-----------------------------
OMB APPROVAL
-----------------------------
OMB Number: 3235-0145
Expires: October 31, 1994
Estimated average burden
hours per form....... 14.90
-----------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _________)*
AccuMed International, Inc.
(Name of Issuer)
Common Stock, no par value
(Title of Class of Securities)
010740108
(CUSIP Number)
J.P. Wilson, Esq.
General Counsel
Commonwealth Associates
733 3rd Avenue, New York, New York 10017 (212) 297-5652
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications)
October 12, 1993
(Date of Event which Requires Filing of 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(b)(3) or (4), check the
following box |_|.
Check the following box if a fee is being paid with the statement|X|. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7).
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
person'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 1 of 9 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 010740108 Page 2 of 10 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael S. Falk
- --------------------------------------------------------------------------------
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
807,631 (of which 585,409 shares of Common Stock are
NUMBER OF issuable upon exercise of warrants)
--------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,696,931 (of which 2,252,931 shares of Common Stock
OWNED BY are issuable upon exercise of warrants)
--------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 807,631 (of which 585,409 shares of Common Stock are
PERSON issuable upon exercise of warrants)
--------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
2,696,931 (of which 2,252,487 shares of Common Stock
are issuable upon exercise of warrants)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,504,562 (of which 2,838,896 shares of Common Stock are issuable upon
exercise of warrants)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.97%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS)
OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 2 of 9 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 010740108 Page 3 of 10 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Commonwealth Associates Management Company, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,889,300 (of which 1,667,078 shares of Common Stock are
NUMBER OF issuable upon exercise of warrants)
--------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
--------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,889,300 (of which 1,667,078 shares of Common Stock are
PERSON issuable upon exercise of warrants)
--------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,889,300 (of which 1,667,078 shares of Common Stock are issuable upon
exercise of warrants)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.61%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS)
OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 3 of 9 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 010740108 Page 4 of 10 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Commonwealth Associates
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC, 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
New York
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,889,300 (of which 1,667,078 shares of Common Stock are
NUMBER OF issuable upon exercise of warrants)
--------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
--------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,889,300 (of which 1,667,078 shares of Common Stock are
PERSON issuable upon exercise of warrants)
--------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,889,300 (of which 1,667,078 shares of Common Stock are issuable upon
exercise of warrants)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.61%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
BD, PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS)
OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 4 of 9 Pages
<PAGE>
Item 1. Security and Issuer.
This Schedule relates to the Common Stock, no par value ("Common
Stock"), issued by AccuMed International, Inc. a California corporation (the
"Company"), whose principal executive offices are located at 900 North Franklin,
Suite 401, Chicago, IL 60610.
Item 2. Identity and Background.
This Schedule is filed by: (i) Commonwealth Associates ("CA"), a New
York limited partnership, which is registered as a broker/dealer under Section
15 of the Securities Exchange Act of 1934, as amended; (ii) Commonwealth
Associates Management Company, Inc., a New York corporation ("CAMCI") and the
sole general partner of CA; and (iii) Michael S. Falk ("Falk"), president, a
director and majority stockholder of CAMCI (CA, CAMCI and Falk are each
hereinafter sometimes referred to as a "Reporting Person" and collectively as
the "Reporting Persons"). The address of the Reporting Persons is 733 3rd
Avenue, New York, New York 10017. Falk is a United States citizen.
During the last five (5) years, none of the Reporting Persons has
been: (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (ii) a party to a civil 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, federal or
state securities laws or finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Falk acquired redeemable warrants to purchase 10 shares of Common
Stock, as components of units consisting of Common Stock and redeemable warrants
of the Company at a price of $5.50 per unit in March 1993, using personal funds.
A trust for the benefit of a minor child of Falk, of which Falk's spouse is the
sole trustee, acquired 1,000 shares of Common Stock in April 1994 in an open
market transaction at $1.25 per share using funds constituting a portion of the
principal of the trust. In December 1994 the Company issued to each of CA and
Falk, warrants to purchase 320,000 and 80,000 shares, respectively, of Common
Stock, exercisable at any time until December 31, 1999 at a price of $0.25 per
share. Such warrants were issued to CA and Falk partially to reimburse CA for
certain expenses it incurred in connection with a proposed offering of
Securities of the Company in 1994 that was not consummated and also in
consideration of the cancellation of certain Underwriter's Warrants issued to CA
and certain of its designees, including Falk (such Warrants consisting of Common
Stock and a redeemable warrant to purchase one share of Common Stock). The
Underwriter's Warrants were
Page 5 of 9 Pages
<PAGE>
issued to CA (and its designees) in consideration for services rendered by CA as
underwriter of the Company's initial public offering of Common Stock in October
1992. The Company issued to each of CA, Falk and his wife, warrants to purchase
17,427 and has 211,376 shares, respectively, of Common Stock, exercisable at any
time until May 9, 2000 at a price of $0.625 per share. Such warrants were issued
to CA and certain of its designees, including Falk and his wife in consideration
for services rendered by CA as placement agent in connection with a private
offering of securities by the Company that was consummated in May 1995. The
Company has also issued to CA and Falk, as a designee of CA, for services
rendered by CA in August 1995 as placement agent for certain private offerings
of securities of the Company (i) warrants to purchase 33,196 and 184,871 shares,
respectively; of Common Stock exercisable at any time until August 18, 2000 at
$0.625 per share and (ii) warrants to purchase 3,648 and 34,161 shares of Common
Stock, respectively, exercisable at any time until August 22, 2000 at $0.625 per
share. In connection with the December 29, 1995 merger ("Merger") of AccuMed
International, Inc. into the Company, CA was paid a fee for acting as a "finder"
in connection with the Merger. The fee consisted of $50,000 paid in cash, the
issuance of 444,444 shares of Common Stock (the "Merger Shares") and a five-year
warrant (the "Merger Warrants") to purchase 750,000 shares of the Common Stock
at an exercise of $1.25 per share. CA has distributed to Falk 222,222 of the
Merger Shares and 175,000 of the Merger Warrants. The 2,673 shares of Common
Stock and redeemable warrants to purchase 980,840 shares of Common Stock held by
CA in its investment and trading accounts as of May 31, 1996, were acquired by
CA from time to time in open market transactions at varying prices for
investment or in the ordinary course of its market making activities, using
working capital funds. The warrants held in such account are exercisable at any
time until October 14, 1997 at $5.00 per share.
Item 4. Purpose of Transaction.
The purpose of the acquisition of shares of Common Stock and
warrants to purchase Common Stock by each of the Reporting Persons is for
investment, except for shares of Common Stock acquired by CA and held in its
trading account. Securities held in the trading account were acquired by CA in
open market transactions in the ordinary course of its market making activities.
The Reporting Persons may, for investment purposes, make purchases
of Common Stock and warrants to purchase Common Stock from time to time and may
dispose of any or all of the shares of Common Stock and warrants held by them at
any time. CA may also acquire or dispose of shares of Comon Stock and redeemable
warrants to purchase Common Stock in the course of its market making activities.
The Reporting Persons have no plans or proposals which relate to, or could
result in, any of the matters referred to in Paragraphs (b) through (j) of Item
4 of Schedule
Page 6 of 9 Pages
<PAGE>
13D, except that, pursuant to the Agreement and Plan of Reorganization, dated
April 21, 1995, entered into in connection with the Merger, CA was granted the
right to appoint with a third party three (3) members of the Board of Directors
and has exercised its right, pursuant thereto. The Reporting Persons may review
or reconsider their position with respect to the Company or formulate plans or
proposals with respect to any such matter, but have no present intention of
doing so.
Item 5. Interest in Securities of the Issuer.
As of May 31, 1996, CA beneficially owned an aggregate of 1,889,300
shares of Common Stock (including common stock issuable upon exercise of
warrants), constituting approximately 10.05% of the outstanding Common Stock;
CAMCI beneficially owned an aggregate of 1,889,300 shares of Common Stock
(attributing all of the shares owned or deemed to be owned by CA to CAMCI),
constituting approximately 10.05% of the outstanding Common Stock; and Falk
beneficially owned an aggregate of 3,504,562 shares of common stock (including
2,837,896 shares of common stock issuable upon exercise of warrants),
constituting approximately 19.48% of the outstanding Common Stock (attributing
all of the shares deemed to be owned by CAMCI to Falk). The percentages used
herein are calculated based upon the number of shares of Common Stock issued and
outstanding at June 19, 1996 as provided by the transfer agent for the Company's
Common Stock. Except for the shares owned or deemed owned by CA, as to which
CAMCI and Falk share voting and dispositive power, the 1,000 shares of Common
Stock held by the trust for the benefit of Mr. Falk's minor child and the
warrants to purchase 100,000 shares of Common Stock owned by his wife, Falk has
sole voting and dispositive power with respect to all the shares of Common Stock
to which this Schedule relates. The Reporting Persons have not effected any
transactions in shares of the Common Stock in the past 60 days, except that CA
has effectuated transactions in the Common Stock and redeemable warrants in the
ordinary course of its market making activities.
No person, other than the Reporting Persons, has the right to
receive or the power to direct receipt of dividends from, or the proceeds of the
sale of, Common Stock.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Pursuant to the Merger Agreement the number of directors of the
Company has been set at seven, of which CA and American Equities, a foreign
broker/dealer, have the joint right to appoint three director until the next
shareholders' meeting, at present unscheduled.
The Company has granted CA and its designees certain "piggyback"
and/or demand registration rights with respect to the
Page 7 of 9 Pages
<PAGE>
shares of Common Stock issuable upon exercise of the Merger Warrants and the
warrants issued in December 1994 and in connection with the private offerings of
securities that were consummated in May 1995 and August 1995.
Other than as set forth above, there are no contracts, arrangements,
understandings or relationships with the Reporting Persons or any other person
with respect to the securities of the Company, including, but not limited to,
transfer or voting of any other securities, finders' fees, joint ventures, loan
or option arrangements, puts or calls, guaranties of profits, divisions of
profits or loss or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 2.0 Agreement of Merger and Plan of Reorganization, dated April 21,
1995, between the Company and Almar BioSciences, Inc.
Exhibit 2.1 Amendment No. 1 to Agreement and Plan of Reorganization
Exhibit 2.2 Amendment No. 2 to Agreement and Plan of Reorganization
Exhibit 2.3 Agreement of Merger
Exhibit 2.4 Affiliate Agreement
Exhibit 2.5 Waiver Under Merger Agreement
Exhibit 2.6 Mutual Waiver
Exhibit 4.0 Warrant Agreement, dated December 31, 1994, between the Company
and CA to purchase up to 420,000 shares of Common Stock issued by
the Company to CA and its designee(s).
Exhibit 4.1 Warrant Agreement, dated December 28, 1995, between the Company
and CA to purchase up to 750,000 shares of Common Stock issued by
the Company to CA and/or its designee(s).
Exhibit 4.2 Warrant Agreement, dated May 9, 1995, between the Company and CA
to purchase up to 264,840 shares of Common Stock issued by the
Company to CA and/or its designee(s).
Exhibit 4.3 Warrant Agreement, dated August 18, 1995, between the Company and
CA to purchase up to 258,700 shares of Common Stock issued by the
Company to CA and/or its designee(s).
Exhibit 4.4 Warrant Agreement, dated August 22, 1994, between the Company and
CA to purchase up to 41,300 shares of Common Stock issued by the
Company to CA and/or its designee(s).
Exhibit 99 Joint Filing Agreement among the Reporting Persons, dated October
23, 1996.
Page 8 of 9 Pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of his or its knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
DATE: October 23, 1996
/s/ Michael S. Falk
--------------------------------
Michael S. Falk
COMMONWEALTH ASSOCIATES MANAGEMENT
COMPANY, INC.
By: /s/ Michael S. Falk
-------------------------------
Michael S. Falk, President
COMMONWEALTH ASSOCIATES
By: Commonwealth Associates
Management Company, Inc.,
its General Partner
By: /s/ Michael S. Falk
-------------------------------
Michael S. Falk, President
Page 9 of 9 Pages
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of April 21, 1995 by and between ALAMAR BIOSCIENCES, INC., a
California corporation ("Alamar") and ACCUMED, INC., an Illinois corporation
("AccuMed").
RECITALS
A. The Boards of Directors of AccuMed and Alamar believe that it is in the
best interests of each company and their respective shareholders that AccuMed
and Alamar combine into a single company through the merger of AccuMed with and
into Alamar (the "Merger") and, in furtherance thereof, have approved the
Merger.
B. Pursuant to the Merger, among other things, the outstanding shares of
Common Stock of AccuMed shall be converted into shares of Common Stock of Alamar
at the rate determined herein, subject to the forfeiture by the pre-merger
shareholders of AccuMed (the "AccuMed Shareholders") of certain of such shares
of Common Stock of Alamar if certain performance targets are not met as
determined herein.
C. AccuMed and Alamar desire to make certain representations and
warranties and other agreements in connection with the Merger.
D. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined) and subject
to and upon the terms and conditions of this Agreement and the applicable
provisions of the Illinois Business Corporation Act of 1983, as amended
("Illinois Law"), and the California General Corporation Law, as amended
("California Law"), AccuMed shall be merged with and into Alamar, the separate
corporate existence of AccuMed shall cease and Alamar shall continue as the
surviving corporation. Alamar as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation".
<PAGE>
1.2 Effective Time. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by filing the Agreement
of Merger of Alamar and AccuMed substantially in the form of Exhibit A attached
hereto (the "Agreement of Merger") with the Secretary of State of each of
Illinois and California, in accordance with the relevant provisions of Illinois
Law and California Law (the time of such filing being the "Effective Time") as
soon as practicable on or after the Closing Date (as herein defined). The
closing of the Merger (the "Closing") shall take place at the offices of Katten
Muchin & Zavis at a time and date to be specified by the parties, which shall be
no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VIII, or at such other time, date and location
as the parties hereto agree (the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Illinois
Law and California Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of AccuMed and Alamar shall vest in the Surviving
Corporation, and all debts, liabilities and duties of AccuMed and Alamar shall
become the debts, liabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation of Alamar,
as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation.
(b) At the Effective Time, the Bylaws of Alamar, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation.
1.5 Directors and Officers. The directors and officers of AccuMed shall be
the initial directors and officers of the Surviving Corporation, until their
respective successors are duly elected or appointed and qualified. The Surviving
Corporation will elect new directors and new officers as per Sections 7.17 and
7.18 hereof.
1.6 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of AccuMed or the holders of any of
the following securities:
(a) Conversion of AccuMed Capital Stock. Each share of Common Stock,
no par value, of AccuMed ("AccuMed Capital Stock") issued and outstanding
immediately prior to the Effective Time will be cancelled and extinguished
and will be converted automatically into the right to receive its pro rata
portion of 5,750,000 shares of Common Stock, no par value, of Alamar
("Alamar Common Stock"). Each share of AccuMed Capital Stock shall be
cancelled and converted as set forth in this Section 1.6(a) upon surrender
of the certificate representing such share of AccuMed Capital Stock in the
manner provided in Section 1.7 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit (and bond, if
required) in the manner provided in Section 1.9).
-2-
<PAGE>
(b) Adjustments to Exchange Ratio. The number of shares of Alamar
Common Stock into which each share of AccuMed Common Stock shall convert
pursuant to this Article I shall be adjusted to reflect fully the effect
of any split, reverse stock split, stock dividend (including any dividend
or distribution of securities convertible into Alamar Common Stock or
AccuMed Capital Stock), reorganization, recapitalization or other like
change with respect to Alamar Common Stock or AccuMed Capital Stock
occurring after the date hereof and prior to the Effective Time, except
for the issuance of any shares of Alamar Common Stock pursuant to the S
Private Placement and/or the D Private Placement.
(c) Fractional Shares. No fraction of a share of Alamar Common Stock
will be issued by virtue of the Merger, but in lieu of thereof each
AccuMed Shareholder who would otherwise be entitled to a fraction of a
share of Alamar Common Stock (after aggregating all fractional shares of
Alamar Common Stock to be received by such holder) shall receive from
Alamar one additional share of Alamar Common Stock in the event such
fraction is one-half or more and no additional shares of Alamar Common
Stock in the event such fraction is less than one-half.
1.7 Exchange of Certificates.
(a) Alamar to Provide Common Stock. Promptly after the Effective
Time, Alamar shall make available to each AccuMed Shareholder for exchange
in accordance with this Article I, through such reasonable procedures as
Alamar may adopt, the shares of Alamar Common Stock issuable pursuant to
Section 1.6 in exchange for outstanding shares of AccuMed Capital Stock.
(b) Exchange Procedures. Promptly after the Effective Time, Alamar
shall cause to be mailed to each holder of record of certificate or
certificates (the "Certificates") which immediately prior to the Effective
Time represented outstanding shares of AccuMed Capital Stock whose shares
were converted into the right to receive shares of Alamar Common Stock
pursuant to Section 1.6, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to Alamar
and shall be in such form and have such other provisions as Alamar may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for three separate certificates
representing shares of Alamar Common Stock, one such certificate to
represent Alamar Common Stock not subject to forfeiture ("Vested Alamar
Common Stock"), one such certificate to represent Alamar Common Stock
subject to forfeiture pursuant to Section 3.1 (as defined in such Section
3.1, the "First Year Performance Stock") and one such certificate to
represent Alamar Common Stock subject to forfeiture pursuant to Section
3.2 (as defined in such Section 3.2, "Second Year Performance Stock") (the
Vested Alamar Common Stock, First Year Performance Stock and Second Year
Performance Stock are sometimes collectively referred to as the "Exchanged
Alamar Common Stock").
-3-
<PAGE>
Upon surrender of a Certificate for cancellation to Alamar or to such
other agent or agents as may be appointed by Alamar, together with such
letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Certificate shall be
entitled to receive in exchange therefor the certificates representing the
number of whole shares of Exchanged Alamar Common Stock which such holder
has the right to receive pursuant to Section 1.6, and the Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each
outstanding certificate that, prior to the Effective Time, represented a
share of AccuMed Capital Stock will be deemed from and after the Effective
Time, for all corporate purposes, other than the payment of dividends or
other distributions, to evidence the ownership of the number of full
shares of Alamar Common Stock into which such shares of AccuMed Capital
Stock shall have been so converted in accordance with Section 1.6.
(c) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the date of this Agreement
with respect to Alamar Common Stock with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of Alamar Common Stock represented thereby until the
holder of record of such Certificate shall surrender such Certificate.
Subject to applicable law, following surrender of any such Certificate,
there shall be paid to the record holder of the certificates representing
whole shares of Alamar Common Stock issued in exchange therefor, without
interest, at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time payable with
respect to such whole shares of Alamar Common Stock.
(d) Transfers of Ownership. If any certificate for shares of Alamar
Common Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange will have (i) paid to Alamar or any
agent designated by it any transfer or other taxes required by reason of
the issuance of a certificate for shares of Alamar Common Stock in any
name other than that of the registered holder of the certificate
surrendered or (ii) established to the satisfaction of Alamar or any agent
designated by it that such tax has been paid or is not payable.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, none of Alamar, AccuMed or the Surviving Corporation shall be
liable to a holder of shares of Alamar Common Stock or AccuMed Capital
Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in AccuMed Capital Stock. All shares of
Alamar Common Stock issued upon the surrender for exchange of shares of AccuMed
Capital Stock in accordance with the terms hereof (including any cash paid in
respect thereof) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of AccuMed Capital
-4-
<PAGE>
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of AccuMed Capital Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event any certificates
evidencing shares of AccuMed Capital Stock shall have been lost, stolen or
destroyed, Alamar shall issue in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the holder
thereof, such shares of Exchanged Alamar Common Stock as may be required
pursuant to Section 1.6; provided, however, that Alamar may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against Alamar
with respect to the certificates alleged to have been lost, stolen or destroyed
or such other indemnity as may be reasonably requested by Alamar.
1.10 Tax and Accounting Consequences. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of Section
368 of the Code.
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of AccuMed and Alamar, the officers and directors of AccuMed and
Alamar are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action, so long
as such action is consistent with this Agreement.
1.12 Restrictions on Transfer. No more than 10% of the shares of the
Exchanged Alamar Common Stock issued to each of the AccuMed Shareholders
pursuant to this Article I may be offered for sale, sold, disposed of or
otherwise transferred or pledged or otherwise encumbered until 18 months after
the Effective Time. Transfers by gift, will or intestacy to an AccuMed
Shareholder's immediate family or to a trust, the beneficiaries of which are
exclusively such AccuMed Shareholder and/or members of his or her immediate
family, will be exempted, so long as the certificate continues to bear the
legend below. The Surviving Corporation will maintain stop transfer instructions
with its transfer agent at all appropriate times to enforce this restriction on
transfer. The certificates representing Exchanged Alamar Common Stock issued to
each AccuMed Shareholder pursuant to this Agreement will bear substantially the
following legend:
"The securities represented by this certificate are subject to certain
restrictions on transfer as set forth in the Agreement and Plan of
Reorganization by and between Alamar Biosciences, Inc. (the "Company") and
AccuMed, Inc. dated April 21, 1995, a copy of which may be obtained at the
principal executive office of the Company. Any transfer or pledge in
conflict with or in derogation of this legend is void and of no legal
force, effect or validity whatsoever."
-5-
<PAGE>
The restriction on transfer imposed by this Section 1.12 shall terminate 18
months after the Effective Time. At any time 18 months or more after the
Effective Time, each AccuMed Shareholder may request, and the Surviving
Corporation will issue, new certificates of like tenor and amount without the
aforesaid restrictive legend.
ARTICLE II
OPTION TO PURCHASE ADDITIONAL ALAMAR COMMON STOCK
2.1 Grant of Options. In further consideration of AccuMed's execution of
this Agreement and consummation of the Merger and the operation of AccuMed's
business by its management and employees during the period from the date hereof
until the Closing Time for the ultimate benefit of Alamar, Alamar shall, on the
Closing Date, grant to AccuMed's officers and employees, options (the "Options")
to purchase from Alamar an additional 750,000 shares of Alamar Common Stock
plus, if the Option Price (as defined below) is greater than $1.25, such number
of shares of Alamar Common Stock as shall be determined by subtracting $1.25
from the Option Price, then multiplying by 750,000 and dividing by the Option
Price (collectively, the "Option Shares"). The Options shall be granted pursuant
to the Stock Option Plan of Alamar in effect as of the Closing Date (the "Option
Plan"). The Option Shares shall be distributed on the Closing Date, as
determined by the Board of Directors of AccuMed prior to the Closing Date,
subject to applicable law and the terms of the Option Plan. Alamar covenants
that, at all times from the date hereof until the earlier of the expiration of
the Option Period (as hereinafter defined) or the exercise in full of all of the
Options, Alamar will have reserved for issuance under the Option Plan such
number of authorized but not issued and not outstanding shares of Alamar Common
Stock as equals (a) the aggregate number of Option Shares issuable upon exercise
of Options, less (b) such number of shares of Alamar Common Stock as have
previously been issued upon exercise of Options. The Option Plan shall be
amended, if necessary, so that a sufficient number of shares of Alamar Common
Stock are reserved for issuance upon exercise of Options, and any such amendment
shall be submitted to Alamar's shareholders for approval at the Alamar
Shareholders' Meeting.
2.2 Option Price. The purchase price of each Option Share shall be the
Fair Market Value of Alamar Common Stock on the Closing Date (the "Option
Price"), payable pursuant to the terms of the Option Plan. Upon payment to
Alamar of the Option Price, Alamar shall assign, transfer, convey and deliver
the Option Shares purchased to the Option holder exercising the Option.
2.3 Vesting and Exercise Period. Each Option shall have a term of five
years from the Closing Date (the "Option Period") and shall vest in three equal
installments on the Closing Date and the first two anniversaries thereof. Each
Option must be exercised by written notice given to Alamar at any time during
the Option Period. The certificate or certificates for the shares of Alamar
Common Stock as to which the Option shall have been so exercised shall be
delivered to the Option holder as soon as practicable after receipt by Alamar of
such notice and payment pursuant to Section 2.2 above. If not so exercised, the
Option shall lapse.
-6-
<PAGE>
2.4 Option Terms. Each Option granted to an AccuMed Shareholder may be
exercised in whole or in part, and if exercised in part any remaining shares of
Alamar Common Stock which were subject to the Option may still be purchased,
pursuant to the terms of such Option by the Option holder at any time prior to
the expiration of the Option Period. Each Option holder may exercise his or her
Option without regard to the exercise or lack of exercise by other Option
holders, and there is no requirement that any or all of the Options be
exercised.
2.5 Adjustments. Except for the transactions contemplated by this
Agreement, if after the Closing Date there is any change in the outstanding
shares of Alamar Common Stock by reason of a stock dividend, stock split, or
combination or exchange of such shares, or any recapitalization, merger,
consolidation, reorganization, exchange or similar event, the number of shares
of Alamar Common Stock available for purchase pursuant to the exercise of the
Options, the number of such shares covered by each outstanding Option, and the
Option Price shall be proportionately adjusted by Alamar to reflect such
changes; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated by rounding to the next lower whole number of
shares.
ARTICLE III
FORFEITURE OF ALAMAR COMMON STOCK
3.1 First Year Performance Targets. If for the 12-month period beginning
on the first day of the first full fiscal quarter of the Surviving Corporation
commencing after the Effective Time (the "First Year Performance Period") both
(i) the earnings per share of the Surviving Corporation Common Stock on a
fully-diluted basis are less than $.01 and (ii) the Fair Market Value of the
Surviving Corporation Common Stock does not equal or exceed $2.00 per share for
a period of 45 consecutive trading days (the "First Year Performance Targets"),
then the AccuMed Shareholders shall forfeit and surrender to the Surviving
Corporation 1,000,000 of the shares of the Alamar Common Stock issued to them
pursuant to Article I (the "First Year Performance Stock"), ratably in
proportion to the number of Alamar Common Stock shares originally issued to each
such AccuMed Shareholder.
3.2 Second Year Performance Targets. If for the 12-month period commencing
immediately after the end of the First Year Performance Period (the "Second Year
Performance Period" and together with the First Year Performance Period, the
"Performance Periods") both (i) the earnings per share of the Surviving
Corporation Common Stock on a fully-diluted basis ("fully diluted" for the
purposes of this Article III shall included the First Year Performance Stock
whether or not forfeited pursuant to Section 3.1) are less than $.03 and (ii)
the Fair Market Value of the Surviving Corporation Common Stock does not equal
or exceed $2.50 per share for a period of 45 consecutive trading days (the
"Second Year Performance Targets" and together with the First Year Performance
Targets, the "Performance Targets"), then the AccuMed Shareholders shall forfeit
and surrender to the Surviving Corporation an additional 1,000,000 of the shares
of the Alamar Common Stock issued to them pursuant to Article I (the "Second
Year Performance Stock" and together with the First Year Performance Stock, the
"Performance Stock"), ratably in proportion to the number of Alamar Common Stock
shares originally issued to each such AccuMed Shareholder.
-7-
<PAGE>
3.3 Earn-Back Provision. If the Surviving Corporation fails to meet its
First Year Performance Targets, but, for the Second Year Performance Period,
both (i) the earnings per share of the Surviving Corporation Common Stock on a
fully diluted basis is greater than or equal to the sum of $0.03, plus the
amount of any net loss per share incurred by the Surviving Corporation for the
First Year Performance Period, and (ii) the Fair Market Value of the Surviving
Corporation Common Stock equals or exceeds $2.50 per share for a period of 45
consecutive trading days (the "Earn-Back Targets"), then the First Year
Performance Stock shall not be forfeited pursuant to Section 3.1, but rather
shall become fully vested. The First Year Performance Stock shall not be
surrendered and cancelled pursuant to Section 3.4 until the end of the Second
Year Performance Period and the determination that this Section 3.3 has not
served to vest such First Year Performance Stock.
3.4 Surrender Procedure for Forfeited Performance Stock. Determination as
to whether applicable Performance Targets are met with respect to the applicable
Performance Period will be made by the Surviving Corporation in its reasonable
discretion as soon as practicable after the end of the applicable Performance
Period. If both of the applicable Performance Targets are not met for the
applicable Performance Period, and, in the case of the First Year Performance
Stock, either of the Earn-Back Targets set forth in Section 3.3 is not met for
the Second Year Performance Period, each AccuMed Shareholder shall surrender to
the Surviving Corporation within 30 days after receipt of written notice of
failure to meet such Performance Targets, his or her certificate or certificates
which represents the forfeited Performance Stock, provided that Alamar gives
notice to the AccuMed Shareholders that such Performance Stock is to be
forfeited within 90 days after the end of the Second Year Performance Period.
Each Performance Stock certificate which immediately after the end of the Second
Year Performance Period is subject to forfeiture shall be deemed for all
purposes to be cancelled and void as of the end of the Second Year Performance
Period. If any such Performance Stock certificates are not delivered to Alamar,
Alamar shall make appropriate notations on its stock records, which may include
stop transfer instructions.
3.4 Adjustment. The Performance Targets and Earn-Back Targets shall be
adjusted to reflect fully the effect of any stock split, reverse stock split,
stock dividend (including any dividend or distribution of securities convertible
into Alamar Common Stock), reorganization, recapitalization or other like change
with respect to Alamar Common Stock occurring after the Effective Time if such
adjustment would fairly advance the essential intent and principles of the
Performance Targets and Earn-Back Targets as determined in good faith by a
majority of the disinterested directors of the Surviving Corporation.
3.5 Restrictive Legend on Performance Stock; Nontransferability of
Performance Stock. The certificates representing Performance Stock issued to
each AccuMed Shareholder pursuant to this Agreement will bear substantially the
following legend:
"The securities represented by this certificate are subject to forfeiture
and certain restrictions on transfer as set forth in the Agreement and Plan
of Reorganization by and between Alamar Biosciences, Inc. (the "Company")
and AccuMed, Inc. dated April 21, 1995 (the "Agreement"), a copy of which
may be obtained at the principal executive office of the Company. Any
transfer or pledge in conflict
-8-
<PAGE>
with or in derogation of the Agreement is void and of no legal force,
effect, or validity whatsoever."
No Performance Stock shall be offered for sale, sold, disposed of, or otherwise
transferred, or pledged or otherwise encumbered until such time as either of the
applicable Performance Targets has been met or, in the case of the First Year
Performance Stock, both of the Earn-Back Targets have been met or until any such
Performance Stock is forfeited pursuant to this Article III. Transfers by gift,
will or intestacy to a Performance Stock holder's immediate family or to a
trust, the beneficiaries of which are exclusively such holder and/or members of
his or her immediate family, will be exempted, so long as the Performance Stock
certificate continues to bear the aforesaid legend. If either of the applicable
Performance Targets is met during the applicable Performance Period or, in the
case of the First Year Performance Stock, both of the Earn-Back Targets are met,
the Surviving Corporation will promptly notify each AccuMed Shareholder, at
which time each AccuMed Shareholder may request the Surviving Corporation to
issue a new certificate with respect to the applicable Performance Stock of like
tenor and amount without the aforesaid restrictive legend. The Surviving
Corporation will cause appropriate stock transfer instructions to be placed in
the records of its transfer agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACCUMED
AccuMed represents and warrants to Alamar as of the date hereof and again
as of the Effective Time, subject to the exceptions disclosed in writing in the
disclosure letter supplied to Alamar by AccuMed (the "AccuMed Schedules") which
identifies the Section numbers hereof to which the disclosures pertain and which
is dated as of the date hereof and again as of the Effective Time and which is
attached to this Agreement and incorporated by reference, as set forth below.
4.1 Organization of AccuMed. AccuMed, and each of its subsidiaries as set
forth on the AccuMed Schedules, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power to own, lease and operate its property
and to carry on its business as now being conducted and as proposed to be
conducted, and is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the failure to be so qualified
would have a Material Adverse Effect on AccuMed. A true and complete list of all
of AccuMed's subsidiaries, together with the jurisdiction of incorporation of
each subsidiary is listed on the AccuMed Schedules. AccuMed does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any interest in, any corporation,
partnership, joint venture or other business association or entity except as
listed on the AccuMed Schedules. The AccuMed Schedules contain a true and
correct copy of the Articles of Incorporation and Bylaws of AccuMed and similar
governing instruments of each of its subsidiaries, each as amended to date.
4.2 AccuMed Capital Structure. The authorized capital stock of AccuMed
consists as of the date hereof, and will consist as of the Effective Time, of
5,000,000 shares of Common Stock, no par value, of which as of the date hereof
there are 1,835,500 shares issued and
-9-
<PAGE>
outstanding. All outstanding shares of AccuMed Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and are not subject to
preemptive rights created by statute, the Articles of Incorporation or Bylaws of
AccuMed or any agreement or document to which AccuMed is a party or by which it
is bound. The AccuMed Schedules include a list of all issuances of capital stock
by AccuMed since its inception and contain a true, accurate and complete list of
the names and respective number of shares of AccuMed Common Stock held by each
AccuMed Shareholder. All shares of AccuMed capital stock have been issued in
compliance with all applicable federal and state securities laws, and no right
of rescission inures to any shareholder of AccuMed.
4.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 4.2, there are no equity securities of any class of AccuMed, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. Except for securities AccuMed owns,
directly or indirectly through one or more subsidiaries (which securities are
listed in the AccuMed Schedules), there are no equity securities of any class of
any subsidiary of AccuMed, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or outstanding. Except as
set forth in Section 4.2, there are no options, warrants, equity securities,
calls, rights, commitments or agreements of any character to which AccuMed or
any of its subsidiaries is a party or by which it is bound obligating AccuMed or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of AccuMed or any of its
subsidiaries or obligating AccuMed or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. To the knowledge of AccuMed,
there are no voting trusts, proxies or other agreements or understandings with
respect to the shares of capital stock of AccuMed.
4.4 Authority.
(a) AccuMed has all requisite corporate power and authority to enter
into this Agreement and the Transaction Documents to which it is or will
be a party, subject to obtaining requisite shareholder approval, and to
consummate the transactions contemplated hereby or thereby. The execution
and delivery of this Agreement and the Transaction Documents to which
AccuMed is or will be a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of AccuMed, subject only to the approval of
the Merger by the vote of the holders of a majority of the AccuMed Capital
Stock. This Agreement has been duly executed and delivered by AccuMed and
constitutes the valid and binding obligation of AccuMed, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity.
