purchase 11,433 shares of Common Stock.
Mr. Ritger holds the shares of Common Stock and the Warrants as an
individual. As explained under Item 4 above, the Warrants are not
exercisable at this time.
(iv) Mr. Pearson. On the date of this statement, the aggregate
number of shares of Common Stock of which Mr. Pearson may be deemed a
beneficial owner is 107,220 (approximately 0.9% of the Common Stock
outstanding). On the date of this statement Mr. Pearson is also the
beneficial owner of Warrants to purchase 79,396 shares of Common Stock.
Mr. Pearson holds the shares of Common Stock and the Warrants as Trustee of
Fred H. Pearson's Trust. As explained under Item 4 above, the Warrants are
not exercisable at this time.
(v) Mr. Herbst. On the date of this statement, the aggregate number
of shares of Common Stock of which Mr. Herbst may be deemed a beneficial
owner is 343,103 (approximately 2.9% of the Common Stock outstanding). On
the date of this statement Mr. Herbst is also the beneficial owner of
Warrants to purchase 254,068 shares of Common Stock. Mr. Herbst holds the
shares of Common Stock and the Warrants as Trustee of the Sandra Herbst
Trust. As explained under Item 4 above, the Warrants are not exercisable
at this time.
(vi) AccuMed. On the date of this statement, the aggregate number of
shares of Common Stock of which AccuMed may be deemed a beneficial owner is
85,766 (approximately 0.7% of the Common Stock outstanding). On the date
of this statement AccuMed is also the beneficial owner of Warrants to
purchase 63,517 shares of Common Stock. AccuMed holds the shares of Common
Stock and the Warrants for its own account. As explained under Item 4
above, the Warrants are not exercisable at this time.
(vii) AccuMed directors and executive officers. On the date of this
statement, none of the AccuMed directors and executive officers set forth
in Appendix I hereto owned, for their own account, any shares of Common
Stock or Warrants to purchase shares of Common Stock.
(viii) Northlea. On the date of this statement, the aggregate number
of shares of Common Stock of which Northlea may be deemed a beneficial
owner is 107,220 (approximately 0.9% of the Common Stock outstanding). On
the date of this statement Northlea is also the beneficial owner of
Warrants to purchase 79,396 shares of Common Stock. Northlea holds the
shares of Common Stock and the Warrants for its own account. As explained
under Item 4 above, the Warrants are not exercisable at this time.
(ix) Dr. Abeles. On the date of this statement, except for the
shares of Common Stock owned by Northlea, Dr. Abeles is not the beneficial
owner of any shares of Common Stock or Warrants to purchase shares of
Common Stock.
(x) Monroe. On the date of this statement, the aggregate number of
shares of Common Stock of which Monroe may be deemed a beneficial owner is
171,552 (approximately 1.4% of the Common Stock outstanding). On the date
of this statement Monroe is also the beneficial owner of Warrants to
purchase 127,034 shares of Common Stock. Monroe holds the shares of Common
Stock and the Warrants for its own account. As explained under Item 4
above, the Warrants are not exercisable at this time.
(xi) Mr. Koenig as sole director and executive officer of Monroe. On
the date of this statement, except for the shares of Common Stock and
Warrants to purchase shares of Common Stock held as Trustee of The EAG
Trust, Trustee of The CMC Trust, Trustee of The MDG Trust, and Trustee of
The MSD Trust, and the shares of Common Stock and Warrants to purchase
shares of Common Stock owned by Monroe, Mr. Koenig does not beneficially
own any shares of Common Stock or Warrants to purchase shares of Common
Stock.
<PAGE>
(xii) The Non-InPath Parties. On the date of this statement, the
Reporting Persons do not know or have reason to know the aggregate number
of shares or percentage of Common Stock beneficially owned by the Non-
InPath Parties.
Except for the shares of Common Stock owned by Monroe with respect to
Mr. Koenig, each of the Reporting Persons disclaims beneficial ownership of
the shares of Common Stock held by the other Reporting Persons or by any of
the Non-InPath Parties.
(b)(i) Mr. Gombrich. Mr. Gombrich has sole power to vote and sole
power to dispose or direct the disposition of the 2,256,590 shares of
Common Stock he holds as an individual. Mr. Gombrich has sole power to
vote the 138,957 shares he holds as Trustee of the InPath, LLC Voting
Trust, but does not have power to dispose or direct the disposition of such
shares.
(ii) Mr. Koenig. Mr. Koenig has sole power to vote and sole power to
dispose of the 1,235,484 shares of Common Stock he holds as Trustee of The
EAG Trust, Trustee of The CMC Trust, Trustee of The MDG Trust, and Trustee
of The MSD Trust, and controls as sole shareholder, director and executive
officer of Monroe combined.
(iii) Mr. Ritger. Mr. Ritger has sole power to vote and sole power
to dispose of the 15,440 shares of Common Stock he holds as an individual.
(iv) Mr. Pearson. Mr. Pearson has sole power to vote and sole power
to dispose of the 107,220 shares of Common Stock he holds as Trustee of
Fred H. Pearson's Trust.
(v) Mr. Herbst. Mr. Herbst has sole power to vote the 343,103 shares
of Common Stock he holds as Trustee of the Sandra Herbst Trust, but does
not have power to dispose or direct the disposition of such shares.
(vi) AccuMed. AccuMed has sole power to vote and sole power to
dispose of the 85,776 shares of Common Stock it holds for its own account.
(vii) AccuMed directors and executive officers. The AccuMed
directors and executive officers set forth in Appendix I hereto share with
one another the power to vote and dispose of the shares of Common Stock
owned by AccuMed. Otherwise, none of the AccuMed directors or executive
officers has any power to vote, direct the vote, dispose of, or direct the
disposition of any shares of Common Stock.
(viii) Northlea. Northlea has sole power to vote and sole power to
dispose of the 107,220 shares of Common Stock it holds for its own account.
(ix) Dr. Abeles. Dr. Abeles, as General Partner of Northlea, has
sole power to vote and sole power to dispose of the shares of Common Stock
owned by Northlea. Otherwise, Dr. Abeles does not have any power to vote,
direct the vote, dispose of, or direct the disposition of any shares of
Common Stock.
(x) Monroe. Monroe has sole power to vote and sole power to dispose
of the 171,552 shares of Common Stock it holds for its own account.
(xi) As sole shareholder, director and executive officer of Monroe,
Mr. Koenig has sole power to vote and sole power to dispose of the shares
of Common Stock owned by Monroe. Except for the shares of Common Stock
owned by Monroe and except for the shares of Common Stock he holds as
Trustee of The EAG Trust, Trustee of The CMC Trust, Trustee of The MDG
Trust, and Trustee of The MSD Trust, Mr. Koenig has no power to vote,
direct the vote, dispose of, or direct the disposition of any shares of
Common Stock.
(xii) The Non-InPath Parties. The Reporting Persons do not know or
have reason to know the number of shares beneficially owned on the date of
this statement by the Non-InPath Parties over which the Non-InPath Parties
have sole power to vote or to direct the vote, shared power to vote or to
direct the vote, sole power to dispose or to direct the disposition, or
shared power to dispose or to direct the disposition.
<PAGE>
(c) The Reporting Persons. Except as set forth herein, there have
been no transactions in the Common Stock effected by the Reporting Persons
during the 60 days preceding the date of this statement.
The Non-InPath Parties. On December 4, 1998, the Non-InPath Parties
other than Winchester National, Inc. entered into a Claims Settlement
Agreement by and among the Issuer, themselves, and Liberty Associates
Limited Partnership, a Delaware limited partnership. Pursuant to the
Claims Settlement Agreement, these Non-InPath Parties each received shares
of Common Stock in settlement of debts owed to them by the Issuer on
account of employment compensation, management fees, and other amounts
payable. The dollar amounts of each of these Non-InPath Parties' claims
and the number of shares of Common Stock each of the claims was settled for
are set forth in Annex A to the Claims Settlement Agreement, which
Agreement is Exhibit 4 to this Schedule 13D and which Annex A is herein
incorporated by reference. Except as set forth in the Claims Settlement
Agreement, the Reporting Persons do not know or have reason to know of any
transactions in the Common Stock effected during the last 60 days or since
the most recent filing of a Schedule 13D, by any of the Non-InPath Parties.
(d) Except as set forth herein, no person is known to have the right
to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, shares of Common Stock.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SECURITIES OF THE ISSUER.
Except for the Exchange Agreement and Stockholders Agreement
described above, there are no contracts, arrangements, understandings or
relationships among the Reporting Persons or between such persons and any
other person with respect to the Common Stock.
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DESCRIPTION
Exhibit 1. Exchange Agreement dated December 4, 1998 by and
among the Issuer, InPath, Mr. Gombrich, Mr. Koenig, Mr. Ritger, Mr.
Pearson, Mr. Herbst, AccuMed, Northlea, and Monroe.
Exhibit 2. Stockholders Agreement dated December 4, 1998 by
and among the Issuer, Alexander M. Milley, Robert C. Shaw, Cadmus
Corporation, Milley Management Incorporated, Mr. Gombrich, Mr. Koenig, Mr.
Ritger, Mr. Pearson, Mr. Herbst, AccuMed, Northlea, and Monroe.
Exhibit 3. Form of Common Stock Purchase Warrant.
Exhibit 4. Claims Settlement Agreement dated December 4, 1998
by and among the Issuer, Alexander M. Milley, Robert C. Shaw, Cadmus
Corporation, Milley Management Incorporated, and Liberty Associates Limited
Partnership.
Exhibit 5. Joint Filing Agreement.
Exhibit 6. Powers of Attorney.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
December 14, 1998
Peter P. Gombrich
/s/ Jonathan A. Bohlen
------------------------------
His: Attorney-in-Fact
Theodore L. Koenig
/s/ Jonathan A. Bohlen
------------------------------
His: Attorney-in-Fact
William J. Ritger
/s/ Jonathan A. Bohlen
------------------------------
His: Attorney-in-Fact
Fred H. Pearson
/s/ Jonathan A. Bohlen
------------------------------
His: Attorney-in-Fact
Walter Herbst
/s/ Jonathan A. Bohlen
------------------------------
His: Attorney-in-Fact
AccuMed International, Inc.
/s/ Jonathan A. Bohlen
------------------------------
Its: Attorney-in-Fact
Northlea Partners Ltd.
/s/ Jonathan A. Bohlen
------------------------------
Its: Attorney-in-Fact
Monroe Investments, Inc.
/s/ Jonathan A. Bohlen
------------------------------
Its: Attorney-in-Fact
<PAGE>
APPENDIX I
DIRECTORS AND OFFICERS OF ACCUMED
Set forth below are the names and present principal occupations of
each director and executive officer of AccuMed. Except as set forth below,
the business address of each of the persons listed is the same as that set
forth in Item 2 for AccuMed.
Name and Business Address: Position with AccuMed and Present
Principal Occupation:
Peter P. Gombrich See Item 2
See Item 2
J. Donald Gaines Director, President of the
Business address of Storz Storz Division of American
Division of American Cyanamid Cyanamid Company
Company
Jack H. Halperin, Esq. Director, corporate attorney
Paul F. Lavallee Director, Chairman of the Board, Chief
Business address of AccuMed Executive Officer and President
Joseph W. Plandowski Director, President of The
Business address of The Lakewood Group, whose
Lakewood Group principal business is
healthcare consulting
Robert L. Priddy Director, Chairman of the
Business address of ValuJet, Board and Chief Executive
Inc. Officer of ValuJet, Inc.,
whose principal business is
providing air travel services
Leonard M. Schiller, Esq. Director, attorney
Business address of Klein & specializing in real estate
McElroy, P.C. tax law, partner in the law
firm of Klein & McElroy, P.C.,
and President of The Dearborn
Group, a company whose
principal business is
residential property
management and real estate
acquisition
Norman J. Pressman, Ph.D. Senior Vice President of
Business address of AccuMed Research and Development and
Chief Scientific Officer
Leonard R. Prange Chief Operating Officer, Chief
Business address of AccuMed Financial Officer, and
Corporate Vice President
Joyce L. Wallach, Esq. General Counsel and Secretary,
1500 7th Avenue corporate attorney
Sacramento, California 95818
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
Exhibit 1. Exchange Agreement dated December 4, 1998 by and
among the Issuer, InPath, Mr. Gombrich, Mr. Koenig, Mr. Ritger, Mr.
Pearson, Mr. Herbst, AccuMed, Northlea, and Monroe.
Exhibit 2. Stockholders Agreement dated December 4, 1998 by
and among the Issuer, Alexander M. Milley, Robert C. Shaw, Cadmus
Corporation, Milley Management Incorporated, Mr. Gombrich, Mr. Koenig, Mr.
Ritger, Mr. Pearson, Mr. Herbst, AccuMed, Northlea, and Monroe.
Exhibit 3. Form of Common Stock Purchase Warrant.
Exhibit 4. Claims Settlement Agreement dated December 4, 1998
by and among the Issuer, Alexander M. Milley, Robert C. Shaw, Cadmus
Corporation, Milley Management Incorporated, and Liberty Associates Limited
Partnership.
Exhibit 5. Joint Filing Agreement.
Exhibit 6. Powers of Attorney.
EXHIBIT 1
- ---------
STOCK AND MEMBERSHIP INTEREST EXCHANGE AGREEMENT
This Stock and Membership Interest Exchange Agreement (the
"Agreement") is made as of the 4th day of December, 1998, by and among Bell
National Corporation, a California corporation ("Bell"), InPath, LLC, a
Delaware limited liability company ("InPath"), and Peter P. Gombrich, as an
individual and as Trustee of the InPath, LLC Voting Trust ("Gombrich");
Theodore L. Koenig, as Trustee of each of The EAG Trust, The CMC Trust, The
MDG Trust and The MSD Trust; William J. Ritger; AccuMed International,
Inc., a Delaware corporation; Northlea Partners Ltd., a Colorado limited
partnership; and Fred H. Pearson, as Trustee of Fred H. Pearson's Trust;
Walter Herbst, as Trustee of the Sandra Herbst Trust; and Monroe
Investments, Inc., an Illinois corporation (collectively, the "InPath
Members").
W I T N E S S E T H:
WHEREAS, Bell wishes to acquire the business of InPath;
WHEREAS, InPath is in the business of developing and marketing
certain medical diagnostic technology;
WHEREAS, the InPath Members own all of the units of membership
interest (the "Units") of InPath;
WHEREAS, based upon the representations, agreements and warranties
herein made by the parties and subject to the terms and conditions
contained in this Agreement, the InPath Members wish to exchange the Units
of InPath owned by them for shares of no par common stock of Bell (the
"Stock") and warrants to purchase Stock in the form of Exhibit A attached
hereto (the "Warrants"); and
WHEREAS, it is the intent of the parties that after the consummation
of the transactions contemplated herein, the InPath Members will own 50% of
the Stock of Bell computed on a fully diluted basis;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties, intending to be legally bound, agree as follows:
Article I. Exchange.
1.1 Exchange of Units for Stock and Warrants. Subject to the terms
and conditions set forth herein, as of the Closing Date (as defined in
Article II) the InPath Members shall sell, assign and deliver to Bell, free
and clear of any and all claims, liens, pledges, mortgages, security
interests, charges, options, defaults, equities, rights of first refusal
and other restrictions and other adverse claims ("Liens") all of their
Units in InPath in exchange for the shares of Stock and Warrants set forth
next to their names on Schedule 3.4, and Bell shall issue and deliver such
Stock and Warrants free and clear of any and all Liens in exchange for
Units. The number of shares of Stock issuable pursuant to the Warrants
shall be subject to adjustment as provided in Sections 1.2 and 1.4.
1.2 Anti-Dilution Provisions. It is understood and agreed that
after consummation of the transactions contemplated hereby, the InPath
Members will own 50% of the issued and outstanding common stock of Bell
computed on a fully diluted basis, subject to adjustment as set forth in
Section 1.4 and as provided herein. In the event Bell changes (or
establishes a record date for changing) the number of shares of its Stock
issued and outstanding prior to the Closing Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect
to its outstanding Stock and the record date therefor shall be prior to the
Closing Date, the number of shares of Stock and Warrants each InPath Member
is entitled to receive under this Agreement shall be adjusted
proportionately.
1.3 Directors and Officers. At and as of the Closing Date, Bell
shall take such actions as may be necessary and appropriate so that the
directors and officers of Bell shall be as follows:
(a) The directors of Bell shall be:
Peter P. Gombrich
Thomas R. Druggish
Denis M. O'Donnell
Alexander M. Milley
Robert C. Shaw
(b) The officers of Bell shall be:
Peter P. Gombrich - Chairman, Chief Executive
Officer and Secretary
Leonard Prange - President and Chief Financial
Officer
Richard Domanik - Vice President and Chief
Technology Officer
David M. Doolittle - Vice President and Treasurer
1.4 Adjustments. On or before the date one hundred and twenty
(120) days after the date hereof, Bell will identify all liabilities and
obligations ("Liabilities") that would be required to be reflected on a
balance sheet dated as of the Closing Date prepared in accordance with
generally accepted accounting principles (the "Closing Balance Sheet").
Notwithstanding the foregoing, the Closing Balance Sheet shall specifically
exclude the following Liabilities: (a) all legal and accounting expenses
that relate to the transactions contemplated hereby, (b) all accounting
expenses that relate to the audit of the 1998 calendar year, and (c) all
expenses relating to any underfunding of the Payne Fabrics, Inc. pension
plan or the 401(k) plan. If such liabilities identified on such Closing
Balance Sheet exceed the sum of twenty five thousand dollars ($25,000) in
the aggregate, the number of shares of Stock issuable pursuant to the
Warrants will be increased by an amount equal to the quotient of (i) the
amount of such Liabilities in excess of the sum of twenty five thousand
dollars ($25,000), divided by (ii) nine hundred twenty-five thousand
dollars ($925,000), multiplied by (iii) 7,464,640. The shares of Stock
subject to each Warrant will be increased pro rata, based upon the Stock
issuable to every Warrant holder. If the representation and warranty in
Section 5.12 is not true and correct as of the Closing Date, the amount of
any shortfall in cash and cash equivalents of Bell shall be added to clause
(i) in the formula above.
Article II. The Closing.