(b) The execution and delivery by AccuMed of this Agreement and the
Transaction Documents to which AccuMed is or will be a party do not or
will not, and the consummation of the transactions contemplated hereby or
thereby will not, conflict with, or result in any violation of, or default
under (with or without notice or lapse of time, or both), or give rise to
a right of termination,
-10-
<PAGE>
cancellation or acceleration of any obligation or loss of any benefit
under (i) any provision of the Articles of Incorporation, as amended, or
Bylaws, as amended, of AccuMed or similar governing instruments of any of
its subsidiaries or (ii) any material mortgage, indenture, lease, contract
or other agreement or instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to AccuMed or its properties or assets other than any such
conflicts, violations, defaults, terminations, cancellations or
accelerations which would not have a Material Adverse Effect on AccuMed or
have a material adverse effect on the ability of AccuMed to consummate the
transactions contemplated hereby or thereby.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to AccuMed in connection with the execution
and delivery of this Agreement or the Transaction Documents or the
consummation of the transactions contemplated hereby or thereby, except
for (i) the filing of the Agreement of Merger with the California
Secretary of State, (ii) the filing of the Agreement of Merger with the
Illinois Secretary of State, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable federal and state securities laws and the laws of any
foreign country and (iv) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have
a Material Adverse Effect on AccuMed.
4.5 Taxes and Tax Returns. Except as disclosed in the AccuMed Schedules,
AccuMed and its subsidiaries have timely filed all Tax Returns required to have
been filed, and such returns are true and correct. AccuMed and its subsidiaries
have paid or have adequately reserved for the payment of all Taxes that have or
may become due pursuant to said Tax Returns, or pursuant to any assessment
received with respect thereto. There are no present or threatened disputes as to
Taxes payable by AccuMed. There have been no federal, state, foreign or local
audits of income, sales, ad valorem or other Taxes payable by AccuMed or any of
its subsidiaries. There are no unexpired waivers by AccuMed or any of its
subsidiaries of any statute of limitations with respect to any Taxes, and
neither AccuMed nor any of its subsidiaries is a party to any actions or
proceedings by any Governmental Entity for the collection or assessment of
Taxes.
4.6 Restrictions on Business Activities. There is no material agreement,
judgment, injunction, order or decree binding upon AccuMed or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any material current business practice of
AccuMed or any of its subsidiaries, any acquisition of material property by
AccuMed or any of its subsidiaries or the conduct of business by AccuMed or any
of its subsidiaries as currently conducted or as proposed to be conducted by
AccuMed or any of its subsidiaries.
4.7 Absence of Liens and Encumbrances. AccuMed and each of its
subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of their material tangible
properties and assets, real, personal and mixed, used in their business, free
and clear of any liens or encumbrances except as reflected in the AccuMed
-11-
<PAGE>
Schedules and except for liens for taxes not yet due and payable and such
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby. A complete list of all leased and owned real property of
AccuMed and each of its subsidiaries is set forth in the AccuMed Schedules.
4.8 Proprietary Rights. The AccuMed Schedules contain a complete and
accurate list of all patented and registered Proprietary Rights owned by AccuMed
and each of its subsidiaries and all pending patent applications and
applications for the registration of other Proprietary Rights owned or filed by
AccuMed and each of its subsidiaries. The AccuMed Schedules also contain a
complete and accurate list of all trade or corporate names used by AccuMed and
each of its subsidiaries and a complete and accurate list of all licenses and
other rights granted by AccuMed and each of its subsidiaries to any third party
with respect to Proprietary Rights and licenses and other rights granted by any
third party to AccuMed and each of its subsidiaries. Except as set forth on the
AccuMed Schedules, (a) AccuMed and each of its subsidiaries own and possess all
right, title and interest in and to, or have a valid and enforceable license to
use, all of the Proprietary Rights necessary for the operation of AccuMed's and
each of its subsidiaries' respective businesses as presently conducted or as
currently proposed by AccuMed to be conducted; (b) no claim by any third party
contesting the validity, enforceability, use or ownership of any such
Proprietary Rights has been made, is currently outstanding or, to the knowledge
of AccuMed or any of its subsidiaries, is threatened, and to the knowledge of
AccuMed or any of its subsidiaries, there is no reasonable basis for any such
claim; (c) neither AccuMed nor any of its subsidiaries nor any registered agent
of AccuMed or any of its subsidiaries has received any notices of, nor is it
aware of any reasonable basis for an allegation of, any infringement or
misappropriation by, or conflict with, any third party with respect to such
Proprietary Rights, nor has AccuMed or any of its subsidiaries or any registered
agent of AccuMed or any of its subsidiaries received any claims of infringement
or misappropriation of or other conflict with any Proprietary Rights of any
third party; and (d) neither AccuMed nor any of its subsidiaries has infringed,
misappropriated or otherwise violated any Proprietary Rights of any third
parties, nor is AccuMed or any of its subsidiaries aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of AccuMed's or any of its subsidiaries' business as presently
conducted or as currently proposed by AccuMed to be conducted. Except as
disclosed in the AccuMed Schedules, to the knowledge of AccuMed or any of its
subsidiaries, AccuMed and each of its subsidiaries are not obligated or under
any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner of, licensor of, or other claimant to, any patent,
trademark, trade name, copyright, trade secret or other intangible assets, with
respect to the use thereof or in connection with the conduct of its business or
otherwise. To the knowledge of AccuMed or any of its subsidiaries, it is
currently not necessary nor will it be necessary for AccuMed or any of its
subsidiaries to utilize nor will AccuMed or any of its subsidiaries utilize any
inventions of any persons or entities (or people it currently intends to hire)
made or owned prior to their employment by or affiliation with AccuMed or any of
its subsidiaries, nor is it or will it be necessary to utilize any other assets
or rights of any such persons or entities (or people it currently intends to
hire) made or owned prior to their employment with or engagement by AccuMed or
any of its subsidiaries, in violation of any limitations or restrictions to
which any such person or entity is a party or to which any of such assets or
rights may be subject. To the knowledge of AccuMed or any of its subsidiaries,
neither AccuMed nor any of its subsidiaries' employees, consultants, officers,
-12-
<PAGE>
directors or shareholders has taken, removed or made use of any proprietary
documentation, manuals, products, materials or any other tangible item from his
or her previous employer relating to the business as conducted of such previous
employer which has resulted in AccuMed or any of its subsidiaries' access to or
use of such proprietary items. Except as disclosed in the AccuMed Schedules
hereto, all actions required to be taken to transfer interest in such
Proprietary Rights to AccuMed or any of its subsidiaries have been taken, all
notices required to be made in connection with such transfer have been made, and
all consents required to be secured in connection with such transfer have been
secured.
4.9 Contracts. The AccuMed Schedules contain a true and complete list of
every material contract, understanding, agreement, relationship and commitment,
written or oral, to which AccuMed or any of its subsidiaries is a party or by
which its or any of its subsidiaries' properties is bound or subject
(collectively, the "AccuMed Contracts"). Except as expressly set forth in the
AccuMed Schedules, (a) all such AccuMed Contracts are in full force and effect,
enforceable in accordance with their terms; (b) AccuMed and each of its
subsidiaries has performed in all material respects all obligations required to
be performed by each of them thereunder; (c) AccuMed and each of its
subsidiaries is not, nor, to the knowledge of AccuMed, is any other party to any
such AccuMed Contract in default in any material respect or alleged to be in
default in any material respect under the terms thereof; and (d) there exists no
condition which, after notice or lapse of time or both, would constitute such a
default by AccuMed or any of its subsidiaries or which would otherwise allow the
other contracting party to terminate any such AccuMed Contract. Neither AccuMed
nor any of its subsidiaries has received written notice or, to the knowledge of
AccuMed or any of its subsidiaries, any other notice, that any party to any such
AccuMed Contract intends to cancel or terminate, or to exercise any option
under, any such AccuMed Contract. For purposes of this Section 4.9, a contract,
agreement, relationship or commitment is deemed material if it gives rise to
rights or liabilities on the part of AccuMed or any of its subsidiaries
exceeding $10,000 in the aggregate, or is one of a series of related AccuMed
Contracts, commitments, agreements or relationships with the same contracting
party or group of affiliated parties that in the aggregate give rise to rights
or liabilities exceeding such amount.
4.10 Governmental Authorization. AccuMed and each of its subsidiaries
holds all Permits which are material to the operation of AccuMed's and each of
its subsidiaries' business as currently conducted. AccuMed and each of its
subsidiaries is in material compliance with the terms of such Permits. The
business of AccuMed and each of its subsidiaries is not being conducted in
violation of any Laws, except for violations or possible violations which
individually or in the aggregate do not, and insofar as reasonably can be
foreseen, in the future will not have a Material Adverse Effect on AccuMed and
its subsidiaries, taken as a whole. As of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to AccuMed or
any of its subsidiaries is pending or, to the knowledge of AccuMed or any of its
subsidiaries, threatened, nor has any Governmental Entity indicated an intention
to conduct the same.
4.11 Intentionally Deleted.
4.12 Intentionally Deleted.
-13-
<PAGE>
4.13 Litigation. Except as set forth in the AccuMed Schedules:
(a) there are no claims, actions, suits, inquiries, proceedings or
investigations pending or, to the best of AccuMed's or any of its
subsidiaries knowledge, threatened by or against AccuMed or any of its
subsidiaries relating to any product alleged to have been designed,
manufactured, sold or licensed by AccuMed or any subsidiary and alleged to
have been defective, improperly designed or manufactured or improperly
labeled;
(b) there are no claims, actions, suits, inquiries, proceedings or
investigations pending or, to the knowledge AccuMed or any of its
subsidiaries, threatened by or against AccuMed or any of its subsidiaries,
at law or in equity or before or by any Governmental Entity. AccuMed does
not know of any basis for any such claim, action, suit, proceeding or
investigation; and
(c) there are no contracts between AccuMed and any Governmental
Entity purporting to impose any affirmative action or equal employment
opportunities upon AccuMed or any of its subsidiaries relating to
AccuMed's or any of its subsidiaries' employees and with regard to said
employees so far as AccuMed or any of its subsidiaries is aware. Neither
AccuMed nor any of its subsidiaries is a government contractor within the
meaning of Executive Order No. 11246, the Vietnam Veterans Readjustment
Assistance Act of 1974, or the Rehabilitation Act of 1973.
4.14 Health, Safety and Environment.
(a) Compliance with Environmental and Safety Requirements. AccuMed
and each of its subsidiaries is in compliance with all applicable
Environmental and Safety Requirements, and AccuMed and each of its
subsidiaries possess all required permits, licenses and certificates, and
have filed all notices or applications, required thereby.
(b) No Hazardous Wastes. Except as set forth in the AccuMed
Schedules, AccuMed and each of its subsidiaries have not ever generated,
transported, treated, stored or disposed of any Hazardous Wastes (as
hereinafter defined) at any site, location or facility and no such
Hazardous Wastes are present on, in or under any real property owned or
used by AccuMed or any of its subsidiaries, and such property does not
contain (including containment by means of any underground storage tank)
any Hazardous Waste.
(c) No Actions or Proceedings. Neither AccuMed nor any of its
subsidiaries has been subject to, or received any written notice or, to
the knowledge of AccuMed or any of its subsidiaries, any other notice of,
any private, administrative or judicial action, or any written notice or,
to the knowledge of AccuMed or any of its subsidiaries, any other notice
of any intended private, administrative or judicial action relating to the
presence or alleged presence of Hazardous Wastes in, under or upon any
real property owned
-14-
<PAGE>
or used by AccuMed or any of its subsidiaries, and Accumed does not know
and has no reason to know of any reasonable basis for any such notice or
action; and there are no pending or, to the knowledge of AccuMed or any of
its subsidiaries, threatened actions or proceedings (or notices of
potential actions or proceedings) from any governmental agency or any
other entity regarding any matter relating to health, safety or protection
of the environment.
(d) Other Conditions. To the knowledge of AccuMed or any of its
subsidiaries, no facts, events or conditions with respect to the past or
present operations or facilities of AccuMed, it subsidiaries or their
businesses exist which could reasonably be expected to interfere with or
prevent continued compliance with, or could give rise to any common law or
statutory liability or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation against or involving AccuMed,
its subsidiaries or their business under any Environmental and Safety
Requirement based on any such fact, event or circumstance, including
liability for cleanup costs, personal injury or property damage.
4.15 Brokers' and Finders' Fees. Except for fees payable to Lake Shore
Capital Partners, Inc. pursuant to the engagement letter dated April 21, 1994
(which along with all amendments thereto is attached to the AccuMed Schedules),
and the fees payable to Commonwealth Associates pursuant to an engagement letter
dated February 14, 1995, AccuMed has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
4.16 Labor Matters. There are no pending material claims against AccuMed
or any of its subsidiaries under any workers compensation plan or policy or for
long term disability. AccuMed and each of its subsidiaries, have complied in all
material respects with all applicable provisions of COBRA and, if applicable,
similar foreign laws and has no material obligations with respect to any former
employees or qualifying beneficiaries thereunder. Except as set forth in the
AccuMed Schedules, neither AccuMed nor any of its subsidiaries has any labor
unions or collective bargaining agreements with employees. Except as set forth
in the AccuMed Schedules, there is no, and neither AccuMed nor any of its
subsidiaries has experienced any, strike, picketing, boycott, work stoppage or
slowdown or other labor dispute or, to the knowledge of AccuMed or each of its
subsidiaries, any union organizational activity or any complaint of, or any
allegation, charge or reasonable basis for any allegation or charge of, unfair
labor practice, employment discrimination or other matters relating to the
employment of labor. To the knowledge of AccuMed or any of its subsidiaries,
after due inquiry, no such complaint, allegation or charge of unfair labor
practice or employment discrimination has been threatened against AccuMed or any
of its subsidiaries which is likely to have a Material Adverse Effect on AccuMed
and its subsidiaries, taken as a whole. To the knowledge of AccuMed or any of
its subsidiaries, no key employee and no group of employees has any plans to
terminate employment with AccuMed. AccuMed and each of its subsidiaries have
complied in all material respects with all applicable laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes. Except as set forth in the AccuMed Schedules, there are no
-15-
<PAGE>
administrative charges or court complaints pending or, to the knowledge of
AccuMed or any of its subsidiaries, threatened against AccuMed or any of its
subsidiaries before the EEOC or any state or federal court or agency concerning
alleged employment discrimination or any other matters relating to the
employment of labor.
4.17 Employee Benefit Plans.
(a) The AccuMed Schedules set forth all employee benefit plans (as
defined in Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement,
severance and other similar employee benefit plans, programs or
arrangements, and any current or former employment or executive
compensation or severance agreements, written or otherwise, for the
benefit of, or relating to, any current or former employees of AccuMed or
any trade or business (whether or not incorporated) which is a member or
which is under common control with AccuMed (an "ERISA Affiliate") within
the meaning of Section 414 of the Code, or any subsidiary of AccuMed
(collectively, the "AccuMed Employee Plans").
(b) The AccuMed Schedules set forth a complete and correct list of
each plan, policy or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental employment benefits, vacation benefits,
fringe benefits or other forms of compensation or benefits which (i) is
not an AccuMed Employee Plan, (ii) is maintained, established or
contributed to by AccuMed or any subsidiary or any related person, and
(iii) covers any employee or former employee of AccuMed or any related
person, including any employee or former employee of a related person that
does business outside of the United States. Such plans and arrangements as
are described above are hereinafter referred to collectively as the
"AccuMed Benefit Arrangements".
(c) (i) None of the AccuMed Employee Plans or Benefit Arrangements
promises or provides retiree medical or other retiree welfare benefits to
any person except as required by applicable law, including COBRA; (ii) all
AccuMed Employee Plans and AccuMed Benefit Arrangements are, and during
the six-year period ending on the date hereof have been, in compliance in
all material respects with the requirements prescribed by, and have
complied with the reporting and disclosure requirements of, any and all
applicable statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with respect
thereto (including all applicable requirements for notification to
participants or beneficiaries or the Department of Labor, Internal Revenue
Service (the "IRS") or Secretary of the Treasury or similar foreign
regulatory authority), and AccuMed and each of its subsidiaries have
performed all material obligations required to be performed by it under,
is not in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the AccuMed Employee
Plans or AccuMed Benefit Arrangements; (iii) each AccuMed Employee Plan
intended to qualify under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code either has
-16-
<PAGE>
received a favorable determination letter with respect to each such
AccuMed Employee Plan from the IRS or still has a remaining period of time
under applicable Treasury Regulations or IRS pronouncements in which to
apply for such a determination letter and to make any amendments necessary
to obtain a favorable determination; and (iv) no AccuMed Employee Plan or
AccuMed Benefit Arrangement is or within the prior six years has been
subject to, and neither AccuMed nor any of its subsidiaries has incurred
and nor expects to incur any liability under, Title IV of ERISA or Section
412 of the Code and (v) nothing in any AccuMed Employee Plan or AccuMed
Benefit Arrangement precludes or interferes with Alamar's ability to cause
AccuMed to terminate (or consolidate, at Alamar's option) any AccuMed
Employee Plan or AccuMed Benefit Arrangement after the Closing; provided
that (i) the AccuMed Employee Plans and AccuMed Benefit Arrangements may
be terminated prospectively only, subject to rights accrued by AccuMed's
employees at the time of such termination and (ii) not more than 60 days'
notice may be required to terminate certain AccuMed Employee Plans and
AccuMed Benefit Arrangements.
(d) Each AccuMed Employee Plan and AccuMed Benefit Arrangement has
been maintained in substantial compliance with its terms, and all
contributions, premiums or other payments due from AccuMed or any of its
subsidiaries to (or under) any such AccuMed Employee Plan or AccuMed
Benefit Arrangement have been fully paid for the most recently-ended
fiscal year. All accruals thereon (including, where appropriate,
proportional accruals for partial periods) have been made in accordance
with GAAP consistently applied on a reasonable basis. There has been no
amendment, written interpretation or announcement (whether or not written)
by AccuMed or any of its subsidiaries with respect to, or change in
employee participation or coverage under, any AccuMed Employee Plan or
AccuMed Benefit Arrangement that would increase materially the expense of
maintaining such plans or arrangements, individually or in the aggregate,
above the level of expense incurred with respect thereto for the most
recently-ended fiscal year. All non-U.S. Plans and Arrangements are fully
funded under applicable law.
(e) AccuMed has made available to Alamar complete, accurate and
current copies of all AccuMed Employee Plans and AccuMed Benefit
Arrangements and all amendments, documents, correspondence and filings
relating thereto, including, but not limited to, any statements, filings,
reports or returns filed with any governmental agency with respect to the
AccuMed Employee Plans and AccuMed Benefit Arrangements at any time within
the three-year period ending on the date hereof.
4.18 Change of Control Payments. No amounts shall become payable (whether
currently or in the future) to current or former officers, directors or
employees of AccuMed or any of its subsidiaries as a result of or in connection
with the Merger.
-17-
<PAGE>
4.19 Registration Statement; Proxy Statement/Prospectus. The information
supplied in writing by AccuMed for inclusion in the Registration Statement (as
hereinafter defined) shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. AccuMed has reviewed the disclosures in the S Private
Placement document relating to AccuMed and its subsidiaries and represents that,
to its knowledge, such disclosures do not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. The
information supplied in writing by AccuMed for inclusion in the proxy
statement/prospectus to be sent to the shareholders of Alamar in connection with
the meeting of Alamar's shareholders to consider the Merger (the "Alamar
Shareholders' Meeting") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "Proxy Statement") shall not, on the
date the Proxy Statement is first mailed to the Alamar's shareholders, at the
time of the Alamar Shareholders' Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not false or misleading;
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the Alamar
Shareholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to AccuMed or any of its affiliates,
officers or directors should be discovered by AccuMed which should be set forth
in an amendment to the Registration Statement or a supplement to the Proxy
Statement, AccuMed shall promptly inform Alamar. Notwithstanding the foregoing,
AccuMed makes no representation or warranty with respect to any information
supplied by or concerning Alamar which is contained in any of the foregoing
documents.
4.20 No Illegal Payments. Neither AccuMed nor any of its subsidiaries has
not, directly or indirectly, paid or delivered, accepted, or agreed to pay or
deliver any remuneration, fee, commission or sum of money or item of property,
however characterized, to any Person, government official or other party which
is in any manner related to the business of AccuMed or any of its subsidiaries
and which AccuMed or any of its subsidiaries knows or has reason to believe to
have been illegal under any federal, state or local law, which payment or
delivery may impose liability on Alamar.
4.21 Board Approval. The Board of Directors of AccuMed has, on or prior to
the date hereof, unanimously approved this Agreement and the Merger.
4.22 Insurance Policies. The AccuMed Schedules contain a true and complete
list of all policies of insurance currently owned or maintained by AccuMed and
each of its subsidiaries with respect to their business. Said list includes
policy numbers, identity of insurers and a description of the type and amount of
coverage under each such policy. All such policies are in full force and effect,
and AccuMed has not received notice of cancellation or intent to cancel with
respect thereto or is aware of any basis for such action.
-18-
<PAGE>
4.23 Financial Statements. AccuMed has prepared and delivered to Alamar
the following financial statements: (a) an unaudited Income Statement for
AccuMed for the period from February 7, 1994 to December 31, 1994, (b) an
unaudited Balance Sheet for AccuMed dated December 31, 1994, (c) an unaudited
consolidated Income Statement for AccuMed and its subsidiary for the period from
January 1, 1995 to February 28, 1995, and (d) an unaudited consolidated Balance
Sheet for AccuMed and its subsidiary dated February 28, 1995 (the "AccuMed
Balance Sheet"). These financial statements were not prepared in accordance with
GAAP, nor were they reviewed or compiled by independent public accountants, but,
to the knowledge of AccuMed after due inquiry, these financial statements fairly
presented the assets, liabilities and financial position of AccuMed and (to the
extent applicable) its subsidiary as of the respective dates thereof and the
results of their operations for the periods indicated.
4.24 No Undisclosed Liabilities. To the knowledge of AccuMed after due
inquiry, except as set forth in the AccuMed Schedules, AccuMed has no material
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise) other than liabilities or
obligations reflected or reserved against in the AccuMed Balance Sheet and
current liabilities incurred in the ordinary course of business, consistent with
past practices, since the date of the AccuMed Balance Sheet.
4.25 Absence of Certain Changes. Except as disclosed on the AccuMed
Schedules, since February 28, 1995, neither AccuMed nor any of its subsidiaries
has:
(a) Granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment), or any increase in the
compensation payable or to become payable to any officer or employee,
except regularly scheduled increases consistent with past experience;
(b) Made any single capital expenditure or commitment in excess of
$5,000 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures and commitments in excess of
$5,000 for additions to property, plant, equipment or intangible capital
assets;
(c) Declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or
other equity securities of AccuMed or any subsidiary;
(d) Paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of
its officers or directors or any affiliate or associate of any of its
officers or directors, except for regularly scheduled compensation to
officers;
(e) Changed its method of accounting or accounting practices;
-19-
<PAGE>
(f) Written off any notes or accounts receivable as uncollectible
other then in the ordinary course of business and consistent with past
practices;
(g) Discharged or satisfied any lien or encumbrance or paid any
obligation or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due) other than current liabilities
shown on the AccuMed Financial Statements and current liabilities incurred
in the ordinary course of business and consistent with past practice;
(h) Sold, assigned, transferred, mortgaged, pledged or encumbered
any of its assets (real, personal or mixed, tangible or intangible),
cancelled any debts or claims or waived any rights of substantial value,
except, in each case, in the ordinary course of business and consistent
with past practice;
(i) Sold, assigned or transferred any patents, trademarks, trade
names, copyrights or other similar assets, including applications or
licenses therefor;
(j) Entered into any transaction other than in the ordinary course
of business or otherwise contemplated by this Agreement; or
(k) Entered into any agreement or commitment to do any of the
foregoing.
4.26 Manufacturing, Distribution and License Rights. Except as disclosed
in the AccuMed Schedules, neither AccuMed nor any subsidiary has granted rights
or licenses to manufacture, assemble, distribute, license or sell its products
to any person or entity, is bound by any agreement that affects AccuMed's or its
subsidiaries' exclusive right to manufacture, assemble, distribute, license or
sell AccuMed's or its subsidiaries' products, or has licensed or sold any of its
technology or Proprietary Rights to any person or entity.
4.27 Customers and Distributors. Except as disclosed in the AccuMed
Schedules, neither AccuMed nor any of its subsidiaries has actual knowledge that
any customer or distributor has ceased, or intends to cease, utilizing or
purchasing the goods or services, or distributing the products, of AccuMed and
its subsidiaries, or has substantially reduced, or intends substantially to
reduce, the use or purchase of such goods or services, or the distribution of
such products.
4.28 Suppliers. AccuMed has no actual knowledge that any supplier of
AccuMed or any of its subsidiaries will not sell goods and services to Alamar at
any time after the Effective Time on terms and conditions and in quantities
similar to those of prior sales to AccuMed.
4.29 Full Disclosure. AccuMed is not aware of any facts directly relating
to its or its subsidiaries' business or property (excluding, without limitation,
any fact relating to economic, business, political or industry conditions
generally) which it believes affect materially adversely such business or
property or which it believes are likely in the future to affect materially
adversely such business or property which have not been disclosed in this
Agreement or the AccuMed Schedules or been otherwise disclosed in writing to
Alamar.
-20-
<PAGE>
4.30 No Misrepresentation. None of the representations and warranties of
AccuMed set forth in this Agreement or in any of the certificates, schedules,
lists, documents, exhibits, or other instruments delivered, or to be delivered,
to Alamar as contemplated by any provision hereof, contains, or will contain at
the Effective Time, any untrue statement of a material fact or omits, or will
omit at the Effective Time, any material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ALAMAR
Alamar represents and warrants to AccuMed as of the date hereof and again
as of the Effective Time, subject to the exceptions disclosed in writing in the
disclosure letter supplied to AccuMed by Alamar (the "Alamar Schedules") which
identifies the Section numbers hereof to which the disclosures pertain and which
is dated as of the date hereof and again as of the Effective Time and which is
attached to this Agreement and incorporated by reference, as set forth below.
5.1 Organization of Alamar. Alamar is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power to own, lease and operate its property
and to carry on its business as now being conducted and as proposed to be
conducted, and is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the failure to be so qualified
would have a Material Adverse Effect on Alamar. Alamar does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any interest in, any corporation,
partnership, joint venture or other business association or entity. The Alamar
Schedules contain true and correct copy of the Articles of Incorporation and
Bylaws or other charter documents of Alamar, each as amended to date. Alamar has
no subsidiaries.
5.2 Capital Structure.
(a) The authorized capital stock of Alamar consists as of the date
hereof of 30,000,000 shares of Common Stock, no par value, of which
5,140,939 shares were issued and outstanding as of April 21, 1995, and
5,000,000 shares of Preferred Stock, no par value, none of which are
issued or outstanding. All such shares have been duly authorized, and all
such issued and outstanding shares have been validly issued, are fully
paid and nonassessable and are free of any liens or encumbrances other
than any liens or encumbrances created by or imposed upon the holders
thereof. As of April 21, 1995, Alamar has also reserved (i) 724,985 shares
of Common Stock for issuance to employees, officers or directors of Alamar
under the 1990 Alamar Option Plan and the 1992 Alamar Option Plan, and
(ii) 4,070,964 shares of Common Stock for issuance upon exercise of the
Alamar Warrants. As of April 21, 1995, of the 724,985 shares of Alamar
Common Stock reserved for issuance upon exercise of options therefor,
581,809 shares remained subject to outstanding options with a weighted
average exercise price of approximately $1.30, and 173,176 shares were
reserved for future grant. As of April 21, 1995, of the 4,070,964 shares
of
-21-
<PAGE>
Alamar Common Stock reserved for issuance upon exercise of Alamar
Warrants, 4,070,964 shares remained subject to outstanding Alamar Warrants
with a weighted average exercise price of approximately $4.38, and no
shares were reserved for future grant. All shares of Alamar Common Stock
subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in the Alamar Schedules, there are no
other equity securities, options, warrants, calls, rights, commitments or
agreements of any character to which Alamar is a party or by which it is
bound obligating Alamar to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares
of the capital stock of Alamar or obligating Alamar to grant, extend or
enter into any such equity security, option, warrant, call, right,
commitment or agreement. All shares of Alamar capital stock have been
issued in compliance with all applicable federal and state securities
laws, and no right of rescission inures to any shareholder of Alamar.
(b) The shares of Alamar Common Stock to be issued pursuant to the
Merger will, upon issuance, be duly authorized, validly issued, fully paid
and non-assessable.
5.3 Authority.
(a) Alamar has all requisite corporate power and authority to enter
into this Agreement and the Transaction Documents to which it is or will
be a party, subject to obtaining requisite shareholder approval, and to
consummate the transactions contemplated hereby or thereby. The execution
and delivery of this Agreement and the Transaction Documents to which it
is or will be a party and the consummation of the transactions
contemplated hereby or thereby have been duly authorized by all necessary
corporate action on the part of Alamar subject only to the approval of the
Merger by Alamar's shareholders as contemplated by Section 8.1(a). This
Agreement has been duly executed and delivered by Alamar and constitutes
the valid, binding and enforceable obligation of Alamar, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity.
(b) The execution and delivery by Alamar of this Agreement and the
Transaction Documents to which Alamar is or will be a party do not or will
not, and the consummation of the transactions contemplated hereby or
thereby will not, conflict with, or result in any violation of, or default
under (with or without notice or lapse of time, or both), or give rise to
a right of termination, cancellation or acceleration of any obligation or
loss of a benefit under (i) any provision of the Articles of Incorporation
or Bylaws of Alamar or (ii) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Alamar or its properties or assets other than any
such conflicts, violations, defaults, terminations, cancellations or
-22-
<PAGE>
accelerations which would not have a Material Adverse Effect on Alamar or
have a material adverse effect on the ability of Alamar to consummate the
transactions contemplated hereby or thereby.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is
required by or with respect to Alamar in connection with the execution and
delivery of this Agreement or the Transaction Documents to which it is
party by Alamar or the consummation by Alamar of the transactions
contemplated hereby or thereby, except for (i) the filing of the Agreement
of Merger with the California Secretary of State, (ii) the filing of the
Agreement of Merger with the Illinois Secretary of State, (iii) the filing
of the Registration Statement with the SEC in accordance with the
Securities Act, (iv) the filing of the Proxy Statement with the SEC in
accordance with the Exchange Act, (v) the filing of a Form 8-K and Form
10-C with the SEC within 15 days and 10 days, respectively, after the
Closing Date, (vi) any filings as may be required under applicable state
securities laws and the laws of any foreign country, and (vii) such other
consents, authorizations, filings, approvals and registrations which if
not obtained or made would not have a Material Adverse Effect on Alamar.
5.4 SEC Filings; Alamar Financial Statements.
(a) Alamar has filed on a timely basis all forms, reports and
documents required to be filed with the SEC since October 14, 1992, and
Alamar has made available to AccuMed, in the form filed with the SEC, (i)
its Annual Reports on Form 10-KSB for the fiscal years ended September 30,
1992, 1993 and 1994, respectively, (ii) its Quarterly Reports on Form
10-QSB for the period ended December 31, 1994, (ii) all proxy statements
relating to Alamar's meetings of shareholders (whether annual or special)
held since September 30, 1992, (iv) all other reports or registration
statements filed by Alamar with the SEC since September 30, 1992 and (v)
all amendments and supplements to all such reports and registration
statements filed by Alamar with the SEC. All such required forms, reports
and documents (including those enumerated in clauses (i) through (v) of
the preceding sentence) are referred to herein as the "Alamar SEC
Reports". As of their respective dates, the Alamar SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Alamar SEC Reports and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Alamar SEC Reports,
including any Alamar SEC Reports filed after the date hereof until the
Closing, (x)
-23-
<PAGE>
complies as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (y) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and (z) fairly
presented the assets, liabilities and financial position of Alamar as of
the respective dates thereof and the results of its operations and cash
flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
The audited balance sheet of Alamar contained in the Alamar SEC Reports,
as of September 30, 1994, is hereinafter referred to as the "Alamar
Balance Sheet".
(c) Alamar has heretofore furnished or made available to AccuMed a
complete and correct copy of any amendments or modifications, which have
not yet been filed with the SEC but which are required to be filed, to
agreements, documents or other instruments which previously had been filed
by Alamar with the SEC pursuant to the Securities Act or the Exchange Act.
5.5 Intentionally Deleted.
5.6 Taxes, Tax Returns and Audits. Alamar has timely filed all Tax Returns
required to have been filed, and such returns are true and correct. Alamar has
paid or has adequately reserved in the Alamar Financial Statements for the
payment of all Taxes that have or may become due pursuant to said Tax Returns,
or pursuant to any assessment received with respect thereto. Except as disclosed
in the Alamar Schedules, there are no present or threatened disputes as to Taxes
payable by Alamar. There have been no federal, state, foreign or local audits of
income, sales, ad valorem or other Taxes payable by Alamar except as disclosed
in the Alamar Schedules and any deficiencies proposed as a result of such audits
have been paid or settled. There are no unexpired waivers by Alamar of any
statute of limitations with respect to any Taxes, and Alamar is not a party to
any actions or proceedings by any Governmental Entity for the collection or
assessment of Taxes.
5.7 Restrictions on Business Activities. There is no material agreement,
judgment, injunction, order or decree binding upon Alamar which has or
reasonably would be expected to have the effect of prohibiting or materially
impairing any material current business practice of Alamar, any acquisition of
material property by Alamar or the conduct of business by Alamar as currently
conducted or as proposed to be conducted by Alamar.
5.8 Absence of Liens and Encumbrances. Alamar has good and valid title to,
or, in the case of leased properties and assets, valid leasehold interests in,
all of its material tangible properties and assets, real, personal and mixed,
used in its business, free and clear of any liens or encumbrances except as
reflected in the Alamar Financial Statements and except for liens for taxes not
yet due and payable and such imperfections of title and encumbrances, if any,
which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby. A complete list of all
Alamar leased and owned real property is set forth in the Alamar Schedules.
-24-
<PAGE>
5.9 Proprietary Rights. The Alamar Schedules contain a complete and
accurate list of all patented and registered Proprietary Rights owned by Alamar
and all pending patent applications and applications for the registration of
other Proprietary Rights owned or filed by Alamar. The Alamar Schedules also
contain a complete and accurate list of all trade or corporate names used by
Alamar and a complete and accurate list of all licenses and other rights granted
by Alamar to any third party with respect to Proprietary Rights and licenses and
other rights granted by any third party to Alamar. Except as set forth on the
Alamar Schedules, (a) Alamar owns and possesses all right, title and interest in
and to, or has a valid license to use, all of the Proprietary Rights necessary
for the operation of Alamar's business as presently conducted or as currently
proposed by Alamar to be conducted; (b) no claim by any third party contesting
the validity, enforceability, use or ownership of any such Proprietary Rights
has been made, is currently outstanding or, to the knowledge of Alamar, is
threatened, and to the knowledge of Alamar, there is no reasonable basis for any
such claim; (c) none of Alamar nor any registered agent of Alamar has received
any notices of, nor are they aware of any reasonable basis for an allegation of,
any infringement or misappropriation by, or conflict with, any third party with
respect to such Proprietary Rights, nor has Alamar or any registered agent of
Alamar received any claims of infringement or misappropriation of or other
conflict with any Proprietary Rights of any third party; and (d) Alamar has not
infringed, misappropriated or otherwise violated any Proprietary Rights of any
third parties, nor is aware of any infringement, misappropriation or conflict
which will occur as a result of the continued operation of Alamar's business as
presently conducted or as currently proposed by Alamar to be conducted. Except
as disclosed in the Alamar Schedules, to the knowledge of Alamar, Alamar is not
obligated or under any liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner of, licensor of, or other claimant to,
any patent, trademark, trade name, copyright, trade secret or other intangible
assets, with respect to the use thereof or in connection with the conduct of its
business or otherwise. To the knowledge of Alamar, it is currently not necessary
nor will it be necessary for Alamar to utilize nor will Alamar, nor is it or
will it be necessary to utilize any inventions of any persons or entities (or
people it currently intends to hire) made or owned prior to their employment by
or affiliation with Alamar nor is it or will it be necessary to utilize any
other assets or rights of any of such persons or entities (or people it
currently intends to hire) made or owned prior to their employment with or
engagement by Alamar or in violation of any limitations or restrictions to which
any such person or entity is a party or to which any of such assets or rights
may be subject. Except as disclosed in the Alamar Schedules, to the knowledge of
Alamar, none of Alamar's employees, consultants, officers, directors or
shareholders has taken, removed or made use of any proprietary documentation,
manuals, products, materials or any other tangible item from his or her previous
employer relating to the business as conducted of such previous employer which
has resulted in Alamar's access to or use of such proprietary items. Except as
disclosed in the Alamar Schedules hereto, all actions required to be taken to
transfer interest in such Proprietary Rights to Alamar have been taken, all
notices required to be made in connection with such transfer have been made, and
all consents required to be secured in connection with such transfer have been
secured.
5.10 Contracts. The Alamar Schedules contain a true and complete list of
every material contract, understanding, agreement, relationship and commitment,
written or oral, to which Alamar is a party or by which its properties is bound
or subject (collectively, the "Alamar Contracts"). Except as expressly set forth
in the Alamar Schedules, (a) all such Alamar Contracts are in full force and
effect, enforceable in accordance with their terms; (b)
-25-
<PAGE>
Alamar has performed in all material respects all obligations required to be
performed by it thereunder; (c) Alamar is not, nor, to the knowledge of Alamar,
is any other party to any such Alamar Contract in default in any material
respect or alleged to be in default in any material respect under the terms
thereof; and (d) there exists no condition which, after notice or lapse of time
or both, would constitute such a default by Alamar or which would otherwise
allow the other contracting party to terminate any such Alamar Contract. Alamar
has not received written notice nor, to the knowledge of Alamar, any other
notice, that any party to any such Alamar Contract intends to cancel or
terminate, or to exercise any option under, any such Alamar Contract. For
purposes of this Section 5.10, a contract, agreement, relationship or commitment
is deemed material if it (i) is, or has been, required to be filed as an exhibit
to the Alamar SEC Reports or (ii) gives rise to rights or liabilities on the
part of Alamar exceeding $10,000 in the aggregate, or is one of a series of
related Alamar Contracts, commitments, agreements or relationships with the same
contracting party or group of affiliated parties that in the aggregate give rise
to rights or liabilities exceeding such amount.
5.11 Governmental Authorization. Alamar holds all Permits which are
material to the operation of Alamar's business as currently conducted. Alamar is
in material compliance with the terms of such Permits. Except as set forth on
the Alamar Schedules, the business of Alamar is not being conducted in violation
of any Laws, except for violations or possible violations which individually or
in the aggregate do not, and insofar as reasonably can be foreseen, in the
future will not, have a Material Adverse Effect on Alamar. As of the date of
this Agreement, no investigation or review by any Governmental Entity with
respect to Alamar is pending or, to the knowledge of Alamar, threatened, nor has
any Governmental Entity indicated an intention to conduct the same.
5.12 Intentionally Deleted.
5.13 Intentionally Deleted.
5.14 Litigation. Except as set forth in the Alamar Schedules:
(a) there are no claims, actions, suits, inquiries, proceedings or
investigations pending or, to the knowledge of Alamar, threatened by or
against Alamar relating to any product alleged to have been designed,
manufactured, sold or licensed by Alamar and alleged to have been
defective, improperly designed or manufactured or improperly labeled;
(b) there are no claims, actions, suits, inquiries, proceedings or
investigations pending or, to the knowledge of Alamar, threatened by or
against Alamar at law or in equity or before or by any Governmental
Entity. Alamar does not know of any basis for any such claim, action,
suit, proceeding or investigation; and
(c) there are no contracts between Alamar and any Governmental
Entity purporting to impose any affirmative action or equal employment
opportunities upon Alamar relating to Alamar's employees and with regard
to said employees so far as Alamar is aware. Alamar is not a government
contractor
-26-
<PAGE>
within the meaning of Executive Order No. 11246, the Vietnam Veterans
Readjustment Assistance Act of 1974, or the Rehabilitation Act of 1973.
5.15 Health, Safety and Environment.
(a) Compliance with Environmental and Safety Requirements. Alamar is
in compliance with all applicable Environmental and Safety Requirements,
and Alamar possesses all required permits, licenses and certificates, and
has filed all notices or applications, required thereby.
(b) No Hazardous Wastes. Except as set forth in the Alamar
Schedules, Alamar has not ever generated, transported, treated, stored, or
disposed of any Hazardous Wastes at any site, location or facility and no
such Hazardous Wastes are present on, in or under any real property owned
or used by Alamar, and such property does not contain (including
containment by means of any underground storage tank) any Hazardous Waste.
(c) No Actions or Proceedings. Alamar has not been subject to, or
received any written notice or, to the knowledge of Alamar, any other
notice of, any private, administrative or judicial action, or any written
notice or, to the knowledge of Alamar, any other notice of any intended
private, administrative, or judicial action relating to the presence or
alleged presence of Hazardous Wastes in, under or upon any real property
owned or used by Alamar, and Alamar does not know and has no reason to
know of any reasonable basis for any such notice or action; and there are
no pending or, to the knowledge of Alamar, threatened actions or
proceedings (or notices of potential actions or proceedings) from any
governmental agency or any other entity regarding any matter relating to
health, safety or protection of the environment.
(d) Other Condition. To the knowledge of Alamar, no facts, events or
conditions with respect to the past or present operations or facilities of
Alamar or its business exist which could reasonably be expected to
interfere with or prevent continued compliance with, or could give rise to
any common law or statutory liability or otherwise form the basis of any
claim, action, suit, proceeding, hearing or investigation against or
involving Alamar or its business under any Environmental and Safety
Requirement based on any such fact, event or circumstance, including
liability for cleanup costs, personal injury or property damage.
5.16 Broker's and Finders' Fees. Except for fees payable to Commonwealth
pursuant to the engagement letter dated February 14, 1995 and the fees, costs
and expenses payable to Commonwealth in connection with this Agreement, the S
Private Placement and the D Private Placement, all of which have been disclosed
in writing to AccuMed, and fees payable to Bridgemere Capital pursuant to the
engagement letter dated March 29, 1995, copies of which have been provided to
Accumed, Alamar has not incurred, and will not incur, directly or indirectly,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement, the Merger or any transaction
contemplated hereby.
-27-
<PAGE>
5.17 Labor Matters. There are no pending material claims against Alamar
under any workers compensation plan or policy or for long term disability.
Alamar and each of its United States subsidiaries, has complied in all material
respects with all applicable provisions of COBRA and, if applicable, similar
foreign laws and has no material obligations with respect to any former
employees or qualifying beneficiaries thereunder. Except as set forth in the
Alamar Schedules, Alamar has no labor unions or collective bargaining agreements
with its employees. Except as set forth in the Alamar Schedules, there is not,
and within the last three years Alamar has not experienced, any strike,
picketing, boycott, work stoppage or slowdown or other labor dispute or, to the
knowledge of Alamar, any union organizational activity or any complaint of, or
any allegation, charge or reasonable basis for any allegation or charge of,
unfair labor practice, employment discrimination or other matters relating to
the employment of labor. To the knowledge of Alamar, after due inquiry, no such
complaint, allegation or charge of unfair labor practice or employment
discrimination has been threatened against Alamar which is likely to adversely
affect Alamar. To the knowledge of Alamar, no key employee and no group of
employees has any plans to terminate employment with Alamar. Alamar has complied
in all material respects with all applicable laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes. Except
as set forth in the Alamar Schedules, there are no administrative charges or
court complaints pending or, to the knowledge of Alamar, threatened against
Alamar before the EEOC or any state or federal court or agency concerning
alleged employment discrimination or any other matters relating to the
employment of labor.
5.18 Employee Benefit Plans.
(a) The Alamar Schedules set forth all employee benefit plans (as
defined in Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement,
severance and other similar employee benefit plans, programs or
arrangements, and any current or former employment or executive
compensation or severance agreements, written or otherwise, for the
benefit of, or relating to, any current or former employees of Alamar or
any trade or business (whether or not incorporated) which is a member or
which is under common control with Alamar (an "Alamar ERISA Affiliate")
within the meaning of Section 414 of the Code, or any subsidiary of Alamar
(collectively, the "Alamar Employee Plans").
(b) The Alamar Schedules set forth a complete and correct list of
each plan, policy or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental employment benefits, vacation benefits,
fringe benefits or other forms of compensation or benefits which (i) is
not an Alamar Employee Plan, (ii) is maintained, established or
contributed to by Alamar or any related person, and (iii) covers any
employee or former employee of Alamar or any related person, including any
employee or former employee of a related person that does business outside
of the United States. Such plans and arrangements as are described above
are hereinafter referred to collectively as the "Alamar Benefit
Arrangements".
-28-
<PAGE>
(c) (i) None of the Alamar Employee Plans or Alamar Benefit
Arrangements promises or provides retiree medical or other retiree welfare
benefits to any person except as required by applicable law, including
COBRA; (ii) all Alamar Employee Plans and Alamar Benefit Arrangements are,
and during the six-year period ending on the date hereof have been, in
compliance in all material respects with the requirements prescribed by,
and have complied with the reporting and disclosure requirements of, any
and all applicable statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with respect
thereto (including all applicable requirements for notification to
participants or beneficiaries or the Department of Labor, IRS or Secretary
of the Treasury or similar foreign regulatory authority), and Alamar has
performed all material obligations required to be performed by it under,
is not in default under or violation of, and has no knowledge of any
default or violation by any other party to, any of the Alamar Employee
Plans or Alamar Benefit Arrangements; (iii) each Alamar Employee Plan
intended to qualify under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code either has received a
favorable determination letter with respect to each such Alamar Employee
Plan from the IRS or still has a remaining period of time under applicable
Treasury Regulations or IRS pronouncements in which to apply for such a
determination letter and to make any amendments necessary to obtain a
favorable determination; and (iv) no Alamar Employee Plan or Alamar
Benefit Arrangement is or within the prior six years has been subject to,
and Alamar has not incurred and does not expect to incur any liability
under, Title IV of ERISA or Section 412 of the Code and (v) nothing in any
Alamar Employee Plan or Alamar Benefit Arrangement precludes or interferes
with AccuMed's ability to cause Alamar to terminate (or consolidate, at
AccuMed's option) any Alamar Employee Plan or Alamar Benefit Arrangement
after the Closing; provided that (i) the Alamar Employee Plans and Alamar
Benefit Arrangements may be terminated prospectively only, subject to
rights accrued by Alamar's employees at the time of such termination and
(ii) not more than 60 days' notice may be required to terminate certain
Alamar Employee Plans and Alamar Benefit Arrangements.
(d) Each Alamar Employee Plan and Alamar Benefit Arrangement has
been maintained in substantial compliance with its terms, and all
contributions, premiums or other payments due from Alamar or any of its
subsidiaries to (or under) any such Alamar Employee Plan or Alamar Benefit
Arrangement have been fully paid for the most recently-ended fiscal year.
All accruals thereon (including, where appropriate, proportional accruals
for partial periods) have been made in accordance with GAAP consistently
applied on a reasonable basis. There has been no amendment, written
interpretation or announcement (whether or not written) by Alamar with
respect to, or change in employee participation or coverage under, any
Alamar Employee Plan or Alamar Benefit Arrangement that would increase
materially the expense of maintaining such plans or arrangements,
individually or in the aggregate, above the level of expense incurred with
respect thereto for the most recently-ended fiscal year. All non-U.S.
Plans and Arrangements are fully funded under applicable law.
-29-
<PAGE>
(e) Alamar has made available to AccuMed complete, accurate and
current copies of all Alamar Employee Plans and Alamar Benefit
Arrangements and all amendments, documents, correspondence and filings
relating thereto, including any statements, filings, reports or returns
filed with any governmental agency with respect to the Alamar Employee
Plans and Alamar Benefit Arrangements at any time within the three-year
period ending on the date hereof.
5.19 Change of Control Payments. Except as set forth on the Alamar
Schedules, no amounts shall become payable (whether currently or in the future)
to current or former officers, directors or employees of Alamar as a result of
or in connection with the Merger.
5.20 Registration Statement; Proxy Statement/Prospectus. The Registration
Statement on Form S-4 (or such other or successor form as shall be appropriate),
(including any amendments or supplements thereto, the "Registration Statement"),
pursuant to which the shares of Alamar Common Stock to be issued in the Merger
will be registered with the SEC shall not, at the time the Registration
Statement is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements included therein not
misleading. The Proxy Statement shall not, on the date the Proxy Statement is
first mailed to shareholders, at the time of the Alamar Shareholders' Meeting
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not false or misleading, or omit to state any material affect
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Alamar Shareholders' Meeting which has
become false or misleading. Alamar has reviewed the disclosures in the S Private
Placement document and represents that such disclosures do not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. The Registration Statement will comply as to form in all material
respects with the applicable provisions of the Securities Act and the rules and
regulations thereunder. The Proxy Statement will comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. The S Private Placement document will comply
as to form in all material respects with the provisions of the Securities Act
and the rules and regulations thereunder. If at any time prior to the Effective
Time any event relating to Alamar or any of its respective affiliates, officers
or directors should be discovered by Alamar which should be set forth in an
amendment to the Registration Statement or S Private Placement document or a
supplement to the Proxy Statement, Alamar will promptly inform AccuMed.
Notwithstanding the foregoing, Alamar makes no representation or warranty with
respect to any information supplied by AccuMed for inclusion in any of the
foregoing documents.
5.21 No Illegal Payments. Alamar has not, directly or indirectly, paid or
delivered, accepted, or agreed to pay or deliver any remuneration, fee,
commission or sum of money or item of property, however characterized, to any
Person, government official or other party which is in any manner related to the
business of Alamar and which Alamar knows or has reason to believe to have been
illegal under any federal, state or local law, which payment or delivery may
impose liability on AccuMed.
-30-
<PAGE>
5.22 Board Approval. The Board of Directors of Alamar has, as of the date
hereof, approved this Agreement and the Merger.
5.23 Insurance Policies. The Alamar Schedules contain a true and complete
list of all policies of insurance currently owned or maintained by Alamar with
respect to its business. Said list includes policy numbers, identity of insurers
and a description of the type and amount of coverage under each such policy. All
such policies are in full force and effect, and Alamar has not received notice
of cancellation or intent to cancel with respect thereto or is aware of any
basis for such action.
5.24 No Undisclosed Liabilities. To the knowledge of Alamar after due
inquiry, except as set forth in the Alamar Schedules, Alamar has no material
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) other then liabilities or
obligations reflected or reserved against in the Alamar Balance Sheet and
current liabilities incurred in the ordinary course of business, consistent with
past practices, since the date of the Alamar Balance Sheet.
5.25 Intentionally Deleted.
5.26 Absence of Certain Changes. Except as disclosed on the Alamar
Schedules, since December 31, 1994, Alamar has not:
(a) Granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment), or any increase in the
compensation payable or to become payable to any officer or employee,
except regularly scheduled increases consistent with past experience;
(b) Made any single capital expenditure or commitment in excess of
$5,000 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures and commitments in excess of
$5,000 for additions to property, plant, equipment or intangible capital
assets;
(c) Declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or
other equity securities of Alamar;
(d) Paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of
its officers or directors or any affiliate or associate of any of its
officers or directors, except for regularly scheduled compensation to
officers;
(e) Changed its method of accounting or accounting practices;
-31-
<PAGE>
(f) Written off any notes or accounts receivable as uncollectible
other then in the ordinary course of business and consistent with past
practices;
(g) Discharged or satisfied any lien or encumbrance or paid any
obligation or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due) other than current liabilities
shown on the Alamar Balance Sheet and current liabilities incurred in the
ordinary course of business and consistent with past practice;
(h) Sold, assigned, transferred, mortgaged, pledged or encumbered
any of its assets (real, personal or mixed, tangible or intangible),
cancelled any debts or claims or waived any rights of substantial value,
except, in each case, in the ordinary course of business and consistent
with past practice;
(i) Sold, assigned or transferred any patents, trademarks, trade
names, copyrights or other similar assets, including applications or
licenses therefor;
(j) Entered into any transaction other than in the ordinary course
of business or otherwise contemplated by this Agreement; or
(k) Entered into any agreement or commitment to do any of the
foregoing.
5.27 Manufacturing, Distribution and License Rights. Except as disclosed
in the Alamar Schedules, Alamar has not granted rights or licenses to
manufacture, assemble, distribute, license or sell its products to any person or
entity, is not bound by any agreement that affects Alamar's exclusive right to
manufacture, assemble, distribute, license or sell Alamar's products, and has
not licensed or sold any of its technology or Proprietary Rights to any person
or entity.
5.28 Customers and Distributors. Except as disclosed in the Alamar
Schedules, Alamar has no actual knowledge that any customer or distributor has
ceased, or intends to cease, utilizing or purchasing the goods or services, or
distributing the products, of Alamar or has substantially reduced, or intends
substantially to reduce, the use or purchase of such goods or services, or the
distribution of such products.
5.29 Suppliers. Alamar has no actual knowledge that any supplier of Alamar
will not sell goods and services to Alamar at any time after the Effective Time
on terms and conditions and in quantities similar to those of prior sales to
Alamar.
5.30 Full Disclosure. Alamar is not aware of any facts directly relating
to its business or property (excluding, without limitation, any facts relating
to economic, business, political or industry conditions generally) which it
believes affect materially adversely such business or property or which it
believes are likely in the future to affect materially adversely such business
or property which have not been disclosed in this Agreement or the Alamar
Schedules or been otherwise disclosed in writing to AccuMed.
-32-
<PAGE>
5.31 No Misrepresentation. None of the representations and warranties of
Alamar set forth in this Agreement or in any of the certificates, schedules,
lists, documents, exhibits, or other instruments delivered, or to be delivered,
to AccuMed as contemplated by any provision hereof, contains, or will contain at
the Effective Time, any untrue statement of a material fact or omits, or will
omit at the Effective Time, any material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE VI
CONDUCT AND COVENANTS PRIOR TO THE EFFECTIVE TIME
6.1 Conduct of Business. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement pursuant
to its terms and the Effective Time, each of Alamar and AccuMed agrees, except
to the extent that the other party shall otherwise consent in writing (which
consent shall not be unreasonably withheld or delayed), to carry on its business
in the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other material obligations
when due, and to use all commercially reasonable efforts consistent with past
practices and policies to preserve intact its present business organizations,
keep available the services of its present officers and employees and preserve
its relationships with customers, suppliers, distributors, licensors, licensees
and others having business dealings with it, to the end that its goodwill and
ongoing businesses be unimpaired at the Effective Time. Alamar and AccuMed
further agree that each shall promptly notify the other of any event or
occurrence not in the ordinary course of its business, and will not enter into
or amend any agreement or take any action which reasonably would be expected to
have a Material Adverse Effect on it. Alamar further covenants and agrees that
it will use its best efforts (a) to raise at least $1,800,000 in gross proceeds
through the S Private Placement and/or D Private Placement within 10 business
days of the date of this Agreement and (b) to maintain the listing of the Alamar
Common Stock on, and to meet all of the requirements for continued listing on,
the Nasdaq SmallCap Market or, if the Alamar Common Stock is removed from
listing on the Nasdaq SmallCap Market, to obtain the relisting of the Alamar
Common Stock on the Nasdaq SmallCap Market or another national securities
market. The parties are aware of the pending negotiations with Becton, Dickinson
& Company ("BD") and each will cooperate and use their best efforts to complete
these negotiations successfully in order to obtain additional capital for
Alamar.
6.2 Consent of Other Party to Engage in Certain Conduct. Except as
expressly contemplated by this Agreement or disclosed on the Alamar Schedules in
the case of Alamar and the AccuMed Schedules in the case of AccuMed, neither
Alamar nor Accumed shall prior to the Effective Time or earlier termination of
this Agreement pursuant to its terms, without the prior written consent of the
other party (which consent shall not be unreasonably withheld or delayed, and to
the extent Peter P. Gombrich is consenting on behalf of Alamar, Mr. Gombrich
will obtain the approval of Alamar's Board prior to giving such consent):
-33-
<PAGE>
(a) Accelerate, amend or change the period of exercisability of
options or restricted stock, or reprice options granted under the employee
stock plans of such party or authorize cash payments in exchange for any
options granted under any of such plans;
(b) Grant any severance or termination pay (i) to any executive
officer or (ii) to any other employee except payments made in connection
with the termination of employees who are not executive officers in
amounts consistent with such party's policies and past practices or
pursuant to written agreements outstanding, or policies existing, on the
date hereof or pursuant to written agreements consistent with such party's
prior agreements under similar circumstances;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to such party's Proprietary Rights or enter
into grants to future patent rights, other than licenses in connection
with the sale of goods or services entered into in the ordinary course of
business consistent with past practices;
(d) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of capital stock of such party;
(e) Repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with written agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
(f) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of any shares of its capital stock of any class or
securities convertible into, or subscriptions, rights, warrants or options
to acquire, or other agreements or commitments of any character obligating
it to issue any such shares or other convertible securities, other than,
in the case of Alamar, (i) shares of Alamar Common Stock issuable upon the
exercise of previously issued Alamar Warrants, (ii) shares of Alamar
Common Stock issuable upon the exercise of options previously granted
pursuant to the 1990 Alamar Option Plan and the 1992 Alamar Option Plan
and/or (iii) no more than an aggregate of 4,000,000 shares of Alamar
Common Stock pursuant to the S Private Placement and the D Private
Placement, provided that neither the S Private Placement nor the D Private
Placement is conditioned in any way upon the continued listing of the
Alamar Common Stock on the Nasdaq SmallCap Market;
(g) Except as otherwise provided for herein, cause, permit or
propose any amendments to such party's Articles of Incorporation or
Bylaws;
-34-
<PAGE>
(h) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets
of, or by any other manner, any business or any corporation, partnership
interest, association or other business organization or division thereof,
or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of such party, or enter
into any joint ventures, strategic partnerships or alliances or purchase
any distributors;
(i) Sell, lease, license, encumber or otherwise dispose of any of
such party's properties or assets which are material, individually or in
the aggregate, to the business of such party, except in the ordinary
course of business consistent with past practice;
(j) Incur any indebtedness for borrowed money (other than ordinary
course trade payables or pursuant to existing credit facilities in the
ordinary course of business) or guarantee any such indebtedness or issue
or sell any debt securities or warrants or rights to acquire debt
securities of such party or guarantee any debt securities of others;
(k) Adopt or amend any employee benefit or stock purchase or option
plan, or enter into any employment contract, pay any special bonus or
special remuneration to any director or employee, or increase the salaries
or wage rates of its employees other than in the ordinary course of
business, consistent with past practice;
(l) Revalue any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business consistent with past practices;
(m) Pay, discharge or satisfy in an amount in excess of $10,000 (in
any one case) or $50,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities of the type reflected or
reserved against in such party's financial statements (or the notes
thereto) (included in each of the AccuMed and Alamar Schedules is a list
of accounts payables as to which AccuMed and Alamar agree there is no
dispute and which may be paid down in the ordinary course);
(n) Make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, file any material Tax
Return or any amendment to a material Tax Return, enter into any closing
agreement, settle any claim or assessment in respect of Taxes (except
settlements effected solely through payment of immaterial sums of money),
or consent to any extension or waiver of the limitation period applicable
to any claim or assessment in respect of Taxes;
-35-
<PAGE>
(o) Commence any litigation other than (i) for the routine
collection of bills or (ii) in such case where such party in good faith
determines in good faith that failure to commence suit would result in the
material impairment of a valuable aspect of such party's business,
provided that such party consults with the other party prior to the filing
of such a suit; or
(p) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.2(a) through (o) above, or any action
which would cause or would be reasonably likely to cause any of the
conditions to the Merger set forth in Sections 8.1 or 8.2, with respect to
Alamar, or Sections 8.1 or 8.3, with respect to AccuMed, not to be
satisfied.
6.3 Bring-down of Disclosure Schedules. At the closing, Alamar shall
deliver the Updated Alamar Schedules (as hereinafter defined) to AccuMed and
AccuMed shall deliver the Updated AccuMed Schedules (as hereinafter defined) to
Alamar.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Proxy Statement/Prospectus; Registration Statement. As promptly as
practicable after the execution of this Agreement, Alamar shall prepare, and
file with the SEC, the Proxy Statement and the Registration Statement in which
the Proxy Statement will be included as a prospectus. Alamar shall use its best
efforts to have the Registration Statement declared effective as soon thereafter
as practicable. The Proxy Statement shall also include the recommendation of the
Board of Directors of Alamar in favor of the Merger which shall not be
withdrawn, modified or withheld except in compliance with the fiduciary duties
of Alamar's Board under applicable law. AccuMed shall cooperate with Alamar and
its agents in the preparation and efforts to achieve effectiveness of the Proxy
Statement and Registration Statement.
7.2 Meetings of Shareholders. Promptly after the date hereof, AccuMed
shall take all action necessary in accordance with Illinois Law and its Articles
of Incorporation and Bylaws to convene a meeting of the AccuMed Shareholders
("AccuMed Shareholders' Meeting") to be held as promptly as practicable for the
purpose of voting upon this Agreement and the Merger. Promptly after the date
hereof, Alamar shall take all action necessary in accordance with California Law
and its Articles of Incorporation and Bylaws to convene the Alamar Shareholders'
Meeting to be held as promptly as practicable for the purpose of voting upon
this Agreement and the Merger.
7.3 Access to Information; Confidentiality.
(a) Each party shall afford the other party and its accountants,
counsel and other representatives reasonable access during normal business
hours during the period prior to the Effective Time to all information
concerning the business, including the status of product development
efforts, properties and personnel of such party as the other party may
reasonably request. No information or
-36-
<PAGE>
knowledge obtained in any investigation pursuant to this Section 7.3 shall
affect or be deemed to modify any representation or warranty contained
herein or the conditions to the obligations of the parties to consummate
the Merger.
(b) The parties acknowledge that Alamar and AccuMed have previously
executed a Confidentiality Disclosure Agreement dated December 20, 1994
(the "Confidentiality Agreement"), which Confidentiality Agreement shall
continue in full force and effect in accordance with its terms.
7.4 No Solicitation; Exclusivity.
(a) Except for the completion of the ongoing negotiations with BD
with respect to licensing ,certain Proprietary Rights of Alamar, neither
Alamar nor AccuMed nor any of their subsidiaries, affiliates or
representatives shall, directly or indirectly, encourage, solicit,
participate in, initiate or continue discussions or negotiations with, or
provide any information to, any Person (other than any of the parties to
this Agreement and their subsidiaries, affiliates and representatives)
concerning any merger, sale of assets, sale of shares of capital stock or
similar transactions involving any of the parties to this Agreement, and
any existing discussions or negotiations with third persons relating
thereto shall be terminated immediately.
(b) Nothing contained in this Section 7.4 shall prevent Alamar or
its Board of Directors from complying with the provisions of Rule 14e-2(a)
and 14d-9 promulgated under the Exchange Act.
7.5 Expenses. Except as set forth in this Section 7.5, all fees and
expenses incurred by the parties hereto in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses; provided, however, that upon consummation of the Merger all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including all fees and expenses incurred prior to the
consummation of the Merger, shall be paid or reimbursed by the Surviving
Corporation.
7.6 Public Disclosure. Alamar and AccuMed shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange or The Nasdaq Stock Market. In the event any such disclosure would
violate the terms of the Confidentiality Agreement, Alamar will use its best
efforts to secure confidential treatment with respect to information for which
such treatment is available.
7.7 FIRPTA. Alamar shall deliver to the Internal Revenue Service a notice
that the Alamar Common Stock is not a "U.S. Real Property Interest" as defined
in and in accordance with the requirements of Treasury Regulation Section
1.897-2(h)(2).
-37-
<PAGE>
7.8 Legal Requirements. Each of Alamar and AccuMed will take all
reasonable actions necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement (including furnishing all
information required under and in connection with approvals of or filings with
any Governmental Entity, and prompt resolution of any litigation prompted
hereby) and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon any of
them or their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement, and will take all reasonable
actions necessary to obtain (and will cooperate with the other parties hereto in
obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any Governmental Entity or other
public or private third party required to be obtained or made in connection with
the Merger or taking of any action contemplated by this Agreement.
7.9 Blue Sky Laws. Alamar shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of Alamar Common Stock pursuant hereto. AccuMed shall
use its best efforts to assist Alamar as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable in
connection with the issuance of Alamar Common Stock pursuant hereto.
7.10 Best Efforts and Further Assurances. Each of the parties to this
Agreement shall use its best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement (including resolution of any litigation prompted hereby). Each
party hereto, at the reasonable request of another party hereto, shall execute
and deliver such other instruments and do and perform such other acts and things
as may be necessary or desirable for effecting completely the consummation of
the transactions contemplated hereby.
7.11 Certain Benefit Plans. Alamar shall take such reasonable actions as
are necessary to allow eligible employees of AccuMed to participate in the
benefit programs of Alamar, or alternative benefit programs substantially
comparable to those applicable to employees of Alamar on similar terms, as soon
as practicable after the Effective Time in accordance with the terms of such
programs. To the extent reasonably possible, eligible employees of AccuMed shall
receive credit under any new benefit program (other than sabbatical programs)
for the duration of their service with AccuMed.
7.12 Officer and Director Indemnification.
(a) After the Effective Time, the Surviving Corporation shall
indemnify and hold harmless each person who has at any time prior to the
Effective Time been an officer, director or employee of AccuMed or other
person entitled to be indemnified by AccuMed pursuant to its Articles of
Incorporation and Bylaws as they are currently in effect on the date
hereof to the same extent as provided in such Articles of Incorporation
and Bylaws; provided that it is understood that the foregoing undertaking
shall not grant to any such officers, directors or employees or other
person rights of indemnity against Surviving
-38-
<PAGE>
Corporation more extensive than those such persons may currently have
against AccuMed.
(b) After the Effective Time, the Surviving Corporation shall
indemnify the persons who immediately prior to the Effective Time were
directors or officers of AccuMed against all actions, claims, damages,
costs, expenses, liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party of or in connection
with any claim, action, suit, proceeding or investigation based in whole
or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of AccuMed, in each case to the
full extent a corporation is permitted under California Law to indemnify
its own directors and officers (and the Surviving Corporation will pay
expenses in advance of the final disposition of any such actual proceeding
to each indemnified party to the full extent permitted by California Law).
In connection with such indemnification, (x) any counsel retained by the
indemnified parties for any period after the Effective Time shall be
satisfactory to the Surviving Corporation, (y) after the Effective Time,
the Surviving Corporation shall pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received and (z) the
Surviving Corporation will cooperate in the defense of any such matter,
provided, that the Surviving Corporation shall not be liable for any
settlement effected without their prior written consent. The indemnified
parties as a group may retain only one law firm to represent them with
respect to any single action unless there is, under applicable standards
of professional conduct, a conflict on any significant issue between the
positions of any two or more indemnified parties.
(c) For a period of three years after the Effective Time, the
Surviving Corporation shall use its best efforts to maintain in effect, if
available, directors' and officers' liability insurance covering those
persons who are currently directors and officers of AccuMed on terms
comparable to those applicable to the then current directors and officers
of Alamar.
(d) This Section shall survive the consummation of the Merger, is
intended to benefit the indemnified parties, and shall be binding on all
successors and assigns of the Surviving Corporation.
7.13 Affiliate Agreements. Set forth in the AccuMed Schedules is a list of
those persons who are, in AccuMed's reasonable judgment "Affiliates" of AccuMed
within the meaning of Rule 145 (each such person who is an "affiliate" of
AccuMed within the meaning of Rule 145 is referred to as an "Affiliate")
promulgated under the Securities Act ("Rule 145"). AccuMed shall provide Alamar
with such information and documents as Alamar shall reasonably request for
purposes of reviewing such list. AccuMed shall use its best efforts to deliver
or cause to be delivered to Alamar, concurrently with the execution of this
Agreement, from each of the Affiliates of AccuMed, an executed Affiliate
Agreement in the form attached hereto as Exhibit B (each an "AccuMed Affiliate
Agreement" collectively, the "AccuMed Affiliate Agreements"). Alamar shall be
entitled to place appropriate legends on the certificates evidencing any Alamar
Common Stock to be received by such Affiliates of AccuMed pursuant
-39-
<PAGE>
to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for Alamar Common Stock, consistent with the
terms of the AccuMed Affiliate Agreements.