The closing of the issuance of the Stock and Warrants contemplated
herein (the "Closing") will take place on December 4, 1998 at 10:00 a.m.
local time, or such other time as the parties may mutually agree (the
"Closing Date"). The issuance of additional Stock by Bell pursuant to the
Warrants will take place on a date and at a time mutually selected by
Milley and Gombrich, but in no event later than March 30, 1999 or such
later date as is approved by Gombrich.
Article III. Representations and Warranties of InPath
As a material inducement to Bell to enter into and perform this
Agreement, InPath represents and warrants that:
3.1 InPath's Organization and Corporate Authority. InPath is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full power and
authority to carry on its business as now conducted and to consummate the
transactions contemplated by this Agreement. InPath maintains its
principal place of business in Illinois. InPath has not failed to qualify
as a foreign corporation to do business in any jurisdiction where failure
to so qualify would have a material adverse effect on Inpath or its
business.
3.2 Certificate of Formation and Operating Agreement. The copies
of the Certificate of Formation of InPath and the Limited Liability Company
Agreement of InPath, which have previously been furnished to Bell, are
true, correct and complete copies.
3.3 No Violation. Neither the execution and delivery by InPath of
this Agreement or other agreements and instruments required by the
provisions of this Agreement, nor consummation of the transactions herein
or therein contemplated, nor compliance with the terms, conditions and
provisions hereof or thereof will conflict with or violate any provision of
law applicable to InPath or its Certificate of Formation or Limited
Liability Company Agreement, or result in a violation or default in any
provision of any regulation, order, writ, injunction or decree of any court
or governmental agency or authority or except for a lease of office space,
of any agreement or instrument to which InPath is party or by which InPath
or any of its property is bound or to which InPath or any of its property
is subject, or constitute a default thereunder or result in the imposition
of any Lien whatsoever upon any of InPath's property pursuant to the terms
of any such agreement or instrument.
3.4 Capitalization. InPath has authorized 200,000 Units, of which
100,000 Units are presently issued and outstanding. There are no other
classes of InPath equity securities, or rights to convert or to exercise
into InPath equity securities, currently outstanding. There are no
outstanding rights to purchase or pre-emptive rights of any kind affecting
any Units, whether or not outstanding. Schedule 3.4, attached hereto, is a
true and complete list of all holders of InPath Units.
3.5 Financial Statements. InPath has heretofore delivered to Bell
copies of InPath's unaudited balance sheet as of November 30, 1998 (the
"InPath Financials"). The InPath Financials were prepared in accordance
with generally accepted accounting principles applied on a consistent
basis, and fairly present in all material respects the financial position
of InPath as at the date thereof, subject to normal year-end adjustments
and any other adjustments described therein except that the InPath
Financials do not contain footnote disclosure. As of the date of the
InPath Financials, there were no material liabilities of InPath of any
kind, contingent or otherwise, other than liabilities disclosed or provided
for in the InPath Financials. The InPath Financials reflect or provide for
all claims against and all debts and liabilities of InPath as of the date
hereof, whether absolute, accrued, contingent or otherwise in accordance
with generally accepted accounting principles. InPath has no knowledge of
any circumstance, condition, event or arrangement that may hereafter give
rise to any other liability of InPath, other than in the ordinary course of
business.
3.6 No Adverse Change. Since October 31, 1998, (a) there has been
no material adverse change in the financial condition, results of
operation, assets, liabilities or business of InPath, and InPath is not
aware of any fact or condition particularly related to InPath which it
reasonably believes is likely to cause any such change at any time in the
future; (b) there have been no distributions with respect to Units paid or
declared by InPath; (c) the physical properties owned or leased by InPath
have not suffered any destruction or damage, regardless of whether or not
the loss suffered was insured, that would materially and adversely affect
InPath's business; and (d) there has been no incurrence of any material
liability other than in the ordinary course of business consistent with
past practice.
3.7 Subsidiaries. InPath has no subsidiaries. InPath does not
own, directly or indirectly, any of the capital stock of any corporation,
association, trust or similar entity, any interest in the equity of any
partnership, limited liability company or similar entity, any share in any
joint venture, or any other equity or proprietary interest in any entity or
enterprise, however organized and however such interest may be denominated
or evidenced.
3.8 Taxes. InPath has filed all federal, state, local and other
tax returns which are required to be filed by it and which were due prior
to the date of this Agreement and has paid all taxes shown thereon,
including without limitation all taxes on properties, income, licenses,
sales and payrolls. All federal, state, local and other taxes accruable
since the end of the respective periods covered by such returns and up to
the date hereof and the Closing Date have or will have been paid or accrued
on the books of InPath. Any tax returns of InPath delivered to Bell are
true, accurate and complete, and fairly present the information purported
to be shown therein, and reflect all the tax liabilities of InPath for the
periods covered thereby. The amount reflected in the InPath Financials as
a provision for taxes as of the date thereof is sufficient for the payment
of all accrued and unpaid federal, state and local taxes of InPath, whether
or not disputed, for such period stated and for all periods prior thereto
or arising out of transactions entered into or any state of facts existing
on or prior to such date.
No federal income tax returns of InPath have been audited by the
Internal Revenue Service. No federal or state tax liabilities have been
assessed or proposed which remain unpaid. There is no basis upon which any
assessment for any amount of additional taxes could be made.
The present taxes which InPath is required by law to withhold or
collect have been withheld or collected and have been paid over to the
proper governmental authorities or are properly held by InPath for such
payment, and all withholdings, collections or other payments due in
connection therewith as of the date of the InPath Financials, are fully
reflected in the InPath Financials as at such date and for the period then
ended. All such taxes are and will be so withheld, collected, paid over or
held for payment as of the date of this Agreement and the Closing. No
waivers of statutes of limitations with respect to any tax returns of
InPath nor extensions of time for the assessment of any tax have been given
which are now in effect.
Neither InPath nor any InPath Member has taken or will take any
action other than in the ordinary course of business and other than the
transactions to occur pursuant to this Agreement which would create a tax
liability of InPath that would become such on or after the Closing Date.
3.9 Interests of Officers. Except as previously disclosed to Bell,
and except for normal advances for business expenses incurred in the
ordinary course of business, no officer, director, or InPath Member nor any
affiliate of any of the foregoing parties has any loan or other obligation
outstanding to or from InPath or for which InPath is or may be liable under
guaranty or otherwise, or has any material interest in any firm, person or
entity with which InPath has entered into any contract or lease, or with
which InPath does business.
3.10 Property. InPath has good and marketable title to its
interests in all real and personal property owned by it and reflected on
the InPath Financials, and property leased or licensed by InPath, free and
clear of all Liens.
All leases and licenses to which InPath is a party are in good
standing and are valid and effective in accordance with their respective
terms, and except for the need to obtain certain insurance under a lease
for office space, there is not under any such lease or license any existing
default or event which with notice or lapse of time or both would become a
default. All personal property of InPath has been properly maintained and
is in good order and repair and is operable and fit to be used for its
intended purposes.
3.11 Intellectual Property. InPath owns or has a valid license to
use all of its intellectual property rights disclosed in Schedule 3.11 and
is not infringing on intellectual property rights of others. Without
limiting the generality of the foregoing: InPath's point-of-care
diagnostic products currently being developed or contemplated are within
"LICENSEE'S PROTECTED BUSINESS," and excluded from "ACCUMED'S PROTECTED
BUSINESS," within the meaning of InPath's Patent and Technology License
Agreement with AccuMed International, Inc.
3.12 Material Contracts; Defaults. Inpath has previously delivered
to Bell a list of all of InPath's Material Contracts. Each such Material
Contract is in full force and effect and constitutes a valid and binding
obligation of InPath and to InPath's knowledge, each other party thereto.
InPath has delivered a true and complete copy of each Material Contract to
Bell. InPath has not breached any of its Material Contracts, and InPath
has no knowledge of any default by any other party to any such Material
Contract or any condition which, with the giving of notice or passage of
time, or both, could reasonably be expected to constitute a default by any
party thereto. For purposes hereof, "Material Contract" shall mean any
agreement, contract, arrangement, commitment or understanding (wither
written or oral) (i) that is a "material contract" within the meaning of
Item 601(b)(10) of SEC Regulation S-K, or (ii) that materially restricts
the conduct of business by InPath, or (iii) any other contract, agreement,
commitment, lease or other instrument that cannot be terminated within one
year or that involves an amount in excess of $10,000.
3.13 Litigation. There are no actions, suits or proceedings,
pending, or, to the knowledge of InPath, after due inquiry, threatened
before any court, arbitrator, commission, agency or other administrative
authority against, or affecting, InPath or its businesses or properties, or
which would interfere with the marketing of InPath's services or products
or the transactions contemplated by this Agreement, and InPath is not the
subject of any order or decree.
3.14 Employee Benefit Plans. InPath maintains, sponsors and/or
contributes to no Employee Benefit Plans, as defined in Section 3(3) of
ERISA, nor has it ever done so.
3.15 Finder's Fee. Neither InPath nor any InPath Member has
incurred any obligation of any kind whatsoever to any party for a finder's
or broker's fee in connection with the transactions contemplated by this
Agreement.
3.16 No Practices in Violation of Law. Neither InPath nor any
InPath Member by, on behalf of or for the benefit of InPath, has engaged in
or is now engaging in any act, conspiracy or course of conduct in violation
of any applicable federal or state law which is likely to result in a
materially adverse change in the financial condition, results of operation,
assets, liabilities or business of InPath, and has not received any notice,
claim or protest that it is now or has heretofore been so engaged.
3.17 Authority. InPath has full right, power and authority to
execute, deliver and perform this Agreement, all other proper corporate
actions of InPath's Board of Directors, Managers and Members authorizing
the execution, delivery and performance hereof and thereof having been
taken. This Agreement has been duly executed and delivered by InPath and
constitutes a valid and legally binding obligation of InPath, enforceable
against InPath in accordance with its terms, subject, as to enforcement, to
bankruptcy, reorganization and other laws affecting the enforcement of
creditors' rights generally from time to time in effect and to judicial
discretion in accordance with general equitable principles. There are
pending no proceedings or actions to dissolve or liquidate InPath.
3.18 Consents and Approvals. No consents or approvals of, or
filings or registrations with, any governmental authority or with any third
party are required to be made or obtained by InPath in connection with the
execution, delivery or performance by InPath of this Agreement or to enter
into this Agreement or consummate any of the transactions contemplated
herein.
3.19 Environmental Matters.
(a) InPath has complied at all times with applicable
Environmental Laws; (i) no real property (including buildings or other
structures) currently or formerly owned, leased or operated by it has been
contaminated with, or has had any release of, any Hazardous Substance;
(ii) InPath is not subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (iii) InPath has not
received any notice, demand letter, claim or request for information
alleging any violation of, or liability under, any Environmental Law;
(iv) InPath is not subject to any order, decree, injunction or other
agreement with any governmental authority or any third party relating to
any Environmental Law; (v) to the best of InPath's knowledge, there are no
circumstances or conditions (including the presence of asbestos,
underground storage tanks, lead products, polychlorinated biphenyls, prior
manufacturing operations, dry-cleaning, or automotive services) involving
InPath, or any currently or formerly owned or operated property, that could
reasonably be expected to result in any claims, liability or investigations
against InPath or result in any restrictions on the ownership, use, or
transfer of any property pursuant to any Environmental Law; and (vi) InPath
has delivered to Bell copies of all environmental reports, studies,
sampling data, correspondence, filings and other environmental information
in its possession or reasonably available to it relating to itself and any
currently or formerly owned, leased or operated property.
(b) As used herein, the term "Environmental Law" means any
federal, state or local law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to:
(i) the protection or restoration of the environment, health, safety, or
natural resources, (ii) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance or (iii) noise, odor,
wetlands, indoor air, pollution, contamination or any injury or threat of
injury to persons or property in connection with any Hazardous Substance
and the term "Hazardous Substance" means any substance in any concentration
that is: (i) listed, classified or regulated pursuant to any Environmental
Law; (ii) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (iii) any other substance which is or
may be the subject of regulatory action by any governmental authority in
connection with any Environmental Law.
Article IV. Representations of the InPath Members.
As a material inducement to Bell to enter into and perform this
Agreement, the InPath Members represent and warrant that:
4.1 Title to Units. Each InPath Member owns the number of Units
listed opposite his name in Schedule 3.4, free and clear of any and all
Liens. Such Units in the aggregate constitute all of the issued and
outstanding Membership Interests in InPath.
4.2 Authority. The InPath Members have full legal capacity, right,
power and authority to execute, deliver and perform this Agreement and to
cause InPath to approve the execution of this Agreement. This Agreement
has been duly executed and delivered by the InPath Members and constitutes
the valid and legally binding obligation of each of them, enforceable
against each of them in accordance with its terms, subject, as to
enforcement, to bankruptcy, reorganization and other laws affecting the
enforcement of creditors' rights generally from time to time in effect and
to judicial discretion in accordance with general equitable principles.
4.3 No Violation. Neither the execution and delivery by the InPath
Members of this Agreement or other agreements and instruments required by
the provisions of this Agreement, nor consummation of the transactions
herein or therein contemplated, nor compliance with the terms, conditions
and provisions hereof or thereof will conflict with or violate any
provision of law applicable to any of the InPath Members or if applicable,
their organizational documents, or result in a violation or default in any
provision of any regulation, order, writ, injunction or decree of any court
or governmental agency or authority or of any agreement or instrument to
which any of the InPath Members is party or by which any of the InPath
Members or any of their property is bound or to which any of the InPath
Members or any of their property is subject, or constitute a default
thereunder or result in the imposition of any Lien upon any of the InPath
Members' property pursuant to the terms of any such agreement or
instrument.
4.4 Investment Representations. (i) The Stock and Warrants to be
issued to the InPath Members hereunder (the "InPath Members Securities")
are being acquired for the InPath Members' own account for investment
purposes only and without any present intention to sell, transfer or
otherwise dispose of the same (except in compliance with clause (v)
hereof); (ii) the InPath Members have such knowledge and experience in
financial matters that they are capable of evaluating the merits and risks
of their investment in the InPath Members Securities; (iii) the InPath
Members understand that the InPath Members Securities have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act") or any securities laws of any state of the United States
("Blue Sky Laws"); (iv) the InPath Members are fully informed as to the
applicable limitations upon any distribution or resale of the InPath
Members Securities under such Securities Act and Blue Sky Laws and that the
InPath Members Securities may not be distributed or resold if such
distribution or resale would constitute a violation of the Securities Act
or Blue Sky Laws; and (v) the InPath Members will not sell, transfer,
assign, pledge or otherwise distribute any of the InPath Members Securities
unless (a) there is an effective registration statement under the
Securities Act and Blue Sky Laws covering such InPath Members Securities,
(b) such sale, transfer, assignment, pledge or other distribution is exempt
from the registration or qualification requirements of the Securities Act
and Blue Sky Laws or (c) the Securities Act and Blue Sky Laws are
inapplicable to such transaction. In connection with the foregoing, the
InPath Members agree and consent to the inclusion on the certificate(s)
representing the InPath Members Securities of the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN TAKEN BY THE ISSUEE
FOR INVESTMENT PURPOSES. SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED
(a) UNLESS THEY HAVE BEEN REGISTERED UNDER SAID ACT, OR (b) UNLESS SUCH
REGISTRATION IS EXPRESSLY WAIVED BY THE COMPANY, OR THE TRANSFER AGENT (OR
THE COMPANY, IF THEN ACTING AS ITS TRANSFER AGENT) IS PRESENTED WITH A
WRITTEN OPINION SATISFACTORY TO COUNSEL FOR THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE CIRCUMSTANCES OF SUCH SALE OR
TRANSFER."
The foregoing may be relied upon by Bell and also by: (i) Bell's
counsel on the date hereof, Berlack, Israels and Liberman LLP, New York,
New York, in connection with any opinion or other letter that they may
deliver in respect of the issuance and delivery of any of the InPath
Members Securities, and (ii) the Company's transfer agent, Continental
Stock Transfer & Trust Company, in connection with their effectuation of
such issuance and delivery.
Article V. Representations and Warranties of Bell.
As a material inducement to InPath and the InPath Members to enter
into and perform this Agreement, Bell represents and warrants that:
5.1 Bell's Organization and Corporate Authority. Bell is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California, with full power and authority to carry on
its business as now conducted and to consummate the transactions
contemplated by this Agreement. Bell maintains its principal place of
business in Florida. Bell has not failed to qualify as a foreign
corporation to do business in any jurisdiction where failure to so qualify
would have a material adverse effect on the business of Bell.
5.2 Charter and Bylaws. Bell has heretofore delivered to InPath,
true, correct and complete copies of the Articles of Incorporation of Bell
and the Bylaws of Bell.
5.3 No Violation. Neither the execution and delivery by Bell of
this Agreement or other agreements and instruments required by the
provisions of this Agreement, nor consummation of the transactions herein
or therein contemplated, nor compliance with the terms, conditions and
provisions hereof or thereof will conflict with or violate any provision of
law or the Articles of Incorporation or Bylaws of Bell, or result in a
violation or default in any provision of any regulation, order, writ,
injunction or decree of any court or governmental agency or authority or of
any agreement or instrument to which Bell is party or by which Bell or any
of its property is bound or to which Bell or any of its property is
subject, or constitute a default thereunder or result in the imposition of
any lien, charge, encumbrance or security interest of any nature whatsoever
upon any of Bell's property pursuant to the terms of any such agreement or
instrument.
5.4 Capitalization. Bell has authorized capital stock consisting
of 12,000,000 shares of common stock, no par value, of which 7,711,210
shares are issued and outstanding (except for 17,858 shares due to Rafalco)
and all such outstanding shares of capital stock are duly authorized, fully
paid and nonassessable. Except for 450,000 Stock Appreciation Rights with
an exercise price of $.30 per right issued in 1989 (the "1989 SARs"), there
are no other classes of Bell equity securities, or rights to convert or to
exercise into Bell equity securities, currently outstanding, and there are
no outstanding rights to purchase, warrants, stock appreciation rights,
options or pre-emptive rights of any kind affecting any shares of the
capital stock of Bell. Schedule 5.4 attached hereto is a true and complete
list of all holders holding 5% or more of the issued and outstanding Stock,
excluding the InPath Members, as of the Closing Date.