7.14 Migratory Merger to Delaware; Name Change. Immediately after the
Effective Time, the Surviving Corporation shall, for the purpose of changing the
domicile of the Surviving Corporation from California to Delaware and changing
the name of the Surviving Corporation from "Alamar Biosciences, Inc." to
"AccuMed International, Inc.", merge with and into a Delaware corporation having
the identical characteristics of the "Surviving Corporation" except that it
shall have the name "AccuMed International, Inc." Such Delaware corporation
shall thereafter be deemed, for the purposes of this Agreement and the
transactions contemplated hereby, the "Surviving Corporation". Alamar will
obtain the consent of their shareholders to such change in corporate domicile
and will take all other actions necessary to effect such change in corporate
domicile.
7.15 Intentionally Deleted.
7.16 Tax-Free Reorganization. Alamar and AccuMed shall each use all
reasonable efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368 of the Code.
7.17 Interim Management.
(a) As of the date of this Agreement, Alamar shall turn over
management control of Alamar to Peter P. Gombrich ("Gombrich") who shall
serve as acting Chief Executive Officer with full authority as provided to
the Chief Executive Officer under Alamar's Bylaws, including the full and
absolute authority to disburse Alamar funds. In consideration therefor,
Alamar shall pay Gombrich at the rate of $12,500 per month during the
period from the date hereof until the Effective Time. Gombrich expressly
agrees and acknowledges that by assuming the position of acting Chief
Executive Officer, Gombrich will incur fiduciary duties and obligations to
Alamar's shareholders consistent with the position of Chief Executive
Officer. Gombrich agrees to maintain from the date hereof to the Closing
Date the distinction, separateness and integrity of Alamar as a separate
corporation and entity and agrees not to commingle funds or assets. If at
any time a conflict arises between Gombrich's duties to Alamar and to
AccuMed, Gombrich will immediately advise Alamar's Board of Directors,
which will relieve Gombrich of his obligations with respect to Alamar to
the extent necessary to alleviate the conflict. In the event this
Agreement is terminated as provided herein prior to the Effective Time,
Gombrich will resign as acting Chief Executive Officer immediately after
such termination.
(b) As of the date of this Agreement all of Alamar's current
Directors who will not serve on the Interim Board as set forth in this
Section 7.17(b) shall resign. From and after the date of this Agreement
until the Closing Date (the "Interim Period"), Alamar shall take all
actions necessary to cause its Board to be composed of the following
persons (each an "Interim Director" and collectively, the "Interim
Board"):
-40-
<PAGE>
(1) Gombrich;
(2) Jack Halperin;
(3) Richard Corbin;
(4) Len Schiller;
(5) John Abeles; and
(6) Don Earhart.
(c) During the Interim Period, the Interim Board shall take all
actions necessary to create an "Expenses Committee", which shall consist
of Jack Halperin, Richard Corbin and Len Schiller and which during the
Interim Period shall approve all (i) expenditures by Alamar of $25,000 or
more and (ii) capital expenditures by Alamar of $5,000 or more ("capital
expenditures" for purposes hereof, shall means any expenditure which is
required by GAAP to be capitalized and which appears on Alamar's balance
sheet in the category of property, plant or equipment).
(d) In the event this Agreement is terminated as provided herein
prior to the Closing, Gombrich will resign from the Interim Board
immediately after such termination.
7.18 Board Representation Upon Closing. Immediately after the Closing the
Interim Directors who will not continue to serve on the Board as set forth in
this Section 7.18 will resign. The Surviving Corporation will take all actions
necessary to cause, immediately after the Closing, (i) the number of members of
its Board of Directors to be seven and (ii) such Board to be composed of the
following persons, each of whom shall serve for a term of two years:
(a) Gombrich, who shall serve as Chairman;
(b) Two individuals (together with Gombrich, the "AccuMed
Nominees"), who will be selected by AccuMed;
(c) Three individuals (collectively, the "Alamar Nominees"), who
will be selected jointly by Commonwealth Associates and American Equities;
and
(d) one person designated and nominated by mutual consent of the
AccuMed Nominees and the Alamar Nominees.
In the event that this Agreement is terminated as provided herein and
Gombrich and the AccuMed Nominees shall have been elected to Alamar's Board of
Directors pursuant to this Section 7.18, Gombrich and the AccuMed Nominees shall
resign from Alamar's Board of Directors immediately after such termination.
-41-
<PAGE>
7.19 Alamar Interim Loan to AccuMed. On the date at least $650,000 in
gross proceeds are received by Alamar pursuant to the S Private Placement and/or
the D Private Placement, which shall be no later than seven business days after
the date of this Agreement, Alamar shall loan the principal sum of $150,000 to
AccuMed which loan shall be evidenced by a promissory note in the principal
amount of $150,000 repayable by AccuMed, with 10% per annum interest, to Alamar
on December 31, 1995, which promissory note shall be convertible into 51% of the
capital stock of AccuMed, at the election of the holder thereof, if not repaid
on or prior to December 31, 1995.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote under applicable law of
the shareholders of each of AccuMed and Alamar.
(b) Registration Statement Effective. The SEC shall have declared
the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose, and no similar proceeding
in respect of the Proxy Statement, shall have been initiated or threatened
in writing by the SEC; and all requests for additional information on the
part of the SEC shall have been complied with to the reasonable
satisfaction of the parties hereto.
(c) No Injunctions; illegality. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect.
(d) Tax Opinions. Alamar and AccuMed shall each have received
substantially identical written opinions from their counsel, Graham &
James and Katten Muchin & Zavis, respectively, in form and substance
reasonably satisfactory to them, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code. The parties to this Agreement agree to make reasonable
representations as requested by such counsel for the purpose of rendering
such opinions.
(e) Nasdaq Listing. If as of the Closing Date shares of Alamar
Common Stock are listed on the Nasdaq SmallCap Market, the shares of
Alamar Common Stock issuable to the AccuMed Shareholders pursuant to this
Agreement shall have been authorized for listing on the Nasdaq SmallCap
Market upon official notice of issuance.
-42-
<PAGE>
8.2 Additional Conditions to Obligations of AccuMed. The obligations of
AccuMed to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, exclusively by AccuMed:
(a) Representations and Warranties. The representations and
warranties of Alamar contained in this Agreement shall be true and correct
in all material respects on and as of the Effective Time, except for
changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date),
with the same force and effect as if made on and as of the Effective Time,
except, in all such cases, for such breaches, inaccuracies or omissions of
such representations and warranties which have neither had nor reasonably
would be expected to have a Material Adverse Effect on Alamar, and the
Alamar Schedules shall be updated (the "Updated Alamar Schedules") through
the Effective Time to reflect any changes in Alamar's representations and
warranties;
(b) Agreements and Covenants. Alamar shall have performed or
complied in all material respect with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time;
(c) Third Party Consents. AccuMed shall have received all written
consents, assignments, waivers, authorizations or other certificates
reasonably deemed necessary by AccuMed's legal counsel to provide for the
continuation in full force and effect of any and all material Alamar
Contracts and Permits and for Alamar to consummate the transactions
contemplated hereby, except where the failure to receive any such consent,
assignment, waiver, authorization or other certificate would not have a
Material Adverse Effect on Alamar.
(d) Legal Opinion. AccuMed shall have received a legal opinion from
Graham & James, counsel to Alamar, in form and substance reasonably
acceptable to AccuMed.
(e) Employment Agreements. Alamar shall have executed Employment
Agreements, in form and substance reasonably acceptable to AccuMed,
Alamar, Gombrich and, with respect to severance provisions only,
Commonwealth (the "Employment Agreements"), with Gombrich and the other
key employees listed on the AccuMed Schedules ("Key Employees"), and such
Employment Agreements shall be in full force and effect. The Employment
Agreement between Alamar and Gombrich shall provide for a base salary of
at least $150,000 per year and shall include appropriate severance
provisions.
(f) Funding Requirements. AccuMed shall have been furnished with
evidence satisfactory to it that Alamar has received at least $1,800,000
in gross proceeds from the S Private Placement and/or the D Private
Placement.
-43-
<PAGE>
(g) Legal Due Diligence. No later then the end of the AccuMed Due
Diligence Period (as defined below) Alamar shall have made available to
AccuMed a true, accurate and complete copy of each written Alamar Contract
(together with all amendments and addendum thereto), a true, accurate and
complete description of each oral Alamar Contract and a true, accurate and
complete copy of any other document reasonably requested by AccuMed in
connection with its legal due diligence investigation (the "Alamar
Documents") and AccuMed shall have completed its legal due diligence
investigation of Alamar and review of the Alamar Documents, to its
reasonable satisfaction during the period of fourteen (14) days after the
date hereof (the "AccuMed Due Diligence Period"); provided that this
condition shall be deemed satisfied in full if within twenty-four (24)
hours of the end of the AccuMed Due Diligence Period AccuMed shall not
have given Alamar written notice stating that AccuMed's legal due
diligence investigation of Alamar and review of the Alamar Documents
indicates the existence of facts and circumstances which would have a
Material Adverse Effect on Alamar or the Surviving Corporation and
specifying in reasonable detail the factual basis therefor. To the extent
that any of the Alamar Documents or any information reasonably requested
by AccuMed in connection with its due diligence investigation of Alamar is
not delivered to AccuMed within seven (7) days of the date hereof, then
the expiration date of the AccuMed Due Diligence Period shall be extended
one (1) day for each day that such delivery is delayed. In addition, if
the date upon which the AccuMed Due Diligence Period would otherwise
expire shall fall on a date that is not a business day, the next business
day following such non-business day shall be the expiration date of the
Due Diligence Period.
8.3 Additional Conditions to the Obligations of Alamar. The obligations of
Alamar to consummate and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Effective Time of
each of the following conditions, any of which may be waived, in writing,
exclusively by Alamar:
(a) Representations and Warranties. The representations and
warranties of AccuMed contained in this Agreement shall be true and
correct in all material respects on and as of the Effective Time, except
for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date),
with the same force and effect as if made on and as of the Effective Time,
except, in all such cases, for such breaches, inaccuracies or omissions of
such representations and warranties which have neither had nor reasonably
would be expected to have a Material Adverse Effect on AccuMed, and the
AccuMed Schedules shall be updated ("Updated AccuMed Schedules") through
the Effective Time to reflect any changes in AccuMed's representations and
warranties;
(b) Agreement and Covenants. AccuMed shall have performed or
complied in all material respects with all agreements and covenants
required by
-44-
<PAGE>
this Agreement to be performed or complied with by it on or prior to the
Effective Time;
(c) Third Party Consents. Alamar shall have received all written
consents, assignments, waivers, authorizations or other certificates
reasonably deemed necessary by Alamar's legal counsel to provide for the
continuation in full force and effect of any and all material AccuMed
Contracts and Permits and for AccuMed to consummate the transactions
contemplated hereby except where the failure to receive any such consent,
assignment, waiver, authorization or other certificate would not have a
Material Adverse Effect on Alamar.
(d) Legal Opinion. Alamar shall have received a legal opinion from
Katten Muchin & Zavis, legal counsel to AccuMed, in form and substance
reasonably acceptable to Alamar.
(e) Employment Agreements. Peter P. Gombrich and the Key Employees
shall have executed the Employment Agreements, and the Employment
Agreements shall be in full force and effect.
(f) Affiliate Agreements. Each of the parties identified by AccuMed
pursuant to Section 7.13 hereof as being an Affiliate of AccuMed shall
have delivered to Alamar an executed AccuMed Affiliate Agreement, which
shall be in full force and effect.
(g) Legal Due Diligence. No later then the end of the Alamar Due
Diligence Period (as defined below) AccuMed shall have made available to
Alamar a true, accurate and complete copy of each written AccuMed Contract
(together with all amendments and addendum thereto), a true, accurate and
complete description of each oral AccuMed Contract and a true, accurate
and complete copy of any other document reasonably requested by Alamar in
connection with its legal due diligence investigation (the "AccuMed
Documents") and Alamar shall have completed its legal due diligence
investigation of AccuMed and review of the AccuMed Documents, to its
reasonable satisfaction during the period of fourteen (14) days after the
date hereof (the "Alamar Due Diligence Period"); provided that this
condition shall be deemed satisfied in full if within twenty-four (24)
hours of the end of the Alamar Due Diligence Period Alamar shall not have
given AccuMed written notice stating that Alamar's legal due diligence
investigation of AccuMed and review of the AccuMed Documents indicates the
existence of facts and circumstances which would have a Material Adverse
Effect on AccuMed or the Surviving Corporation and specifying in
reasonable detail the factual basis therefor. To the extent that any of
the AccuMed Documents or any information reasonably requested by Alamar in
connection with its due diligence investigation of AccuMed is not
delivered to Alamar within seven (7) days of the date hereof, then the
expiration date of the Alamar Due Diligence Period shall be extended one
(1) day for each day that such delivery is delayed. In addition, if the
date upon which the Alamar Due Diligence Period would otherwise expire
shall fall on a date that is not a business
-45-
<PAGE>
day, the next business day following such non-business day shall be the
expiration date of the Due Diligence Period.
(h) Indebtedness. AccuMed shall not have aggregate liabilities for
borrowed money, evidenced by notes, debentures or similar instruments, in
excess of $825,000 (which shall not include indebtedness to Alamar or
Commonwealth incurred after the date of this Agreement).
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) by mutual written consent of AccuMed and Alamar;
(b) by Alamar if:
(i) there has been a material breach of any representation,
warranty, covenant or agreement, contained in this Agreement on the
part of AccuMed and such breach has not been cured within ten
business days after written notice to AccuMed (provided, that Alamar
is not in material breach of the terms of this Agreement; and
provided further, that no cure period shall be required for a breach
which by its nature cannot be cured) such that the conditions set
forth in Section 8.3(a) or Section 8.3(b), as the case may be, will
not be satisfied; or
(ii) the Board of Directors of AccuMed adversely amends,
withholds or withdraws its recommendation of the Merger (provided
that Alamar is not in material breach of the terms of this
Agreement);
(iii) AccuMed's shareholders do not approve the Merger at the
AccuMed Shareholders' Meeting;
(c) by AccuMed if:
(i) there has been a material breach of any representation,
warranty, covenant or agreement, contained in this Agreement on the
part of the Alamar and such breach has not been cured within ten
days after written notice to Alamar (provided, that AccuMed is not
in material breach of the terms of this Agreement; and provided
further, that no cure period shall be required for a breach which by
its nature cannot be cured) such that the
-46-
<PAGE>
conditions set forth in Section 8.2(a) or Section 8.2(b), as the
case may be, will not be satisfied;
(ii) the Board of Directors of Alamar adversely amends,
withholds or withdraws its recommendation of the Merger or the
Merger is not submitted to Alamar's shareholders as contemplated by
this Agreement (provided that AccuMed is not in material breach of
the terms of this Agreement); or
(iii) Alamar's shareholders do not approve the Merger at the
Alamar Shareholders' Meeting;
(d) by any party hereto if: (i) there shall be a final,
non-appealable order of a federal or state court in effect preventing
consummation of the Merger; or (ii) there shall be any final action taken,
or any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the Merger by any Governmental Entity which would
make consummation of the Merger illegal or which would prohibit Alamar's
ownership or operation of all or a material portion of the business of
AccuMed, or compel Alamar to dispose of or hold separate all or a material
portion of the business or assets of AccuMed or Alamar as a result of the
Merger;
(e) by any party hereto if the Merger shall not have been
consummated by December 31, 1995; provided, further, that the right to
terminate this Agreement under this Section 9.1(e) shall not be available
to any party whose willful failure to fulfill any material obligation
under this Agreement has been the cause of, or resulted in, the failure of
the Effective Time to occur on or before such date;
Where action is taken to terminate this Agreement pursuant to this Section 9.1,
it shall be sufficient for such action to be authorized by the Board of
Directors (as applicable) of the party taking such action.
9.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 9.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Alamar, AccuMed or their
respective officers, directors, shareholders or affiliates, except to the extent
that such termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, and, provided that the provisions of Sections 7.3(b) and 7.5, and
Article XI of this Agreement shall remain in full force and effect and survive
any termination of this Agreement.
9.3 Notice of Termination. Any termination of this Agreement under Section
9.1 above will be effective immediately upon the delivery of written notice of
the terminating party to the other parties hereto.
9.4 Amendment. This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of the
parties hereto.
-47-
<PAGE>
9.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE X
DEFINITIONS
10.1 Definitions. For purposes of this Agreement, the following terms have
the meaning set forth below:
"Alamar Private Warrants" means the 1,368,059 warrants issued to the
Persons, in the amounts, at the times and with the expiration dates, listed in
the Alamar Schedules.
"Alamar Public Warrants" means the 2,702,905 publicly issued warrants,
with an exercise price of $5.00 and an expiration date of October 15, 1997.
"Alamar Warrants" means the Alamar Private Warrants and the Alamar Public
Warrants.
"American Equities" means American Equities Overseas, Inc.
"COBRA" means limited continued medical benefit coverage for former
employees, their spouses and other dependents as required to be provided under
Section 4980B of the Code and Part 6 of Subtitle B of ERISA and the accompanying
proposed regulations or state continuation coverage laws.
"Commonwealth" means Commonwealth Associates, a New York limited
partnership.
"D Private Placement" means the issuance and sale by Alamar of Alamar
Common Stock at a price of $0.625 per share pursuant to a Regulation D Private
Placement conducted by Commonwealth commencing on or after the date hereof.
"EEOC" means the United States Equal Employment Opportunity Commission.
"Environmental and Safety Requirements" means all federal, state and local
statutes, laws, rules, regulations, codes, ordinances, orders, standards,
permits, licenses, actions, policies and requirements (including consent
decrees, judicial decisions and administrative orders) relating to protection,
preservation or conservation of the environment and public or worker health and
safety, all as amended, hereafter amended or reauthorized.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
-48-
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" of the Alamar Common Stock or the Surviving
Corporation Common Stock (in either case, the "ASC Common Stock") means the
value determined on the basis of the good faith determination of the Board of
Directors of Alamar or the Surviving Corporation, as the case may be, without
regard to whether the ASC Common Stock is restricted or represents a minority
interest, pursuant to the applicable method described below:
(a) if the ASC Common Stock is listed on a national securities
exchange or quoted on The Nasdaq Stock Market ("NASDAQ"), the closing (or
last) bid price of the ASC Common Stock on the relevant date (or, if such
date is not a business day or a day on which quotations are reported, then
on the immediately preceding date on which quotations were reported), as
reported by the principal national exchange on which such shares are
traded (in the case of an exchange) or by NASDAQ, as the case may be;
(b) if the Common Stock is not listed on a national securities
exchange or quoted on NASDAQ, but is actively traded in the
over-the-counter market, the closing bid price for the ASC Common Stock on
the relevant date, or the most recent preceding date for which such
quotations are reported; or
(c) if, on the relevant date, the ASC Common Stock is not publicly
traded or reported as described in (a) or (b), the value determined in
good faith by the Board of Directors of Alamar or the Surviving
Corporation, as the case may be.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or any successor authority) that are
applicable as the date of determination, consistently applied.
"Governmental Entity" means any court, arbitrator, department, board,
bureau, public authority, administrative agency or commission or other foreign,
federal, state, municipal or other governmental authority or instrumentality,
including the U.S. Food and Drug Administration and the California Department of
Health Services, Food and Drug Branch.
"Hazardous Wastes" means: (A) hazardous materials, hazardous substances,
extremely hazardous substances or hazardous wastes, as those terms are defined
by the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss.9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
ss.6901 et seq., and any other Environmental and Safety Requirements; (B)
petroleum, including crude oil or any fraction thereof which is liquid at
standard conditions of temperature and pressure (60 degrees Fahrenheit and 14.7
pounds per square inch absolute); (C) any radioactive material, including any
source, special nuclear, or by-product material as defined in 42 U.S.C. ss.2011
et seq.; (D) asbestos in any form or condition; (E) polychlorinated biphenyls;
and (F) any other material, substance or waste to which liability or standards
of conduct may be imposed under any Environmental and Safety Requirements.
-49-
<PAGE>
"Laws" means all laws, statutes, codes, ordinances, rules, regulations and
orders of Governmental Entities.
"material" means material to the condition (financial or otherwise),
properties, assets, liabilities, businesses, operations or results of operations
of AccuMed and its subsidiaries, taken as a whole, or Alamar, as the case may
be.
"Material Adverse Effect" means a material adverse effect on the business,
assets (including intangible assets), condition (financial or otherwise), or
results of operations of a party.
"Permits" means all permits (including environmental, construction and
operation permits), licenses, notifications, variances, exemptions, franchises,
certificates, classifications, registrations, orders, approvals and other
similar documents and authorizations, and applications therefor, of all
Governmental Entities.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated association, corporation, entity or government
(whether federal, state, county, city or otherwise, including any
instrumentality, division, agency or department thereof).
"Proprietary Rights" means all patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not reduced
to practice); all trademarks, service marks, trade dress, trade names and
corporate names; all registered and unregistered statutory and common law
copyrights; all registrations, applications and renewals for any of the
foregoing; all trade secrets, confidential information, ideas, formulae,
compositions, know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
improvements, proposals, technical and computer data, documentation and
software, financial, business and marketing plans, and franchisee, customer and
supplier lists and related information and all other proprietary rights.
"S Private Placement" means the issuance and sale by Alamar of Alamar
Common Stock at a price of $0.625 per share pursuant to a Regulation S Private
Placement to foreign investors conducted by American Equities and Commonwealth
commencing on the date hereof.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
-50-
<PAGE>
"Tax Returns" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of any Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Transaction Documents" means this Agreement, the Agreement of Merger, the
Voting Trust Agreement, the Employment Agreements and any and all other
agreements, documents and instruments contemplated by and being delivered
pursuant to or in connection with this Agreement.
ARTICLE XI
GENERAL PROVISIONS
11.1 Non-Survival of Representations and Warranties. The representations
and warranties of AccuMed and Alamar contained in this Agreement shall terminate
at the Effective Time, and only the covenants that by their terms survive the
Effective Time shall survive the Effective Time.
11.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) If to AccuMed, to:
AccuMed, Inc.
920 North Franklin, Suite 402
Chicago, Illinois 60610
Attention: Peter P. Gombrich, President
Telecopy No.: (312) 642-8684
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Russell N. Pallesen, Esq.
Mark D. Wood, Esq.
Telecopy No.: (312) 902-1061
-51-
<PAGE>
(b) If to Alamar, to:
Alamar Biosciences, Inc.
4110 North Freeway Boulevard
Sacramento, California 95834
Attention: Chief Executive Officer
Telecopy No.: (916) 567-3887
with a copy to:
Graham & James
400 Capital Mall, Suite 2400
Attention: Gilles S. Attia, Esq.
Telecopy No.: (916) 441-6700
11.3 Interpretation. When a reference is made in this Agreement to
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include", "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation". The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When reference is made herein to "the business
of" an entity such reference shall be deemed to include the business of all
direct and indirect subsidiaries of such entity. Reference to the subsidiaries
of an entity shall be deemed to include all direct and indirect subsidiaries of
such entity.
11.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
11.5 Entire Agreement. This Agreement and the documents and instruments
and other agreements among the parties hereto as contemplated by or referred to
herein, including the Exhibits and Schedules attached hereto (a) constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof including that certain
letter of intent dated February 25, 1995 by and between AccuMed and Alamar, it
being understood that the Confidentiality Agreement shall continue in full force
and effect until the Closing and shall survive any termination of this
Agreement; and (b) are not intended to confer upon any other person any rights
or remedies hereunder, except as specifically set forth in Section 7.12.
11.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that
-52-
<PAGE>
will achieve, to the extent possible, the economic, business and other purposes
of such void or unenforceable provision.
11.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
11.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
11.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
11.10 Assignment. No party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other party.
-53-
<PAGE>
IN WITNESS WHEREOF, Alamar and AccuMed have caused this Agreement to be
signed by themselves or their duly authorized respective officers, all as of the
date first written above.
ALAMAR BIOSCIENCES, INC.
By: /s/ Kenneth E. Miller
---------------------------------------
Kenneth E. Miller
Chairman and Chief Executive Officer
ACCUMED, INC.
By: /s/ Peter P. Gombrich
---------------------------------------
Peter P. Gombrich
Chairman, President and Chief Executive
Officer
-54-
<PAGE>
In consideration of the benefits the undersigned, Peter P. Gombrich will
receive as the majority shareholder, President, Chief Executive Officer and
Chairman of AccuMed, Inc., an Illinois corporation ("AccuMed"), the undersigned
agrees to be bound by the terms of Sections 6.2 and 7.17 of that certain
Agreement and Plan of Reorganization dated as of April 21, 1995 by and between
Alamar Biosciences, Inc, a California corporation, and AccuMed.
Peter P. Gombrich
-55-
<PAGE>
LIST OF EXHIBITS
Exhibit A Agreement of Merger
Exhibit B AccuMed Affiliate Agreement
-56-
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF REORGANIZATION
Amendment No. 1 dated as of August 1, 1995 (this "Amendment") to the
Agreement and Plan of Reorganization dated as of April 21, 1995 (the "Merger
Agreement") between Alamar Biosciences, Inc., a California corporation
("Alamar"), and AccuMed, Inc., an Illinois corporation doing business as AccuMed
International, Inc. ("AccuMed").
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth herein and for other good and valuable consideration, the adequacy,
sufficiency and receipt of which are hereby acknowledged, and intending to be
legally bound, in accordance with Section 9.4 of the Merger Agreement, the
parties agree as follows:
1. Section 1.6 of the Merger Agreement is hereby deleted and the following
is inserted in lieu thereof:
"1.6 Effect on Capital Stock and Warrants. At the Effective Time, by virtue
of the Merger and without any action on the part of AccuMed or the holders
of any of the following securities:
(a) Conversion of AccuMed Capital Stock and Warrants. Each share of
Common Stock, no par value, of AccuMed (the "AccuMed Capital Stock") and
each Warrant to purchase a share of AccuMed Capital Stock (the "AccuMed
Warrants") issued and outstanding immediately prior to the Effective Time
will be cancelled and extinguished and will be converted automatically into
the right to receive, in the case of AccuMed Capital Stock, or the right to
purchase, in the case of AccuMed Warrants, the former holder's pro rata
portion of 5,750,000 shares of Common Stock, no par value, of Alamar (the
"Alamar Common Stock"). Each share of AccuMed Capital Stock shall be
cancelled and converted as set forth in this Section 1.6(a) upon surrender
of the certificate representing such share of AccuMed Capital Stock in the
manner provided in Section 1.7 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit (and bond, if
required) in the manner provide in Section 1.9). Each AccuMed Warrant shall
be cancelled and converted into a warrant to purchase the holder's pro rata
portion of the Alamar Common Stock (an "Alamar Warrant") as set forth in
Section 1.13 upon surrender of the warrant certificate representing such
AccuMed Warrant.
-1-
<PAGE>
(b) Adjustments to exchange Ratio. The number of shares of Alamar
Common Stock and Alamar Warrants into which each share of AccuMed Common
Stock and each AccuMed Warrant, respectively, shall convert pursuant to
this Article I shall be adjusted to reflect fully the effect of any split,
reverse stock split, stock dividend (including any dividend or distribution
of securities convertible into Alamar Common Stock), reorganization,
recapitalization or other like change with respect to Alamar Common Stock
or AccuMed Capital Stock occurring after the date hereof and prior to the
Effective Time, except for the issuance of any shares of Alamar Common
Stock pursuant to the S Private Placement and/or the D private Placement.
(c) Fractional Shares. No fraction of a share of Alamar Common Stock
will be issued by virtue of the Merger; in lieu thereof each AccuMed
Shareholder who would otherwise be entitled receive to a fraction of a
share of Alamar Common Stock (after aggregating all fractional shares of
Alamar Common Stock to be received by such holder) shall receive one
additional share of Alamar Common Stock if such fraction is one-half or
more and no additional share of Alamar Common Stock if such fraction is
less than one-half. Likewise, Alamar Warrants will be issued for the
purchase of whole shares only and not for any fraction of a share of Alamar
Common Stock; each holder of an AccuMed Warrant who would otherwise be
entitled to receive an Alamar Warrant for the purchase of a fraction of a
share of Alamar Common Stock (after aggregating all fractional shares of
Alamar Common Stock such holder would be entitled to purchase pursuant to
the Alamar Warrants to be received by such holder) shall receive a Warrant
to purchase one additional share of Alamar Common Stock if such fraction is
one-half or more and no additional share of Alamar Common Stock if such
fraction is less than one-half.
2. A new Section 1.13 is hereby added to the Merger Agreement to read in
its entirety as follows:
1.13 Exchanqe of AccuMed Warrants.
-2-
<PAGE>
(a) Alamar to Provide Alamar Warrants. Promptly after the Effective
Time, Alamar shall make available to each former AccuMed Warrant holder for
exchange in accordance with this Article I, through such reasonable
procedures as Alamar may adopt, the Alamar Warrants issuable pursuant to
Section 1.6 in exchange for outstanding AccuMed Warrants.
(b) Exchange Procedures. Promptly after the Effective Time, Alamar
shall cause to be mailed to each holder of record of a warrant certificate
(a "Warrant Certificate") which immediately prior to the Effective Time
represented outstanding AccuMed Warrants which were converted into Alamar
Warrants pursuant to Section 1.6(a) (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Warrant Certificates shall pass, only upon delivery of the Warrant
Certificates to Alamar and shall be in such form and have such provisions
as Alamar may reasonably specify) and (ii) instructions for use in
effecting the surrender of a Warrant Certificate in exchange for a
certificate representing an Alamar Warrant. Upon surrender of a Warrant
Certificate for cancellation to Alamar together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the former holder of such Warrant Certificate shall
be entitled to receive in exchange therefor a certificate representing the
Alamar Warrants which such holder has the right to receive pursuant to
Section 1.6(a).
(c) Provisions of Alamar Warrants. Each Alamar Warrant certificate
shall be of like tenor to the cancelled AccuMed Warrant for which the
Alamar Warrant is exchanged, except as provided in this Section 1.13 and
shall specify (i) the number of shares of Alamar Common Stock underlying
the Alamar Warrant determined in accordance with Section 1.6 which the
holder is or may become entitled to purchase (in accordance with Sections
1.13(d), (e) and (f) ), (ii) the purchase price or prices per each such
share (which shall be based on the purchase price or prices set forth in
the exchanged AccuMed
-3-
<PAGE>
Warrant and adjusted as appropriate to correspond to the adjustment in the
number of shares of Alamar Common Stock underlying the Alamar Warrant),
(iii) that 65.2% of such shares are "Vested Alamar Warrant Shares", (iv)
17.4% of such shares are "First Year Performance Warrant Shares" and (v)
17.45% of such shares are "Second Year Performance Warrant Shares".
(d) Vested Alamar Warrant Shares. Each Alamar Warrant shall be
immediately exercisable with respect to the Vested Alamar Warrant Shares.
(e) First Year Performance Warrant Shares. If the Surviving
Corporation achieves the First Year Performance Targets (as defined in
Section 3.1), the right to purchase the First Year Performance Warrant
Shares shall become vested on the date on which the Surviving Corporation
shall have determined that the First Year Performance Targets have been
achieved, in accordance with Section 3.4 such date shall be as soon as
practicable after the end of the First Year Performance Period (as defined
in Section 3.1).
(e) Second Year Performance Warrant Shares. If the Surviving
Corporation achieves the Second Year Performance Targets (as defined in
Section 3.2), the right to purchase the Second Year Performance Warrant
Shares shall become vested on the date on which the Surviving Corporation
shall have determined that the First Year Performance Targets have been
achieved, in accordance with Section 3.4 such date shall be as soon as
practicable after the end of the Second Year Performance Period (as defined
in Section 3.2).
(f) Earn-Back Provisions. If the Surviving Corporation fails to
achieve the First Year Performance Targets but does achieve the Earn-Back
Targets (as defined in Section 3.3) for the Second Year Performance Period,
the right to purchase the First Year Performance Warrant Shares shall
become vested on the date on which the Surviving Corporation shall have
determined that the
-4-
<PAGE>
Earn-Back Targets have been achieved, such date shall be as soon as
practicable following the end of the Second Year Performance Period.
(g) Failure to Achieve Performance Targets, Earn-Back Targets. If the
Surviving Corporation fails to achieve the First Year Performance Targets
and the Earn-Back Targets, the right to purchase the First Year Performance
Warrant Shares shall at no time become vested. If the Surviving Corporation
fails to achieve the Second Year Performance Targets, the right to purchase
the Second Year Performance Warrant Shares shall at no time become vested.
If the Surviving Corporation shall determine that the right to acquire the
First Year Performance Warrant Shares and/or the Second Year Performance
Warrant Shares shall at no time become vested, the Surviving Corporation
may, in its discretion, issue a new warrant in exchange for an outstanding
Alamar Warrant; any such new warrant shall be of like tenor but shall not
include such First Year Performance Warrant Shares and/or Second Year
Performance Warrant Shares, as the case may be.
3. Section 7.17(c) of the Merger Agreement is hereby deleted and the
following is inserted in lieu thereof:
(c) During the Interim Period, the Interim Board shall take all
actions necessary to create an "Expenses Committee". During the Interim
Period the Expenses Committee shall consist of Jack Halperin, Richard
Corbin and Leonard Schiller. From and after the Effective Time the Expenses
Committee shall consist of three directors appointed by the Board of
Directors of the Surviving Corporation. During (i) the Interim Period and
(ii) from and following the Effective Time until such time, if any, as the
Expenses Committee is dissolved by the Board of Directors of the Surviving
Corporation, the Expenses Committee shall approve all the following
expenditures by Alamar or the Surviving Corporation, as the case may be,
(x) any expenditure of $25,000 or more and (y) capital expenditures of
$5,000 or more ("capital expenditures" for the purposes of this Section
7.17(c), shall mean any
-5-
<PAGE>
expenditure which is required by GAAP to be capitalized and which appears
on Alamar's balance sheet in the category of property, plant or equipment).