The 696,570 shares of Stock designated by the Debtors Plan of
Reorganization dated December 30, 1986 filed in the US Bankruptcy Court for
the Northern District of California in Case No. 3-85-01696-LK as the "4-B
Shares" have no voting, dividend, liquidation, preference or other rights
of any nature whatsoever. After the consummation of the issuance of Stock
and Warrants, as contemplated herein, the InPath Members will collectively
own 4,228,790 shares of Stock, as listed on Schedule 3.4, free and clear of
all Liens (excluding any arising through or under any Inpath Member). Upon
exercise of the Warrants and the issuance by Bell of the shares of Stock to
satisfy the Warrants, the InPath Members will collectively own 7,464,640
shares of Stock, free and clear of all Liens, (excluding any arising
through or under any InPath Member) constituting 50% of the issued and
outstanding capital stock of Bell, computed on a fully diluted basis,
without giving effect to the "4-B Shares" or any transactions approved by
the Board of Directors of Bell, which shall include the affirmative Vote of
Gombrich, after the date hereof. All of the Stock to be issued to the
InPath Members pursuant hereto has been and will be duly authorized, and
upon issuance will be fully paid and nonassessable.
5.5 Financial Statements. Included in Bell's Annual Report on Form
10-K for the year ended December 31, 1997 (the "10-K") and Quarterly
Reports on Form 10-Q for the quarters ended March 31, June 30 and September
30, 1998 (collectively, with the 10-K, the "SEC Filings") are copies of
Bell's audited consolidated financial statements for the fiscal year ended
1997, and unaudited interim financial statements as of September 30, 1998
(together, the "Bell Financials"). The Bell Financials were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis, except as may be indicated therein or on the notes
thereto, and fairly present in all material respects the financial position
of Bell as at the dates thereof and the results of its operations and cash
flows for the periods then ended, subject to normal year-end adjustments
and any other adjustments described therein. As of the date of the Bell
Financials, there were no material liabilities of Bell of any kind,
contingent or otherwise, other than liabilities disclosed or provided for
in the Bell Financials or set forth elsewhere in the SEC Filings. The Bell
Financials reflect or provide for all claims against and all debts and
liabilities of Bell as of the dates thereof whether absolute, accrued,
contingent or otherwise in accordance with generally accepted accounting
principles, consistently applied. Bell has no knowledge of any
circumstance, condition, event or arrangement that may hereafter give rise
to any other liability of Bell, other than in the ordinary course of
business.
5.6 No Adverse Change. Since September 30, 1998, (a) there has
been no material adverse change in the financial condition, results of
operation, assets, liabilities or business of Bell, and Bell is aware of no
fact or condition particularly related to the business of Bell which it
reasonably believes is likely to cause any such change at any time in the
future; (b) there have been no distributions with respect to Stock paid or
declared by Bell; (c) except pursuant to this Agreement or the Claims
Settlement Agreement (the "Claims Settlement Agreement") dated as of the
date hereof, among Bell and certain claimholders, pursuant to which Bell
will issue 1,776,666 shares of common stock, Bell has not issued or sold
any Stock or any rights to purchase, warrants, stock appreciation rights,
options or pre-emptive rights of any kind affecting any shares of the
capital stock of Bell, whether or not outstanding; (d) the physical
properties owned or leased by Bell have not suffered any destruction or
damage, regardless of whether or not the loss suffered was insured, that
would materially and adversely affect Bell's business; and (e) there has
been no incurrence of any material liability other than in the ordinary
course of business consistent with past practice.
5.7 Reports. Bell has filed all required forms, reports and
documents (including all prospectuses and all registration statements) with
the Securities and Exchange Commission required to be filed by it pursuant
to the federal securities laws and the Securities and Exchange Commission
rules and regulations promulgated thereunder, all of which have complied in
all material respects with all applicable requirements including those of
the Securities Act of 1933 and the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder. None of the SEC Filings,
including the financial statements included therein, at the time filed,
contained any untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
5.8 Subsidiaries. Bell has no subsidiaries not disclosed in the
SEC Filings. Bell does not own, directly or indirectly, other than for
investment purposes, any of the capital stock of any corporation,
association, trust or similar entity, any interest in the equity of any
partnership, limited liability company or similar entity, any share in any
joint venture, or any other equity or proprietary interest in any entity or
enterprise, however organized and however such interest may be denominated
or evidenced not disclosed in the SEC Filings.
5.9 Taxes. Bell has filed all federal, state, local and other tax
returns which are required to be filed by it and which were due prior to
the date of this Agreement and has paid all taxes shown thereon, including
without limitation all taxes on properties, income, licenses, sales and
payrolls. All federal, state, local and other taxes accruable since the
end of the respective periods covered by such returns and up to the date
hereof and the Closing Date have or will have been paid or accrued on the
books of Bell. Any tax returns of Bell delivered to the InPath Members are
true, accurate and complete, and fairly present the information purported
to be shown therein, and reflect all the tax liabilities of Bell for the
periods covered thereby. The amount reflected in the Bell Financials as a
provision for taxes as of the dates thereof are sufficient for the payment
of all accrued and unpaid federal, state and local taxes of Bell, whether
or not disputed, for the year stated and for all fiscal periods prior
thereto or arising out of transactions entered into or any state of facts
existing on or prior to such dates.
No federal income tax returns of Bell have been audited by the
Internal Revenue Service. No federal or state tax liabilities have been
assessed or proposed which remain unpaid. There is no basis upon which any
assessment for a material amount of additional taxes could be made.
The present taxes which Bell is required by law to withhold or
collect have been withheld or collected and have been paid over to the
proper governmental authorities or are properly held by Bell for such
payment, and all withholdings, collections or other payments due in
connection therewith as of the dates of the Bell Financials, are fully
reflected in the balance sheets included as a part of the Bell Financials
as at such dates and for the periods then ended. All such taxes are and
will be so withheld, collected, paid over or held for payment as of the
date of this Agreement and the Closing. No waivers of statutes of
limitations with respect to any tax returns of Bell nor extensions of time
for the assessment of any tax have been given which are now in effect.
Bell has not taken and will not take any action other than in the
ordinary course of business and other than the transactions to occur
pursuant to this Agreement or the Claims Settlement Agreement which would
create a tax liability of Bell that would become such on or after the
Closing Date.
5.10 Interests of Officers. Except for the Claims (as defined in
the Claims Settlement Agreement), and except for normal advances for
business expenses incurred in the ordinary course of business, no officer,
director, or stockholder nor any affiliate of any of the foregoing parties
has any loan or other obligation outstanding to or from Bell or for which
Bell is or may be liable under guaranty or otherwise, or has any material
interest in any firm, person or entity with which Bell has entered into any
contract or lease, or with which Bell does business. All of the agreements
and arrangements which are the subject of the Claims Settlement Agreement
are terminated as of the date hereof.
5.11 Property. Bell has good and marketable title to its interests
in all real and personal property owned by it and reflected on the Bell
Financials, and property leased or licensed by Bell, free and clear of any
and all Liens.
All leases and licenses to which Bell is a party are in good standing
and are valid and effective in accordance with their respective terms, and
there is not under any such lease any existing default or event which with
notice or lapse of time or both would become a default. All personal
property of Bell has been properly maintained and is in good order and
repair and is operable and fit to be used for its intended purposes.
5.12 Cash on Deposit. Bell has cash or cash equivalents of not less
than $1,000,000 on deposit at the financial institutions listed on Schedule
5.12 hereto, after applying $150,000 towards the discharge of a liability
for the underfunding of the Payne Fabrics pension plan.
5.13 Intellectual Property. Bell owns or has a valid license to use
all intellectual property rights disclosed in Schedule 5.13 and is not
infringing on intellectual property rights of others.
5.14 Material Contracts; Defaults. Set forth on Schedule 5.14 is a
list of all of Bell's Material Contracts. Each such Material Contract is
in full force and effect and constitutes a valid and binding obligation of
Bell and to Bell's knowledge, each other party thereto. Bell has delivered
a true and complete copy of each Material Contract to InPath. Bell has not
breached any Material Contract, and Bell has no knowledge of any default by
any other party to any such Material Contract or any condition which, with
the giving of notice or passage of time, or both, could reasonably be
expected to constitute a default by any party thereto.
5.15 Litigation. There are no actions, suits or proceedings,
pending, or, to the knowledge of Bell, after due inquiry, threatened before
any court, arbitrator, commission, agency or other administrative authority
against, or affecting, Bell or its business or properties, or which would
interfere with the marketing of Bell's services or products or the
transactions contemplated by this Agreement, and Bell is not the subject of
any order or decree.
5.16 Employee Benefit Plans. Schedule 5.16 lists all "Employee
Benefit Plans" as defined in Section 3(3) of ERISA existing on the date
hereof or within three (3) years prior to the Closing Date that are
maintained, sponsored or contributed to by Bell. Schedule 5.16 also lists
all "Employee Benefit Plans" of any of Bell's current or former
subsidiaries or affiliates (including for this purpose and for the purpose
of all of the representations in this Section 5.16 all entities (whether or
not incorporated) which by reason of common control are treated together
with Bell as a single employer under Section 414 of the Code) to the extent
that Bell has any liability with respect to such plans.
True and correct copies of each Employee Benefit Plan listed on
Schedule 5.16 have been delivered to the InPath Members prior to the
Closing Date along with, where applicable, the most recent summary plan
description, actuarial report, standard or distress termination filing with
the Pension Benefit Guaranty Corporation and all subsequent correspondence
relating thereto, Tax Form 5310 filing with the IRS and all subsequent
correspondence relating thereto, the most recent determination letter
issued by the IRS with respect to each Employee Benefit Plan which purports
to be a "qualified plan" as defined under Code Section 401(a), and the most
recent Tax Form 5500 Series Annual Return (including, but not limited to
all schedules thereto and financial statements with attached opinions of
independent accountants). Except as set forth on Schedule 5.16, all
Employee Benefit Plans listed on Schedule 5.16 (i) are currently in
compliance and have in the past complied in all material respects with all
applicable requirements of law and regulations and (ii) have been
maintained and funded in all material respects in accordance with its terms
and with all applicable provisions of ERISA and of the Code applicable
thereto. Except as set forth on Schedule 5.16, there are no accumulated
funding deficiencies within the meaning of Section 412 of the Code under
any such Employee Benefit Plan which is a defined benefit plan within the
meaning of Code Section 414(j). Other than with respect to the Payne
Fabrics, Inc. Pension Plan, Bell has no liability with respect to unfunded
benefits to employees and/or the Pension Benefit Guaranty Corporation which
respect to any defined benefit plan within the meaning of Section 414(j) of
the Code. The Payne Fabrics, Inc. Pension Plan is in the process of being
terminated, and the liability with respect to such plan to Bell or any of
its subsidiaries or affiliates with respect to unfunded benefits is not
materially greater than $200,000.
All Form 5500 series returns filed within the last three years
relating to such Employee Benefit Plans and any actuarial reports relating
to such Employee Benefit Plans are true and correct in all material
respects. No excise tax or payment to the Pension Benefit Guaranty
Corporation is due or owing from Bell relating to any such Employee Benefit
Plan, other than regular PBGC premium payments on account of the current
plan year. Neither Bell nor any of its subsidiaries or affiliates is aware
of the occurrence of a prohibited transaction (under Section 4975(c)(1) of
the Code) with respect to any Employee Benefit Plan. No reportable event
as described in ERISA Section 4043, for which the 30 day or advance
reporting requirement has not been waived, has occurred with respect to any
such Employee Benefit Plan.
Except as set forth herein or on Schedule 5.16, Bell has no liability
to any Employee Benefit Plan. None of the plans or arrangements listed in
Schedule 5.16 are the subject of any lawsuit or other proceeding concerning
any benefit claims (other than routine claims for benefits). With respect
to any severance pay arrangement, the consummation of the transactions
contemplated by this Agreement will not accelerate the time of payment,
vesting or increase the amount of compensation due to an individual covered
by a severance pay agreement. Bell has no obligation to provide any
"retiree medical benefits" to any employee or former employee and has no
unfunded liability with respect to any such "retiree medical benefits."
5.17 Finder's Fee. Neither Bell nor any stockholder of Bell has
incurred any obligation of any kind whatsoever to any party for a finder's
or broker's fee in connection with the transactions contemplated by this
Agreement.
5.18 No Practices in Violation of Law. Neither Bell nor any
stockholder thereof, by, on behalf of or for the benefit of Bell, has
engaged in or is now engaging in any act, conspiracy or course of conduct
in violation of any applicable federal or state law which is likely to
result in a materially adverse change in the financial condition, results
of operation, assets, liabilities or business of Bell, and has not received
any notice, claim or protest that it is now or has heretofore been so
engaged.
5.19 Authority. Bell has full right, power and authority to
execute, deliver and perform this Agreement, all other proper corporate
actions of Bell's Board of Directors authorizing the execution, delivery
and performance hereof and thereof having been taken. This Agreement has
been duly executed and delivered by Bell and constitutes a valid and
legally binding obligation of Bell enforceable against Bell in accordance
with its terms, subject, as to enforcement, to bankruptcy, reorganization
and other laws affecting the enforcement of creditors' rights generally
from time to time in effect and to judicial discretion in accordance with
general equitable principles. There are pending no proceedings or actions
to dissolve or liquidate Bell.
5.20 Consents and Approvals. No consents or approvals of, or
filings or registrations with, any governmental authority or with any third
party are required to be made or obtained by Bell in connection with the
execution, delivery or performance by Bell of this Agreement or to enter
into this Agreement or consummate any of the transactions contemplated
herein.
5.21 Environmental Matters. Bell has complied at all times with
applicable Environmental Laws; (i) no real property (including buildings or
other structures) currently or formerly owned, leased or operated by it has
been contaminated with, or has had any release of, any Hazardous Substance;
(ii) Bell is not subject to liability for any Hazardous Substance disposal
or contamination on any third party property; (iii) Bell has not received
any notice, demand letter, claim or request for information alleging any
violation of, or liability under, any Environmental Law; (iv) Bell is not
subject to any order, decree, injunction or other agreement with any
governmental authority or any third party relating to any Environmental
Law; (v) to the best of Bell's knowledge, there are no circumstances or
conditions (including the presence of asbestos, underground storage tanks,
lead products, polychlorinated biphenyls, prior manufacturing operations,
dry-cleaning, or automotive services) involving Bell, any currently or
formerly owned or operated property, that could reasonably be expected to
result in any claims, liability or investigations against Bell or result in
any restrictions on the ownership, use, or transfer of any property
pursuant to any Environmental Law; and (vi) Bell has delivered to InPath
copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its
possession or reasonably available to it relating to itself and any
currently or formerly owned, leased or operated property.
Article VI. Covenants of InPath.
6.1 Gombrich Loans. Inpath agrees that it will not utilize any of
the funds of Bell on deposit as of the date hereof to repay indebtedness of
Inpath to Gombrich or his affiliates without the unanimous written consent
of the Board of Directors of Bell.
Article VII. Covenants of Bell.
7.1 Transfer of Working Capital. At the Closing, Bell shall
transfer to InPath's bank account or otherwise make available to InPath all
cash and cash equivalents of Bell for InPath's use as working capital.
7.2 Delivery of Stock. At the Closing, Bell shall deliver to each
InPath Member stock certificates representing the number of shares of Stock
as set forth on Schedule 3.4.
7.3 Delivery of Warrants. At the Closing, Bell shall deliver to
each InPath Member a Warrant in the form of Exhibit A attached hereto, to
be redeemed by Bell on the date of the Stockholders' Meeting to be held
pursuant to Section 7.4(b), in the amounts of Stock opposite each InPath
Member's name on Schedule 3.4.
7.4 Post-Closing Actions.
(a) Promptly after the Closing, but in no event later than
March 30, 1999, or such later date as is approved by Gombrich, Bell shall
take all actions necessary to incorporate a wholly-owned subsidiary, to be
named (if available) Ampersand Medical Corporation ("Ampersand"), under the
laws of the State of Delaware.
(b) Promptly after the Closing, Bell shall call a stockholder
meeting to be held no later than March 30, 1999 or such later date as is
agreed upon by Gombrich, for the purpose of (i) approving the merger of
Bell with and into Ampersand, with Ampersand as the surviving corporation;
(ii) authorizing additional shares of Stock in an amount at least
sufficient to permit the issuance of Stock issuable upon exercise of the
Warrants; (iii) authorizing shares of so-called "blank check" preferred
stock; (iv) electing a slate of directors of Peter P. Gombrich, John
Abeles, Denis O'Donnell, Alexander Milley and an additional director to be
selected by Gombrich and Milley; (v) ratifying the transactions
contemplated by this Agreement and the Claims Settlement Agreement; and
(vi) considering such other proposals as may come before the meeting.
(c) The existing members of Bell's Board of Directors shall
recommend that the stockholders vote in favor of proposals (i), (ii),
(iii), (iv) and (v) listed in Subsection (b) above.
(d) Promptly after the Closing Date, Bell shall prepare and file
all documents and forms and amendments to forms which are or will be
required to be filed or delivered under applicable federal and state laws
and regulations, including without limitation the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as a result of the consummation
of the transactions contemplated by this Agreement and the Claims
Settlement Agreement.
(e) Promptly after the date hereof, the directors of Bell shall
appoint the directors listed in Subsection 1.3(a) above to the Board of
Directors of the Bell. Peter P. Gombrich shall serve as Chairman of the
Board.
(f) Effective as of the date hereof, the Board of Directors shall
appoint the officers listed in Subsection 1.3(b) above as the officers of
Bell.
(g) From and after the date hereof, until the Warrants have been
redeemed for the Stock issuable in respect thereof, Bell will not issue any
capital stock, securities convertible into capital stock, warrants, rights
to purchase, stock appreciation rights, options or exemptive rights of any
kind unless such issuance has been approved by Gombrich, or Leonard Prange
if Gombrich is not able to act.
Article VIII. Covenants of the InPath Members.
8.1 Assignment of Units. At the Closing, each of the InPath
Members shall assign his or its Units to Bell, free and clear of any and
all Liens, causing InPath to become a wholly-owned subsidiary of Bell.
8.2 Approval. At the Closing, the InPath Members shall cause the
Board of Directors of InPath to grant its consent to the transfer of Units
described above.
8.3 Voting of Stock. The InPath Members agree that they will vote
their Stock and take all actions necessary or desirable to effect and
consummate each of the transactions contemplated by this Agreement.
Article IX. Conditions Precedent to InPath's and the InPath Members'
Obligations.
All obligations of InPath and the InPath Members under this Agreement
are subject to the fulfillment and satisfaction, prior to or at the
Closing, of each of the following conditions, any one or more of which may
be waived by it or them in regard to its or their obligations,
respectively:
9.1 Bell's Certificate. Bell shall have delivered a certificate,
duly executed by its President, dated as of the date of the Closing
certifying that (i) since the delivery of Bell's Articles of Incorporation
and Bylaws pursuant to Section 5.2, there have been no amendments or other
modifications thereof; (ii) true, complete and accurate copies of the
minutes of meetings of the Board of Directors (or consents in lieu thereof)
approving this Agreement and the transaction contemplated herein have been
delivered to InPath; and (iii) the officers of Bell are those persons named
in the certificate.
9.2 Other Documents. The appropriate parties shall have executed
and delivered:
(a) A Stockholders Agreement in the form of Exhibit 9.2; and
(b) All other documents required by this Agreement or otherwise
necessary to effectuate the transaction contemplated by this Agreement.
9.3 Cancellation. Bell shall have cancelled or there shall have
expired all rights to purchase, warrants, stock appreciation rights,
options or pre-emptive rights of any kind affecting any shares of the
capital stock of Bell (other than the 1989 SARs), outstanding prior to the
date hereof and delivered evidence thereof to InPath in form and substance
reasonably satisfactory to InPath.
9.4 Approvals. Any consent, approval, authorization or order of
any court, governmental agency, administrative body or other person or
entity required for the consummation of the transactions contemplated by
this Agreement shall have been obtained and shall be in effect on the
Closing Date.
9.5 Bell's Performance. The representations and warranties made by
Bell in this Agreement shall be true and correct in all material respects
as of the Closing Date, and its obligations to be performed on or before
the Closing Date pursuant to the terms of this Agreement shall have been
duly performed on or before the Closing Date and Bell shall have delivered
to InPath a certificate dated the Closing Date, certifying as to the
foregoing.
9.6 Approval of Documentation. The form and substance of all
certificates, and other documents shall be reasonably satisfactory in all
respects to InPath, the InPath Members and its or their counsel.
9.7 Examination of Books and Records. For purposes of compliance
with and performance of this Agreement, InPath and the InPath Members,
acting through itself or themselves or through counsel, accountants, or
other representatives designated by it or them, shall have been afforded
full and complete opportunity to examine and investigate all aspects of
Bell's business and affairs and assets and liabilities, including without
limitation, its minute books and stock transfer records, financial books
and records, the workpapers of Bell's independent public accountants,
titles and leases to properties, loan and other agreements, the condition
of its facilities and equipment, and the collectability of accounts
receivable.
Article X. Conditions Precedent to Bell's Obligations.
All obligations of Bell under this Agreement are subject to the
fulfillment and satisfaction, prior to or at the Closing, of each of the
following conditions, any one or more of which may be waived by it in
regard to its obligations:
10.1 InPath's Certificate. InPath shall have delivered a
certificate, duly executed by its President, dated as of the date of the
Closing certifying that (i) since the delivery of InPath's Certificate of
Formation and Limited Liability Company Agreement pursuant to Section 3.2,
there have been no amendments or other modifications thereof; (ii) true,
complete and accurate copies of the minutes of meetings of the Board of
Directors and Members (or consents in lieu thereof) approving this
Agreement and the transaction contemplated herein have been delivered to
Bell; and (iii) that the officers of InPath are those persons named in the
certificate.
10.2 Other Documents. The appropriate parties shall have executed
and delivered:
(a) A Stockholders Agreement in the form of Exhibit 9.2;
(b) A revised Employment Agreement between InPath and Gombrich in
the form of Exhibit 10.2;
(c) The Claims Settlement Agreement; and
(d) All other documents required by this Agreement or otherwise
necessary to effectuate the transaction contemplated by this Agreement.
10.3 Approvals. Any consent, approval, authorization or order of
any court, governmental agency, administrative body or other person or
entity required for the consummation of the transactions contemplated by
this Agreement shall have been obtained and shall be in effect on the
Closing Date.
10.4 InPath's and the InPath Members' Performance. The
representations and warranties made by InPath and the InPath Members in
this Agreement shall be true and correct in all material respects as of the
Closing Date, and their respective obligations to be performed on or before
the Closing Date pursuant to the terms of this Agreement shall have been
duly performed on or before the Closing Date and InPath and Gombrich shall
have delivered a certificate, dated as of the Closing Date, certifying as
to the foregoing.
10.5 Approval of Documentation. The form and substance of all
opinions, certificates, and other documents shall be reasonably
satisfactory in all respects to Bell and its counsel.
10.6 Examination of Books and Records. For purposes of compliance
with and performance of this Agreement, Bell, acting through itself,
counsel, accountants, or other representatives designated by it, shall have
been afforded full and complete opportunity to examine and investigate all
aspects of InPath's business and affairs and assets and liabilities,
including without limitation, its minute books and stock transfer records,
financial books and records, the workpapers of InPath's independent public
accountants, titles and leases to properties, loan and other agreements,
the condition of its facilities and equipment, and the collectability of
accounts receivable.
Article XI. Post-Closing Covenants.
11.1 Further Assurances. From time to time after the Closing at the
request of any party, and without further consideration, the other parties
shall execute and deliver any further instruments and take such other
action as may reasonably be required to consummate the transactions
contemplated herein. To the extent that the transactions contemplated
herein requires the consent of any person in order to avoid a breach of the
terms of any lease, contract or commitment to which any party hereto is a
party or by which any party hereto is bound, and such consent is not
obtained satisfactorily prior to the Closing, the party with respect to
which the failure to obtain consent applies shall use their best efforts to
assure the other parties hereto of the benefits of such leases, contracts,
commitments and rights. Nothing in this section shall be deemed a waiver
by any party hereto of its or his rights under this Agreement.
Article XII. Indemnification.
12.1 Indemnification by the InPath Members. Subject to all of the
limitations and provisions of this Article XII, the InPath Members agree to
indemnify Bell, on a pro-rata basis proportionate with their membership
interests in InPath, from and against any and all demands, claims, actions,
causes of action, assessments, damages, liabilities, losses, expenses,
fees, judgments and deficiencies of any nature whatsoever (including,
without limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, action or proceeding) incurred or sustained by Bell
which shall arise out of or result from: (i) any breach of any
representation or warranty by Inpath or any Inpath Member hereunder or (ii)
any non-fulfillment of any covenant or obligation of InPath or any Inpath
Member under this Agreement.
12.2 Indemnification by Bell. Subject to all of the limitations and
provisions of this Article 12, Bell agrees to indemnify each InPath Member
from and against any and all demands, claims, actions, causes of action,
assessments, damages, liabilities, losses, expenses, fees, judgments and
deficiencies of any nature whatsoever (including, without limitation,
reasonable attorneys' fees and other costs and expenses incident to any
suit, action or proceeding) incurred or sustained by any InPath Member
which shall arise out of or result from: (i) any breach of any
representation or warranty by Bell hereunder or (ii) any non-fulfillment of
any covenant or obligation of Bell under this Agreement.
12.3 Limitations on Indemnity; Payment. Anything herein to the
contrary notwithstanding, none of the parties hereto shall be obligated to
provide indemnification hereunder unless and until the indemnified party's
indemnifiable damages exceed $25,000, and the maximum amount of
indemnification any party shall be responsible for shall be $925,000. If
Bell is the indemnifying party it shall issue additional Stock to the
Inpath Members in satisfaction of its obligation and if the Inpath Members
are the indemnifying party they shall have the option of paying cash or
Stock to Bell in satisfaction of their obligations. For purposes hereof,
the Stock shall be valued at $.30 per share. There shall be no
indemnification hereunder for (i) any breach of the representation in
Section 5.16 (absent fraud) with respect to liabilities arising from any
underfunding of the Payne Fabrics Pension Plan, or (ii) any Liability for
which additional Stock is issued under Section 1.4 (so as not to compensate
the Inpath Members twice for such Liability). This Article 12 shall be
parties' sole remedy for any dispute arising under this Agreement.
Article XIII. General.
13.1 Entire Agreement. All exhibits and schedules shall be deemed
to be incorporated into and made part of this Agreement. This Agreement,
together with its exhibits and schedules, contains the entire agreement
among the parties and there are no agreements, representations, or
warranties by any of the parties which are not set forth herein. This
Agreement may not be amended or revised except by a writing signed by all
parties.
13.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns;
provided, however, this Agreement and all rights hereunder may not be
assigned by any party except by prior written consent of all parties.
13.3 Survival of Representations and Warranties. The
representations and warranties of the parties set forth in this Agreement
and referred to in Articles III, IV, V and VI above shall survive the
Closing for a period of one (1) year.
13.4 Separate Counterparts. This Agreement may be executed in
several identical counterparts, all of which when taken together shall
constitute but one instrument, and it shall not be necessary in any court
of law to introduce more than one executed counterpart in proving this
Agreement.
13.5 Consistent Accounting. The parties to this Agreement shall
consult with each other for the purpose of arriving at consistent
accounting, tax and reporting treatment, whether public or private, of the
transaction contemplated hereby.
13.6 Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if
personally delivered, delivered by reputable overnight courier, or
telecopied with confirmation, or mailed by registered or certified mail,
return receipt requested, to the party to be notified at the party's
address shown below. Notices which are hand delivered shall be effective
on delivery. Notices which are mailed shall be effective on the third day
after mailing.
(i) If to InPath or the InPath Members:
InPath, LLC
900 North Franklin Street
Suite 210
Chicago, Illinois 60610
Attention: Peter Gombrich
Telecopier: (312) 640-1994
with a copy to:
Holleb & Coff
55 East Monroe Street
Suite 4100
Chicago, Illinois 60603
Attention: Theodore L. Koenig, Esq.
Telecopier: (312) 807-3900
(ii) If to Bell:
Bell National Corporation
3600 Rio Vista Avenue
Suite A
Orlando, Florida 32805
Attention: President
Telecopier:
with a copy to:
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, New York 10036
Attention: Claude A. Baum, Esq.
Telecopier: (212) 704-0196
unless and until notice of another or different address shall be given as
provided herein.
13.7 Severability. The provisions of this Agreement are severable
and the invalidity of any provision shall not affect the validity of any
other provision.
13.8 Captions. The captions have been inserted solely for
convenience of reference and in no way define, limit or describe the scope
or substance of any provision of this Agreement.
13.9 Gender. All pronouns used herein shall include the masculine,
feminine and neuter gender, as the context requires.
13.10 Governing Law. The execution, interpretation, and performance
of this Agreement shall be governed by the laws of the State of Illinois.
[Signature pages follow.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a document under seal as of the date first above written.
BELL NATIONAL CORPORATION
By: /s/ Thomas R. Druggish
Its:
Attest:
INPATH, LLC
By: /s/ Peter P. Gombrich
Its:
Attest:
/s/ Peter P. Gombrich
Peter P. Gombrich, as an individual and
as Trustee of the InPath, LLC Voting Trust
/s/ Theodore L. Koenig
Theodore L. Koenig, as Trustee of each
of The EAG Trust, The CMC Trust, The MDG Trust and The MSD Trust
/s/ William J. Ritger
William J. Ritger
ACCUMED INTERNATIONAL, INC.
By: /s/ Peter F. Lavallee
Its: CEO
Attest: /s/ Caryn J. Sosu
NORTHLEA PARTNERS LTD.
By: /s/ John H. Abeles, M.D.
Its: General Partner
Attest: __________________________
/s/ Fred H. Pearson
Fred H. Pearson, as Trustee of Fred H.
Pearson's Trust
/s/ Walter Herbst
Walter Herbst, as Trustee of the Sandra
Herbst Trust
MONROE INVESTMENTS, INC.
By:/s/ Theodore L. Koenig
Its:
Attest: __________________________
<PAGE>
SCHEDULE 3.4
Number Amount Amount of
of of Bell Warrants % of
Units Stock to to Bell
InPath Member Owned Receive Receive Owned
Peter P. Gombrich 52,616 2,256,590 1,671,005 26.31%
Peter P. Gombrich,
as Trustee of
the Inpath, LLC
Voting Trust 3,240 138,957 102,897 1.62%
Theodore L. Koenig,
as Trustee of
The EAG Trust 6,428 275,683 204,144 3.21%
Theodore L. Koenig,
as Trustee of The CMC Trust 6,428 275,683 204,144 3.21%
Theodore L. Koenig,
as Trustee of
The MDG Trust 6,428 275,683 204,144 3.21%
Theodore L. Koenig,
as Trustee of The MSD Trust 5,500 235,883 174,672 2.75%
William J. Ritger 360 15,440 11,433 0.18%
AccuMed Interna-
tional, Inc. 2,000 85,776 63,517 1.00%
Northlea Partners Ltd. 2,500 107,220 79,396 1.25%
Fred H. Pearson,
as Trustee of
Fred H. Pearson's
Trust 2,500 107,220 79,396 1.25%
Walter Herbst,
as Trustee of
the Sandra Herbst
Trust 8,000 343,103 254,068 4.00%
Monroe Investments,
Inc. 4,000 171,552 127,034 2.00%
TOTAL: 100,000 4,288,790 3,175,850 50.00%
<PAGE>
EXHIBIT 9.2
Stockholders Agreement
[See Exhibit 2 to this Schedule 13D]
<PAGE>
EXHIBIT 10.2(b)
Amendment No. 1 to Employment Agreement
This is Amendment No. 1, dated as of December 4, 1998, to that certain
Employment
Agreement (the "Original Agreement") dated as of May 1, 1998 between
InPath, LLC, a Delaware limited liability company ("InPath"), and Peter P.
Gombrich ("Employee").
Recitals:
Inpath and the members of Inpath are contemporaneously herewith entering into a
Stock and Membership Interest Exchange Agreement with Bell National
Corporation and Alexander M. Milley (the "Exchange Agreement"), and it is a
condition to the closing of the transactions contemplated by such agreement
that the Original Agreement be amended to modify the term of the Employee's
employment, clarify certain circumstances under which the Employee may be
terminated and clarify that the transactions contemplated thereby shall not
constitute a "Change of Control" for purposes of the Original Agreement.
In consideration of the mutual covenants and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:
Covenants
1.Amendments to Original Agreement. The Original Agreement is hereby
amended as follows:
(a)Paragraph 1 of the Original Agreement is hereby amended by deleting
the first two sentences thereof and inserting in their place:
InPath shall
employ Employee for a three (3) year period, commencing May 1, 1998 (the
"Effective Date") and ending April 30, 2001, unless terminated as provided
in Sections 5 or 6. This Agreement shall automatically renew for
additional two (2) year terms unless either party delivers to the other
written notice of non-renewal at least sixty (60) days prior to the end of
the term.
(b) Section 3(b) of the Original Agreement is hereby amended by deleting
the comma after the word "Directors", by adding the words "of Bell National
Corporation" after "Directors, and deleting the words "but with a minimum
annual bonus of not less than 25% of the Employee's base annual salary
applicable in that year".
(c)Section 5(b) of the Original Agreement is hereby amended
by deleting the word "or"
at the end of clause (iii), by deleting the period at the end of clause
(iv) and inserting a semicolon and by inserting the following after clause
(iv):
(v) InPath
materially deviates from its business and financial plan as from time to
time approved by the Board of Directors of Bell National Corporation, and
such deviation directly results in a material and adverse change in or to
the business of InPath.
2.Change in Control. Employee agrees that the
transactions contemplated by the
Exchange Agreement will not constitute a "Change of Control," as defined in
Section 7(d) of the Original Agreement.
3.Reaffirmation of Original Agreement.
Except as otherwise specifically set forth
herein, the Original Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 to the
Original Agreement as of the date first set forth above.
/s/ Peter P. Gombrich
Peter P. Gombrich
InPath, LLC
By: /s/ Peter P. Gombrich
Its: CEO
<PAGE>
EXHIBIT 10.2(c)
Claims Settlement Agreement
[See Exhibit 4 to this Schedule 13D]
<PAGE>
SCHEDULE 3.11
Intellectual Property - InPath
1.Patent and Technology License Agreement dated September 4, 1998,
between AccuMed
International, Inc. and InPath, granting InPath an exclusive license (a) to
make, have made, use, offer to sell, and sell Licensed Products covered by
the Claims of the Patents; (b) to make, have made, use, offer to sell, and
sell Licensed Products covered by the subject matter of the Technology; and
(c) to use and copy the Copyrighted Works.
<PAGE>
SCHEDULE 5.4
Capitalization - Bell
5% Stockholders
(Excluding (i.e., not naming) the InPath Members
but/and after giving effect to the consummation of the
Agreement and Claims Settlement Agreement transactions)
Name No. of Shares
Santa Fe Mortgage Development Company 648,485
Alexander M. Milley 616,4861
Milley Management Incorporated 503,0002
Cadmus Corporation<PAGE>
1,206,7863
1 Excludes: (i) 148,655 shares held by
Winchester National, Inc., (ii) the shares listed herein as being held by
Milley Management Incorporated, and (iii) the shares listed herein as being
held by Cadmus Corporation. Mr. Milley is an officer, director and
stockholder of each of these entities and, accordingly, may be deemed to be
the beneficial owner of securities held by them.
2 Excludes the shares listed herein as held by
Cadmus Corporation. Milley Management Incorporated is a controlling
stockholder of Cadmus Corporation and, accordingly, may be deemed to be the
beneficial owner of securities held by it.
3 Excluded shares issuable upon exercise 450,000
stock appreciate rights in the process of being purchased. Includes
606,786 shares issued pursuant to exercises of stock appreciation rights in
1997 recently purchased or in the process of being purchased.
<PAGE>
SCHEDULE 5.12
Cash On Deposit - Bell
Financial Institutions at which
Cash and Cash Equivalents are Deposited
A. Bell Accounts
Checking: Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
B. PFI National Corporation Accounts
Checking: Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Checking: NationsBank
P.O. Box 45144
Jacksonville, Florida 32231-5144
Money Market: Goldman Sachs Funds
Sears Tower, 60th Floor
233 South Wacker Drive
Chicago, Illinois 60606
Money Market: Morgan Stanley Dean Witter Discover
315 East Robinson Street, #100
Orlando, Florida 32801
Securities: N.B. Zoulas Securities
277 Park Avenue
New York, New York 10172
<PAGE>
SCHEDULE 5.13
Intellectual Property - Bell
None
<PAGE>
SCHEDULE 5.14
Material Contracts - Bell
None
<PAGE>
SCHEDULE 5.16
Employee Benefit Plans - Bell
[Schedule 5-16 not completed at time of filing]
EXHIBIT 2
- ---------
STOCKHOLDERS AGREEMENT
----------------------
This Stockholders Agreement (the "Agreement") is made as of the 4th
day of December, 1998, by and among (1) Bell National Corporation ("Bell");
(2) Alexander M. Milley ("Milley"), Robert C. Shaw ("Shaw"), Cadmus
Corporation, a Massachusetts corporation ("Cadmus"), Milley Management
Incorporated, a Delaware corporation ("MMI") and Winchester National, Inc.,
a Delaware corporation ("WNI"); and (3) Peter P. Gombrich, as an individual
and as Trustee of the InPath, LLC Voting Trust ("Gombrich"); Theodore L.