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first above written.
ALAMAR BIOSCIENCES, INC.
By: /s/PETER P. GOMBRICH
------------------------
Peter P. Gombrich
Acting Chief Executive Officer
ACCUMED, INC.
By: /s/PETER P. GOMBRICH
------------------------
Peter P. Gombrich
Chief Executive Officer
-6-
AMENDMENT NO. 2
TO
AGREEMENT AND PLAN OF REORGANlZATION
Amendment No. 2, dated as of October 6, 1995 (this "Amendment") to the
Agreement and Plan of Reorganization dated as of April 21, 1995, (the "Merger
Agreement") as amended by Amendment No 1, dated August 1, 1995, between Alamar
Biosciences, Inc., a California corporation ("Alamar"), and AccuMed, Inc., an
Illinois corporation doing business as AccuMed International, Inc. ("AccuMed").
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth herein and for other good and valuable consideration, the adequacy,
sufficiency and receipt of which are hereby acknowledged, and intending to be
legally bound, in accordance with Section 9.4 of the Merger Agreement, the
parties agree as follows:
1. Section 1.6 of the Merger Agreement is hereby deleted and the following
is inserted in lieu thereof:
"1.6 Effect on Capital Stock and Warrants. At the Effective Time, by
virtue of the Merger and without any action on the part of AccuMed or
the holders of any of the following securities:
(a) Conversion of AccuMed Capital Stock and Warrants. Each share
of Common Stock, no par value, of AccuMed (the "Accumed Capital
Stock") and each Warrant to purchase a share of AccuMed Capital
Stock (the "AccuMed Warrants") issued and outstanding immediately
prior to the Effective Time will be canceled and extinguished and
will be converted automatically into the right to receive, in the
case of AccuMed Capital Stock, or the right to purchase, in the
case of AccuMed Warrants, the former holder's pro rata portion of
6,178,104 shares of Common Stock, no par value, of Alamar (the
"Alamar Common Stock"). Each share of AccuMed Capital Stock shall
be canceled and converted as set forth in this Section 1.6 (a)
upon surrender of the certificate representing such share of
AccuMed Capital Stock in the manner provided in Section 1.7 (or
in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in manner
provided in Section 1.9). Each AccuMed Warrant shall be canceled
and converted into a warrant to purchase the holder's pro rata
portion of the Alamar Common Stock (an "Alamar Warrant") as set
forth in Section 1.13 upon surrender of the warrant certificate
representing such AccuMed Warrant.
<PAGE>
(b) Adjustments to Exchange Ratio. The number of shares of Alamar
Common Stock and Alamar Warrants into which each share of AccuMed
Common Stock and each AccuMed Warrant, respectively, shall
convert pursuant to this Article I shall be adjusted to reflect
fully the effect of any split, reverse stock split, stock
dividend (including any dividend or distribution of securities
convertible into Alamar Common Stock), reorganization,
recapitalization or other like change with respect to Alamar
Common Stock or Accumed Capital Stock occurring after the date
hereof and prior to the Effective Time, except for the issuance
of any shares of Alamar Common Stock pursuant to the S Private
Placement and/or the D Private Placement
(c) Fractional Shares. No fraction of a share of Alamar Common
Stock will be issued by virtue of the Merger; in lieu thereof
each AccuMed Shareholder who would otherwise be entitled receive
to a fraction of a share of Alamar Common Stock (after
aggregating all fractional shares of Alamar Common Stock to be
received by such holder) shall receive one additional share of
Alamar Common Stock if such fraction is one-half or more and no
additional share of Alamar Common Stock if such fraction is less
than one-half. Likewise, Alamar Warrants will be issued for the
purchase of whole shares only and not for any fraction of a share
of Alamar Common Stock; each holder of an AccuMed Warrant who
would otherwise be entitled to receive an Alamar Warrant for the
purchase of a fraction of a share of Alamar Common Stock (after
aggregating all fractional shares of Alamar Common Stock such
holder would be entitled to purchase pursuant to the Alamar
Warrants to be received by such holder) shall receive a Warrant
to purchase one additional share of Alamar Common Stock if such
fraction is one-half or more and no additional share of Alamar
Common Stock if such fraction is less than one-half.
2. Section 2.1 of the Merger Agreement is hereby deleted and the following
is inserted in lieu thereof:
<PAGE>
2.1 Grant of Option. In further consideration of AccuMed's execution of
this Agreement and consummation of the Merger and the operation of
AccuMed's business by its management and employees during the period from
the date hereof until the Closing Time for the ultimate benefit of Alamar,
Alamar shall, on the Closing Date, grant to AccuMed's officers and
employees, options (the "Options") to purchase from Alamar up to an
additional 1,000,000 shares of Alamar Common Stock plus, if the Option
Price (as defined below) is greater than $1.25, such number of shares of
Alamar Common Stock as shall be determined by subtracting $1.25 from the
Option Price, then multiplying by up to 1,000,000 and dividing by the
Option Price (collectively, the "Option Shares"). The Options shall be
granted pursuant to the Stock Option Plan of Alamar in effect as of the
Closing Date (the "Option Plan"). The Option Shares shall be distributed on
the Closing Date, as determined by the Board of Directors of AccuMed prior
to the Closing Date, subject to applicable law and the terms of the Option
Plan. Alamar covenants that, at all times from the date hereof until the
earlier of the expiration of the Option Period (as hereinafter defined) or
the exercise in full of all of the Options, Alamar will have reserved for
issuance under the Option Plan such number of authorized but not issued and
not outstanding shares of Alamar Common Stock as equals (a) the aggregate
number of Option Shares issuable upon exercise of Options, less (b) such
number of shares of Alamar Common Stock as have previously been issued upon
exercise of Options. The Option Plan shall be amended, if necessary, so
that a sufficient number of shares of Alamar Common Stock are reserved for
issuance upon exercise of Options, and any such amendment shall be
submitted to Alamar's shareholders for approval at the Alamar Shareholders'
Meeting.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date first above written.
ALAMAR BIOSCIENCES, INC.
By: /s/ Peter P. Gombrich
-------------------------------
Peter P. Gombrich
Acting Chief Executive Officer
ACCUMED, INC.
By: /s/ Peter P. Gombrich
-------------------------------
Peter P. Gombrich
Chief Executive Officer
AGREEMENT OF MERGER
This Agreement of Merger ("Agreement") is entered into between Alamar
Biosciences, Inc., a California corporation (herein "Surviving Corporation"),
and AccuMed, Inc., an Illinois corporation (herein "Merging Corporation").
1. Merging Corporation shall be merged into Surviving Corporation.
2. Each issued and outstanding share of Merging Corporation shall be converted
into 2.4318999 shares of Common Stock, no par value, of Surviving
Corporation and each outstanding Warrant to purchase Common Stock shall be
converted into a Warrant to purchase 2.4318999 shares of Common Stock, no
par value, of Surviving Corporation; provided, however, that no fractional
shares shall be issued, but in lieu thereof each Merging Corporation
shareholder who would otherwise be entitled to a fraction of a share of
Surviving Corporation (after aggregating all fractional shares of Surviving
Corporation to be received by such shareholder) shall receive from
Surviving Corporation one additional share of Surviving Corporation in the
event such fraction is one-half or more and no additional shares of
Surviving corporation in the event such fraction is less than one-half;
provided, however, that if the fraction which any shareholder would
otherwise be entitled receive is more than one-half of 1 percent of the
total shares such person is entitled to receive, such person shall receive
one additional full share.
3. The outstanding shares of Surviving Corporation shall remain outstanding
and are not effected by the Merger.
4. Merging Corporation shall from time to time, as and when requested by
Surviving Corporation, execute and deliver all such documents and
instruments and take all such actions necessary or desirable to evidence or
carry out this merger.
5. The effect of the merger and the effective date of the merger are as
prescribed by law.
6. Merging Corporation and Surviving Corporation have also entered into that
certain Agreement and Plan of Reorganization, dated as of April 21, 1995,
as amended by Amendment No. 1 dated as of August 1, 1995 and Amendment No.
2 dated as of October 6, 1995 (the "Plan of Reorganization"); the Plan of
Reorganization and this Agreement are intended to be construed together and
the terms of the Plan of Reorganization are incorporated herein by this
reference.
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
DEC 29 1995
BILL JONES, Secretary of State
<PAGE>
IN WITNESS WHEREOF the parties have examined this Agreement.
ALAMAR BIOSCIENCES, INC.
By: /s/ Mark L. Santor
---------------------------
Mark L. Santor, Vice President,
Finance and Secretary
-AND-
ACCUMED, INC.
By: /s/ Peter P. Gombrich
---------------------------
Peter P. Gombrich, President
By: /s/ Peter P. Gombrich
---------------------------
Peter P. Gombrich, Secretary
<PAGE>
CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
Mark L. Santor certifies that:
1. He is the vice president, finance and secretary, of Alamar Biosciences,
Inc., a California corporation ("Alamar").
2. The Agreement of Merger in the form attached hereto was duly approved by
the Board of Directors and shareholders of Alamar.
3. The principal terms of the Agreement of Merger were adopted by the
affirmative vote of the outstanding shares of Alamar which equaled or
exceeded the required vote; which such vote was a majority of the
outstanding shares.
4. There is only one class of shares outstanding and the number of shares
outstanding is 11,115,339.
I further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of my own knowledge.
Dated: December 28, 1995
/s/ Mark L. Santor
-----------------------------
Mark L. Santor, Vice President, Finance
/s/ Mark L. Santor
-----------------------------
Mark L. Santor, Secretary
<PAGE>
CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
Peter P. Gombrich certifies that:
1. He is the President and Secretary of AccuMed Inc., an Illinois corporation
("AccuMed").
2. The Agreement of Merger in the form attached hereto was duly approved by
the Board of Directors and shareholders of AccuMed.
3. The principal terms of the Agreement of Merger were adopted by the
affirmative vote of the outstanding shares of AccuMed which equaled or
exceeded the required vote; which such vote was two-thirds of the total
outstanding shares.
4. There is only one class of shares outstanding and the number of shares
outstanding is 2,390,441.
I further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of my own knowledge.
Dated: December 28, 1995
/s/ Peter P. Gombrich
-----------------------------
Peter P. Gombrich, President
/s/ Peter P. Gombrich
-----------------------------
Peter P. Gombrich, Secretary
<PAGE>
State of California
[SEAL]
SECRETARY OF STATE
CORPORATION DIVISION
I, BILL JONES, Secretary of State of the State of California, hereby
certify:
That the annexed transcript has been compared with the corporate record on
file in this office, of which it purports to be a copy, and that same is full,
true and correct.
IN WITNESS WHEREOF, I execute
this certificate and affix the
Great Seal of the State of
California this
JAN 10 1996
[THE STATE OF CALIFORNIA SEAL]
/s/ Bill Jones
---------------------
Secretary of State
ACCUMED, INC.
AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT (this "Agreement") is made and entered into as of
April 21, 1995 by and among ACCUMED, INC., an Illinois corporation ("Company"),
ALAMAR BIOSCIENCES, INC., a California corporation ("Alamar"), and the
undersigned affiliate ("Affiliate") of the Company.
R E C I T A L S
A. The Company and Alamar have entered into an Agreement and Plan of
Reorganization, dated April 21, 1995 (the "Reorganization Agreement"), providing
for the merger ("Merger") of the Company with and into the Alamar. Pursuant to
the Merger, among other things, the outstanding shares of Common Stock of the
Company will be converted into shares of Common Stock of Alamar at the rate
determined in accordance with the Reorganization Agreement.
B. Affiliate is the beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of such number
of shares of the outstanding Common Stock, no par value per share, of the
Company as is indicated on the final page of this Agreement (the "Shares").
C. Affiliate understands that Affiliate may be deemed to be an "affiliate"
of the Company (within the meaning of Rule 145 promulgated under the Securities
Act of 1933, as amended (the "Securities Act")), the Shares may only be disposed
of in conformity with the limitations described herein. Affiliate has been
informed that the treatment of the Merger as a tax-free reorganization under
applicable provisions of the Internal Revenue Code of 1986, as amended, is
dependent upon the accuracy of certain of the representations and warranties and
the compliance with certain of the agreements set forth herein. Affiliate
further understands that the representations, warranties and agreements set
forth herein will be relied upon by Alamar, the Company and their respective
counsel and accounting firms.
NOW, THEREFORE, the parties agree as follows:
1. Tax Treatment; Rule 145. Affiliate understands and agrees that it is
intended that the Merger will be treated as a "reorganization" for federal
income tax purposes. Affiliate further understands and agrees that Affiliate may
be deemed to be an "affiliate" of the Company within the meaning of Rule 145
under the Securities Act, although nothing contained herein should be construed
as an admission of such fact.
2. Reliance Upon Representations Warranties and Covenants. Affiliate has
been informed that the treatment of the Merger as a reorganization for federal
income tax purposes requires that a sufficient number of former shareholders of
the Company maintain a meaningful
<PAGE>
continuing equity ownership interest in Alamar after the Merger. Affiliate
understands that the representations, warranties and covenants of Affiliate set
forth herein will be relied upon by Alamar, the Company and their respective
counsel and accounting firms.
3. Representations Warranties and Covenants of Affiliate. Affiliate
represents, warrants and covenants as follows:
(a) Affiliate has full power and authority to execute this Agreement,
to make the representations, warranties and covenants herein contained and
to perform Affiliate's obligations hereunder.
(b) Set forth below the signature below is the number of shares of
Common Stock of the Company ("Company Stock") owned by Affiliate, including
all Company Stock as to which Affiliate has sole or shared voting or
investment power and all rights, options and warrants to acquire Company
Stock owned or held by Affiliate.
(c) Affiliate will not sell, transfer, exchange, pledge or otherwise
dispose of, or make any offer or agreement relating to any of the foregoing
with respect to, any shares of Common Stock of Alamar ("Alamar Stock") that
Affiliate may acquire in connection with the Merger, or any securities that
may be paid as a dividend or otherwise distributed thereon or with respect
thereto or issued or delivered in exchange or substitution therefor (all
such shares and other securities of Alamar are sometimes collectively
referred to as "Restricted Securities"), or any option, right or other
interest with respect to any Restricted Securities, unless: (i) such
transaction is permitted pursuant to Rule 145(c) and 145(d) under the
Securities Act; (ii) counsel representing Affiliate, which counsel is
reasonably satisfactory to Alamar, shall have advised Alamar in a written
opinion letter satisfactory to Alamar and Alamar's legal counsel, and upon
which Alamar and its legal counsel may rely, that no registration under the
Securities Act would be required in connection with the proposed sale,
transfer or other disposition; (iii) a registration statement under the
Securities Act covering the Alamar Stock proposed to be sold, transferred
or otherwise disposed of, describing the manner and terms of the proposed
sale, transfer or other disposition, and containing a current prospectus,
shall have been filed with the Securities and Exchange Commission (the
"SEC") and made effective under the Securities Act; or (iv) an authorized
representative of the SEC shall have rendered written advice to Affiliate
(sought by Affiliate or counsel to Affiliate, with a copy thereof and all
other related communications delivered to Alamar) to the effect that the
SEC would take no action, or that the staff of the SEC would not recommend
that the SEC take any action, with respect to the proposed disposition if
consummated.
(d) Affiliate has, and as of the Effective Time will have, no present
plan or intention (a "Plan") to sell, transfer, exchange, pledge or
otherwise dispose of, including a distribution by a partnership to its
partners, or a corporation to its shareholders, or any other transaction
which results in a reduction in the risk of ownership (any of the
foregoing, a "Sale") of the shares of Alamar Stock that Affiliate may
acquire in connection with the Merger, or any securities that may be paid
as a dividend or otherwise distributed thereon with respect thereto or
issued or delivered in exchange or substitution therefor. Affiliate is not
aware of, or participating in, any Plan on the part
-2-
<PAGE>
of the Company's shareholders to engage in Sales of the shares of Alamar Stock
to be issued in the Merger. If any of Affiliate's representations in this
Section 4(d) cease to be true at any time prior to the Effective Time, Affiliate
will deliver to each of the Company and Alamar, prior to the Effective Time, a
written statement to that effect, signed by Affiliate.
4. Rules 144 and 145. From and after the Effective Time and for so long as
is necessary in order to permit Affiliate to sell the Alamar Stock held by
Affiliate pursuant to Rule 145 under the Securities Act and, to the extent
applicable, Rule 144 under the Securities Act, Alamar will use its reasonable
efforts to file on a timely basis all reports required to be filed by it
pursuant to Section 13 of the Exchange Act, referred to in paragraph (c)(1) of
Rule 144 under the Securities Act, in order to permit Affiliate to sell the
Alamar Stock held by it pursuant to the terms and conditions of Rule 145 under
the Securities Act and the applicable provisions of Rule 144 under the
Securities Act.
5. Limited Resales. Affiliate understands that, in addition to the
restrictions imposed under Section 3 of this Agreement, the provisions of Rule
145 under the Securities Act limit Affiliate's public resales of Restricted
Securities, in the manner set forth in subsections (a), (b) and (c) below:
(a) Unless and until the restriction "Cut-off" provisions of Rule
145(d)(2) or Rule 145(d)(3) under the Securities Act set forth below become
available, public resales of Restricted Securities may only be made by
Affiliate in compliance with the requirements of Rule 145(d)(1) under the
Securities Act. Rule 145(d)(1) under the Securities Act permits such
resales only: (i) while Alamar meets the public information requirements of
Rule 144(c) under the Securities Act; (ii) in brokers' transactions or in
transactions with a market maker; and (iii) where the aggregate number of
Restricted Securities sold at any time together with all sales of
restricted Alamar Stock sold for Affiliate's account during the preceding
three-month period does not exceed the greater of (A) one percent (1%) of
the Alamar Stock outstanding or (B) the average weekly volume of trading in
Alamar Stock on all national securities exchanges, or reported through the
automated quotation system of a registered securities association, during
the four (4) calendar weeks preceding the date of receipt of the order to
execute the sale.
(b) Affiliate may make unrestricted sales of Restricted Securities
pursuant to Rule 145(d)(2) of the Securities Act if: (i) Affiliate has
beneficially owned (within the meaning of Rule 144(d) under the Securities
Act) the Restricted Securities for at least two (2) years after the
Effective Time; (ii) Affiliate is not an affiliate of Alamar; and (iii)
Alamar meets the public information requirements of Rule 144(c) under the
Securities Act.
(c) Affiliate may make unrestricted sales of Restricted Securities
pursuant to Rule 145(d)(3) under the Securities Act if Affiliate has
beneficially owned (within the meaning of Rule 144(d) under the Securities
Act) the Restricted Securities for at least three (3) years and is not, and
has not been for the last three (3) months, an affiliate of Alamar.
-3 -
<PAGE>
(d) Parent acknowledges that the provisions of Section 3(c) of this
Agreement will be satisfied as to any sale by the undersigned of the
Restricted Securities pursuant to Rule 145(d) under the Securities Act, by
a broker's letter and a letter from the undersigned with respect to that
sale stating that each of the above-described requirements of Rule
145(d)(1) under the Securities Act has been met or is inapplicable by
virtue of Rule 145(d)(2) under the Securities Act or Rule 145(d)(3) under
the Securities Act; provided, however, that Alamar has no reasonable basis
to believe that such sales were not made in compliance with such provisions
of Rule 145(d) under the Securities Act.
6. Legends. Affiliate also understands and agrees that stop transfer
instructions will be given to Alamar's transfer agent with respect to
certificates evidencing the Restricted Securities and that there will be placed
on the certificates evidencing the Restricted Securities legends stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE OFFERED, SOLD, PLEDGED, EXCHANGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE OTHER CONDITIONS
SPECIFIED IN THAT CERTAIN AFFILIATE AGREEMENT
DATED AS OF APRIL 10, 1995 BY AND AMONG ALAMAR
BIOSCIENCES, INC., ACCUMED, INC. AND THE
SHAREHOLDER, A COPY OF WHICH AFFILIATE AGREEMENT
MAY BE INSPECTED BY THE HOLDER OF THIS CERTIFICATE
AT THE OFFICES OF ALAMAR BIOSCIENCES, INC. ALAMAR
BIOSCIENCES, INC. WILL FURNISH, WITHOUT CHARGE, A
COPY THEREOF TO THE HOLDER OF THIS CERTIFICATE,
UPON WRITTEN REQUEST THEREFOR.
Alamar agrees to remove promptly such stop transfer instructions and legend upon
full compliance with this Agreement by the undersigned, including, without
limitation, a sale or transfer of Alamar Stock permitted under Section 3(c)
above.
7. Termination. This Agreement shall be terminated and shall be of no
further force and effect upon the termination of the Reorganization Agreement
pursuant to Article VII of the Reorganization Agreement.
8. Counterparts. This Agreement shall be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.
9. Binding Agreement. This Agreement will inure to the benefit of and be
binding upon and enforceable against the parties and their successors and
assigns, including administrators, executors, representatives, heirs, legatees
and devisees of Affiliate and any pledgee holding Restricted Securities as
collateral.
-4-
<PAGE>
10. Waiver. No waiver by any party hereto of any condition or of any breach
of any provision of this Agreement shall be effective unless in writing and
signed by each party hereto.
11. Governing Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of Illinois.
12 Effect of Headiings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
13. Third Party Reliance. Counsel to and accountants for the parties shall
be entitled to rely upon this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
ACCUMED, INC., AFFILIATE:
an Illinois corporation
By: /s/ Peter P. Gombrich By:/s/ Peter P. Gombrich
-------------------------- -------------------------
Name: Peter P. Gombrich Name: Peter P. Gombrich
Title: President and Chief Executive Title: Chairman, President and Chief
Officer. Executive Officer
ALAMAR BIOSCIENCES, INC., Affiliate's Address for Notice:
a California corporation
920 N. Franklin
Suite 402
By: /s/ Kenneth E. Miller Chicago, Illinois 60610
--------------------------
Name: Kenneth E. Miller
Title: Chairman and Chief Executive
Officer
Shares beneficially owned:
1,347,000 shares of AccuMed, Inc.
Common Stock
-5-
WAIVER UNDER MERGER AGREEMENT
Reference is made to the Agreement and Plan of Reorganization (the "Merger
Agreement") dated as of April 21, 1995, as amended by Amendment No. 1 dated as
of August 1, 1995 and Amendment No. 2 dated as of October 6, 1995 between Alamar
Biosciences, Inc., a California corporation ("Alamar"), and AccuMed, Inc., an
Illinois corporation ("AccuMed"). All capitalized terms not otherwise defined
herein shall have the same meaning as when used in the merger Agreement.
WHEREAS, Section 7.18 of the Merger Agreement provides that the persons to
serve as directors of the Surviving Corporation will each serve a two-year term;
and
WHEREAS, both California corporate law and Delaware corporate law require
that a meeting of shareholders be held annually for the purpose of electing
directors;
NOW THEREFORE, each of Alamar and AccuMed hereby waives the requirement
that the Surviving Corporation take action as is necessary to cause such board
members to serve a two-year term, and mutually consent to allow such directors
to serve the maximum term permissible under applicable corporate law, which
shall be until the next annual meeting of shareholders of the Surviving
Corporation, or until their earlier removal or resignation.
IN WITNESS WHEREOF, the parties have caused this Waiver to be duly executed
as of November 20, 1995.
ALAMAR BIOSCIENCES, INC.
By: /s/ Mark L. Santor
----------------------------
Mark L. Santor, Chief
Financial Officer
ACCUMED, INC.
By: /s/ Peter P. Gombrich
----------------------------
Peter P. Gombrich, Chief
Executive Officer
MUTUAL WAIVER PURSUANT TO SECTIONS 8.2(e) and 8.3(e)
OF MERGER AGREEMENT
This Mutual Waiver is hereby made as of December 19, 1995 by Alamar
Biosciences, Inc. ("Alamar"), and AccuMed, Inc. ("AccuMed"). Reference is made
to the Agreement and Plan of Reorganization dated as of April 21, 1995 by Alamar
and AccuMed, as amended by Amendment No. 1 dated as of August 1, 1995, and
Amendment No. 2 dated as of October 6, 1995 (the "Merger Agreement"). Terms not
otherwise defined herein shall have the same meanings as when used in the Merger
Agreement.
1. Each of Alamar and AccuMed hereby waives the requirements pursuant to
Section 8.2(e) and Section 8.3(e), respectively, that Employment Agreements be
executed between the Surviving Corporation and Peter P. Gombrich, Kenn Miller,
Mark L. Santor, Derek Kelly, Roger Grist, and Michael D. Burke.
2. Each of the parties hereby consents to and agrees that the surviving
Corporation shall adopt and assume the obligations under the (i) Employment
Agreement dated as of August 1, 1994, between Mr. Gombrich and AccuMed, (ii) the
Employment Letter dated March 2, 1995 between Accumed and Mr. Miller, (iii) the
Employment Letter dated February 28, 1995 between Accumed and Mr. Santor, and
(iv) the Employment Agreement as in effect between AccuMed and Mr. Burke as of
the date hereof, and that the Service Agreement between Sensititre and Mr. Kelly
dated May 9, 1994 and the Service Agreement between Dr. Grist and Sensititre as
in effect on the date hereof shall continue in full force and effect after the
Effective Time of the Merger.
ALAMAR BIOSCIENCES, INC.
a California corporation
By: /s/ Mark L. Santor
---------------------------
Mark L. Santor
Chief Financial Officer
ACCUMED, INC.,
a California corporation
By: /s/ Peter P. Gombrich
---------------------------
Peter P. Gombrich
Chief Executive Officer
WARRANT AGREEMENT dated as of December 31, 1994 between Alamar BioSciences,
Inc., a California corporation (the "Company"), and Commonwealth Associates
(hereinafter referred to as "Commonwealth").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to Commonwealth warrants
("Warrants") to purchase up to 420,000 shares (the "Shares") of common stock of
the Company, no par value (the "Common Stock"); and
WHEREAS, the Warrants issued pursuant to this Agreement are being issued by
the Company to Commonwealth or its designees as reimbursement to Commonwealth of
certain expenses incurred by Commonwealth in connection with its role as
placement agent for a proposed private placement of the Company's securities
which was abandoned in November 1994 and the cancellation of warrants issued by
the Company to Commonwealth in connection with the Company's initial public
offering;
NOW, THEREFORE, in consideration of the premises, the payment by
Commonwealth to the Company of ONE DOLLAR ($1.00), the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Commonwealth, and/or its designees who are officers or partners of
Commonwealth, are hereby granted the right to purchase, at any time from
December 31, 1994 until 5:00 P.M. New York City time on December 31, 1999 (the
"Warrant Exercise Term"), up to 420,000 (subject to adjustment as provided in
Article 8 hereof) Shares at an initial exercise price (subject to adjustment as
provided in Article 8 hereof) of $.25 per Share.
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificates") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth as Exhibit
A, attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as required or permitted by this
Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Warrants initially are exercisable at a price
of $.25 per Share, payable in cash or by check to the order of the Company, or
any combination of cash or check, subject to adjustment as provided in Article 8
hereof. Upon surrender of the Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the Exercise Price
(as hereinafter defined) for the Shares purchased, at the Company's principal
offices (presently located at 4110 N. Freeway Blvd., Sacramento, CA 95834) the
registered holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a certificate or certificates for the Shares so purchased.
The purchase rights represented by each Warrant
<PAGE>
Certificate are exercisable at the option of the Holder thereof, in whole or in
part (but not as to fractional shares of the Common Stock). In the case of the
purchase of less than all the Shares purchasable under any Warrant Certificate,
the Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise Term,
the Holder may, at its option, exchange all or part of the Warrants (a "Warrant
Exchange"), into the number of Shares determined in accordance with this Section
3.2, by surrendering his Warrant Certificate at the principal office of the
Company or at the office of its transfer agent, accompanied by a notice stating
such holder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new warrant or
warrants of like tenor evidencing the balance of the Shares remaining subject to
the Warrants, shall be issued as of the Exchange Date and delivered to the
Holder within seven (7) days following the Exchange Date. In connection with any
Warrant Exchange, the Warrant Certificate surrendered shall represent the right
to subscribe for and acquire the number of Shares (rounded to the next highest
integer) equal to (i) the number of Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Shares equal to the
quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price (as hereinafter defined) by (B) the current market value
of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within three business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall (subject to the provisions of Article 5 hereof) be issued in
the name of, or in such names as may be directed by, the Holder thereof;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificates in a name other than that of the Holder and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares shall
be executed on behalf of the Company by the manual or facsimile signature of the
present or any future
-2-
<PAGE>
Chairman or Vice Chairman of the Board of Directors or Chief Executive Officer,
President or Vice President of the Company under its corporate seal reproduced
thereon, attested to by the manual or facsimile signature of the present or any
future Secretary or Assistant Secretary of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or in
whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
offered or sold except (i) pursuant to an effective registration statement
under the Act, (ii) to the extent applicable, pursuant to Rule 144 under
the Act (or any similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company of an
opinion of counsel, reasonably satisfactory to counsel to the Company,
stating that an exemption from registration under such Act is available."
5. Investment Restriction.
The Holder of a Warrant Certificate, by its acceptance thereof, covenants
and agrees that the Warrants are being acquired as an investment and not with a
view to the distribution thereof.
6. Price.
6.1 Initial and Adjusted Exercise Price. The initial exercise prices
of each Warrant shall be $.25 per Share. The adjusted exercise price shall be
the price which shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of Article 8
hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The Warrants and
the Shares have not been registered for purposes of public distribution under
the Securities Act of 1933, as amended ("the Act").
7.2 Registrable Securities. As used herein the term "Registrable
Security" means each of the Warrants, the Shares and any shares of Common Stock
issued upon any stock split
-3-
<PAGE>
or stock dividend in respect of such Shares; provided, however, that with
respect to any particular Registrable Security, such security shall cease to be
a Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Securities Act and disposed of pursuant
thereto, (ii) registration under the Securities Act is no longer required for
the immediate public distribution of such security or (iii) it has ceased to be
outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Article 7.
7.3 Piggyback Registration. If, at any time during the seven years
following the date of this Agreement, the Company proposes to prepare and file
any registration statement or post-effective amendments thereto covering equity
or debt securities of the Company, or any such securities of the Company held by
its shareholders (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form), (for purposes of this
Article 7, collectively, a "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least thirty
(30) business days prior to the filing of each such Registration Statement, to
all holders of the Registrable Securities. Upon the written request of such a
holder (a "Requesting Holder"), made within twenty (20) business days after
receipt of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the Company
shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Securities Act of the Registrable Securities which it has
been so requested to register ("Piggyback Registration"), at the Company's sole
cost and expense and at no cost or expense to the Requesting Holders.
7.4 Demand Registration.
(a) At any time during the Warrant Exercise Term, any "Majority
Holder" (as such term is defined in Section 7.4(d) below) of the Registrable
Securities shall have the right (which right is in addition to the piggyback
registration rights provided for under Section 7.3 hereof), exercisable by
written notice to the Company (the "Demand Registration Request"), to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, at the sole expense of the Company (other than
the pro rata portion of underwriting discounts, if any, attributable to the
Holder's Registrable Securities and the expenses of Holder's counsel or
advisors), a Registration Statement and such other documents, including a
prospectus, as may be necessary (in the opinion of both counsel for the Company
and counsel for such Majority Holder), in order to comply with the provisions of
the Act, so as to permit a public offering and sale of the Registrable
-4-
<PAGE>
Securities by the holders thereof, for nine (9) consecutive months.
(b) The Company covenants and agrees to give written notice of
any Demand Registration Request to all holders of the Registrable Securities
within ten (10) days from the date of the Company's receipt of any such Demand
Registration Request. After receiving notice from the Company as provided in
this Section 7.4(b), holders of Registrable Securities may request the Company
to include their Registrable Securities in the Registration Statement to be
filed pursuant to Section 7.4(a) hereof by notifying the Company of their
decision to include such securities within ten (10) days of their receipt of the
Company's notice.
(c) The term "Majority Holder" as used in this Section 7.4 shall
mean any holder or any combination of holders of Registrable Securities, if
included in such holders' Registrable Securities are that aggregate number of
Shares (including Shares already issued and Shares issuable pursuant to the
exercise of outstanding Warrants) as would constitute a majority of the
aggregate number of Shares (including Shares already issued and Shares issuable
pursuant to the exercise of outstanding Warrants) included in all of the
Registrable Securities.
7.5 Covenants of the Company With Respect to Registration. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 7.4 hereof,
the Company shall file the Registration Statement as expeditiously as possible,
but in no event later than twenty (20) business days following receipt of any
demand therefor, shall use its best efforts to have any such Registration
Statements declared effective at the earliest possible time, and shall furnish
each holder of Registrable Securities such number of prospectuses as shall
reasonably be requested. In connection with the obligations of the Company
hereunder to register a Holder's Registrable Securities, the Holder shall
furnish the Company such information concerning the Holder, the Holder's
Registrable Securities, and the terms of the offering of such Registrable
Securities by the Holder as the Company may reasonably request in order to
comply with the provisions of the Act with respect to the Registration Statement
to be filed.
(b) Other than fees and disbursements of counsel acting on behalf
of the holders of Registrable Securities and the pro rata portion of the
underwriting discounts and commissions, if any, attributable to Registrable
Securities, the Company shall pay all costs, fees and expenses in connection
with all Registration Statements filed pursuant to Sections 7.3 and 7.4(a)
hereof including, without limitation, the Company's legal and accounting fees,
printing expenses, and blue sky fees and expenses.
(c) The Company will take all necessary action which may be
required in qualifying or registering the
-5-
<PAGE>
Registrable Securities included in a Registration Statement for offering and
sale under the securities or blue sky laws of such states as are requested by
the holders of such securities, provided that the Company shall not be obligated
to execute or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.