Koenig, as Trustee of each of The EAG Trust, The CMC Trust, The MDG Trust
and The MSD Trust; William J. Ritger; AccuMed International, Inc., a
Delaware corporation; Northlea Partners Ltd., a Colorado limited
partnership; Fred H. Pearson, as Trustee of Fred H. Pearson's Trust; Walter
Herbst, as Trustee of the Sandra Herbst Trust; and Monroe Investments,
Inc., an Illinois corporation (collectively, the "InPath Members," and,
collectively with Milley, Shaw, Cadmus and MMI, the "Shareholders").
WITNESSETH:
WHEREAS, pursuant to the Stock and Membership Interest Exchange
Agreement dated as of December 4, 1998 among Bell National Corporation,
InPath, LLC, and the InPath Members (the "Exchange Agreement"), the InPath
Members, concurrently with the execution of this Agreement, are acquiring
securities of Bell; and
WHEREAS, pursuant to the Claims Settlement Agreement (the "Claims
Settlement Agreement") dated as of December 4, 1998, among Bell, Milley,
Shaw, Cadmus and MMI, Milley, Shaw, Cadmus and MMI concurrently with the
execution of this Agreement are acquiring securities of Bell;
WHEREAS, the parties desire to enter into this Agreement to govern
certain of their rights, duties and obligations after the consummation of
the transactions contemplated by the Exchange Agreement and the Claims
Settlement Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties, intending to be legally bound, agree as follows:
Article I CORPORATE GOVERNANCE.
Section 1.01. ELECTION OF DIRECTORS. Commencing as soon as
practicable after the date hereof and during the remainder of the term of
this Agreement, each Shareholder shall vote his or its shares of common
stock, no par value, of Bell (collectively with any additional shares
acquired by the Shareholders, the "Stock") in favor of, and take all other
actions necessary to, elect as directors of Bell, two directors designated
by Gombrich, two directors designated by Milley, and an additional
director to be selected by Gombrich and Milley. The directors to be
elected at the first meeting of shareholders to be held after the date
hereof, shall be Peter P. Gombrich, John Abeles, Denis M. O'Donnell,
Alexander M. Milley and an additional director to be selected by Gombrich
and Milley.
<PAGE>
Section 1.02. APPOINTMENT OF OFFICERS. After the date hereof, each
Shareholder shall take all actions necessary to cause Bell's Board of
Directors (the "Board") to appoint the following officers:
Peter P. Gombrich - Chairman, Chief Executive Officer and Secretary
Leonard Prange - President and Chief Financial Officer
Richard Dominick - Vice President and Chief Technology Officer
David M. Doolittle - Vice President and Treasurer
Section 1.03. SHAREHOLDER APPROVAL. When presented for shareholder
approval at a meeting of shareholders or through a solicitation for
consents, the Shareholders shall vote their Stock and take all other
reasonable actions necessary to: (a) approve the merger of Bell with and
into a Delaware corporation to be formed as a wholly-owned subsidiary of
Bell (to be named Ampersand Medical Corporation ("Ampersand"), if
available), with Ampersand as the surviving corporation; (b) authorize
additional shares of Stock in an amount at least sufficient to permit the
issuance of Stock issuable upon the exercise of the warrants issued to
InPath Members issued pursuant to the Exchange Agreement (the "Warrants");
(c) authorize shares of so called "blank check" preferred stock; (d) ratify
the Exchange Agreement and the transactions contemplated thereby; (e)
approve, ratify or take any other action necessary to effectuate the
transactions contemplated in the Exchange Agreement; and (f) approve and
ratify the Claims Settlement Agreement and the transactions contemplated
thereby.
Section 1.04. REMOVAL. Any director designated by a Shareholder or
group of Shareholders as set forth in Section 1.01 may be removed by such
Shareholder or group of Shareholders. Each Shareholder agrees that if, at
any time, it is then entitled to vote for the removal of directors of Bell,
it will not vote any of its Stock in favor of the removal of any director
who shall have been designated or nominated pursuant to Section 1.01 unless
such removal shall be for Cause (as defined below) or the individual,
corporation, limited liability company, partnership, association, trust or
other entity ("Person") entitled to designate or nominate such director
shall have consented to such removal in writing. Removal for "Cause" shall
mean removal of a director because of such director's (a) willful and
continued failure to substantially perform his or her duties as a member of
the Board, (b) willful misconduct which is significantly injurious to Bell,
monetarily or otherwise, or (c) conviction for, or guilty plea to, a felony
or other crime involving moral turpitude. Subject to Section 1.06, nothing
contained in this Section 1.04 shall affect the right of any Shareholder to
designate members of the Board pursuant to Section 1.01.
<PAGE>
Section 1.05. VACANCIES. If, as a result of death, disability,
retirement, resignation, removal (with or without Cause) or otherwise,
there shall exist or occur any vacancy on the Board:
(a) the Person or Persons entitled under Section 1.01 to designate
or nominate such director whose death, disability, retirement, resignation
or removal resulted in such vacancy, may, subject to the provisions of
Sections 1.01 and 1.06, designate another individual (the "Nominee") to
fill such capacity and serve as a director of Bell; and
(b) each Shareholder then entitled to vote for the election of the
Nominee as a director of Bell agrees that it will vote its Stock, or
execute a written consent, as the case may be, in order to ensure that the
Nominee be elected to the Board.
Section 1.06. TERMINATION OF RIGHTS AND OBLIGATIONS. The right to
designate one or more members of the Board pursuant to this Article I shall
terminate as to any Shareholder, at such time as he or it beneficially owns
less than 50% of the number of shares of Stock beneficially owned by such
Shareholder as of the date hereof, such amount to be subject to adjustment,
as appropriate, to take into account any stock split, stock dividend,
reverse stock split or similar event. The obligations imposed on
Shareholders in this Agreement shall not terminate as to any Shareholder
when such Shareholder's right to designate a director is terminated.
Section 1.07. ACTION BY THE BOARD. A quorum of the Board shall
consist of three directors, of which at least one director must be a
director designated by Gombrich and one director must be a director
designated by Milley. In addition to any requirement of Bell's Articles of
Incorporation or Bylaws, all actions of the Board shall require the
affirmative vote of at least a majority of the directors at a duly convened
meeting of the Board at which a quorum (as aforesaid) is present or the
unanimous written consent of the Board; provided that, in the event there
is a vacancy on the Board and an individual has been nominated to fill such
vacancy, the first order of business shall be to fill such vacancy.
Written notice of any meeting of the board of directors will be sent to
each director not less than 15 days prior to such meeting, specifying the
date, time and location of such meeting.
Section 1.08. ARTICLES OF INCORPORATION AND BYLAWS. Each
Shareholder shall vote its Stock, and shall take all other actions
necessary, to ensure, in a manner recommended or requested by the Board,
that Bell's Articles of Incorporation and Bylaws facilitate and do not at
any time conflict with any provision of this Agreement.
<PAGE>
Article II DRAG-ALONG RIGHTS.
Section 2.01. RIGHT TO COMPEL PARTICIPATION IN CERTAIN TRANSFERS.
(a) If a Shareholder or group of Shareholders beneficially owning
more than 50% of the outstanding Stock (the "Majority Shareholders") should
transfer Stock that constitutes more than 50% of the outstanding Stock (a
"Drag-along Sale"), such Majority Shareholders may, at its option, require
all but not less than all of the other Shareholders to participate in such
transfer at the same Drag-along Sale Price (as defined below), and
otherwise on substantially the same terms and conditions, as the Majority
Shareholders. Not later than 15 days prior to the proposed date of the
Drag-along Sale, the Majority Shareholders shall provide written notice of
the Drag-along Sale to the other Shareholders ("Drag-along Notice"), which
shall have attached a copy of the agreement pursuant to which such
Drag-along Stock (as defined below) is proposed to be transferred (the
"Drag-along Agreement"). The Drag-along Notice shall identify the
transferee, the number of shares of Stock subject to the Drag-along Sale,
the consideration per share of Stock for which a transfer is proposed to be
made (the "Drag-along Sale Price") and all other material terms and
conditions of the Drag-along Sale. Each other Shareholder shall be
required to participate in the Drag-along Sale on the terms and conditions
set forth in the Drag-along Notice and to tender shares of Stock (the
"Drag-along Stock") owned by such other Shareholder at the time the
Drag-along Notice is delivered. Within 10 days following receipt of the
Drag-along Notice (the "Drag-along Notice Period"), each other Shareholder
shall deliver in escrow to a representative of the Majority Shareholders
designated in the Drag-along Notice certificates representing all
Drag-along Stock held by such other Shareholder, duly endorsed, together
with all other documents required to be executed in connection with such
Drag-along Sale or, if such delivery is not permitted by applicable law, an
unconditional agreement to deliver such Stock pursuant to this Section
2.01(a) at the closing of such Drag-along Sale against delivery to such
other Shareholder of the consideration therefor. In the event that any
other Shareholder should fail to deliver such certificates to the Majority
Shareholders, Bell shall cause the books and records of Bell to show that
the holders of such Stock are bound by the provisions of this Section
2.01(a) and that such Stock shall be transferred to the buyer immediately
upon surrender for transfer by such other Shareholder.
(b) If, within 120 days after the Majority Shareholders give the
Drag-along Notice, the transfer of all Stock subject to the Drag-along Sale
is not completed, the Majority Shareholders shall return to each other
Shareholder all certificates representing Stock that such other Shareholder
delivered for transfer pursuant hereto, together with any documents in the
possession of the Majority Shareholders executed by such other Shareholder
in connection with such proposed transfer, and all restrictions on transfer
contained in this Agreement or otherwise applicable at such time with
respect to Stock owned by the other Shareholders shall again be in effect.
<PAGE>
(c) Promptly after the consummation of the transfer of Stock of the
Majority Shareholders and the other Shareholders pursuant to this Section
2.01, the Majority Shareholders shall give notice thereof to the other
Shareholders, shall remit to each of the other Shareholders who have
surrendered their certificates the total consideration for the Stock of
such other Shareholders transferred pursuant thereto and shall furnish such
other evidence of the completion and time of completion of such transfer
and the terms thereof as may be reasonably requested by such other
Shareholders. The consideration per Share to be paid to the Majority
Shareholders and the other Shareholders shall be the relevant Drag-along
Sale Price.
Article III REGISTRATION RIGHTS.
Section 3.01. DEMAND REGISTRATION.
(a) The Majority Shareholders may make a written request and, after
Bell is eligible to use form S-3 for sales by selling Shareholders of
Stock, or any successor form, the other Shareholders may make a written
request (any such requesting Shareholder, a "Registering Shareholder") that
Bell effect the registration under the Securities Act of 1933, as amended
(the "Securities Act"), of all or a portion of such Registering
Shareholder's Registrable Stock (as defined below), which request shall
specify the intended method of disposition thereof. Bell will promptly
give written notice of such requested registration (a "Demand
Registration") at least 30 days prior to the anticipated filing date of the
registration statement relating to such Demand Registration to the other
Shareholders and thereupon will use its best efforts to effect, as
expeditiously as possible, the registration under the Securities Act of:
(i) the Registrable Stock which Bell has been so requested to
register by the Registering Shareholders, then held by the Registering
Shareholders; and
(ii) subject to Section 3.02, all other Registrable Stock
which any other Shareholder entitled to request Bell to effect an
Incidental Registration (as such term is defined in Section 3.02) pursuant
to Section 3.02 (all such Shareholders, together with the Registering
Shareholders, the "Holders") has requested Bell to register by written
request received by Bell within 15 days after the receipt by such Holders
of such written notice given by Bell, all to the extent necessary to permit
the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Stock so to be registered; PROVIDED that,
subject to Section 3.01(c) hereof, Bell shall not be obligated (A) to
effect more than two Demand Registrations pursuant to this Section 3.01,
other than any such Demand Registrations effected on Form S-3, with respect
to which there shall be no limitation; (B) to effect a Demand Registration
unless the fair market value of the aggregate proceeds expected to be
received from the sale of the Registrable Stock requested to be included in
such Demand Registration, in the reasonable opinion of the Requesting
Shareholders, equals at least $5,000,000 or (C) to effect more than one
Demand Registration within any twelve month period.
<PAGE>
Promptly after the expiration of the 15-day period referred to in
Section 3.01(a)(ii), Bell will notify all the Holders to be included in the
Demand Registration of the other Holders and the number of shares of
Registrable Stock requested to be included therein. The Registering
Shareholders requesting a registration under this Section 3.01(a) may, at
any time prior to the effective date of the registration statement relating
to such registration, revoke such request, without liability to any of the
other Holders, by providing a written notice to Bell revoking such request,
in which case such request, so revoked, shall be considered a Demand
Registration unless such revocation arose out of the fault of Bell in which
case such request shall not be considered a Demand Registration.
Notwithstanding anything contained in this Agreement to the contrary,
nothing herein shall be construed as requiring Bell to register any of its
securities other than Stock. "Registrable Stock" means any shares of Stock
until (i) a registration statement covering such shares of Stock has been
declared effective by the Securities and Exchange Commission (the "SEC")
and such shares have been disposed of pursuant to such effective
registration statement, (ii) such shares are sold under circumstances in
which all of the applicable conditions of Rule 144 (or any successor
provisions) under the Securities Act are met or such shares may be sold by
the holder thereof pursuant to Rule 144(k) or (iii) such shares are
otherwise transferred and may be resold without subsequent registration
under the Securities Act.
(b) Bell shall pay all registration expenses in connection with any
Demand Registration, including but not limited to (i) all registration and
filing fees, (ii) fees and expenses of compliance with federal or state
securities laws (including reasonable fees and disbursements of counsel),
(iii) printing expenses, (iv) internal expenses of Bell, (v) reasonable
fees and disbursements of counsel for Bell and customary fees and expenses
for independent certified public accountants retained by Bell (including
expenses or costs associated with the delivery by independent certified
public accountants of a comfort letter or comfort letters requested
pursuant to Section 3.04(h)), (vi) the reasonable fees and expenses of any
special experts retained by Bell in connection with such registration,
(vii) reasonable fees and expenses of one counsel for the Shareholders
participating in the offering, selected by the Majority Shareholders,
(viii) fees and expenses in connection with any review of underwriting
arrangements by the National Association of Securities Dealers (the "NASD")
including fees and expenses of any "qualified independent underwriter" and
(ix) fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but shall not include any underwriting fees,
discounts or commissions attributable to the sale of Registrable Stock, or
any out-of-pocket expenses (except as set forth in clause (vii) above) of
the Shareholders or any fees and expenses of underwriter's counsel. Bell
shall not be obligated to pay or bear the expense of any stock transfer
taxes imposed in respect to the transfer of any Registrable Stock to any
purchaser thereof by any holder of Registrable Stock in connection with any
registration of Registrable Stock pursuant to this Article III.
<PAGE>
(c) A registration requested pursuant to this Section 3.01 shall
not be deemed to have been effected unless the registration statement
relating thereto (i) has become effective under the Securities Act and (ii)
has remained effective for a period of at least 90 days (or such shorter
period in which all Registrable Stock of the Holders included in such
registration has actually been sold thereunder); PROVIDED that if after any
registration statement requested pursuant to this Section 3.01 becomes
effective (A) such registration statement is interfered with by any stop
order, injunction or other order or requirement of the SEC or other
governmental agency or court and (B) less than 75% of the Registrable Stock
included in such registration statement has been sold thereunder, such
registration statement shall be at the sole expense of Bell and shall not
be considered a Demand Registration, unless any such interference referred
to in clause (A) of this proviso arose out of the fault of the Registering
Shareholders, in which case such registration statement shall be considered
a Demand Registration.
(d) If a Demand Registration involves a public offering of
Registrable Stock underwritten pursuant to a firm commitment and pursuant
to an effective registration statement under the Securities Act (an
"Underwritten Public Offering") and the managing underwriter shall advise
Bell and the Registering Shareholders that, in its view, (i) the number of
shares of Stock requested to be included in such registration, or (ii) the
inclusion of some or all of the Stock owned by the Holders exceeds the
largest number of shares of Stock which can be sold without having an
adverse effect on such offering, including the price at which such Stock
can be sold (the "Maximum Offering Size"), Bell will include in such
registration, in the priority listed below, up to the Maximum Offering
Size:
(A) first, all Registrable Stock requested to be registered
by any Registering Shareholders pursuant to 3.01(a) hereof (allocated, if
necessary for the offering not to exceed the Maximum Offering Size, pro
rata among such Registering Shareholders on the basis of the relative
number of shares of Registrable Stock so requested to be included in such
registration);
<PAGE>
(B) second, all Registrable Stock requested to be included in
such registration by any other Holder pursuant to Section 3.02 (allocated,
if necessary for the offering not to exceed the Maximum Offering Size, pro
rata among such other Holders on the basis of the relative number of shares
of Registrable Stock so requested to be included in such registration); and
(C) third, any other Stock proposed to be registered by Bell.
Section 3.02. INCIDENTAL REGISTRATION.