(d) The Company shall indemnify any holder of the Registrable
Securities to be sold pursuant to any Registration Statement and any underwriter
or person deemed to be an underwriter under the Act and each person, if any, who
controls such holder or underwriter or person deemed to be an underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), from and against any and all losses,
claims, damages, expenses and liabilities (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
caused by any untrue statement of a material fact contained in the Registration
Statement, any other registration statement filed by the Company under the Act,
any post-effective amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of this Agreement
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, expenses or
liabilities are caused by any such untrue statement or alleged untrue statement
or omission or alleged omission based upon information furnished or required to
be furnished in writing to the company by the Holder or underwriter expressly
for use therein; which indemnification shall include each person, if any, who
controls any such Holder or underwriter within the meaning of the Act and each
officer, director, employee and agent of such Holder or underwriter; provided,
however, that the Company shall not be obligated to so indemnify the Holder or
any such underwriter or other person referred to above unless the Holder or
underwriter or other person, as the case may be, shall at the same time
indemnify the Company, its directors, each officer signing the registration
statement and each person, if any, who controls the Company within the meaning
of the Act, from and against any and all losses, claims, damages, expenses and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the registration Statement, any registration
statement or any prospectus required to be filed or furnished by reason of this
Agreement or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
insofar as such losses, claims, damages, expenses or liabilities are caused by
any untrue statement or alleged untrue statement or omission based upon
information furnished in writing to the Company by the Holder or underwriter
expressly for use therein, and provided, further that the holder, each person,
if any, who controls the holder within the meaning of the Act, and each of the
Holder's directors, officers, employees and agents shall not be obligated to
indemnify any indemnified person pursuant to the foregoing indemnity, or to make
any contribution pursuant to
-6-
<PAGE>
subparagraph 7.5(f) below, in an amount in excess of the net proceeds received
by such holder with respect to the sale of Registrable Securities.
(e) Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against any indemnifying
party under this Section 7.5, the indemnified party will notify the indemnifying
party in writing of the commencement thereof, and the indemnifying party will,
subject to the provisions hereinafter stated, assume the defense of such action
(including the employment of counsel reasonably subject to the provisions
hereinafter stated, assume the defense of such action (including the employment
of counsel reasonably satisfactory to the indemnified party and the payment of
expenses) insofar as such action relates to an alleged liability in respect of
which indemnity may be sought against the indemnifying party. After notice from
the indemnifying party of its election to assume the defense of such claim or
action, the indemnifying party shall no longer by liable to the indemnified
party under this Section 7.5 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that if, in the
written opinion of counsel to the indemnified party or parties, it is advisable
for the indemnified party or parties, it is advisable for the indemnified party
or parties to be represented by separate counsel, the indemnified party or
parties shall have the right to employ a single counsel to represent the
indemnified parties who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified parties thereof
against the indemnifying party, in which event the reasonable fees and expenses
of such separate counsel shall be borne by the indemnifying party. Any party
against whom indemnification may be sought under this Section 7.5 shall not be
liable to indemnify any person that might otherwise be indemnified pursuant
hereto for any settlement of any action effected without such indemnifying
party's consent, which consent shall not be unreasonably withheld.
(f) If for any reason the indemnification provided for in this
Section 7.5 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, expense or liability
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
th indemnified party as a result of such loss, claim, damage, expense or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations.
(g) Nothing contained in this Agreement shall be construed as
requiring any Holder to exercise his Warrants prior to the initial filing of any
Registration Statement or the effectiveness thereof.
-7-
<PAGE>
8. Adjustments of Exercise Price and Number of Shares.
8.1 Computation of Adjusted Price. Except as hereinafter provided, in
case the Company shall at any time after the date hereof issue or sell any
shares of Common Stock (other than the issuances or sales referred to in Section
8.6 hereof), including shares held in the Company's treasury and shares of
Common Stock issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock (other than the issuances or sales of
Common Stock pursuant to rights to subscribe for such Common Stock distributed
to all the shareholders of the Company and Holders of Warrants pursuant to
Section 8.8 hereof) and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common Stock, for a
consideration per share less than either the Exercise Price in effect
immediately prior to the issuance or sale of such shares or the "Market Price"
(as defined in Section 8.1(vi) hereof) per share of Common Stock or without
consideration, then forthwith upon such issuance or sale, the Exercise Price
shall (until another such issuance or sale), be reduced to the price (calculated
to the nearest full cent) equal to the quotient derived by dividing (A) an
amount equal to the sum of (X) the product of (a) the total number of shares of
Common Stock outstanding immediately prior to such issuance or sale, multiplied
by (b) the lower of (i) the Exercise Price in effect immediately prior to such
issuance or sale or (ii) the "Market Price" (as defined in subsection (vi) of
this Section 8.1 hereof) per share of Common Stock on the date immediately prior
to the issuance or sale of such shares, plus, (Y) the aggregate of the amount of
all consideration, if any, received by the Company upon such issuance or sale,
by (B) the total number of shares of Common Stock outstanding immediately after
such issuance or sale; provided, however, that in no event shall the Exercise
Price be adjusted pursuant to this computation to an amount in excess of the
Exercise Price in effect immediately prior to such computation, except in the
case of a combination of outstanding shares of Common Stock, as provided by
Section 8.3 hereof. For the purposes of any computation to be made in accordance
with this Section 8.1, the following provisions shall be applicable: (i) In case
of the issuance or sale of shares of Common Stock for a consideration part or
all of which shall be cash, the amount of the cash consideration therefor shall
be deemed to be the amount of cash received by the Company for such shares (or,
if shares of Common Stock are offered by the Company for subscription, the
subscription price, or, if such securities shall be sold to underwriters or
dealers for public offering without a subscription offering, the initial public
offering price) before deducting therefrom any compensation paid or discount
allowed in the sale, underwriting or purchase thereof by underwriters or dealers
or others performing similar services, or any expenses incurred in connection
therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration
-8-
<PAGE>
part or all of which shall be other than cash, the amount of the consideration
therefor other than cash shall be deemed to be the value of such consideration
as determined in good faith by the Board of Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable upon
the exercise of options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(vi) As used herein, the phrase "Market Price" at any date shall
be deemed to be the last reported sale price, or, in case no such reported sale
takes place on such day, the average of the last reported sale prices for the
last three trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading
or as reported in the NASDAQ National Market System, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on the NASDAQ National Market System, the closing bid price as furnished by the
National Association of Securities Dealers, Inc. through NASDAQ or similar
organization if NASDAQ is no longer reporting such information, or if the Common
Stock is not quoted on NASDAQ, as determined in good faith by resolution of the
Board of Directors of the Company, based on the best information available to it
for the two days immediately preceding such issuance or sale and the day of such
issuance or sale.
8.2 Options, Rights, Warrants and Convertible and Exchangeable
Securities. Except in the case of the Company issuing rights to subscribe for
shares of Common Stock distributed to all the shareholders of the Company and
Holders of Warrants pursuant to Section 8.8 hereof, if the Company shall at any
time after the date hereof issue options, rights or warrants to subscribe for
shares of Common Stock, or issue any securities convertible into or exchangeable
for shares of Common Stock, (i) for a consideration per share less than (a) the
Exercise Price in effect immediately prior to the issuance of such options,
rights
-9-
<PAGE>
or warrants, or such convertible or exchangeable securities, or (b) the Market
Price, or (ii) without consideration, the Exercise Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, as the case may be, shall be reduced to a price
determined by making a computation in accordance with the provisions of Section
8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under all the outstanding options, rights or warrants
shall be deemed to be issued and outstanding at the time all the outstanding
options, rights or warrants were issued, and for a consideration equal to the
minimum purchase price per share provided for in the options, rights or warrants
at the time of issuance, plus the consideration (determined in the same manner
as consideration received on the issue or sale of shares in accordance with the
terms of the Warrants), if any, received by the Company for the options, rights
or warrants, and if no minimum price is provided in the options, rights or
warrants, then the consideration shall be equal to zero; provided, however, that
upon the expiration or other termination of the options, rights or warrants, if
any thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (a) (and for the
purposes of subsection (v) of Section 8.1 hereof) shall be reduced by such
number of shares as to which options, warrants and/or rights shall have expired
or terminated unexercised, and such number of shares shall no longer be deemed
to be issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually issued
or issuable upon the exercise of those options, rights or warrants as to which
the exercise rights shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or sale of
shares of Common Stock in accordance with the terms of the Warrants) received by
the Company for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof; provided,
however, that upon the termination of the right to convert or exchange such
convertible or exchangeable securities (whether by reason of redemption or
otherwise), the number of shares deemed to be issued and outstanding pursuant to
this subsection (b) (and for the purpose of subsection (v) of Section 8.1
hereof) shall be reduced by such number of shares as to which the conversion or
exchange rights shall have expired or terminated unexercised, and such number of
shares shall no longer be deemed to be issued and outstanding and the Exercise
Price then in effect shall forthwith be readjusted and thereafter be the price
which it would have been had adjustment been made on the basis of the issuance
only of the shares actually issued or issuable upon the conversion or exchange
of
-10-
<PAGE>
those convertible or exchangeable securities as to which the conversion or
exchange rights shall not have expired or terminated unexercised.
(c) If any change shall occur in the price per share provided for
in any of the options, rights or warrants referred to in subsection (a) of this
Section 8.2, or in the price per share at which the securities referred to in
subsection (b) of this Section 8.2 are convertible or exchangeable, the options,
rights or warrants or conversion or exchange rights, as the case may be, shall
be deemed to have expired or terminated on the date when such price change
became effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be deemed to
have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
8.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.4 Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Article 8, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
8.5 Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the case of any consolidation
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the
Company as an entirety, the Holders shall thereafter have the right to purchase
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owners of the shares of Common Stock
underlying the Warrants immediately prior to any such events at a price equal to
the product of (x) the number of shares issuable upon exercise of the Warrants
and (y) the Exercise Price in effect immediately prior to the record
-11-
<PAGE>
date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holders had exercised the Warrants.
8.6 No Adjustment of Exercise Price in Certain Cases. No adjustment of
the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock upon the
exercise of the Warrants;
(b) Upon (i) the issuance of options pursuant to the Company's
employee stock option plan in effect on the date hereof or [any employee
stock option plan adopted after the date hereof by stockholders of the
Company] the issuance or sale by the Company of any shares of Common Stock
pursuant to the exercise of any such options, or (ii) the issuance or sale
by the Company of any shares of Common Stock pursuant to the exercise of
any options or warrants previously issued and outstanding on the date
hereof;
(c) Upon issuance of any shares of Common Stock sold in the Company's
offerings of an aggregate of 4,000,000 shares of Common Stock being
conducted pursuant to the Company's Confidential Private Offering Memoranda
dated AApril 20, 1995 and April 21, 1995, respectively; or
(d) Upon the issuance of any shares of Common Stock in connection with
the Company's merger with AccuMed, Inc.
8.7 Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend (other than a dividend consisting
solely of shares of Common Stock or a cash dividend or distribution payable out
of current or retained earnings) or otherwise distribute to its shareholders any
monies, assets, property, rights, evidences of indebtedness, securities (other
than shares of Common Stock), whether issued by the Company or by another person
or entity, or any other thing of value, the Holder or Holders of the unexercised
Warrants shall thereafter be entitled, in addition to the shares of Common Stock
or other securities receivable upon the exercise thereof, to receive, upon the
exercise of such Warrants, the same monies, property, assets, rights, evidences
of indebtedness, securities or any other thing of value that they would have
been entitled to receive at the time of such dividend or distribution. At the
time of any such dividend or distribution, the Company shall make appropriate
reserves to ensure the timely performance of the provisions of this Subsection
8.7.
8.8 Subscription Rights for Shares of Common Stock or Other
Securities. In the case the Company or an affiliate of the Company shall at any
time after the date hereof and prior to the exercise of all the Warrants issue
any rights to
-12-
<PAGE>
subscribe for shares of Common Stock or any other securities of the Company or
of such affiliate to all the shareholders of the Company, the Holders of the
unexercised Warrants shall be entitled, in addition to the shares of Common
Stock or other securities receivable upon the exercise of the Warrants, to
receive such rights at the time such rights are distributed to the other
shareholders of the Company.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
11. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted by NASDAQ or listed on such national
securities exchanges as requested by Commonwealth.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring upon
the Holder or Holders the right to vote or to
-13-
<PAGE>
consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having any
rights whatsoever as a shareholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any
option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable securities or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
13. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
-14-
<PAGE>
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice to the
Holders.
14. Supplements and Amendments.
The Company and Commonwealth may from time to time supplement or amend this
Agreement without the approval of any Holders of Warrant Certificates in order
to cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and Commonwealth may deem necessary or desirable and which the
Company and Commonwealth deem not to adversely affect the interests of the
Holders of Warrant Certificates.
15. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company and the Holders inure to the benefit of their respective successors
and assigns hereunder.
16. Termination.
This Agreement shall terminate at the close of business on December 31,
2002. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public; provided, however,
that the provisions of Section 7.5 shall survive such termination until the
close of business on December 31, 2005.
17. Governing Law.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.
18. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and Commonwealth and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and Commonwealth and
any other holder or holders of the Warrant Certificates, Warrants or the Shares.
-15-
<PAGE>
19. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] ALAMAR BIOSCIENCES, INC.
By:_________________________________
Name: Kenneth D. Miller
Title: Chief Executive Officer
Attest:
___________________________
COMMONWEALTH ASSOCIATES
By: Commonwealth Associates
Management Company, Inc.,
General Partner
By:_________________________________
Name:
Title:
-16-
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK CITY TIME, DECEMBER 31, 1999
No. W-__ 420,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Commonwealth Associates
("Commonwealth") or registered assigns, is the registered holder of 420,000
Warrants to purchase, at any time from December 31, 1994 until 5:00 P.M. New
York City time on December 31, 1999 (the "Expiration Date") up to 420,000 shares
("Shares") of fully-paid and non-assessable common stock, no par value ("Common
Stock"), of Alamar BioSciences, Inc., a California corporation (the "Company"),
at the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $.25 per Share, upon surrender of this Warrant Certificate
and payment of the Exercise Price at an office or agency of the Company, but
subject to the conditions set forth herein and in the warrant agreement dated as
of December 31, 1994 between the Company and Commonwealth (the "Warrant
Agreement"). Payment of the Exercise Price may be made in cash, or by check
payable to the order of the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and/or number of the Company's securities issuable thereupon
may, subject to certain conditions, be adjusted. In such event, the Company
will, at the request of the holder, issue a new Warrant Certificate evidencing
<PAGE>
the adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificates shall not in any way
change, alter, or otherwise impair, the rights of the holder as set forth in the
Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: As of December 31, 1994 ALAMAR BIOSCIENCES, INC.
[SEAL] By:_____________________
Name:
Title:
Attest:
_________________________
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Shares and
herewith tenders in payment for such Shares cash or a check payable to the order
of Alamar Biosciences, Inc. in the amount of $ , all in accordance with the
terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of , whose address is __________________, and that such
Certificate be delivered to __________________, whose address is _____________.
Dated: Signature:
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED_________________________________________________________
hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature:____________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate)
_______________________________
_______________________________
(Insert Social Security or Other
Identifying Number of Assignee)
WARRANT AGREEMENT dated as of December 28, 1995, by and between
AccuMed International, Inc., a Delaware corporation (the "Company"), and
Commonwealth Associates, a New York limited partnership ("Commonwealth").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to Commonwealth a warrant (the
"Warrant") to purchase up to 750,000 shares (the "Warrant Shares") of the
Company's Common Stock, par value $.01 per share (the "Common Stock"); and
WHEREAS, the Warrant issued pursuant to this Agreement is being issued by
the Company to Commonwealth and/or its designees in consideration for certain
services performed by Commonwealth in connection with the merger of AccuMed,
Inc. with and into the Company.
NOW, THEREFORE, in consideration of the premises, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. On the terms and subject to the conditions set forth herein, and
unless this agreement is terminated prior to exercise in accordance with Section
16 hereof, Commonwealth and/or its designees is hereby granted the right to
purchase, at any time from December 28, 1995 until 5:00 P.M., New York time, on
December 28, 2000 (the "Warrant Exercise Term"), up to 750,000 Warrant Shares at
an initial exercise price (subject to adjustment as provided in Article 8
hereof) of $1.25 per Warrant Share.
2. Warrant Certificate. The warrant certificate (the "Warrant Certificate")
delivered and to be delivered pursuant to this Agreement shall be in the form
set forth in Exhibit A attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant. The Warrant initially is exercisable at a price of
$1.25 per Warrant Share, payable in cash or by check to the order of the
Company, or any combination of cash or check, subject to adjustment as provided
in Article 8 hereof. Upon surrender of the Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Warrant Shares purchased, at the
Company's principal offices (currently located at 920 N. Franklin Street, Suite
402, Chicago, Illinois 60610) Commonwealth (or other registered holder of the
Warrant Certificate) (the "Holder") shall be entitled to receive a certificate
or certificates for the Warrant Shares so pur-
1
<PAGE>
chased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder, in whole or in part (but not as to
fractional Warrant Shares). In the case of the purchase of less than all the
Warrant Shares purchasable under any Warrant Certificate, the Company shall
cancel said Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the Warrant
Shares purchasable thereunder.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Warrant Shares purchased shall be made forthwith (and in any event within three
business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Article 5
hereof) be issued in the name of, or in such names as may be directed by, the
Holder thereof; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the issuance
and delivery of any such certificates in a name other than that of the Holder
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
The Warrant Certificate and the certificates representing the Warrant
Shares shall be executed on behalf of the Company by the manual or facsimile
signature of the present or any future Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the
present or any future Secretary or Assistant Secretary of the Company. The
Warrant Certificate and certificates representing the Warrant Shares shall be
dated the date of execution by the Company upon initial issuance, division,
exchange, substitution or transfer.
Upon exercise, in part or in whole, of the Warrants, certificates
representing the Warrant Shares shall bear a legend substantially similar to the
following:
"The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended (the
"Act"), and may not be offered or sold except
(i) pursuant to an effective registration
statement under the Act, (ii) to the extent
applicable, pursuant to Rule 144 under the
Act (or any similar rule under such Act
relating to the disposition of securities),
or (iii) upon the delivery by the holder to
2
<PAGE>
the Company of an opinion of counsel,
reasonably satisfactory to counsel to the
issuer, stating that an exemption from
registration under such Act is available."
5. Restriction on Transfer of Warrants and Warrant Shares.
Commonwealth, by its acceptance thereof, covenants and agrees that the
Warrant is being acquired as an investment and not with a view to the
distribution thereof, and that neither the Warrant nor, if exercised, any
Warrant Shares, may be directly or indirectly offered, transferred, assigned,
pledged, sold or otherwise disposed of for a period of eighteen (18) months from
December 28, 1995 except with the consent of the Company.
6. Price.
6.1. Initial and Adjusted Exercise Price. The initial exercise price of the
Warrant shall be $1.25 per Warrant Share. The adjusted exercise price shall be
the price which shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of Article 8
hereof.
6.2. Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
7.1. Registration Under the Securities Act of 1933. The Warrant and the
Warrant Shares have not been registered for purposes of public distribution
under the Act.
7.2. Registrable Securities. As used herein the term "Registrable Security"
means the Warrant Shares and any shares of Common Stock issued upon any stock
split, dividend or stock dividend in respect of the Warrant Shares; provided,
however, that with respect to any particular Registrable Security, such security
shall cease to be a Registrable Security when, as of the date of determination,
(i) it has been effectively registered under the Act and disposed of pursuant
thereto, (ii) registration under the Act is no longer required for subsequent
public distribution of such security, or (iii) it has ceased to be outstanding.
The term "Registrable Securities" means any and/or all of the securities falling
within the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be made in
the definition of "Registrable Security" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Article 7.
3
<PAGE>
7.3. Piggyback Registration. If, at any time during the seven (7) years
following the date of this Agreement, the Company proposes to prepare and file
any new registration statement or post-effective amendments thereto covering
equity or debt securities of the Company, or any such securities of the Company
held by its shareholders (in any such case, other than in connection with a
merger, acquisition or pursuant to Form S-8 or successor form) (for purposes of
this Article 7, collectively, a "Company Registration Statement"), it will give
written notice (the "Notice") of its intention to do so by registered mail, at
least thirty (30) business days prior to the filing of each such Company
Registration Statement, to all holders of the Registrable Securities. Upon the
written request of such a holder (a "Requesting Holder"), made within twenty
(20) business days after receipt of the Notice, that the Company include any of
the Requesting Holder's Registrable Securities in the proposed Company
Registration Statement, the Company shall, as to each such Requesting Holder,
use its best efforts to effect the registration under the Act of the Registrable
Securities which it has been so requested to register ("Piggyback
Registration"), at the Company's sole cost and expense and at no cost or expense
to the Requesting Holders (except as to underwriting discounts and commissions
and costs of individual Requesting Holders' counsel and professional advisors).
Notwithstanding the provisions of this Section 7.3, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 7.3 (irrespective of whether any written request for inclusion of such
securities shall have already been made) to elect not to file any such proposed
Company Registration Statement, or to withdraw the same after the filing but
prior to the effective date thereof.
7.4 Demand Registration Right.
(a) At any time during the Warrant Exercise Term, any "Majority
Holder" (as such term is defined in Section 7.4(c) below) of the Registrable
Securities shall have the right (which right is in addition to the piggyback
registration rights) provided for under Section 7.3 hereof), exercisable by
written notice to the Company (the "Demand Registration Request"), to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, at the sole expense of the Company (other than
the pro rata portion of underwriting discounts, if any, attributable to the
Holder's Registrable Securities and the expenses of Holder's counsel and
advisors), a Registration Statement and such other documents, including a
prospectus, as may be necessary (in the opinion of both counsel for the Company
and counsel for such Majority Holder), in order to comply with the provisions of
the Act, so as to permit a public offering and sale of the Registrable
Securities until such time as (i) the sale of all Registrable Securities by the
holders thereof or (ii) receipt by the holders thereof of an opinion of
Company's counsel that the Registrable
4
<PAGE>
Securities may be immediately publicly sold without registration under the
Securities Act.
(b) The Company covenants and agrees to give written notice of any
Demand Registration Request to all holders of the Registrable Securities within
ten (10) days from the date of the Company's receipt of any such Demand
Registration Request. After receiving notice from the Company as provided in
this Section 7.4(b), holders of Registrable Securities may request the Company
to include their Registrable Securities in the Registration Statement to be
filed pursuant to Section 7.4(a) hereof by notifying the Company of their
decision to include such securities within ten (10) days of their receipt of the
Company's notice.
(c) The term "Majority Holder" as used in this Section 7.4 shall means
any holder or any combination of holders of Registrable Securities, if included
in such holders' Registrable Securities are that aggregate number of Warrant
Shares (including Warrant Shares already issued and Warrant Shares issuable
pursuant to the exercise of outstanding warrants) as would constitute a majority
of the aggregate number of Warrant Shares (including Warrant Shares already
issued and Warrant Shares issuable pursuant to the exercise of outstanding
Warrants) included in all of the Registrable Securities.
7.5 Covenants of the Company With Respect to Registration. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 7.4 hereof, the
Company shall file the Registration Statement as expeditiously as possible, but
in no event later than ten (10) business days following receipt of any demand
therefor, shall use its best efforts to have any such Registration Statements
declared effective at the earliest possible time, and shall furnish each holder
of Registrable Securities such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs, fees and expenses in connection
with all Registration Statements filed pursuant to Sections 7.3 and 7.4 hereof
including, without limitation, the Company's legal and accounting fees, printing
expenses, and blue sky fees and expenses, except for any underwriting discounts
or commissions with respect to the Registrable Securities and except for fees of
counsel and other professional advisors of a holder or group of holders.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Registrable Securities included in a
Registration Statement for offering and sale under the securities or blue sky
laws of such states as are requested by the holders of such securities, provided
that the Company shall not be obligated to so qualify or
5
<PAGE>
register the Registrable Securities in any state that would require the Company
to execute or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.
(d) The Company shall indemnify any holder of the Registrable
Securities to be sold pursuant to any Registration Statement and any underwriter
or person deemed to be an underwriter under the Act and each person, if any, who
controls such holder or underwriter or person deemed to be an underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), against all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from any untrue statement of a material fact contained in a Registration
Statement, any other registration statement filed by the Company under the Act,
any post-effective amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of this Article 7
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 alleged untrue statement or omission or
alleged omission based upon information furnished or required to be furnished in
writing to the Company by the holder of the Registrable Securities or
underwriter expressly for use therein; which indemnification shall include each
person, if any, who controls any such underwriter within the meaning of the Act
and each officer, director, employee and agent of such underwriter; provided,
however, that the Company shall not be obligated to so indemnify such holder or
any such underwriter or other person referred to above unless such holder or
underwriter or other person, as the case may be, shall at the same time
indemnify the Company to the extent required herein. Each person who may be
entitled to indemnification pursuant to the preceding sentence shall indemnify
the Company, its directors, each officer signing the registration statement and
each person, if any, who controls the Company within the meaning of the 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
a Registration Statement, any registration statement or any prospectus required
to be filed or furnished by reason of this Article 7 or caused by any omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission based upon information furnished in writing to the Company
by the Holder or underwriter expressly for use therein.
6
<PAGE>
(e) Promptly after receipt of notice of the commencement of any action
in respect of which indemnity may be sought against any indemnifying party under
this Section 7.5, the indemnified party will notify the indemnifying party in
writing of the commencement thereof, and the indemnifying party will, subject to
the provisions hereinafter stated, assume the defense of such action (including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of expenses) insofar as such action relates to an alleged liability
in respect of which indemnity may be sought against the indemnifying party.
After notice from the indemnifying party of its election to assume the defense
of such claim or action, the indemnifying party shall no longer be liable to the
indemnified party under this Section 7.5 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
if, in the written opinion of counsel to the indemnified party or parties, it is
advisable for the indemnified party or parties to be represented by separate
counsel, the indemnified party or parties shall have the right to employ a
single counsel to represent the indemnified parties who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the indemnified parties thereof against the indemnifying party, in which
event the reasonable fees and expenses of such separate counsel shall be borne
by the indemnifying party. Any party against whom indemnification may be sought
under this Section 7.5 shall not be liable to indemnify any person that might
otherwise be indemnified pursuant hereto for any settlement of any action
effected without such indemnifying party's consent, which consent shall not be
unreasonably withheld.
(f) If for any reason the indemnification provided for in the
preceding subparagraph is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
(g) Nothing contained in this Agreement shall be construed as
requiring any holder to exercise the Warrant prior to the initial filing of any
registration statement or the effectiveness thereof.
7
<PAGE>
8. Adjustments of Exercise Price and Number of Warrant Shares.
8.1. Computation of Adjusted Price. Except as hereinafter provided, in
case the Company shall at any time after the date hereof issue or sell any
shares of Common Stock (other than the issuances or sales referred to in Section
8.6 hereof), including shares held in the Company's treasury and shares of
Common Stock issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock (other than the issuances or sales of
Common Stock pursuant to rights to subscribe for such Common Stock distributed
to all the shareholders of the Company and Holders of Warrants pursuant to
Section 8.9 hereof) and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common Stock, for a
consideration per share less than the Exercise Price in effect immediately prior
to the issuance or sale of such shares or the "Market Price" (as defined in
Section 8.1(iv) hereof) per share of Common Stock or without consideration, then
forthwith upon such issuance or sale, the Exercise Price shall (until another
such issuance or sale) be reduced to the price (calculated to the nearest full
cent) equal to the quotient derived by dividing (A) an amount equal to the sum
of (X) the product of (a) the total number of shares of Common Stock outstanding
immediately prior to such issuance or sale, multiplied by (b) the lower of (i)
the Exercise Price in effect immediately prior to such issuance or sale or (ii)
the "Market Price" (as defined in subsection (vi) of this Section 8.1 hereof)
per share of Common Stock on the date immediately prior to the issuance or sale
of such shares, plus, (Y) the aggregate of the amount of all consideration, if
any, received by the Company upon such issuance or sale, by (B) the total number
of shares of Common Stock outstanding immediately after such issuance or sale;
provided, however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the Exercise Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section 8.3
hereof.
For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for
a consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if such securities shall
be sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price) before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof
8
<PAGE>
by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as determined in good faith by the Board of
Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable upon
the exercise of options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(vi) The term "Market Price" at any date shall be deemed to be
the last reported sale price, or, in case no such reported sale takes place on
such day, the average of the last reported sale prices for the last three
trading days, in either case as officially reported by the principal securities
exchange on which the Common Stock is listed or admitted to trading or as
reported in the NASDAQ National Market System, or the NASDAQ Small Cap Market,
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on the NASDAQ National Market System or the NASDAQ
Small Cap Market, the closing bid price as furnished by the National Association
of Securities Dealers, Inc. through NASDAQ or similar organization if NASDAQ is
no longer reporting such information, or if the Common Stock is not listed or
admitted to trading on a securities exchange or quoted on NASDAQ, as determined
in good faith by resolution of the Board of Directors of the Company, based on
the best information available to it for the two days immediately preceding such
issuance or sale and the day of such issuance or sale.
9
<PAGE>
8.2. Options, Rights, Warrants and Convertible and Exchangeable Securities.
Except in the case of the Company issuing rights to subscribe for shares of
Common Stock distributed to all the shareholders of the Company and Holders of
Warrants pursuant to Section 8.10 hereof, if the Company shall at any time after
the date hereof issue options, rights or warrants to subscribe for shares of
Common Stock, or issue any securities convertible into or exchangeable for
shares of Common Stock, (i) for a consideration per share less than (a) the
Exercise Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, or (b) the
Market Price, or (ii) without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under all the outstanding options, rights or warrants
shall be deemed to be issued and outstanding at the time all the outstanding
options, rights or warrants were issued, and for a consideration equal to the
minimum purchase price per share provided for in the options, rights or warrants
at the time of issuance, plus the consideration (determined in the same manner
as consideration received on the issue or sale of shares in accordance with the
terms of the Warrants), if any, received by the Company for the options, rights
or warrants, and if no minimum price is provided in the options, rights or
warrants, then the consideration shall be equal to zero; provided, however, that
upon the expiration or other termination of the options, rights or warrants, if
any thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (a) (and for the
purposes of subsection (v) of Section 8.1 hereof) shall be reduced by such
number of shares as to which options, warrants and/or rights shall have expired
or terminated unexercised, and such number of shares shall no longer be deemed
to be issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually issued
or issuable upon the exercise of those options, rights or warrants as to which
the exercise rights shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of Common Stock issuable
upon conversion or exchange of any convertible or exchangeable securities shall
be deemed to be issued and outstanding at the time of issuance of such
securities, and for a consideration equal to the consideration (determined in
the same manner as consideration received on the issue or sale of shares of
Common Stock in accordance with the terms of the Warrants) received by the
Company for such securities, plus the minimum consideration, if any, receivable
by
10
<PAGE>
the Company upon the conversion or exchange thereof; provided, however, that
upon the termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
number of shares deemed to be issued and outstanding pursuant to this subsection
(b) (and for the purpose of subsection (v) of Section 8.1 hereof) shall be
reduced by such number of shares as to which the conversion or exchange rights
shall have expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding and the Exercise Price then in
effect shall forthwith be readjusted and thereafter be the price which it would
have been had adjustment been made on the basis of the issuance only of the
shares actually issued or issuable upon the conversion or exchange of those
convertible or exchangeable securities as to which the conversion or exchange
rights shall not have expired or terminated unexercised.
(c) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in subsection (a) of this
Section 8.2, or in the price per share at which the securities referred to in
subsection (b) of this Section 8.2 are convertible or exchangeable, the options,
rights or warrants or conversion or exchange rights, as the case may be, shall
be deemed to have expired or terminated on the date when such price change
became effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be deemed to
have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
8.3. Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.4. Adjustment in Number of Warrant Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Article 8, the number of
Warrant Shares issuable upon the exercise of the Warrant shall be adjusted to
the nearest full Warrant Share by multiplying a number equal to the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares issuable upon exercise of the Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
8.5. Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the case of any
11
<PAGE>
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the Warrant
Shares underlying the Warrant at a price equal to the product of (x) the number
of shares of Common Stock issuable upon conversion of the Warrant Shares and (y)
the Exercise Price prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance as if such Holders had exercised the
Warrant.
8.6. No Adjustment of Exercise Price in Certain Cases. Notwithstanding
anything herein to the contrary, no adjustment of the Exercise Price shall be
made:
(a) Upon the issuance or sale of the Warrant or the Warrant Shares; or
(b) Upon (i) the issuance of options pursuant to the Company's
employee stock option plans in effect on the date hereof or the issuance or
sale by the Company of any shares of Common Stock pursuant to the exercise
of any such options, or (ii) the issuance or sale by the Company of any
shares of Common Stock pursuant to the exercise of any options or warrants
previously issued and outstanding on the date hereof; or
(c) If the amount of said adjustment shall be less than one cent
($0.01) per Share, provided, however, that in such case any adjustment that
would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall
amount to at least one cent ($0.01) per Share.
8.7. Redemption of Warrant; Redemption of Warrant Shares. Notwithstanding
anything to the contrary contained in the Warrant or elsewhere, the Warrant
cannot be redeemed by the Company under any circumstances.
8.8. Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time prior to the
exercise of the Warrant declare a dividend (other than a dividend consisting
solely of shares of
12
<PAGE>
Common Stock or a cash dividend or distribution payable out of current or
retained earnings) or otherwise distribute to its shareholders any monies,
assets, property, rights, evidences of indebtedness, securities (other than
shares of Common Stock), whether issued by the Company or by another person or
entity, or any other thing of value, the Holder of the Warrant shall thereafter
be entitled, in addition to the securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrant, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that he would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 8.8.
8.9. Subscription Rights for Shares of Common Stock or Other Securities. In
the case that the Company or an affiliate of the Company shall at any time after
the date hereof and prior to the exercise of the Warrant issue any rights to
subscribe for shares of Common Stock or any other securities of the Company or
of such affiliate to all the shareholders of the Company, the Holder of the
unexercised Warrant shall be entitled, in addition to the securities receivable
upon the exercise of the Warrant, to receive such rights at the time such rights
are distributed to the other shareholders of the Company.
9. Exchange and Replacement of Warrant Certificates.
The Warrant Certificate is exchangeable without expense, upon the surrender
hereof by the registered Holder at the principal executive office of the
Company, for a new Warrant Certificate of like tenor and date representing in
the aggregate the right to purchase the same number of Warrant Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of the Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrant, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of Warrant Shares upon the exercise of the Warrant, nor shall it be
required to issue scrip or pay cash in lieu of fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of Warrant Shares.
13
<PAGE>
11. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrant, such number of shares of Common Stock as shall be
issuable upon such exercise. The Company covenants and agrees that, upon
exercise of the Warrant and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrant shall be outstanding, the Company shall use
its best efforts to cause all Warrant Shares to be listed on or quoted by NASDAQ
or listed on such national securities exchanges as the Company's Common Stock is
listed.
12. Notices to Warrant Holder.
Nothing contained in this Agreement shall be construed as conferring upon
the Holder the right to vote or to consent or to receive notice as a shareholder
in respect of any meetings of shareholders for the election of directors or any
other matter, or as having any rights whatsoever as a shareholder of the
Company. If, however, at any time prior to the expiration of the Warrants and
their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any
option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
then, in any one or more of said events, the Company shall give written notice
to the Holder of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the shareholders entitled to such dividend, distribution, convertible
14
<PAGE>
or exchangeable securities or subscription rights, options or warrants, or
entitled to vote on such proposed dissolution, liquidation, winding up or sale.
Such notice shall specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend or distribution, or the issuance of
any convertible or exchangeable securities or subscription rights, options or
warrants, or any proposed dissolution, liquidation, winding up or sale.
13. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Warrant, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice
to the Holder.
14. Supplements and Amendments.
The Company and Commonwealth may from time to time supplement or amend this
Agreement without the approval of any Holder of the Warrant and/or securities
underlying the Warrant in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and Commonwealth may deem
necessary or desirable and which the Company and the Underwriter deem not to
adversely affect the interests of the Holder of the Warrant.
15. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company and the Holder inure to the benefit of their respective successors
and assigns hereunder.
16. Termination.
This Agreement shall terminate at the close of business on September 1,
2003. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when the Warrant has been exercised and all securities underlying
the Warrant have been resold to the public; provided, however, that the
provisions of Section 7 shall survive such termination until the close of
15
<PAGE>
business on September 1, 2006 with respect to any outstanding Registrable
Securities.
17. Governing Law.
This Agreement and the Warrant Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.
18. Jurisdiction; Consent to Service of Process.
(a) The Company hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in the Borough of
Manhattan, City of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment hereon. The Company and Commonwealth,
by their acceptance of this Agreement, hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
and determined in such New York State court or, to the extent permitted by law,
in such Federal court. Each such party also agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Holder may otherwise
have to bring any action or proceeding relating to this Agreement against the
Company or its properties in the courts of any jurisdiction.
(b) The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any New York State or Federal
court. The Company and Commonwealth, by their acceptance of this Agreement,
hereby irrevocably waive, to the fullest extent permitted by law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) The Company and Commonwealth, by their acceptance hereof,
irrevocably consent to service of process in the manner provided for notices in
Section 13. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
19. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and Commonwealth and any other registered
Holder of the Warrant or any securities underlying the Warrant any legal or
equitable right, remedy or
16
<PAGE>
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company and Commonwealth and any such other Holder.
20. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] ACCUMED INTERNATIONAL, INC.
By:__________________________________
Name: Peter P. Gombrich
Title: Chief Executive Officer
Attest:
_________________________
Mark L. Santor
Secretary
COMMONWEALTH ASSOCIATES
By: Commonwealth Associates Management
Company, Inc., General Partner
By:________________________________
Name:
Title:
<PAGE>
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT
AGREEMENT REFERRED TO HEREIN.
EXERCISABLE AT ANY TIME FROM DECEMBER 28, 1995 UNTIL
5:00 P.M., NEW YORK TIME, DECEMBER 28, 2000
_______ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that _____________ __________________
("__________"), or registered assigns, is the registered holder of Warrants to
purchase, at any time from December 28, 1995 until 5:00 P.M. New York City time
on December 28, 2000 ("Expiration Date"), up to _______ fully-paid and
non-assessable share(s) (the "Shares") of Common Stock, no par value ("Common
Stock"), of AccuMed International, Inc., a Delaware corporation (the "Company"),
at the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $1.25 per share, upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the Warrant
Agreement dated as of December 28, 1995, by and between the Company and
Commonwealth Associates (the "Warrant Agreement"). Payment of the Exercise Price
may be made in cash, or by check payable to the order of the Company, or any
combination of cash or check.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
<PAGE>
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: December 28, 1995 ACCUMED INTERNATIONAL, INC.
[SEAL] By:___________________________
Name: Peter P. Gombrich
Title: Chief Executive Officer
Attest:
_______________________
Mark L. Santor
Secretary
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE AT ANY TIME FROM DECEMBER 28, 1995 UNTIL
5:00 P.M., NEW YORK TIME, DECEMBER 28, 2000
750,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Commonwealth Associates, a New York
limited partnership ("Commonwealth"), or registered assigns, is the registered
holder of Warrants to purchase, at any time from December 28, 1995 until 5:00
P.M. New York City time on December 28, 2000 ("Expiration Date"), up to 750,000
fully-paid and non-assessable share(s) (the "Shares") of Common Stock, no par
value ("Common Stock"), of AccuMed International, Inc., a Delaware corporation
(the "Company"), at the initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), of $1.25 per share, upon surrender of this
Warrant Certificate and payment of the Exercise Price at an office or agency of
the Company, but subject to the conditions set forth herein and in the Warrant
Agreement dated as of December 28, 1995, by and between the Company and
Commonwealth Associates (the "Warrant Agreement"). Payment of the Exercise Price
may be made in cash, or by check payable to the order of the Company, or any
combination of cash or check.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
<PAGE>
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: December 28, 1995 ACCUMED INTERNATIONAL, INC.
[SEAL] By:___________________________
Name: Peter P. Gombrich
Title: Chief Executive Officer
Attest:
______________________
Mark L. Santor
Secretary
WARRANT AGREEMENT dated as of May 9, 1995 between Alamar
BioSciences, Inc., a California corporation (the "Company"), and Commonwealth
Associates (hereinafter referred to as "Commonwealth").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to Commonwealth Associates
("Commonwealth") warrants ("Warrants") to purchase up to 264,840 shares (the
"Shares") of common stock of the Company, no par value (the "Common Stock"); and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Commonwealth and/or its designees in connection with
Commonwealth's role as placement agent for a private placement of the Company's
Common Stock pursuant to the Company's Confidential Private Offshore Offering
Memorandum dated April 19, 1995 and the Company's Confidential Private Offering
Memorandum dated April 21, 1995;
NOW, THEREFORE, in consideration of the premises, the payment by
Commonwealth to the Company of ONE DOLLAR ($1.00), the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Commonwealth, and/or its designees, are hereby granted the right to
purchase, at any time from May 9, 1995 until 5:00 P.M. New York City time on May
9, 2000 (the "Warrant Exercise Term"), up to 264,840 (subject to adjustment as
provided in Article 8 hereof) Shares at an initial exercise price (subject to
adjustment as provided in Article 8 hereof) of $0.625 per Share.
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificates") delivered and
to be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Warrants initially are exercisable at a
price of $0.625 per Share, payable in cash or by check to the order of the
Company, or any combination of cash or check, subject to adjustment as provided
in Article 8 hereof. Upon surrender of the Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Shares purchased, at the
Company's principal offices (presently located at 4110 N. Freeway Blvd.,
Sacramento, CA 95834) the registered holder of a Warrant Certificate ("Holder"
or "Holders") shall be entitled to receive a certificate or certificates for the
Shares
<PAGE>
so purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock). In the case of the purchase of less
than all the Shares purchasable under any Warrant Certificate, the Company shall
cancel said Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the Shares
purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange all or part of the Warrants (a
"Warrant Exchange"), into the number of Shares determined in accordance with
this Section 3.2, by surrendering his Warrant Certificate at the principal
office of the Company or at the office of its transfer agent, accompanied by a
notice stating such holder's intent to effect such exchange, the number of
Shares to be exchanged and the date on which the Holder requests that such
Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall
take place on the date specified in the Notice of Exchange or, if later, the
date the Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new warrant or warrants of like tenor evidencing the balance of
the Shares remaining subject to the Warrants, shall be issued as of the Exchange
Date and delivered to the Holder within seven (7) days following the Exchange
Date. In connection with any Warrant Exchange, the Warrant Certificate
surrendered shall represent the right to subscribe for and acquire the number of
Shares (rounded to the next highest integer) equal to (i) the number of Shares
specified by the Holder in its Notice of Exchange (the "Total Number") less (ii)
the number of Shares equal to the quotient obtained by dividing (A) the product
of the Total Number and the existing Exercise Price (as hereinafter defined) by
(B) the current market value of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for
the Shares shall be made forthwith (and in any event within three business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall (subject to the provisions of Article 5 hereof) be issued in
the name of, or in such names as may be directed by, the Holder thereof;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificates in a name other than that of the Holder and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
-2-
<PAGE>
The Warrant Certificates and the certificates representing the
Shares shall be executed on behalf of the Company by the manual or facsimile
signature of the present or any future Chairman or Vice Chairman of the Board of
Directors or Chief Executive Officer, President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part
or in whole, certificates representing the Shares shall bear a legend
substantially similar to the following:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
offered or sold except (i) pursuant to an effective registration statement
under the Act, (ii) to the extent applicable, pursuant to Rule 144 under
the Act (or any similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company of an
opinion of counsel, reasonably satisfactory to counsel to the Company,
stating that an exemption from registration under such Act is available."
5. Investment Restriction.
The Holder of a Warrant Certificate, by its acceptance thereof,
covenants and agrees that the Warrants are being acquired as an investment and
not with a view to the distribution thereof.
6. Price.
6.1 Initial and Adjusted Exercise Price. The initial exercise
prices of each Warrant shall be $0.625 per Share. The adjusted exercise price
shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Article 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price, depending upon
the context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The
Warrants and the Shares have not been registered for
-3-
<PAGE>
purposes of public distribution under the Securities Act of 1933, as amended
("the Act").
7.2 Registrable Securities. As used herein the term
"Registrable Security" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "Registrable
Securities" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 7.
7.3 Piggyback Registration. If, at any time during the seven
years following the date of this Agreement, the Company proposes to prepare and
file any registration statement or post-effective amendments thereto covering
equity or debt securities of the Company, or any such securities of the Company
held by its shareholders (in any such case, other than in connection with a
merger, acquisition or pursuant to Form S-8 or successor form), (for purposes of
this Article 7, collectively, a "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least thirty
(30) business days prior to the filing of each such Registration Statement, to
all holders of the Registrable Securities. Upon the written request of such a
holder (a "Requesting Holder"), made within twenty (20) business days after
receipt of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the Company
shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Securities Act of the Registrable Securities which it has
been so requested to register ("Piggyback Registration"), at the Company's sole
cost and expense and at no cost or expense to the Requesting Holders.
7.4 Demand Registration.
(a) At any time during the Warrant Exercise Term, any
"Majority Holder" (as such term is defined in Section 7.4(d) below) of the
Registrable Securities shall have the right (which right is in addition to the
piggyback registration rights provided for under Section 7.3 hereof),
exercisable by written notice to the Company (the "Demand Registration
Request"), to have the Company prepare and file with the Securities and Exchange
Commission (the "Commission"), on one occasion, at the
-4-
<PAGE>
sole expense of the Company (other than the pro rata portion of underwriting
discounts, if any, attributable to the Holder's Registrable Securities and the
expenses of Holder's counsel and advisors), a Registration Statement and such
other documents, including a prospectus, as may be necessary (in the opinion of
both counsel for the Company and counsel for such Majority Holder), in order to
comply with the provisions of the Act, so as to permit a public offering and
sale of the Registrable Securities until such time as (i) the sale of all
Registrable Securities by the holders thereof or (ii) receipt by the holders
thereof of an opinion of Company's counsel that the Registrable Securities may
be immediately publicly sold without registration under the Securities Act.
(b) The Company covenants and agrees to give written
notice of any Demand Registration Request to all holders of the Registrable
Securities within ten (10) days from the date of the Company's receipt of any
such Demand Registration Request. After receiving notice from the Company as
provided in this Section 7.4(b), holders of Registrable Securities may request
the Company to include their Registrable Securities in the Registration
Statement to be filed pursuant to Section 7.4(a) hereof by notifying the Company
of their decision to include such securities within ten (10) days of their
receipt of the Company's notice.
(c) The term "Majority Holder" as used in this Section
7.4 shall mean any holder or any combination of holders of Registrable
Securities, if included in such holders' Registrable Securities are that
aggregate number of Shares (including Shares already issued and Shares issuable
pursuant to the exercise of outstanding Warrants) as would constitute a majority
of the aggregate number of Shares (including Shares already issued and Shares
issuable pursuant to the exercise of outstanding Warrants) included in all of
the Registrable Securities.
7.5 Covenants of the Company With Respect to Registration. The
Company covenants and agrees as follows:
(a) In connection with any registration under Section 7.4
hereof, the Company shall file the Registration Statement as expeditiously as
possible, but in no event later than twenty (20) business days following receipt
of any demand therefor, shall use its best efforts to have any such Registration
Statements declared effective at the earliest possible time, and shall furnish
each holder of Registrable Securities such number of prospectuses as shall
reasonably be requested. In connection with the obligations of the Company
hereunder to register a Holder's Registrable Securities, the Holder shall
furnish the Company such information concerning the Holder, the Holder's
Registrable Securities and the terms of the offering of such Registrable
Securities by the Holder as the Company may
-5-
<PAGE>
reasonably request in order to comply with the provisions of the Act with resect
to the Registration Statement to be filed.
(b) Other than fees and disbursements of counsel acting
on behalf of the holders of Registrable Securities and the pro rata portion of
the underwriting discounts and commissions, if any, attributable to Registrable
Securities, the Company shall pay all costs, fees and expenses in connection
with all Registration Statements filed pursuant to Sections 7.3 and 7.4(a)
hereof including, without limitation, the Company's legal and accounting fees,
printing expenses, and blue sky fees and expenses.
(c) The Company will take all necessary action which may
be required in qualifying or registering the Registrable Securities included in
a Registration Statement for offering and sale under the securities or blue sky
laws of such states as are requested by the holders of such securities, provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(d) The Company shall indemnify any holder of the
Registrable Securities to be sold pursuant to any Registration Statement and any
underwriter or person deemed to be an underwriter under the Act and each person,
if any, who controls such holder or underwriter or person deemed to be an
underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), from and against
any and all losses, claims, damages, expenses and liabilities (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) caused by any untrue statement of a material fact
contained in the Registration Statement, any other registration statement filed
by the Company under the Act, any post-effective amendment to such registration
statements, or any prospectus included therein required to be filed or furnished
by reason of this Agreement 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, expenses or liabilities are caused by any such untrue statement or
alleged untrue statement or omission or alleged omission based upon information
furnished or required to be furnished in writing to the company by the Holder or
underwriter expressly for use therein; which indemnification shall include each
person, if any, who controls any such Holder or underwriter within the meaning
of the Act and each officer, director, employee and agent of such Holder or
underwriter; provided, however, that the Company shall not be obligated to so
indemnify the Holder or any such underwriter or other person referred to above
unless the Holder or underwriter or other person, as the case may be, shall at
the same time indemnify the Company, its directors, each officer signing the
-6-
<PAGE>
registration statement and each person, if any, who controls the Company within
the meaning of the Act, from and against any and all losses, claims, damages,
expenses and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the registration Statement, any
registration statement or any prospectus required to be filed or furnished by
reason of this Agreement or caused by any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, insofar as such losses, claims, damages, expenses or liabilities
are caused by any untrue statement or alleged untrue statement or omission based
upon information furnished in writing to the Company by the Holder or
underwriter expressly for use therein, and provided, further that the holder,
each person, if any, who controls the holder within the meaning of the Act, and
each of the Holder's directors, officers, employees and agents shall not be
obligated to indemnify any indemnified person pursuant to the foregoing
indemnity, or to make any contribution pursuant to subparagraph 7.5(f) below, in
an amount in excess of the net proceeds received by such holder with respect to
the sale of Registrable Securities.
(e) Promptly after receipt of notice of the commencement
of any action in respect of which indemnity may be sought against any
indemnifying party under this Section 7.5, the indemnified party will notify the
indemnifying party in writing of the commencement thereof, and the indemnifying
party will, subject to the provisions hereinafter stated, assume the defense of
such action (including the employment of counsel reasonably subject to the
provisions hereinafter stated, assume the defense of such action (including the
employment of counsel reasonably satisfactory to the indemnified party and the
payment of expenses) insofar as such action relates to an alleged liability in
respect of which indemnity may be sought against the indemnifying party. After
notice from the indemnifying party of its election to assume the defense of such
claim or action, the indemnifying party shall no longer by liable to the
indemnified party under this Section 7.5 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
if, in the written opinion of counsel to the indemnified party or parties, it is
advisable for the indemnified party or parties, it is advisable for the
indemnified party or parties to be represented by separate counsel, the
indemnified party or parties shall have the right to employ a single counsel to
represent the indemnified parties who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the indemnified parties
thereof against the indemnifying party, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the indemnifying party. Any
party against whom indemnification may be sought under this Section 7.5 shall
not be liable to indemnify any person that might otherwise be indemnified
pursuant hereto for any settlement of any action effected without such
-7-
<PAGE>
indemnifying party's consent, which consent shall not be unreasonably withheld.
(f) If for any reason the indemnification provided for in
this Section 7.5 is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, claim, damage, expense or
liability referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim,
damage, expense or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations.
(g) Nothing contained in this Agreement shall be
construed as requiring any Holder to exercise his Warrants prior to the initial
filing of any Registration Statement or the effectiveness thereof.
8. Adjustments of Exercise Price and Number of Shares.
8.1 Computation of Adjusted Price. Except as hereinafter
provided, in case the Company shall at any time after the date hereof issue or
sell any shares of Common Stock (other than the issuances or sales referred to
in Section 8.6 hereof), including shares held in the Company's treasury and
shares of Common Stock issued upon the exercise of any options, rights or
warrants to subscribe for shares of Common Stock (other than the issuances or
sales of Common Stock pursuant to rights to subscribe for such Common Stock
distributed to all the shareholders of the Company and Holders of Warrants
pursuant to Section 8.8 hereof) and shares of Common Stock issued upon the
direct or indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than either the Exercise Price in
effect immediately prior to the issuance or sale of such shares or the "Market
Price" (as defined in Section 8.1(vi) hereof) per share of Common Stock or
without consideration, then forthwith upon such issuance or sale, the Exercise
Price shall (until another such issuance or sale), be reduced to the price
(calculated to the nearest full cent) equal to the quotient derived by dividing
(A) an amount equal to the sum of (X) the product of (a) the total number of
shares of Common Stock outstanding immediately prior to such issuance or sale,
multiplied by (b) the lower of (i) the Exercise Price in effect immediately
prior to such issuance or sale or (ii) the "Market Price" (as defined in
subsection (vi) of this Section 8.1 hereof) per share of Common Stock on the
date immediately prior to the issuance or sale of such shares, plus, (Y) the
aggregate of the amount of all consideration, if any, received by the Company
upon such issuance or sale, by (B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale; provided, however, that in
no event shall the
-8-
<PAGE>
Exercise Price be adjusted pursuant to this computation to an amount in excess
of the Exercise Price in effect immediately prior to such computation, except in
the case of a combination of outstanding shares of Common Stock, as provided by
Section 8.3 hereof.
For the purposes of any computation to be made in accordance with
this Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common
Stock for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the amount of cash received by
the Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if such securities shall
be sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price) before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as determined in good faith by the Board of
Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend
or other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the record
date for the determination of shareholders entitled to receive such dividend or
other distribution and shall be deemed to have been issued without
consideration.
(iv) The reclassification of securities of the Company
other than shares of Common Stock into securities including shares of Common
Stock shall be deemed to involve the issuance of such shares of Common Stock for
a consideration other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to receive
such shares, and the value of the consideration allocable to such shares of
Common Stock shall be determined as provided in subsection (ii) of this Section
8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable upon
the exercise of options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
-9-
<PAGE>
(vi) As used herein, the phrase "Market Price" at any
date shall be deemed to be the last reported sale price, or, in case no such
reported sale takes place on such day, the average of the last reported sale
prices for the last three trading days, in either case as officially reported by
the principal securities exchange on which the Common Stock is listed or
admitted to trading or as reported in the NASDAQ National Market System, or, if
the Common Stock is not listed or admitted to trading on any national securities
exchange or quoted on the NASDAQ National Market System, the closing bid price
as furnished by the National Association of Securities Dealers, Inc. through
NASDAQ or similar organization if NASDAQ is no longer reporting such
information, or if the Common Stock is not quoted on NASDAQ, as determined in
good faith by resolution of the Board of Directors of the Company, based on the
best information available to it for the two days immediately preceding such
issuance or sale and the day of such issuance or sale.
8.2 Options, Rights, Warrants and Convertible and Exchangeable
Securities. Except in the case of the Company issuing rights to subscribe for
shares of Common Stock distributed to all the shareholders of the Company and
Holders of Warrants pursuant to Section 8.8 hereof, if the Company shall at any
time after the date hereof issue options, rights or warrants to subscribe for
shares of Common Stock, or issue any securities convertible into or exchangeable
for shares of Common Stock, (i) for a consideration per share less than (a) the
Exercise Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, or (b) the
Market Price, or (ii) without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common
Stock, as the case may be, issuable under all the outstanding options, rights or
warrants shall be deemed to be issued and outstanding at the time all the
outstanding options, rights or warrants were issued, and for a consideration
equal to the minimum purchase price per share provided for in the options,
rights or warrants at the time of issuance, plus the consideration (determined
in the same manner as consideration received on the issue or sale of shares in
accordance with the terms of the Warrants), if any, received by the Company for
the options, rights or warrants, and if no minimum price is provided in the
options, rights or warrants, then the consideration shall be equal to zero;
provided, however, that upon the expiration or other termination of the options,
rights or warrants, if any thereof shall not have been exercised, the number of
shares of Common Stock deemed to be issued and outstanding pursuant to this
subsection (a) (and for the purposes of subsection (v) of Section 8.1 hereof)
shall be reduced by such number of shares as to which
-10-
<PAGE>
options, warrants and/or rights shall have expired or terminated unexercised,
and such number of shares shall no longer be deemed to be issued and
outstanding, and the Exercise Price then in effect shall forthwith be readjusted
and thereafter be the price which it would have been had adjustment been made on
the basis of the issuance only of shares actually issued or issuable upon the
exercise of those options, rights or warrants as to which the exercise rights
shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of Common
Stock issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or sale of
shares of Common Stock in accordance with the terms of the Warrants) received by
the Company for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof; provided,
however, that upon the termination of the right to convert or exchange such
convertible or exchangeable securities (whether by reason of redemption or
otherwise), the number of shares deemed to be issued and outstanding pursuant to
this subsection (b) (and for the purpose of subsection (v) of Section 8.1
hereof) shall be reduced by such number of shares as to which the conversion or
exchange rights shall have expired or terminated unexercised, and such number of
shares shall no longer be deemed to be issued and outstanding and the Exercise
Price then in effect shall forthwith be readjusted and thereafter be the price
which it would have been had adjustment been made on the basis of the issuance
only of the shares actually issued or issuable upon the conversion or exchange
of those convertible or exchangeable securities as to which the conversion or
exchange rights shall not have expired or terminated unexercised.
(c) If any change shall occur in the price per share
provided for in any of the options, rights or warrants referred to in subsection
(a) of this Section 8.2, or in the price per share at which the securities
referred to in subsection (b) of this Section 8.2 are convertible or
exchangeable, the options, rights or warrants or conversion or exchange rights,
as the case may be, shall be deemed to have expired or terminated on the date
when such price change became effective in respect of shares not theretofore
issued pursuant to the exercise or conversion or exchange thereof, and the
Company shall be deemed to have issued upon such date new options, rights or
warrants or convertible or exchangeable securities at the new price in respect
of the number of shares issuable upon the exercise of such options, rights or
warrants or the conversion or exchange of such convertible or exchangeable
securities.
8.3 Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be
-11-
<PAGE>
proportionately decreased in the case of subdivision or increased in the case of
combination.
8.4 Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Article 8, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
8.5 Reclassification, Consolidation, Merger, etc. In case of
any reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Warrants and (y) the Exercise Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holders had exercised the Warrants.
8.6 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock
upon the exercise of the Warrants;
(b) Upon (i) the issuance of options pursuant to any of
the Company's employee stock option plans in effect on the date
hereof or any employee stock option plan adopted after the date
hereof by stockholders of the Company the issuance or sale by the
Company of any shares of Common Stock pursuant to the exercise of
any such options, or (ii) the issuance or sale by the Company of any
shares of Common Stock pursuant to the exercise of any options or
warrants previously issued and outstanding on the date hereof;
-12-
<PAGE>
(c) Upon issuance of any shares of Common Stock sold in
the Company's offerings of an aggregate of up to 4,000,000 shares of
Common Stock being conducted pursuant to the Company's Offering
Memoranda dated April 19, 1995 and April 21, 1995, respectively; or
(d) Upon the issuance of any shares of Common Stock in
connection with the Company's merger with AccuMed, Inc.
8.7 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Holder or Holders
of the unexercised Warrants shall thereafter be entitled, in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 8.7.
8.8 Subscription Rights for Shares of Common Stock or Other
Securities. In the case the Company or an affiliate of the Company shall at any
time after the date hereof and prior to the exercise of all the Warrants issue
any rights to subscribe for shares of Common Stock or any other securities of
the Company or of such affiliate to all the shareholders of the Company, the
Holders of the unexercised Warrants shall be entitled, in addition to the shares
of Common Stock or other securities receivable upon the exercise of the
Warrants, to receive such rights at the time such rights are distributed to the
other shareholders of the Company.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
-13-
<PAGE>
Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of any Warrant Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
11. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted by NASDAQ or listed on such national
securities exchanges as requested by Commonwealth.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise than in cash,
or a cash dividend or distribution payable otherwise than out of
current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the
Company; or
-14-
<PAGE>
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company
or securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe
therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or
a sale of all or substantially all of its property, assets and
business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable securities or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
13. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice to the
Holders.
14. Supplements and Amendments.
The Company and Commonwealth may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and Commonwealth may deem necessary or desirable and which the
Company and Commonwealth
-15-
<PAGE>
deem not to adversely affect the interests of the Holders of Warrant
Certificates.
15. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
16. Termination.
This Agreement shall terminate at the close of business on May 9,
2003. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public; provided, however,
that the provisions of Section 7.5 shall survive such termination until the
close of business on May 9, 2006.
17. Governing Law.
This Agreement and each Warrant Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of New York and for
all purposes shall be construed in accordance with the laws of said State.
18. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person
or corporation other than the Company and Commonwealth and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and Commonwealth and
any other holder or holders of the Warrant Certificates, Warrants or the Shares.
-16-
<PAGE>
19. Counterparts.
This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
[SEAL] ALAMAR BIOSCIENCES, INC.
By: /s/ Kenneth D. Miller
--------------------------------------
Name: Kenneth D. Miller
Title: Chief Executive Officer
Attest:
/s/ M. Sauter
- --------------------------------------
COMMONWEALTH ASSOCIATES
By: Commonwealth Associates
Management Company, Inc.,
General Partner
By: /s/ [ILLEGIBLE TEXT}
--------------------------------------
Name:
Title:
-17-
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREE-
MENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK CITY TIME, May 9, 2000
No. W-1 264,840 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Commonwealth Associates
("Commonwealth") or registered assigns, is the registered holder of 264,840
Warrants to purchase, at any time from May 9, 1995 until 5:00 P.M. New York City
time on May 9, 2000 (the "Expiration Date") up to 264,840 shares ("Shares") of
fully-paid and non-assessable common stock, no par value ("Common Stock"), of
Alamar BioSciences, Inc., a California corporation (the "Company"), at the
initial exercise price, subject to adjustment in certain events (the "Exercise
Price"), of $0.625 per Share, upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of May
9, 1995 between the Company and Commonwealth (the "Warrant Agreement"). Payment
of the Exercise Price may be made in cash, or by check payable to the order of
the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., New York City time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to in a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
<PAGE>
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as
the absolute owner(s) of this Warrant Certificate (notwithstanding any notation
of ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed under its corporate seal.
Dated: May , 1995 ALAMAR BIOSCIENCES, INC.
[SEAL]
By:______________________________________
Name:
Title:
Attest:
______________________________________
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Shares and
herewith tenders in payment for such Shares in cash or a check payable to the
order of Alamar Biosciences, Inc. in the amount of $________ , all in accordance
with the terms hereof. The undersigned requests that a certificate for such
Shares be registered in the name of ________________, whose address is
__________________, and that such Certificate be delivered to
__________________, whose address is _____________.
Dated: Signature:________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate.)
_________________________________
_________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to
transfer the Warrant Certificate.)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and
transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature:________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate)
_______________________________
_______________________________
(Insert Social Security or Other
Identifying Number of Assignee)
WARRANT AGREEMENT dated as of August 18, 1995 between Alamar BioSciences,
Inc., a California corporation (the "Company"), and Commonwealth Associates
(hereinafter referred to as "Commonwealth").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to Commonwealth Associates
("Commonwealth") warrants ("Warrants") to purchase up to 258,700 shares (the
"Shares") of common stock of the Company, no par value (the "Common Stock"); and
WHEREAS, the Warrants issued pursuant to this Agreement are being issued by
the Company to Commonwealth and/or its designees in connection with
Commonwealth's role as placement agent for a private placement of the Company's
Common Stock pursuant to the Company's Confidential Private Offshore Offering
Memorandum dated April 19, 1995 and the Company's Confidential Private Offering
Memorandum dated May 23, 1995;
NOW, THEREFORE, in consideration of the premises, the payment by
Commonwealth to the Company of ONE DOLLAR ($1.00), the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Commonwealth, and/or its designees, are hereby granted the right to
purchase, at any time from August 18, 1995 until 5:00 P.M. New York City time on
August 18, 2000 (the "Warrant Exercise Term"), up to 258,700 (subject to
adjustment as provided in Article 8 hereof) Shares at an initial exercise price
(subject to adjustment as provided in Article 8 hereof) of $0.625 per Share.
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificates") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth as Exhibit
A, attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as required or permitted by this
Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Warrants initially are exercisable at a price
of $0.625 per Share, payable in cash or by check to the order of the Company, or
any combination of cash or check, subject to adjustment as provided in Article 8
hereof. Upon surrender of the Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the Exercise Price
(as hereinafter defined) for the Shares
<PAGE>
purchased, at the Company's principal offices (presently located at 4110 N.
Freeway Blvd., Sacramento, CA 95834) the registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to receive a certificate
or certificates for the Shares so purchased. The purchase rights represented by
each Warrant Certificate are exercisable at the option of the Holder thereof, in
whole or in part (but not as to fractional shares of the Common Stock). In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise Term,
the Holder may, at its option, exchange all or part of the Warrants (a "Warrant
Exchange"), into the number of Shares determined in accordance with this Section
3.2, by surrendering his Warrant Certificate at the principal office of the
Company or at the office of its transfer agent, accompanied by a notice stating
such holder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new warrant or
warrants of like tenor evidencing the balance of the Shares remaining subject to
the Warrants, shall be issued as of the Exchange Date and delivered to the
Holder within seven (7) days following the Exchange Date. In connection with any
Warrant Exchange, the Warrant Certificate surrendered shall represent the right
to subscribe for and acquire the number of Shares (rounded to the next highest
integer) equal to (i) the number of Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Shares equal to the
quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price (as hereinafter defined) by (B) the current market value
of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within three business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall (subject to the provisions of Article 5 hereof) be issued in
the name of, or in such names as may be directed by, the Holder thereof;
provided, however, that the Company shall not be required to pay any tax which
may be payable
-2-
<PAGE>
in respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder and the Company shall not
be required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares shall
be executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman or Vice Chairman of the Board of Directors or
Chief Executive Officer, President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the present or any future Secretary or Assistant Secretary of the
Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or in
whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
offered or sold except (i) pursuant to an effective registration statement
under the Act, (ii) to the extent applicable, pursuant to Rule 144 under
the Act (or any similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company of an
opinion of counsel, reasonably satisfactory to counsel to the Company,
stating that an exemption from registration under such Act is available."
5. Investment Restriction.
The Holder of a Warrant Certificate, by its acceptance thereof, covenants
and agrees that the Warrants are being acquired as an investment and not with a
view to the distribution thereof.
6. Price.
6.1 Initial and Adjusted Exercise Price. The initial exercise prices
of each Warrant shall be $0.625 per Share. The adjusted exercise price shall be
the price which shall result from time to time from any and all adjustments of
-3-
<PAGE>
the initial exercise price in accordance with the provisions of Article 8
hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The Warrants and
the Shares have not been registered for purposes of public distribution under
the Securities Act of 1933, as amended ("the Act").
7.2 Registrable Securities. As used herein the term "Registrable
Security" means each of the Warrants, the Shares and any shares of Common Stock
issued upon any stock split or stock dividend in respect of such Shares;
provided, however, that with respect to any particular Registrable Security,
such security shall cease to be a Registrable Security when, as of the date of
determination, (i) it has been effectively registered under the Securities Act
and disposed of pursuant thereto, (ii) registration under the Securities Act is
no longer required for the immediate public distribution of such security or
(iii) it has ceased to be outstanding. The term "Registrable Securities" means
any and/or all of the securities falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Article 7.
7.3 Piggyback Registration. If, at any time during the seven years
following the date of this Agreement, the Company proposes to prepare and file
any registration statement or post-effective amendments thereto covering equity
or debt securities of the Company, or any such securities of the Company held by
its shareholders (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form), (for purposes of this
Article 7, collectively, a "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least thirty
(30) business days prior to the filing of each such Registration Statement, to
all holders of the Registrable Securities. Upon the written request of such a
holder (a "Requesting Holder"), made within twenty (20) business days after
receipt of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the Company
shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Securities Act
-4-
<PAGE>
of the Registrable Securities which it has been so requested to register
("Piggyback Registration"), at the Company's sole cost and expense and at no
cost or expense to the Requesting Holders.