(a) If Bell proposes to register any of its Stock under the
Securities Act other than a registration (i) on Form S-8 or S-4 or any
successor or similar forms, (ii) relating to Stock issuable upon exercise
of employee stock options or in connection with any employee benefit or
similar plan of Bell, or (iii) in connection with a direct or indirect
merger, acquisition or other similar transaction) whether or not for sale
for its own account, it will each such time, subject to the provisions of
Section 3.02(b), give prompt written notice at least 30 days prior to the
anticipated filing date of the registration statement relating to such
registration to each Shareholder, which notice shall set forth such
Shareholders' rights under this Section 3.02 and shall offer all
Shareholders the opportunity to include in such registration statement such
number of shares of Registrable Stock as each such Shareholder may request
(an "Incidental Registration"). Upon the written request of any such
Shareholder made within 15 days after the receipt of notice from Bell
(which request shall specify the number of shares of Registrable Stock
intended to be disposed of by such Shareholder), Bell will use its best
efforts to effect the registration under the Securities Act of all
Registrable Stock which Bell has been so requested to register by such
Shareholders, to the extent requisite to permit the disposition of the
Registrable Stock so to be registered; provided that (i) if such
registration involves an Underwritten Public Offering, all such
Shareholders requesting to be included in Bell's registration must sell
their Registrable Stock to the underwriters selected as provided in Section
3.04(f) on the same terms and conditions as apply to Bell and the
Registering Shareholders and (ii) if, at any time after giving written
notice of its intention to register any Stock pursuant to this Section
3.02(a) and prior to the effective date of the registration statement filed
in connection with such registration, Bell shall determine for any reason
not to register such Stock, Bell shall give written notice to all such
Shareholders and, thereupon, shall be relieved of its obligation to
register any Registrable Stock in connection with such registration. No
registration effected under this Section 3.02 shall relieve Bell of its
obligations to effect a Demand Registration to the extent required by
Section 3.01 hereof. Bell will pay all Registration Expenses in connection
with each registration of Registrable Stock requested pursuant to this
Section 3.02.
<PAGE>
(b) If a registration pursuant to this Section 3.02 involves an
Underwritten Public Offering (other than in the case of an Underwritten
Public Offering requested by any Shareholder in a Demand Registration, in
which case the provisions with respect to priority of inclusion in such
offering set forth in Section 3.01 (d) shall apply) and the managing
underwriter advises Bell that, in its view, the number of shares of Stock
which Bell and the Registering Shareholders intend to include in such
registration exceeds the Maximum Offering Size, Bell will include in such
registration, in the following priority, up to the Maximum Offering Size:
(i) first, so much of the other stock proposed to be
registered by Bell as would not cause the offering to exceed the Maximum
Offering Size; and
(ii) second, all Registrable Stock requested to be included in
such registration by any Shareholder pursuant to Section 3.02 (allocated,
if necessary for the offering not to exceed the Maximum Offering Size, pro
rata among such Shareholders on the basis of the relative number of shares
of Registrable Stock so requested to be included in such registration).
Section 3.03. HOLDBACK AGREEMENTS. If any registration of
Registrable Stock shall be in connection with an Underwritten Public
Offering, each Shareholder agrees not to effect any public sale or
distribution, including any sale pursuant to Rule 144, of any Registrable
Stock, and not to effect any such public sale or distribution of any other
equity security of Bell or of any stock convertible into or exchangeable or
exercisable for any equity securities of Bell (in each case, other than as
part of such Underwritten Public Offering) during the 14 days prior to the
effective date of such registration statement (except as part of such
registration) or during the period after such effective date that such
managing underwriter and Bell shall agree (but not to exceed 180 days).
Any waiver of any restrictions on sales or distributions referred to in
this Section 3.03 shall be effective as to each Shareholder regardless of
whether the waiver was in fact requested by, or granted to, only certain
Shareholders.
Section 3.04. REGISTRATION PROCEDURES. Whenever Shareholders
request that any Registrable Stock be registered pursuant to Section 3.01
or 3.02 hereof, Bell will, subject to the provisions of such Sections, use
its best efforts to effect the registration and the sale of such
Registrable Stock in accordance with the intended method of disposition
thereof as quickly as practicable, and in connection with any such request:
<PAGE>
(a) Bell will as expeditiously as possible prepare and file with
the SEC a registration statement on any form for which Bell then qualifies
or which counsel for Bell shall deem appropriate and which form shall be
available for the sale of the Registrable Stock to be registered thereunder
in accordance with the intended method of distribution thereof, and use its
best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 90 days (or such shorter
period in which all of the Registrable Stock of the Holders included in
such registration statement shall have actually been sold thereunder).
(b) Bell will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
each Shareholder and each underwriter, if any, of the Registrable Stock
covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter Bell will furnish to such
Shareholder and underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such Shareholder
or underwriter may reasonably request in order to facilitate the
disposition of the Registrable Stock owned by such Shareholder.
(c) After the filing of the registration statement, Bell will
promptly notify each Shareholder holding Registrable Stock covered by such
registration statement of any stop order issued or threatened by the SEC
and take all reasonable actions required to prevent the entry of such stop
order or to remove it if entered.
(d) Bell will use its best efforts to (i) register or qualify the
Registrable Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions in the United States as
any Shareholder holding such Registrable Stock reasonably (in light of such
Shareholder's intended plan of distribution) requests and (ii) cause such
Registrable Stock to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of Bell and do any and all other acts and things
that may be reasonably necessary or advisable to enable such Shareholder to
consummate the disposition of the Registrable Stock owned by such
Shareholder; PROVIDED that Bell will not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this paragraph (d), (B) subject itself to
taxation in any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
<PAGE>
(e) Bell will immediately notify each Shareholder holding such
Registrable Stock covered by such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of an event requiring the preparation of
a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Stock, such prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly prepare and make available
to each such Shareholder and file with the SEC any such supplement or
amendment.
(f) Bell will select, in its sole discretion, the underwriter or
underwriters in connection with any Underwritten Public Offering; PROVIDED
that Majority Shareholders will have the right, in its sole discretion, to
select the underwriter or underwriters in connection with any underwritten
Demand Registration initiated by the Majority Shareholders pursuant to
Section 3.01. Bell will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as
are reasonably required in order to expedite or facilitate the disposition
of such Registrable Stock, including the engagement of a "qualified
independent underwriter" in connection with the qualification of the
underwriting arrangements with the NASD.
(g) Bell will make available for inspection by any Shareholder and
any underwriter participating in any disposition pursuant to a registration
statement being filed by Bell pursuant to this Section 3.04 and any
attorney, accountant or other professional retained by any such Shareholder
or underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of Bell
(collectively, the "Records") as shall be reasonably requested by any such
Person, and cause Bell's officers, directors and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement.
(h) Bell will furnish to each such Shareholder and to each such
underwriter, if any, a signed counterpart, addressed to such underwriter,
of (i) an opinion or opinions of counsel to Bell and (ii) a comfort letter
or comfort letters from Bell's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as a majority of such
Shareholders or the managing underwriter therefor reasonably requests.
(i) Bell will otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
<PAGE>
Bell may require each such Shareholder to promptly furnish in writing
to Bell such information regarding the distribution of the Registrable
Stock as Bell may from time to time reasonably request and such other
information as may be legally required in connection with such
registration.
Each such Shareholder agrees that, upon receipt of any notice from
Bell of the happening of any event of the kind described in Section
3.04(e), such Shareholder will forthwith discontinue disposition of
Registrable Stock pursuant to the registration statement covering such
Registrable Stock until such Shareholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.04(e), and, if
so directed by Bell, such Shareholder will deliver to Bell all copies,
other than any permanent file copies then in such Shareholder's possession,
of the most recent prospectus covering such Registrable Stock at the time
of receipt of such notice. In the event that Bell shall give such notice,
Bell shall extend the period during which such registration statement shall
be maintained effective (including the period referred to in Section
3.04(a)) by the number of days during the period from and including the
date of the giving of notice pursuant to Section 3.04(e) to the date when
Bell shall make available to such Shareholder a prospectus supplemented or
amended to conform with the requirements of Section 3.04(e).
Section 3.05. INDEMNIFICATION BY BELL. Bell agrees to indemnify and
hold harmless each Shareholder holding Registrable Stock covered by a
registration statement, its officers, directors and agents, and each
Person, if any, who controls such Shareholder within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all losses,
claims, damages and liabilities caused by any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
or prospectus relating to the Registrable Stock (as amended or supplemented
if Bell shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission so made in strict
conformity with information furnished in writing to Bell by such
Shareholder or on such Shareholder's behalf expressly for use therein;
PROVIDED that with respect to any untrue statement or omission or alleged
untrue statement or omission made in any preliminary prospectus, or in any
prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the
prospectus as amended or supplemented was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at or prior to
the written confirmation of the sale of the Registrable Stock concerned to
such Person if it is determined that Bell has provided such prospectus (or
such amended or supplemented prospectus, as the case may be) and it was the
responsibility of such Shareholder to provide such Person with a current
copy of the prospectus (or such amended or supplemented prospectus, as the
<PAGE>
case may be) and such current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. Bell also
agrees to indemnify any underwriters of the Registrable Stock, their
officers and directors and each Person who controls such underwriters on
substantially the same basis as that of the indemnification of the
Shareholders provided in this Section 3.05.
Section 3.06. INDEMNIFICATION BY PARTICIPATING SHAREHOLDERS.
(a) Subject to Section 3.06(b), each Shareholder holding
Registrable Stock included in any registration statement agrees, severally
but not jointly, to indemnify and hold harmless Bell, its officers,
directors and agents and each Person, if any, who controls Bell within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from Bell to
such Shareholder, but only (i) with respect to information furnished in
writing by such Shareholder or on such Shareholder's behalf expressly for
use in any registration statement or prospectus relating to the Registrable
Stock, or any amendment or supplement thereto, or any preliminary
prospectus or (ii) to the extent that any loss, claim, damage, liability or
expense described in Section 3.05 results from the fact that a current copy
of the prospectus as amended or supplemented was not sent or given to the
Person asserting any such loss, claim, damage, liability or expense at or
prior to the written confirmation of the sale of the Registrable Stock
concerned to such Person if it is determined that it was the responsibility
of such Shareholder to provide such Person with a current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be)
and such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to
such loss, claim, damage, liability or expense. Subject to Section
3.06(b), each such Shareholder also agrees to indemnify and hold harmless
underwriters of the Registrable Stock, their officers and directors and
each Person who controls such underwriters on substantially the same basis
as that of the indemnification of Bell provided in this Section 3.06. As a
condition to including Registrable Stock in any registration statement
filed in accordance with Article III hereof, Bell may require that it shall
have received an undertaking reasonably satisfactory to it from any
underwriter to indemnify and hold it harmless to the extent customarily
provided by underwriters with respect to similar securities.
<PAGE>
(b) Notwithstanding the foregoing, no Shareholder shall be liable
under Section 3.06(a) for any damage thereunder in excess of the net
proceeds realized by such Shareholder in the sale of the Registrable Stock
of such Shareholder.
Section 3.07. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant
to this Article III, such Person (an "Indemnified Party") shall promptly
notify the Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party, and shall assume the payment of all
fees and expenses; PROVIDED that the failure of any Indemnified Party so to
notify the Indemnifying Party shall not relieve the Indemnifying Party of
its obligations hereunder except to the extent that the Indemnifying Party
is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) in the reasonable judgment of such Indemnified Party
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for
the Indemnified Parties, such firm shall be designated in writing by the
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any and all losses, claims, damages,
liabilities and expenses (to the extent stated above) by reason of such
settlement or judgment. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Party
is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising
out of such proceeding without any admission of liability on the part of
any Indemnified Party or any requirement for any action or forbearance on
its part.
<PAGE>
Section 3.08. CONTRIBUTION. If the indemnification provided for in
this Article III is held by a court of competent jurisdiction to be
unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party as a result of such
losses, claims, damages or liabilities (i) as between Bell and the
Shareholders holding Registrable Stock covered by a registration statement
on the one hand and the underwriters on the other, in such proportion as is
appropriate to reflect both the relative benefits received by Bell and such
Shareholders on the one hand and the underwriters on the other, from the
offering of the Registrable Stock, and the relative fault of Bell and such
Shareholders on the one hand and of such underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between Bell on the one hand and each such
Shareholder on the other, in such proportion as is appropriate to reflect
the relative fault of Bell and of each such Shareholder in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by Bell and such
Shareholders on the one hand and such underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting
expenses) received by Bell and such Shareholders bear to the total
underwriting discounts and commissions received by such underwriters, in
each case as set forth in the table on the cover page of the prospectus.
The relative fault of Bell and such Shareholders on the one hand and of
such underwriters on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by Bell and such Shareholders or by such
underwriters. The relative fault of Bell on the one hand and of each such
Shareholder on the other (or of Bell and the Shareholders holding
Registrable Stock covered by a registration statement, on the one hand, and
the underwriters, on the other) shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
Bell and the Shareholders agree that it would not be just and
equitable if contribution pursuant to this Section 3.08 were determined by
pro rata allocation (even if the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
<PAGE>
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as
a result of the losses, claims, damages or liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 3.08, no underwriter shall be required to contribute any amount in
excess of the amount by which the underwriting discount applicable to the
Registrable Stock purchased by such underwriter in such offering exceeds
the amount of any damages which such underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no Shareholder shall be required to
contribute any amount in excess of the amount by which the net proceeds
realized on the sale of the Registrable Stock of such Shareholder exceeds
the amount of any damages which such Shareholder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. Each Shareholder's obligation to
contribute pursuant to this Section 3.08 is several in the proportion that
the proceeds of the offering received by such Shareholder bears to the
total proceeds of the offering received by all such Shareholders and not
joint.
Section 3.09. PARTICIPATION IN PUBLIC OFFERING. No Person may
participate in any Underwritten Public Offering hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, and (b) completes and executes all
questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements and the provisions of this
Agreement in respect of registration rights.
Section 3.10. OTHER REGISTRATION RIGHTS. The registration rights
provided in this Article III supersede any prior registration rights
granted to any Shareholder, which are hereby canceled.
Article IV MISCELLANEOUS.
Section 4.01 NO INCONSISTENT AGREEMENTS. Except for the
Registration Rights Agreement dated ___________ , 1989, by and among Bell,
Milley, Shaw, Roger L. Keech, Alan D. Gordon, Kim G. Davis, Kevin P. Lynch,
Brian E. Kinsman, The Airlie Group, Winchester National Inc. and Liberty
<PAGE>
Associates Limited Partnership, neither Bell nor any Shareholder is
presently a party to or will hereafter enter into any agreement with
respect to any Stock which is inconsistent with the rights granted to any
Shareholder by this Agreement or any other agreements relating to the Stock
to which the Shareholders are parties or which otherwise conflicts with the
provisions hereof or thereof.
Section 4.02. ENTIRE AGREEMENT. This Agreement, the Exchange
Agreement, the Claims Settlement Agreement and the other documents
contemplated thereby constitute the entire agreement between the parties
with respect to the subject matter of this Agreement, the Exchange
Agreement, the Claims Settlement Agreement and the other documents
contemplated thereby and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to
the subject matter of this Agreement, the Exchange Agreement, the Claims
Settlement Agreement and the other documents contemplated thereby.
Section 4.03. BINDING EFFECT; BENEFIT. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, legal representatives and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer on
any Person other than the parties hereto, and their respective heirs,
successors, legal representatives and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Section 4.04. ASSIGNABILITY. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall
be assignable by Bell or any Shareholder. No purchaser or transferee of
Stock will be bound by or entitled to the benefits hereof unless this
Agreement is amended in accordance with Section 4.05. Any Shareholder who
ceases to beneficially own any Stock shall cease to be bound by the terms
hereof (other than Sections 3.06, 3.07, and 3.08).
Section 4.05. AMENDMENT; WAIVER; TERMINATION.
(a) No provision of this Agreement may be waived except by an
instrument in writing executed by the party against whom the waiver is to
be effective. No provision of this Agreement may be amended or otherwise
modified except by an instrument in writing executed by Bell with the
approval of the Board and Shareholders holding at least 85% of the Stock.
(b) This Agreement shall remain in effect for a period of ten years
from the date hereof.
Section 4.06. NOTICES. All notices and other communications given
or made pursuant hereto or pursuant to any other agreement among the
parties, unless otherwise specified, shall be in writing and shall be
deemed to have been duly given or made if sent by fax (with confirmation in
<PAGE>
writing), delivered personally or sent by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the fax
number or address set forth below or at such other addresses as shall be
furnished by the parties by like notice, and such notice or communication
shall be deemed to have been given or made upon receipt:
(i) If to the InPath Members:
InPath, LLC
900 North Franklin Street
Suite 210
Chicago, Illinois 60610
Attention: Peter Gombrich
Telecopier: (312) 640-1994
with a copy to:
Holleb & Coff
55 East Monroe Street
Suite 4100
Chicago, Illinois 60603
Attention: Theodore L. Koenig, Esq.
Telecopier: (312) 807-3900
(ii) If to Bell, Milley, Shaw, Cadmus, MMI or WNI:
Bell National Corporation
3600 Rio Vista Avenue
Suite A
Orlando, Florida 32805
Attention: President
Telecopier: (407) 849-0625
with a copy to:
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, New York 10036
Attention: Claude A. Baum, Esq.
Telecopier: (212) 704-0196
Section 4.07. HEADINGS. The headings contained in this Agreement
are for convenience only and shall not affect the meaning or interpretation
of this Agreement.
Section 4.08. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
<PAGE>
Section 4.09. APPLICABLE LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Illinois,
without regard to the conflicts of law rules of such state.
Section 4.10. SPECIFIC ENFORCEMENT. Each party hereto acknowledges
that the remedies at law of the other parties for a breach or threatened
breach of this Agreement would be inadequate and, in recognition of this
fact, any party to this Agreement, without posting any bond, and in
addition to all other remedies which may be available, shall be entitled to
obtain equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
Section 4.11. CONSENT TO JURISDICTION. Any suit, action or
proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought in the United States District Court for
the Northern District of Illinois or any other Illinois State court sitting
in Cook County, and each of the parties hereby consents to the
non-exclusive jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably
waives, to the fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient
form. Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the jurisdiction of
any such court.
[Remainder of this page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
BELL NATIONAL CORPORATION
By: _____________________________
Its: _______________________
Attest:__________________________
_________________________________
Alexander M. Milley
_________________________________
Robert C. Shaw
CADMUS CORPORATION
By: _____________________________
Its: _______________________
Attest:__________________________
MILLEY MANAGEMENT INCORPORATED
By: _____________________________
Its: _______________________
Attest:__________________________
<PAGE>
WINCHESTER NATIONAL, INC.
By: _____________________________
Its: _______________________
Attest:__________________________
_________________________________
Peter P. Gombrich, individually and as
Trustee of the Inpath, LLC Voting Trust
_________________________________
Theodore L. Koenig, Trustee of each of
The EAG Trust, The CMC Trust, The MDG Trust and The MSD Trust
_________________________________
William J. Ritger
ACCUMED INTERNATIONAL, INC.
By: _____________________________
Its: _______________________
Attest:__________________________
NORTHLEA PARTNERS LTD.
By: _____________________________
Its: _______________________
Attest:__________________________
<PAGE>
_________________________________
Fred H. Pearson, Trustee of Fred H.
Pearson's Trust
________________________________
Walter Herbst, Trustee of the Sandra
Herbst Trust
MONROE INVESTMENTS, INC.
By: _____________________________
Its: _______________________
Attest:__________________________
EXHIBIT 3
- ---------
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN TAKEN BY THE ISSUEE
FOR INVESTMENT PURPOSES. SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED
(A) UNLESS THEY HAVE BEEN REGISTERED UNDER SAID ACT, OR (B) UNLESS SUCH
REGISTRATION IS EXPRESSLY WAIVED BY THE COMPANY, OR THE TRANSFER AGENT (OR
THE COMPANY, IF THEN ACTING AS ITS TRANSFER AGENT) IS PRESENTED WITH A
WRITTEN OPINION SATISFACTORY TO COUNSEL FOR THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE CIRCUMSTANCES OF SUCH SALE OR
TRANSFER.
BELL NATIONAL CORPORATION
COMMON STOCK PURCHASE WARRANT
-----------------------------
December 4, 1998 Certificate No. W-___
Bell National Corporation, a California corporation (the "Company")
hereby certifies that, for value received, ____________ (the "Holder") or
his or its successors or assigns, is entitled, subject to the terms set
forth below, to purchase from the Company
_______________________________________________ (______) fully paid and
non-assessable shares of Common Stock (as defined in Section 11 hereof),
such amount representing, when added to the Common Stock received, and
Common Stock issuable upon the exercise of the other warrants received, by
the InPath Members under the Stock and Membership Interest Exchange
Agreement among the Company, InPath, LLC, and the InPath Members, dated as
of December 4, 1998 (the "Exchange Agreement"), fifty percent (50%) of the
issued and outstanding shares of Common Stock of the Company computed on a
fully diluted basis, excluding 696,570 shares designated as "4-B Shares" by
the Debtors Plan of Reorganization of December 30, 1986, filed in the
United States District Court for the Northern District of California in
case No. 3-85-01696-LK (such amount hereinafter referred to as "50% on a
fully diluted basis"), at a price of $.001 per share of Common Stock (the
"EXERCISE PRICE"). The number and character of such shares of Common Stock
and the Exercise Price are subject to adjustment as provided herein. For
purposes of determining the number of shares of Common Stock issuable to
the Holder, (a) all computations hereunder shall be made on a fully diluted
basis after giving effect to the exercise of all outstanding warrants,
options, rights, agreements, or other commitments or obligations of any
kind of the Company to issue shares of Common Stock that exist, whether or
not then exercisable, as of the date of exercise of this Warrant, and (b)
there shall be excluded from the number of shares deemed outstanding for
<PAGE>
the purposes of any fully diluted basis computations any Common Stock or
warrants, options, rights, agreements or other commitments or obligations
to issue Common Stock issued after the date hereof which are unanimously
approved by the Board of Directors of the Company and the Chief Executive
Officer of InPath.
This Warrant is subject to the following provisions:
1. DEFINITIONS.
Terms defined in the Exchange Agreement and not otherwise defined
herein are used herein with the meanings so defined. Certain terms are
used in this Warrant as specifically defined in Section 11 hereof.
2. EXERCISE OF WARRANT.
2.1 REDEMPTION PERIOD. The Company shall redeem the purchase rights
represented by this Warrant by delivering the above stated amount of Common
Stock on the earlier of (i) the date of the meeting of stockholders of the
Company contemplated by Section 7.4 (b) of the Exchange Agreement and (ii)
March 30, 1999, or such later date to which the Chief Executive Officer of
InPath may agree for the holding of such meeting (the "REDEMPTION PERIOD").
2.2 EXERCISE PERIOD. The Holder may exercise, in whole or in part,
the purchase rights represented by this Warrant at any time and from time
to time after the earlier of (i) the date of the meeting of stockholders of
the Company contemplated by Section 7.4 (b) of the Exchange Agreement, and
(ii) March 30, 1999, or such later date to which the Chief Executive
Officer of InPath may agree for the holding of such meeting (the "EXERCISE
PERIOD").
2.3 EXERCISE PROCEDURE.
(i) This Warrant shall be deemed to have been redeemed or exercised
when the Company has requested, in the case of redemption, and received, in
the case of redemption or exercise, all of the following items (the
"EXERCISE TIME"):
(a) a completed Exercise Agreement, in the form of Exhibit A,
attached, executed by the Holder;
(b) this Warrant; and
(c) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common
Stock being purchased upon such redemption or exercise (the "AGGREGATE
EXERCISE PRICE").
(ii) Certificates for shares of Common Stock purchased upon
redemption or exercise of this Warrant shall be delivered by the Company to
<PAGE>
the Holder within ten (10) business days after the date of the Exercise
Time. Unless this Warrant has expired or all of the purchase rights
represented hereby have been redeemed or exercised, the Company shall
prepare a new Warrant, substantially identical hereto, representing the
rights formerly represented by this Warrant which have not expired or been
redeemed or exercised and shall, within such ten-day period, deliver such
new Warrant to the person designated for delivery in the Exercise
Agreement.
(iii) The shares of Common Stock issuable upon the redemption or
exercise of this Warrant shall be deemed to have been issued to the Holder
at the Exercise Time, and the Holder shall be deemed for all purposes to
have become the record holder of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for Common Stock upon redemption
or exercise of this Warrant shall be made without charge to the Holder or
the Holder for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such redemption or exercise and the
related issuance of Common Stock. Each share of Common Stock issuable upon
redemption or exercise of this Warrant shall, upon payment of the Exercise
Price therefor, be fully paid and nonassessable and free from all liens and
charges with respect to the issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any shares of Common Stock issued or issuable upon the
redemption or exercise of this Warrant in any manner which interferes with
the timely redemption or exercise of this Warrant.
(vi) The Company shall assist and cooperate with any Holder or
Holder required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any redemption or exercise of this
Warrant (including, without limitation, making any filings required to be
made by the Company).
(vii) All Common Stock issued upon the redemption or exercise of
this Warrant shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Company
shall take all such actions as may be necessary to assure that all such
Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities
exchange upon which the Common Stock may be listed (except for official
notice of issuance which shall be immediately delivered by the Company upon
each such issuance). The Company shall not take any action which would
cause the number of authorized but unissued Common Stock to be less than
the number of such shares of Common Stock required to be reserved hereunder
<PAGE>
for issuance upon redemption or exercise of the Warrants. The Holder
hereof acknowledges that as of the date hereof, the Company does not have
sufficient unissued authorized shares of Common Stock to redeem or honor an
exercise of this Warrant.
2.4 COMMON STOCK RECEIVABLE UPON EXERCISE. The shares of Common
Stock receivable upon exercise of this Warrant shall be shares of the
Company's voting Common Stock, no par value.
2.5 TERMINATION OF THE WARRANT. Unless previously exercised or
redeemed, this Warrant shall terminate on December 31, 2008.
2.6 WARRANT TRUSTEE. If a bank or trust company shall have been
appointed as trustee for the Holder pursuant to Section 6.2 hereof, such
bank or trust company shall have all the powers and duties of a warrant
agent appointed pursuant to Section 14 hereof and shall accept, in its own
name for the account of the Company or such successor entity as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 2.
3. FRACTIONAL SHARES.
In the event that the exercise of this Warrant, in full or in part,
results in the issuance of any fractional share of Common Stock, then in
such event the holder of this Warrant shall be entitled to cash equal to
the fair market value of such fractional share as determined in good faith
by the Company's Board of Directors.
4. ADJUSTMENT FOR DIVIDENDS, DISTRIBUTIONS AND RECLASSIFICATIONS.
In case at any time or from time to time, the holders of Common Stock
shall have received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) shall have become
entitled to receive, without payment therefor:
(a) other or additional stock or other securities or property (other
than cash) by way of dividend; or
(b) other or additional (or less) stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares, or similar corporate
restructuring;
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 6 hereof), then and in each such case the holder of this Warrant,
on the exercise or redemption hereof as provided in Section 2 hereof, shall
be entitled to receive the amount of stock and other securities and
property (including cash in the case referred to in subsection (b) of this
Section 4) that such holder would have received prior to or would have held
<PAGE>
on the date of such exercise or redemption if on the date hereof he 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 in the case referred to in subsection (b) of this
Section 4) receivable by such holder as aforesaid during such period,
giving effect to all further adjustments called for during such period by
Sections 5 and 6 hereof.
5. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION AND MERGER.
5.1 CERTAIN ADJUSTMENTS. In case at any time or from time to time,
the Company shall (i) effect a capital reorganization, reclassification, or
recapitalization, (ii) consolidate with or merge into any other person, or
(iii) 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, the holder of this Warrant, on the
exercise hereof as provided in Section 2 hereof and payment of the Exercise
Price, at any time after the consummation of such reorganization,
recapitalization, consolidation, or merger on the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
issuable on such exercise prior to such consummation or effective date, the
stock and other securities and property (including cash) to which such
holder would have been entitled upon such consummation or in connection
with such dissolution, as the case may be, if such holder had so exercised
this Warrant immediately prior thereto, all subject to further adjustment
thereafter as provided in Sections 4 and 6 hereof.
5.2 APPOINTMENT OF TRUSTEE FOR WARRANT HOLDERS UPON DISSOLUTION. In
the event of any dissolution of the Company following the transfer of all
or substantially all of its properties or assets, the Company, prior to
such dissolution, shall, at its expense, deliver or cause to be delivered
the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrant after the effective
date of such dissolution pursuant to this Section 5 to a bank or trust
company having an office in Chicago, Illinois, as trustee for the holder or
holders of the Warrant.
5.3 CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger, or transfer (and any dissolution following any transfer) referred
to in this Section 5, this Warrant shall continue in full force and effect
and the terms hereof shall be applicable to the shares of stock and other
securities and property receivable on the exercise of this Warrant after
the consummation of such reorganization, consolidation, or merger or the
effective date of dissolution following any such transfer, as the case
maybe, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms
of this Warrant as provided herein.
<PAGE>
6. ADJUSTMENTS FOR ISSUANCE OF COMMON STOCK AND AMOUNT OF
OUTSTANDING COMMON STOCK.
6.1 GENERAL. If at any time there shall occur any stock split,
stock dividend, reverse stock split, or other subdivision of the Company's
Common Stock ("Stock Event"), then the number of shares of Common Stock to
be received by the holder of this Warrant shall be proportionately
adjusted. No adjustment to the Exercise Price shall be made in connection
with any adjustment of the number of shares of Common Stock receivable upon
exercise of this Warrant, except that the Exercise Price shall be
proportionately decreased upon the occurrence of any stock split or other
subdivision of the Common Stock.
6.2 OTHER ISSUANCES OF COMMON STOCK. Unless the Holder shall
otherwise agree, if at any time there shall be any increase in the number
of shares of Common Stock outstanding or which the Company is obligated to
issue, or covered by any option, warrant, or convertible security which is
outstanding or which the Company is obligated to issue (except in the event
such issuance is unanimously approved by the Board of Directors of the
Company and the Chief Executive Officer of InPath), then the number of
shares of Common Stock issued pursuant to the Exchange Agreement and to be
received by the Holders of all Warrants issued pursuant to the Exchange
Agreement in the aggregate shall be 50% on a fully diluted basis as of the
date of redemption of this Warrant and the number of shares of Common Stock
to be received by the Holder of this Warrant shall be increased
proportionately. Thereupon, the Exercise Price shall be correspondingly
reduced so that the aggregate Exercise Price for all shares of Common Stock
covered hereby shall remain unchanged. The provisions of this Section 6.2
shall not apply to any issuance of additional Common Stock for which an
adjustment is provided under Section 6.1 hereof.
6.3 OTHER SECURITIES. In case any Other Securities shall have been
issued, or shall then be subject to issue upon the conversion or exchange
of any stock (or Other Securities as defined in Section 11 hereof) of the
Company (or any other issuer of Other Securities or any other entity
referred to in Section 5 hereof) or to subscription, purchase, or other
acquisition pursuant to any rights or options granted by the Company (or
such other issuer or entity), except in the event such issuance,
subscription, purchase or other transfer shall have been unanimously
approved by the Board of Directors of the Company and the Chief Executive
<PAGE>
Officer of InPath, the holder hereof shall be entitled to receive upon
exercise hereof such amount of Other Securities (in lieu of or in addition
to Common Stock) as is reasonably determined to preserve the rights and
preferences of the holder of this Warrant.
6.4 ADJUSTMENTS TO EXCHANGE AGREEMENT CONSIDERATION. In addition to
any other adjustments, if the conditions set forth in Section 1.4 of the
Exchange Agreement for adjustment of the number of shares of Common Stock
issuable to the InPath Members are met, the number of shares of Common
Stock to be received by the Holder of this Warrant shall be adjusted
according to the formula found in Section 1.4 of the Exchange Agreement
7. NO DILUTION OR IMPAIRMENT.
The Company will not, by amendment of its Articles or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of the Warrant, but
will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or
appropriate to protect the rights of the holder of the Warrant against
dilution or other impairment. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any shares of
stock receivable on the exercise of the Warrant above the amount payable
therefor on such exercise, (ii) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable shares of stock on the exercise of the
Warrant from time to time outstanding, and (iii) will not transfer all or
substantially all of its properties and assets to any other entity
(corporate or otherwise), or consolidate with or merge into any other
entity or permit any such entity to consolidate with or merge into the
Company (if the Company is not the surviving entity), unless such other
entity shall expressly assume in writing and will be bound by all the terms
of this Warrant and the Agreement.
8. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS.
In each case of any event that may require any adjustment or
readjustment in the shares of Common Stock issuable on the exercise of this
Warrant, if requested by the Holder, the Company at its expense will
promptly cause independent certified public accountants selected by the
Board of Directors to compute such adjustment or readjustment, if any, in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment or readjustment, or stating the reasons why no
adjustment or readjustment is being made, and showing, in detail, the facts
upon which any such adjustment or readjustment is based, including a
statement of (i) the number of shares of the Company's Common Stock then
outstanding on a fully diluted basis, and (ii) the number of shares of
Common Stock to be received upon exercise or redemption of this Warrant, in
effect immediately prior to such adjustment or readjustment and as adjusted
and readjusted (if required by Section 6) on account thereof. The Company
<PAGE>
will promptly mail a copy of each such certificate to each holder of a
Warrant, and will, on the written request at any time of any holder of a
Warrant, furnish to such holder a like certificate setting forth the
calculations used to determine such adjustment or readjustment.
9. NOTICES OF RECORD DATE.
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 or other distribution, 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 the assets of the Company to or
any consolidation or merger of the Company with or into any other person;
or
(c) any voluntary or involuntary dissolution, winding-up of
the Company; or liquidation, or
(d) any proposed issue or grant by the Company of any shares
of stock of any class or any other securities, or any right or option to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities (other than the issue of Common Stock on the
exercise of this Warrant),
then, and in each such event, the Company will mail or cause to be mailed
to the holder of this Warrant 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 (or
Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) 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
<PAGE>
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
be mailed at least thirty (30) days prior to the date specified in such
notice on which any such action is to be taken.
10. RESERVATION OF COMMON STOCK ISSUANCE ON EXERCISE OF WARRANT.
The Company will take all steps necessary to amend its Articles of
Incorporation to provide sufficient reserves of shares of Common Stock
issuable upon exercise of the Warrants issued to InPath Members pursuant to
the Exchange Agreement and at all times thereafter to reserve and keep
available, solely for issuance and delivery on the exercise of the Warrant,
a number of shares of its Common Stock equal to the total number of shares
of Common Stock from time to time issuable upon exercise of the Warrant.
The Company will not issue additional shares of Common Stock or Other
Securities, including securities convertible into Common Stock, without the
unanimous approval of the Board of Directors of the Company and the Chief
Executive Officer of InPath.
11. DEFINITIONS.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
11.1 The term "Company" shall include Bell National Corporation, and
any corporation that succeeds to or assumes the obligations of the Company
hereunder.
11.2 The term "Common Stock" means (i) the Company's voting Common
Stock, no par value, (ii) any other capital stock of any class or classes
(however designated) of the Company, the holders of which shall have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and (iii)
any other securities into which or for which any of the securities
described in clauses (i) or (ii) above have been converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of
assets, or otherwise.
11.3 The term "Other Securities" refers to any capital stock (other
than Common Stock) and other securities of the Company or any other entity
(corporate or otherwise) (i) which the holder of this Warrant at any time
shall be entitled to receive, or shall have received, on the exercise of
this Warrant, in lieu of or in addition to Common Stock, or (ii) which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities, in each case pursuant to
Section 4, 5 or 6 hereof.
<PAGE>
12. WARRANT AGENT.
The Company may, by written notice to the holder of this Warrant,
appoint an agent having an office in Chicago, Illinois, for the purpose of
issuing Common Stock on the exercise of this Warrant pursuant to Section 2
hereof, and exchanging or replacing this Warrant pursuant to the Agreement,
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.
13. 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.
14. NOTICES.
All notices and other communications from the Company to the holder
of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the
Company in writing by such holder or, until any such holder furnishes to
the Company an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
15. MISCELLANEOUS.
In case any provision of this Warrant shall be invalid, illegal or
unenforceable, or partially invalid, illegal or unenforceable, the
provision shall be enforced to the extent, if any, that it may legally be
enforced and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. This
Warrant and any term hereof may be changed, waived, discharged or
terminated only by a statement in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
This Warrant shall be governed by and construed in accordance with the
domestic substantive laws (and not the conflict of law rules) of the State
of California. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof. This
Warrant shall take effect as an instrument under seal.
[Signature page to follow]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officer and its corporate seal to be
impressed hereon and attested by its Secretary.
ATTEST: BELL NATIONAL CORPORATION
By:_________________________ By:_____________________________
Name: Thomas R. Druggish Name: Alexander M. Milley
Title: Assistant Secretary Title: Chairman of the Board
[CORPORATE SEAL]
Dated as of December 4, 1998
<PAGE>
EXHIBIT A
FORM OF EXERCISE AGREEMENT
--------------------------
(To Be Executed by the Holder if the Holder Desires to Exercise
Warrants Evidenced by the Foregoing Warrant)
To: Bell National Corporation
The undersigned hereby irrevocably elects to exercise _____ Warrants
evidenced by the foregoing Warrant for, and to purchase thereunder, ____
shares of Common Stock issuable upon exercise of said Warrants and delivery
of $_____________ in cash, and any applicable taxes payable by the
undersigned pursuant to such warrant.
The undersigned requests that certificates for such shares be issued
in the name of
__________________________________
__________________________________
__________________________________
(Please print name and address)
SSN:______________________________
If said number of Warrants shall not be all the Warrants evidenced by
the foregoing Warrant Certificate, the undersigned requests that a new
Warrant Certificate evidencing the Warrants not so exercised be issued in
the name of and delivered to
__________________________________
__________________________________
__________________________________
(Please print name and address)
Dated: ______________, ____ Name of Holder
(Print)
By: _____________________________
Name:
Title:
EXHIBIT 4
- ---------
THIS CLAIMS SETTLEMENT AGREEMENT, dated as of December 4, 1998
(this "Agreement"), is made by and among: (1) Bell National Corporation, a
California corporation ("Bell"); (2) each of the persons and entities
identified in Annex A hereto (each individually, a "Claimant"; and
collectively, The "Claimants"); and (3) Liberty Associates Limited
Partnership, a Delaware limited partnership ("Liberty").
BACKGROUND
Bell owes to each Claimant, on account of employment compensation,
management fees or other amounts payable, the dollar amounts specified in
Annex A hereto (the "Claims"). Bell and the Claimants wish to settle the
Claims in shares of Common Stock, no par value, of Bell ("Common Stock").
Substantially simultaneously with the execution and delivery of
this Agreement, Bell is executing and delivering a Stock and Membership
Interest Exchange Agreement (the "InPath Agreement"), pursuant to which
(among other things): (i) Bell will acquire all of the outstanding equity
interests in InPath, LLC, a Delaware limited liability company, from the
holders of such equity interests (the "InPath Members"); (ii) Bell will
issue and deliver to each InPath Member shares of Common Stock and Warrants
to purchase Common Stock; and (iii) Bell, as the ["Company"], and the
InPath Members, as the ["Stockholders"], will enter into a Stockholders
Agreement in the form of Exhibit 9.2 to the InPath Agreement (the
"Stockholders Agreement"), under which (among other things) Bell will grant
registration rights covering the shares of Common Stock held by the
"Stockholder" parties thereto and such other parties will make certain
agreements with respect to the voting of such shares.
Liberty is the beneficial and record owner of Warrants to purchase
an aggregate of 957,373 Warrants to Purchase Common Stock originally issued
by Bell on November 20, 1989 (the "Liberty Warrants"). It is a condition
precedent to the Closing under (and as defined in) the InPath Agreement
That the Liberty Warrants be cancelled. It is a condition precedent to the
consummation of transactions under to Article I of this Agreement (the
"Main Transactions") that such Closing shall have occurred. It is the
intent of the parties hereto and to The InPath Agreement that such Closing
and the consummation of the Main Transactions occur substantially
simultaneously.
Now, THEREFORE, in consideration of these premises, the mutual
covenants and commitments set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged
by each of the parties hereto, it is hereby agreed as follows:
ARTICLE I: MAIN TRANSACTIONS
SECTION 1.1. Claims Settlement. (A) Effective automatically upon
and simultaneously with the Closing:
(i) each Claimant does hereby sell, assign, transfer and
deliver to Bell, free and clear of any and all claims, liens, pledges,
mortgages, security interests, charges, options, equities, rights of first
refusal and other restrictions and other adverse claims ("Liens"), all of
such Claimant's right, title and interest in and to such Claimant's Claims,
with the result that such Claims shall be cancelled and extinguished; and
(ii) in consideration thereof, Bell does hereby issue and
deliver to each Claimant, free and clear of any and all Liens, the number
of shares of Common Stock set forth opposite such Claimant's name on Annex
A attached hereto (or one (1) share of Common Stock per thirty cents ($.30)
of Claims). The shares of Common Stock issued to any particular Claimant
are hereinafter sometimes referred to as "its Claimant Shares"; and the
shares of Common Stock issued to all Claimants hereunder are hereinafter
collectively referred to as "The Claimant Shares.
(B) In order to evidence and further effect the issuance and
delivery provided for under the foregoing subsection (A)(ii), on the
Closing Date (as defined in the InPath Agreement) Bell shall issue and
deliver (or cause to be issued and delivered) to each Claimant a
certificate or certificates registered in its name and representing its
Claimant Shares.
(C) The transactions contemplated by this Section 1.1 are
hereinafter sometimes referred to as the "Claims Settlement".
SECTION 1.2. Liberty-Warrants Termination. Liberty and Bell
hereby agree that, effective automatically upon and simultaneously with the
Closing, the Liberty Warrants shall be cancelled, terminated and of no
further force or effect. The transactions contemplated by this Section 1.2
are hereinafter sometimes referred to as the "Liberty Warrants
Termination".
SECTION 1.3. Stockholders Agreement. On the Closing Date, Bell
and each Claimant shall execute and deliver the Stockholders Agreement.
SECTION 1.4. Conditions. It is a condition precedent to the
obligations of each Party hereto to effect and consummate the Main
Transactions to be effected and consummated by such party:
(A) in the case of all parties with respect to all Main Transactions,
that the Closing under the InPath Agreement shall have occurred (or shall
substantially simultaneously be occurring);
(B) in the case of Bell with respect to the Claims Settlement, that the
representations and warranties of the Claimants set forth herein shall be
true and correct in all material respects on and as of the Closing Date;
(C) in the case of Bell with respect to the Liberty Warrants
Termination, that the representations and warranties of Liberty set forth
herein shall be true and correct in all material respects on and as of the
Closing Date;
(D) in the case of the Claimants with respect to the Claims Settlement,
that: (i) the representations and warranties of Bell set forth herein
shall be true and correct in all material respects on and as of the Closing
Date, and (ii) Bell shall have delivered to the Claimants the Common Stock
certificates called for under Section 1.1(B);
(E) in the case of Liberty with respect to the Liberty Warrants
Termination, that the representations and warranties of Bell set forth
herein shall be true and correct in all material respects on and as of the
Closing Date; and
(F) in the case of Bell and the Claimants with respect to the
Stockholders Agreement, that all of the InPath Members shall have executed
and delivered the Stockholders Agreement.
ARTICLE II: REPRESENTATIONS AND WARRANTIES
SECTION 2.1. All Parties. Each of the parties hereto hereby
represents and warrants, with respect to itself, that:
(A) in the case of each corporate and partnership party hereto, such
party has the full corporate and/or partnership power and authority to
enter into this Agreement and the other agreement(s) and instrument(s)
contemplated hereby to which it is or is to be a party and to carry out its
obligations hereunder and thereunder;
(B) in the case of each corporate and partnership party hereto, the
execution and delivery by such party of this Agreement and other
agreement(s) and instrument(s) contemplated hereby to which it is or is to
be a party and the consummation by such party of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate and/or partnership action on its part;
(C) this Agreement and other agreement(s) and instrument(s)
contemplated hereby to which it is a party have been, and (upon the
execution and delivery thereof) the other agreement(s) and instrument(s)
contemplated hereby to which it is to be a party will be, duly executed and
delivered by such party and constitute the legal, valid and binding
obligations of such party, enforceable against such party in accordance
with their respective terms;
(D) the compliance by such party with all of the provisions of this
Agreement and other agreement(s) and instrument(s) contemplated hereby to
which it is or is to be a party, and the consummation by such party of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default (or an event which, with notice or lapse of time or
both would constitute a default) under, or result in the termination or
amendment of, or accelerate the performance required by, any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which such party is a party or by which such party is bound,
or to which any of the property or assets of such party are subject, nor
result in any violation of the provisions of the certificate or articles of
incorporation or the bylaws of such party (if it be a corporation) or the
partnership agreement of such party (if it be a partnership), or any
statute, order, judgment, rule or regulation of any court or governmental
agency or body having jurisdiction over such party or the property or
assets of such party; and
(E) no authorization, consent or approval of, or filing with, or notice
to, any public body, court, authority or any other person or entity is
necessary for the execution and delivery by such party of this Agreement or
the other agreement(s) or instrument(s) contemplated hereby to which it is
or is to be a party or for the consummation by such party of the
transactions contemplated herein or therein, other than, in each case, such
authorizations, consents, approvals, filings and notices as have been or
will be obtained, made or given on or prior to the Closing Date.
SECTION 2.2. Liberty. Liberty hereby additionally represents and
warrants that it has good and marketable title to the Liberty Warrants,
free and clear of any and all Liens.
SECTION 2.3. Claimants. (A) Each Claimant hereby additionally
represents and warrants, with respect to itself, that:
(i) he has good and marketable title to the Claims set forth opposite
its name in Annex A hereto, free and clear of any and all Liens; and
(ii) other than the Claims, which will be extinguished as a result of
the Claims Settlement, it has no rights or claims for the payment of money
or the delivery of other value from Bell, or any contracts, agreements or
commitments which may give rise to the same.
(B) Each Claimant hereby additionally represents and warrants, with
respect to itself, that:
(i) its Claimant Shares are being acquired for such Claimant's own
account for investment purposes only and without any present intention to
sell, transfer or otherwise dispose of the same (except in compliance with
clause (v) hereof);
(ii) such Claimant has such knowledge and experience in financial
matters that it is capable of evaluating the merits and risks of its
investment in its Claimant Shares;
(iii) such Claimant understands that its Claimant Shares have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act") or the securities laws of any state of the UniTed States
("Blue Sky Laws");
(iv) such Claimant is fully informed as to the applicable limitations
upon any distribution or resale of its Claimant Shares under the Securities
Act and Blue Sky Laws and that its Claimant Shares may not be distributed
or resold if such distribution or resale would constitute a violation of
the Securities Act or Blue Sky Laws; and
(v) such Claimant will not sell, transfer, assign, pledge or otherwise
distribute any of its Claimant Shares unless; (a) there is an effective
registration statement under the Securities Act and Blue Sky Laws covering
its Claimant Shares, (b) such sale, transfer, assignment, pledge or other
distribution is exempt from the registration or qualification requirements
of the Securities Act and Blue Sky Laws or (C) the Securities Act and Blue
Sky Laws are inapplicable to such transaction.
(C) In connection with the foregoing, each Claimant agrees and consents
to the inclusion on the certificate(s) representing its Claimant Shares of
the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN TAKEN BY THE ACE FOR
INVESTMENT PURPOSES. SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED (A)
UNLESS THEY HAVE BEEN REGISTERED UNDER SAID ACT, OR (B) UNLESS SUCH
REGISTRATION IS EXPRESSLY WAIVED BY THE COMPANY, OR THE TRANSFER AGENT (OR
THE COMPANY, IF THEN ACTING AS ITS TRANSFER AGENT) IS PRESENTED WITH A
WRITTEN OPINION SATISFACTORY TO COUNSEL FOR THE COMPANY TO THE EFFECT THAT
SUCH REGISTRAtION IS NOT REQUIRED UNDER THE CIRCUMSTANCES OF SUCH SALE OR
TRANSFER."
(D) The representations, warranties and agreements in the foregoing
Section 2.3(B) and (C) may be relied upon by Bell and also by: (i) Bell's
counsel on the date hereof, Berlack, Israels & Liberman LLP, New York, New
York, in connection with any opinion or other letter that they may deliver
in respect of the issuance and delivery of the Claimant Shares, and (ii)
the Company's Transfer agent, Continental Stock Transfer & Trust Company,
in connection with their effectuation of such issuance and delivery.
ARTICLE III: MISCELLANEOUS
SECTION 3.1. Further Actions. From time to time after the date
hereof, as and when requested by any party hereto, each other party hereto
shall execute and deliver, or cause to be executed and delivered, such
other and further documents and instruments and shall take, or cause to be
taken, such other and further as such requesting party may reasonably deem
necessary or desirable to further effect or evidence the transactions
contemplated hereby and to otherwise carry out the intent and purposes of
this Agreement.
SECTION 3.2. Complete Agreement. This Agreement (which includes
the Annex A hereto) contains the entire agreement among the parties hereto
with respect to subject matter hereof and supersedes all prior written or
oral agreements and understandings among the parties with respect to such
matters.
SECTION 3.3. Governing Law. Consistent with the InPath Agreement,
the execution, interpretation and performance of this Agreement shall be
governed by the laws of State of Illinois.
SECTION 3.4. Headings. The Article, Section and Annex headings in
this Agreement are for convenience of reference purposes only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
SECTION 3.5. Waivers and Amendments. This Agreement may not be
modified or amended, nor may compliance with any of its terms and
conditions be waived, except in a writing executed by each of the parties
hereto.
SECTION 3.6. Gender and Plural Terms. In This Agreement: (i)
words of gender or neuter may be read as masculine, feminine or neuter, as
required or permitted by The context, and (ii) singular and plural forms of
defined and other terms herein may be read as singular or plural, as
required or permitted by the context.
[the remainder of this page is intentionally blank]
SECTION 3.7. Counterparts. This Agreement may be executed in one
or more counterparts, which, taken together, shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
Bell:
BELL NATIONAL CORPORATION
By: /s/ Alexander M.Milley
Alexander M. Milley
President
ATTEST:
By: /s/ Thomas R. Druggish Thomas R. Druggish
Assistant Secretary
Claimants:
CADMUS CORPORATION
By: /s/ Alexander M. Milley
Alexander M. Milley
President
MILLEY MANAGEMENT INCORPORATED
By: /s/ Alexander M. Milley
Alexander M. Milley
President
/s/ Alexander M. Milley
ALEXANDER M. MILLEY
/s/ Robert C. Shaw
ROBERT C. SHAW
Liberty:
LIBERTY ASSOCIATES LIMITED PARTNERSHIP
By: /s/ Alexander M. Milley
Alexander M. Milley
Sole General Partner
EXHIBIT 5
- ---------
JOINT FILING AGREEMENT
The undersigned agree that the statement on Schedule 13D to which
this Agreement is attached is filed on behalf of each one of them pursuant
to Rule 13d-1(k). This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which shall together constitute one instrument.
December 14, 1998
Peter P. Gombrich
/s/ Jonathan A. Bohlen
------------------------------
By: Jonathan A. Bohlen
His: Attorney-in-Fact
/s/ Theodore L. Koenig
------------------------------
Theodore L. Koenig
William J. Ritger
/s/ Jonathan A. Bohlen
------------------------------
By: Jonathan A. Bohlen
His: Attorney-in-Fact
Fred H. Pearson
/s/ Jonathan A. Bohlen
------------------------------
By: Jonathan A. Bohlen
His: Attorney-in-Fact
Walter Herbst
/s/ Jonathan A. Bohlen
------------------------------
By: Jonathan A. Bohlen
His: Attorney-in-Fact
AccuMed International, Inc.
/s/ Jonathan A. Bohlen
------------------------------
By: Jonathan A. Bohlen
Its: Attorney-in-Fact
Northlea Partners Ltd.
/s/ Jonathan A. Bohlen
------------------------------
By: Jonathan A. Bohlen
Its: Attorney-in-Fact
Monroe Investments, Inc.
/s/ Theodore L. Koenig
------------------------------
By: Theodore L. Koenig
Its: President
EXHIBIT 6
- ---------
POWER OF ATTORNEY
-----------------
Know All Men By These Presents, that each of William J. Ritger, Fred
H. Pearson, Walter Herbst, AccuMed International, Inc., Northlea Partners
Ltd. and Monroe Investments, Inc. constitutes and appoints Peter P.
Gombrich, Leonard Prange, Theodore L. Koenig, Jeffrey C. Everett, and
Jonathan A. Bohlen, and each of them, its and his true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for
each of them, and in their respective names, place and stead, in any and
all capacities, to prepare, execute and file all reports (including
exhibits), documents, and other instruments, together with any amendments
thereto, that may be necessary or appropriate to file with the Securities
and Exchange Commission and any other regulatory agency or authority, to
reflect the direct or indirect beneficial ownership or change in direct or
indirect beneficial ownership of shares of common stock of Bell National
Corporation of any of the undersigned, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premisses, as
fully to all intents and purposes as any of the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or their substitutes, may lawfully do or cause to be done
by virtue hereof.
Dated December 14, 1998
/s/ William J. Ritger
___________________________ AccuMed International, Inc.
William J. Ritger
/s/ Leonard R. Prange
_____________________________
/s/ Fred H. Pearson By: Leonard R. Prange
___________________________ Title: Chief Operating Officer
Fred H. Pearson and Chief Financial
Officer
Northlea Partners Ltd.
/s/ Walter Herbst
___________________________ /s/ John H. Abeles
Walter Herbst _____________________________
By: John H. Abeles, M.D.
Title: General Partner
Monroe Investments, Inc.
/s/ Theodore L. Koenig
_____________________________
By: Theodore L. Koenig
Title: President
<PAGE>
POWER OF ATTORNEY
-----------------
Know All Men By These Presents, that Peter P. Gombrich constitutes
and appoints Leonard Prange, Theodore L. Koenig, Jeffrey C. Everett, and
Jonathan A. Bohlen, and each of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him, and
in his name, place and stead, in any and all capacities, to prepare,
execute and file all reports (including exhibits), documents, and other
instruments, together with any amendments thereto, that may be necessary or
appropriate to file with the Securities and Exchange Commission and any
other regulatory agency or authority, to reflect the direct or indirect
beneficial ownership or change in direct or indirect beneficial ownership
of shares of common stock of Bell National Corporation of the undersigned,
granting unto said attorneys-in-fact and agents full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premisses, as fully to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Dated December 11, 1998 /s/ Peter P. Gombrich
----------------------
Peter P. Gombrich
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that Theodore L. Koenig constitutes
and appoints Peter P. Gombrich, Leonard Prange, Jeffrey C. Everett, and
Jonathan A. Bohlen, and each of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him, and
in his name, place and stead, in any and all capacities, to prepare,
execute and file all reports (including exhibits), documents, and other
instruments, together with any amendments thereto, that may be necessary or
appropriate to file with the Securities and Exchange Commission and any
other regulatory agency or authority, to reflect the direct or indirect
beneficial ownership or change in direct or indirect beneficial ownership
of shares of common stock of Bell National Corporation of the undersigned,
granting unto said attorneys-in-fact and agents full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premisses, as fully to all intents and purposes as
the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Dated December 14, 1998 /s/ Theodore L. Koenig
Theodore L. Koenig