7.4 Demand Registration.
(a) At any time during the Warrant Exercise Term, any "Majority
Holder" (as such term is defined in Section 7.4(d) below) of the Registrable
Securities shall have the right (which right is in addition to the piggyback
registration rights provided for under Section 7.3 hereof), exercisable by
written notice to the Company (the "Demand Registration Request"), to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, at the sole expense of the Company (other than
the pro rata portion of underwriting discounts, if any, attributable to the
Holder's Registrable Securities and the expenses of Holder's counsel and
advisors), a Registration Statement and such other documents, including a
prospectus, as may be necessary (in the opinion of both counsel for the Company
and counsel for such Majority Holder), in order to comply with the provisions of
the Act, so as to permit a public offering and sale of the Registrable
Securities until such time as (i) the sale of all Registrable Securities by the
holders thereof or (ii) receipt by the holders thereof of an opinion of
Company's counsel that the Registrable Securities may be immediately publicly
sold without registration under the Securities Act.
(b) The Company covenants and agrees to give written notice of
any Demand Registration Request to all holders of the Registrable Securities
within ten (10) days from the date of the Company's receipt of any such Demand
Registration Request. After receiving notice from the Company as provided in
this Section 7.4(b), holders of Registrable Securities may request the Company
to include their Registrable Securities in the Registration Statement to be
filed pursuant to Section 7.4(a) hereof by notifying the Company of their
decision to include such securities within ten (10) days of their receipt of the
Company's notice.
(c) The term "Majority Holder" as used in this Section 7.4 shall
mean any holder or any combination of holders of Registrable Securities, if
included in such holders' Registrable Securities are that aggregate number of
Shares (including Shares already issued and Shares issuable pursuant to the
exercise of outstanding Warrants) as would constitute a majority of the
aggregate number of Shares (including Shares already issued and Shares issuable
pursuant to the exercise of outstanding Warrants) included in all of the
Registrable Securities.
-5-
<PAGE>
7.5 Covenants of the Company With Respect to Registration. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 7.4 hereof,
the Company shall file the Registration Statement as expeditiously as possible,
but in no event later than twenty (20) business days following receipt of any
demand therefor, shall use its best efforts to have any such Registration
Statements declared effective at the earliest possible time, and shall furnish
each holder of Registrable Securities such number of prospectuses as shall
reasonably be requested. In connection with the obligations of the Company
hereunder to register a Holder's Registrable Securities, the Holder shall
furnish the Company such information concerning the Holder, the Holder's
Registrable Securities and the terms of the offering of such Registrable
Securities by the Holder as the Company may reasonably request in order to
comply with the provisions of the Act with resect to the Registration Statement
to be filed.
(b) Other than fees and disbursements of counsel acting on behalf
of the holders of Registrable Securities and the pro rata portion of the
underwriting discounts and commissions, if any, attributable to Registrable
Securities, the Company shall pay all costs, fees and expenses in connection
with all Registration Statements filed pursuant to Sections 7.3 and 7.4(a)
hereof including, without limitation, the Company's legal and accounting fees,
printing expenses, and blue sky fees and expenses.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Registrable Securities included in a
Registration Statement for offering and sale under the securities or blue sky
laws of such states as are requested by the holders of such securities, provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(d) The Company shall indemnify any holder of the Registrable
Securities to be sold pursuant to any Registration Statement and any underwriter
or person deemed to be an underwriter under the Act and each person, if any, who
controls such holder or underwriter or person deemed to be an underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), from and against any and all losses,
claims, damages, expenses and liabilities (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
caused by any untrue statement of a material fact contained in the Registration
Statement, any other registration
-6-
<PAGE>
statement filed by the Company under the Act, any post-effective amendment to
such registration statements, or any prospectus included therein required to be
filed or furnished by reason of this Agreement 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, expenses or liabilities are caused by any such
untrue statement or alleged untrue statement or omission or alleged omission
based upon information furnished or required to be furnished in writing to the
company by the Holder or underwriter expressly for use therein; which
indemnification shall include each person, if any, who controls any such Holder
or underwriter within the meaning of the Act and each officer, director,
employee and agent of such Holder or underwriter; provided, however, that the
Company shall not be obligated to so indemnify the Holder or any such
underwriter or other person referred to above unless the Holder or underwriter
or other person, as the case may be, shall at the same time indemnify the
Company, its directors, each officer signing the registration statement and each
person, if any, who controls the Company within the meaning of the Act, from and
against any and all losses, claims, damages, expenses and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
the registration Statement, any registration statement or any prospectus
required to be filed or furnished by reason of this Agreement or caused by any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, insofar as such losses,
claims, damages, expenses or liabilities are caused by any untrue statement or
alleged untrue statement or omission based upon information furnished in writing
to the Company by the Holder or underwriter expressly for use therein, and
provided, further that the holder, each person, if any, who controls the holder
within the meaning of the Act, and each of the Holder's directors, officers,
employees and agents shall not be obligated to indemnify any indemnified person
pursuant to the foregoing indemnity, or to make any contribution pursuant to
subparagraph 7.5(f) below, in an amount in excess of the net proceeds received
by such holder with respect to the sale of Registrable Securities.
(e) Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against any indemnifying
party under this Section 7.5, the indemnified party will notify the indemnifying
party in writing of the commencement thereof, and the indemnifying party will,
subject to the provisions hereinafter stated, assume the defense of such action
(including the employment of counsel reasonably subject to the provisions
hereinafter stated, assume the defense of such action (including the employment
of counsel reasonably satisfactory to the indemnified party and the payment of
-7-
<PAGE>
expenses) insofar as such action relates to an alleged liability in respect of
which indemnity may be sought against the indemnifying party. After notice from
the indemnifying party of its election to assume the defense of such claim or
action, the indemnifying party shall no longer by liable to the indemnified
party under this Section 7.5 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that if, in the
written opinion of counsel to the indemnified party or parties, it is advisable
for the indemnified party or parties, it is advisable for the indemnified party
or parties to be represented by separate counsel, the indemnified party or
parties shall have the right to employ a single counsel to represent the
indemnified parties who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified parties thereof
against the indemnifying party, in which event the reasonable fees and expenses
of such separate counsel shall be borne by the indemnifying party. Any party
against whom indemnification may be sought under this Section 7.5 shall not be
liable to indemnify any person that might otherwise be indemnified pursuant
hereto for any settlement of any action effected without such indemnifying
party's consent, which consent shall not be unreasonably withheld.
(f) If for any reason the indemnification provided for in this
Section 7.5 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, expense or liability
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage, expense or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations.
(g) Nothing contained in this Agreement shall be construed as
requiring any Holder to exercise his Warrants prior to the initial filing of any
Registration Statement or the effectiveness thereof.
8. Adjustments of Exercise Price and Number of Shares.
8.1 Computation of Adjusted Price. Except as hereinafter provided, in
case the Company shall at any time after the date hereof issue or sell any
shares of Common Stock (other than the issuances or sales referred to in Section
8.6 hereof), including shares held in the Company's treasury and shares of
Common Stock issued upon the exercise of any options, rights or
-8-
<PAGE>
warrants to subscribe for shares of Common Stock (other than the issuances or
sales of Common Stock pursuant to rights to subscribe for such Common Stock
distributed to all the shareholders of the Company and Holders of Warrants
pursuant to Section 8.8 hereof) and shares of Common Stock issued upon the
direct or indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than either the Exercise Price in
effect immediately prior to the issuance or sale of such shares or the "Market
Price" (as defined in Section 8.1(vi) hereof) per share of Common Stock or
without consideration, then forthwith upon such issuance or sale, the Exercise
Price shall (until another such issuance or sale), be reduced to the price
(calculated to the nearest full cent) equal to the quotient derived by dividing
(A) an amount equal to the sum of (X) the product of (a) the total number of
shares of Common Stock outstanding immediately prior to such issuance or sale,
multiplied by (b) the lower of (i) the Exercise Price in effect immediately
prior to such issuance or sale or (ii) the "Market Price" (as defined in
subsection (vi) of this Section 8.1 hereof) per share of Common Stock on the
date immediately prior to the issuance or sale of such shares, plus, (Y) the
aggregate of the amount of all consideration, if any, received by the Company
upon such issuance or sale, by (B) the total number of shares of Common Stock
outstanding immediately after such issuance or sale; provided, however, that in
no event shall the Exercise Price be adjusted pursuant to this computation to an
amount in excess of the Exercise Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Common
Stock, as provided by Section 8.3 hereof.
For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common
Stock for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the amount of cash received by
the Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if such securities shall
be sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price) before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration
-9-
<PAGE>
part or all of which shall be other than cash, the amount of the consideration
therefor other than cash shall be deemed to be the value of such consideration
as determined in good faith by the Board of Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the record
date for the determination of shareholders entitled to receive such dividend or
other distribution and shall be deemed to have been issued without
consideration.
(iv) The reclassification of securities of the Company other
than shares of Common Stock into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable upon
the exercise of options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(vi) As used herein, the phrase "Market Price" at any date
shall be deemed to be the last reported sale price, or, in case no such reported
sale takes place on such day, the average of the last reported sale prices for
the last three trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or as reported in the NASDAQ National Market System, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted on the NASDAQ National Market System, the closing bid price as
furnished by the National Association of Securities Dealers, Inc. through NASDAQ
or similar organization if NASDAQ is no longer reporting such information, or if
the Common Stock is not quoted on NASDAQ, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it for the two days immediately preceding such issuance
or sale and the day of such issuance or sale.
8.2 Options, Rights, Warrants and Convertible and Exchangeable
Securities. Except in the case of the Company issuing rights to subscribe for
shares of Common Stock distributed to all the shareholders of the Company and
Holders of
-10-
<PAGE>
Warrants pursuant to Section 8.8 hereof, if the Company shall at any time after
the date hereof issue options, rights or warrants to subscribe for shares of
Common Stock, or issue any securities convertible into or exchangeable for
shares of Common Stock, (i) for a consideration per share less than (a) the
Exercise Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, or (b) the
Market Price, or (ii) without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under all the outstanding options, rights or warrants
shall be deemed to be issued and outstanding at the time all the outstanding
options, rights or warrants were issued, and for a consideration equal to the
minimum purchase price per share provided for in the options, rights or warrants
at the time of issuance, plus the consideration (determined in the same manner
as consideration received on the issue or sale of shares in accordance with the
terms of the Warrants), if any, received by the Company for the options, rights
or warrants, and if no minimum price is provided in the options, rights or
warrants, then the consideration shall be equal to zero; provided, however, that
upon the expiration or other termination of the options, rights or warrants, if
any thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (a) (and for the
purposes of subsection (v) of Section 8.1 hereof) shall be reduced by such
number of shares as to which options, warrants and/or rights shall have expired
or terminated unexercised, and such number of shares shall no longer be deemed
to be issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually issued
or issuable upon the exercise of those options, rights or warrants as to which
the exercise rights shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or sale of
shares of Common Stock in accordance with the terms of the Warrants) received by
the Company for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof; provided,
however, that upon
-11-
<PAGE>
the termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
number of shares deemed to be issued and outstanding pursuant to this subsection
(b) (and for the purpose of subsection (v) of Section 8.1 hereof) shall be
reduced by such number of shares as to which the conversion or exchange rights
shall have expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding and the Exercise Price then in
effect shall forthwith be readjusted and thereafter be the price which it would
have been had adjustment been made on the basis of the issuance only of the
shares actually issued or issuable upon the conversion or exchange of those
convertible or exchangeable securities as to which the conversion or exchange
rights shall not have expired or terminated unexercised.
(c) If any change shall occur in the price per share provided for
in any of the options, rights or warrants referred to in subsection (a) of this
Section 8.2, or in the price per share at which the securities referred to in
subsection (b) of this Section 8.2 are convertible or exchangeable, the options,
rights or warrants or conversion or exchange rights, as the case may be, shall
be deemed to have expired or terminated on the date when such price change
became effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be deemed to
have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
8.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.4 Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Article 8, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
8.5 Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no
-12-
<PAGE>
par value, or from no par value to par value, or as a result of a subdivision or
combination), or in the case of any consolidation of the Company with, or merger
of the Company into, another corporation (other than a consolidation or merger
in which the Company is the surviving corporation and which does not result in
any reclassification or change of the outstanding shares of Common Stock, except
a change as a result of a subdivision or combination of such shares or a change
in par value, as aforesaid), or in the case of a sale or conveyance to another
corporation of the property of the Company as an entirety, the Holders shall
thereafter have the right to purchase the kind and number of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as if the Holders were the owners of
the shares of Common Stock underlying the Warrants immediately prior to any such
events at a price equal to the product of (x) the number of shares issuable upon
exercise of the Warrants and (y) the Exercise Price in effect immediately prior
to the record date for such reclassification, change, consolidation, merger,
sale or conveyance as if such Holders had exercised the Warrants.
8.6 No Adjustment of Exercise Price in Certain Cases. No adjustment of
the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock upon the
exercise of the Warrants;
(b) Upon (i) the issuance of options pursuant to any of the
Company's employee stock option plans in effect on the date hereof or
any employee stock option plan adopted after the date hereof by
stockholders of the Company the issuance or sale by the Company of any
shares of Common Stock pursuant to the exercise of any such options,
or (ii) the issuance or sale by the Company of any shares of Common
Stock pursuant to the exercise of any options or warrants previously
issued and outstanding on the date hereof;
(c) Upon issuance of any shares of Common Stock sold in the
Company's offerings of an aggregate of up to 4,000,000 shares of
Common Stock being conducted pursuant to the Company's Offering
Memoranda dated April 19, 1995 and April 21, 1995, respectively; or
(d) Upon the issuance of any shares of Common Stock in connection
with the Company's merger with AccuMed, Inc.
8.7 Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company
-13-
<PAGE>
shall at any time prior to the exercise of all Warrants declare a dividend
(other than a dividend consisting solely of shares of Common Stock or a cash
dividend or distribution payable out of current or retained earnings) or
otherwise distribute to its shareholders any monies, assets, property, rights,
evidences of indebtedness, securities (other than shares of Common Stock),
whether issued by the Company or by another person or entity, or any other thing
of value, the Holder or Holders of the unexercised Warrants shall thereafter be
entitled, in addition to the shares of Common Stock or other securities
receivable upon the exercise thereof, to receive, upon the exercise of such
Warrants, the same monies, property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been entitled to
receive at the time of such dividend or distribution. At the time of any such
dividend or distribution, the Company shall make appropriate reserves to ensure
the timely performance of the provisions of this Subsection 8.7.
8.8 Subscription Rights for Shares of Common Stock or Other
Securities. In the case the Company or an affiliate of the Company shall at any
time after the date hereof and prior to the exercise of all the Warrants issue
any rights to subscribe for shares of Common Stock or any other securities of
the Company or of such affiliate to all the shareholders of the Company, the
Holders of the unexercised Warrants shall be entitled, in addition to the shares
of Common Stock or other securities receivable upon the exercise of the
Warrants, to receive such rights at the time such rights are distributed to the
other shareholders of the Company.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
-14-
<PAGE>
10. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
11. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted by NASDAQ or listed on such national
securities exchanges as requested by Commonwealth.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring upon
the Holder or Holders the right to vote or to consent or to receive notice as a
shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the
-15-
<PAGE>
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable securities or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
13. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice to the
Holders.
14. Supplements and Amendments.
The Company and Commonwealth may from time to time supplement or amend this
Agreement without the approval of any Holders of Warrant Certificates in order
to cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and Commonwealth may deem necessary or desirable and which the
Company and Commonwealth deem not to adversely affect the interests of the
Holders of Warrant Certificates.
-16-
<PAGE>
15. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company and the Holders inure to the benefit of their respective successors
and assigns hereunder.
16. Termination.
This Agreement shall terminate at the close of business on August 18, 2003.
Notwithstanding the foregoing, this Agreement will terminate on any earlier date
when all Warrants have been exercised and all the Shares issuable upon exercise
of the Warrants have been resold to the public; provided, however, that the
provisions of Section 7.5 shall survive such termination until the close of
business on August 18, 2006.
17. Governing Law.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.
18. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and Commonwealth and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and Commonwealth and
any other holder or holders of the Warrant Certificates, Warrants or the Shares.
-17-
<PAGE>
19. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] ALAMAR BIOSCIENCES, INC.
By:_________________________________
Name:
Title:
Attest:
____________________________
COMMONWEALTH ASSOCIATES
By: Commonwealth Associates
Management Company, Inc.,
General Partner
By:_________________________________
Name:
Title:
-18-
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK CITY TIME, AUGUST 18, 2000
No. WA-1 258,700 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Commonwealth Associates
("Commonwealth") or registered assigns, is the registered holder of 258,700
Warrants to purchase, at any time from August 18, 1995 until 5:00 P.M. New York
City time on August 18, 2000 (the "Expiration Date") up to 258,700 shares
("Shares") of fully-paid and non-assessable common stock, no par value ("Common
Stock"), of Alamar BioSciences, Inc., a California corporation (the "Company"),
at the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $0.625 per Share, upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of August 18, 1995 between the Company and Commonwealth (the
"Warrant Agreement"). Payment of the Exercise Price may be made in cash, or by
check payable to the order of the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the
<PAGE>
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and/or number of the Company's securities issuable thereupon
may, subject to certain conditions, be adjusted. In such event, the Company
will, at the request of the holder, issue a new Warrant Certificate evidencing
the adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificates shall not in any way
change, alter, or otherwise impair, the rights of the holder as set forth in the
Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: May 3, 1995 ALAMAR BIOSCIENCES, INC.
[SEAL] By:__________________________
Name:
Title:
Attest:
_______________________________
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Shares and
herewith tenders in payment for such Shares in cash or a check payable to the
order of Alamar Biosciences, Inc. in the amount of $_____ , all in accordance
with the terms hereof. The undersigned requests that a certificate for such
Shares be registered in the name of ________________ , whose address is
__________________, and that such Certificate be delivered to
__________________, whose address is _____________.
Dated: Signature:________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED_________________________________________________________
hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature:_____________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
WARRANT AGREEMENT dated as of August 22, 1995 between Alamar BioSciences,
Inc., a California corporation (the "Company"), and Commonwealth Associates
(hereinafter referred to as "Commonwealth").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to Commonwealth Associates
("Commonwealth") warrants ("Warrants") to purchase up to 41,300 shares (the
"Shares") of common stock of the Company, no par value (the "Common Stock"); and
WHEREAS, the Warrants issued pursuant to this Agreement are being issued by
the Company to Commonwealth and/or its designees in connection with
Commonwealth's role as placement agent for a private placement of the Company's
Common Stock pursuant to the Company's Confidential Private Offshore Offering
Memorandum dated April 19, 1995 and the Company's Confidential Private Offering
Memorandum dated May 23, 1995;
NOW, THEREFORE, in consideration of the premises, the payment by
Commonwealth to the Company of ONE DOLLAR ($1.00), the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Commonwealth, and/or its designees, are hereby granted the right to
purchase, at any time from August 22, 1995 until 5:00 P.M. New York City time on
August 22, 2000 (the "Warrant Exercise Term"), up to 41,300 (subject to
adjustment as provided in Article 8 hereof) Shares at an initial exercise price
(subject to adjustment as provided in Article 8 hereof) of $0.625 per Share.
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificates") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth as Exhibit
A, attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as required or permitted by this
Agreement.
<PAGE>
3. Exercise of Warrants.
3.1 Cash Exercise. The Warrants initially are exercisable at a price
of $0.625 per Share, payable in cash or by check to the order of the Company, or
any combination of cash or check, subject to adjustment as provided in Article 8
hereof. Upon surrender of the Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the Exercise Price
(as hereinafter defined) for the Shares purchased, at the Company's principal
offices (presently located at 4110 N. Freeway Blvd., Sacramento, CA 95834) the
registered holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a certificate or certificates for the Shares so purchased.
The purchase rights represented by each Warrant Certificate are exercisable at
the option of the Holder thereof, in whole or in part (but not as to fractional
shares of the Common Stock). In the case of the purchase of less than all the
Shares purchasable under any Warrant Certificate, the Company shall cancel said
Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Warrant Certificate of like tenor for the balance of the Shares purchasable
thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise Term,
the Holder may, at its option, exchange all or part of the Warrants (a "Warrant
Exchange"), into the number of Shares determined in accordance with this Section
3.2, by surrendering his Warrant Certificate at the principal office of the
Company or at the office of its transfer agent, accompanied by a notice stating
such holder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new warrant or
warrants of like tenor evidencing the balance of the Shares remaining subject to
the Warrants, shall be issued as of the Exchange Date and delivered to the
Holder within seven (7) days following the Exchange Date. In connection with any
Warrant Exchange, the Warrant Certificate surrendered shall represent the right
to subscribe for and acquire the number of Shares (rounded to the next highest
integer) equal to (i) the number of Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Shares equal to the
quotient obtained by dividing (A) the product of the Total Number and the
-2-
<PAGE>
existing Exercise Price (as hereinafter defined) by (B) the current market value
of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within three business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall (subject to the provisions of Article 5 hereof) be issued in
the name of, or in such names as may be directed by, the Holder thereof;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificates in a name other than that of the Holder and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares shall
be executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman or Vice Chairman of the Board of Directors or
Chief Executive Officer, President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the present or any future Secretary or Assistant Secretary of the
Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or in
whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
offered or sold except (i) pursuant to an effective registration statement
under the Act, (ii) to the extent applicable, pursuant to Rule 144 under
the Act (or any similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company of an
opinion of counsel, reasonably satisfactory to counsel to the Company,
stating that an
-3-
<PAGE>
exemption from registration under such Act is available."
5. Investment Restriction.
The Holder of a Warrant Certificate, by its acceptance thereof, covenants
and agrees that the Warrants are being acquired as an investment and not with a
view to the distribution thereof.
6. Price.
6.1 Initial and Adjusted Exercise Price. The initial exercise prices
of each Warrant shall be $0.625 per Share. The adjusted exercise price shall be
the price which shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of Article 8
hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The Warrants and
the Shares have not been registered for purposes of public distribution under
the Securities Act of 1933, as amended ("the Act").
7.2 Registrable Securities. As used herein the term "Registrable
Security" means each of the Warrants, the Shares and any shares of Common Stock
issued upon any stock split or stock dividend in respect of such Shares;
provided, however, that with respect to any particular Registrable Security,
such security shall cease to be a Registrable Security when, as of the date of
determination, (i) it has been effectively registered under the Securities Act
and disposed of pursuant thereto, (ii) registration under the Securities Act is
no longer required for the immediate public distribution of such security or
(iii) it has ceased to be outstanding. The term "Registrable Securities" means
any and/or all of the securities falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or
-4-
<PAGE>
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Article 7.
7.3 Piggyback Registration. If, at any time during the seven years
following the date of this Agreement, the Company proposes to prepare and file
any registration statement or post-effective amendments thereto covering equity
or debt securities of the Company, or any such securities of the Company held by
its shareholders (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form), (for purposes of this
Article 7, collectively, a "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least thirty
(30) business days prior to the filing of each such Registration Statement, to
all holders of the Registrable Securities. Upon the written request of such a
holder (a "Requesting Holder"), made within twenty (20) business days after
receipt of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the Company
shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Securities Act of the Registrable Securities which it has
been so requested to register ("Piggyback Registration"), at the Company's sole
cost and expense and at no cost or expense to the Requesting Holders.
7.4 Demand Registration.
(a) At any time during the Warrant Exercise Term, any "Majority
Holder" (as such term is defined in Section 7.4(d) below) of the Registrable
Securities shall have the right (which right is in addition to the piggyback
registration rights provided for under Section 7.3 hereof), exercisable by
written notice to the Company (the "Demand Registration Request"), to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, at the sole expense of the Company (other than
the pro rata portion of underwriting discounts, if any, attributable to the
Holder's Registrable Securities and the expenses of Holder's counsel and
advisors), a Registration Statement and such other documents, including a
prospectus, as may be necessary (in the opinion of both counsel for the Company
and counsel for such Majority Holder), in order to comply with the provisions of
the Act, so as to permit a public offering and sale of the Registrable
Securities until such time as (i) the sale of all Registrable Securities by the
holders thereof or (ii) receipt by the holders
-5-
<PAGE>
thereof of an opinion of Company's counsel that the Registrable Securities may
be immediately publicly sold without registration under the Securities Act.
(b) The Company covenants and agrees to give written notice of
any Demand Registration Request to all holders of the Registrable Securities
within ten (10) days from the date of the Company's receipt of any such Demand
Registration Request. After receiving notice from the Company as provided in
this Section 7.4(b), holders of Registrable Securities may request the Company
to include their Registrable Securities in the Registration Statement to be
filed pursuant to Section 7.4(a) hereof by notifying the Company of their
decision to include such securities within ten (10) days of their receipt of the
Company's notice.
(c) The term "Majority Holder" as used in this Section 7.4 shall
mean any holder or any combination of holders of Registrable Securities, if
included in such holders' Registrable Securities are that aggregate number of
Shares (including Shares already issued and Shares issuable pursuant to the
exercise of outstanding Warrants) as would constitute a majority of the
aggregate number of Shares (including Shares already issued and Shares issuable
pursuant to the exercise of outstanding Warrants) included in all of the
Registrable Securities.
7.5 Covenants of the Company With Respect to Registration. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 7.4 hereof,
the Company shall file the Registration Statement as expeditiously as possible,
but in no event later than twenty (20) business days following receipt of any
demand therefor, shall use its best efforts to have any such Registration
Statements declared effective at the earliest possible time, and shall furnish
each holder of Registrable Securities such number of prospectuses as shall
reasonably be requested. In connection with the obligations of the Company
hereunder to register a Holder's Registrable Securities, the Holder shall
furnish the Company such information concerning the Holder, the Holder's
Registrable Securities and the terms of the offering of such Registrable
Securities by the Holder as the Company may reasonably request in order to
comply with the provisions of the Act with resect to the Registration Statement
to be filed.
(b) Other than fees and disbursements of counsel acting on behalf
of the holders of Registrable Securities and the pro rata portion of the
underwriting discounts and
-6-
<PAGE>
commissions, if any, attributable to Registrable Securities, the Company shall
pay all costs, fees and expenses in connection with all Registration Statements
filed pursuant to Sections 7.3 and 7.4(a) hereof including, without limitation,
the Company's legal and accounting fees, printing expenses, and blue sky fees
and expenses.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Registrable Securities included in a
Registration Statement for offering and sale under the securities or blue sky
laws of such states as are requested by the holders of such securities, provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(d) The Company shall indemnify any holder of the Registrable
Securities to be sold pursuant to any Registration Statement and any underwriter
or person deemed to be an underwriter under the Act and each person, if any, who
controls such holder or underwriter or person deemed to be an underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), from and against any and all losses,
claims, damages, expenses and liabilities (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
caused by any untrue statement of a material fact contained in the Registration
Statement, any other registration statement filed by the Company under the Act,
any post-effective amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of this Agreement
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, expenses or
liabilities are caused by any such untrue statement or alleged untrue statement
or omission or alleged omission based upon information furnished or required to
be furnished in writing to the company by the Holder or underwriter expressly
for use therein; which indemnification shall include each person, if any, who
controls any such Holder or underwriter within the meaning of the Act and each
officer, director, employee and agent of such Holder or underwriter; provided,
however, that the Company shall not be obligated to so indemnify the Holder or
any such underwriter or other person referred to above unless the Holder or
underwriter or other person, as the case may be, shall at the same time
indemnify the Company, its directors, each officer signing the
-7-
<PAGE>
registration statement and each person, if any, who controls the Company within
the meaning of the Act, from and against any and all losses, claims, damages,
expenses and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the registration Statement, any
registration statement or any prospectus required to be filed or furnished by
reason of this Agreement or caused by any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, insofar as such losses, claims, damages, expenses or liabilities
are caused by any untrue statement or alleged untrue statement or omission based
upon information furnished in writing to the Company by the Holder or
underwriter expressly for use therein, and provided, further that the holder,
each person, if any, who controls the holder within the meaning of the Act, and
each of the Holder's directors, officers, employees and agents shall not be
obligated to indemnify any indemnified person pursuant to the foregoing
indemnity, or to make any contribution pursuant to subparagraph 7.5(f) below, in
an amount in excess of the net proceeds received by such holder with respect to
the sale of Registrable Securities.
(e) Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against any indemnifying
party under this Section 7.5, the indemnified party will notify the indemnifying
party in writing of the commencement thereof, and the indemnifying party will,
subject to the provisions hereinafter stated, assume the defense of such action
(including the employment of counsel reasonably subject to the provisions
hereinafter stated, assume the defense of such action (including the employment
of counsel reasonably satisfactory to the indemnified party and the payment of
expenses) insofar as such action relates to an alleged liability in respect of
which indemnity may be sought against the indemnifying party. After notice from
the indemnifying party of its election to assume the defense of such claim or
action, the indemnifying party shall no longer by liable to the indemnified
party under this Section 7.5 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that if, in the
written opinion of counsel to the indemnified party or parties, it is advisable
for the indemnified party or parties, it is advisable for the indemnified party
or parties to be represented by separate counsel, the indemnified party or
parties shall have the right to employ a single counsel to represent the
indemnified parties who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified parties thereof
against the indemnifying party, in which event the reasonable
-8-
<PAGE>
fees and expenses of such separate counsel shall be borne by the indemnifying
party. Any party against whom indemnification may be sought under this Section
7.5 shall not be liable to indemnify any person that might otherwise be
indemnified pursuant hereto for any settlement of any action effected without
such indemnifying party's consent, which consent shall not be unreasonably
withheld.
(f) If for any reason the indemnification provided for in this
Section 7.5 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, expense or liability
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage, expense or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations.
(g) Nothing contained in this Agreement shall be construed as
requiring any Holder to exercise his Warrants prior to the initial filing of any
Registration Statement or the effectiveness thereof.
8. Adjustments of Exercise Price and Number of Shares.
8.1 Computation of Adjusted Price. Except as hereinafter provided, in
case the Company shall at any time after the date hereof issue or sell any
shares of Common Stock (other than the issuances or sales referred to in Section
8.6 hereof), including shares held in the Company's treasury and shares of
Common Stock issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock (other than the issuances or sales of
Common Stock pursuant to rights to subscribe for such Common Stock distributed
to all the shareholders of the Company and Holders of Warrants pursuant to
Section 8.8 hereof) and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common Stock, for a
consideration per share less than either the Exercise Price in effect
immediately prior to the issuance or sale of such shares or the "Market Price"
(as defined in Section 8.1(vi) hereof) per share of Common Stock or without
consideration, then forthwith upon such issuance or sale, the Exercise Price
shall (until another such issuance or sale), be reduced to the price (calculated
to the nearest full cent) equal
-9-
<PAGE>
to the quotient derived by dividing (A) an amount equal to the sum of (X) the
product of (a) the total number of shares of Common Stock outstanding
immediately prior to such issuance or sale, multiplied by (b) the lower of (i)
the Exercise Price in effect immediately prior to such issuance or sale or (ii)
the "Market Price" (as defined in subsection (vi) of this Section 8.1 hereof)
per share of Common Stock on the date immediately prior to the issuance or sale
of such shares, plus, (Y) the aggregate of the amount of all consideration, if
any, received by the Company upon such issuance or sale, by (B) the total number
of shares of Common Stock outstanding immediately after such issuance or sale;
provided, however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the Exercise Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section 8.3
hereof.
For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common
Stock for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the amount of cash received by
the Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if such securities shall
be sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price) before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as determined in good faith by the Board of
Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the record
date for the determination of shareholders entitled to receive such dividend
-10-
<PAGE>
or other distribution and shall be deemed to have been issued without
consideration.
(iv) The reclassification of securities of the Company other
than shares of Common Stock into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable upon
the exercise of options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(vi) As used herein, the phrase "Market Price" at any date
shall be deemed to be the last reported sale price, or, in case no such reported
sale takes place on such day, the average of the last reported sale prices for
the last three trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or as reported in the NASDAQ National Market System, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted on the NASDAQ National Market System, the closing bid price as
furnished by the National Association of Securities Dealers, Inc. through NASDAQ
or similar organization if NASDAQ is no longer reporting such information, or if
the Common Stock is not quoted on NASDAQ, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it for the two days immediately preceding such issuance
or sale and the day of such issuance or sale.
8.2 Options, Rights, Warrants and Convertible and Exchangeable
Securities. Except in the case of the Company issuing rights to subscribe for
shares of Common Stock distributed to all the shareholders of the Company and
Holders of Warrants pursuant to Section 8.8 hereof, if the Company shall at any
time after the date hereof issue options, rights or warrants to subscribe for
shares of Common Stock, or issue any securities convertible into or exchangeable
for shares of Common Stock, (i) for a consideration per share less than (a) the
Exercise Price in
-11-
<PAGE>
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, or (b) the Market Price, or (ii)
without consideration, the Exercise Price in effect immediately prior to the
issuance of such options, rights or warrants, or such convertible or
exchangeable securities, as the case may be, shall be reduced to a price
determined by making a computation in accordance with the provisions of Section
8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under all the outstanding options, rights or warrants
shall be deemed to be issued and outstanding at the time all the outstanding
options, rights or warrants were issued, and for a consideration equal to the
minimum purchase price per share provided for in the options, rights or warrants
at the time of issuance, plus the consideration (determined in the same manner
as consideration received on the issue or sale of shares in accordance with the
terms of the Warrants), if any, received by the Company for the options, rights
or warrants, and if no minimum price is provided in the options, rights or
warrants, then the consideration shall be equal to zero; provided, however, that
upon the expiration or other termination of the options, rights or warrants, if
any thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (a) (and for the
purposes of subsection (v) of Section 8.1 hereof) shall be reduced by such
number of shares as to which options, warrants and/or rights shall have expired
or terminated unexercised, and such number of shares shall no longer be deemed
to be issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually issued
or issuable upon the exercise of those options, rights or warrants as to which
the exercise rights shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or sale of
shares of Common Stock in accordance with the terms of the Warrants) received by
the Company for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof; provided,
however, that upon the termination of the right to convert or exchange such
convertible or exchangeable securities (whether by reason of redemption
-12-
<PAGE>
or otherwise), the number of shares deemed to be issued and outstanding pursuant
to this subsection (b) (and for the purpose of subsection (v) of Section 8.1
hereof) shall be reduced by such number of shares as to which the conversion or
exchange rights shall have expired or terminated unexercised, and such number of
shares shall no longer be deemed to be issued and outstanding and the Exercise
Price then in effect shall forthwith be readjusted and thereafter be the price
which it would have been had adjustment been made on the basis of the issuance
only of the shares actually issued or issuable upon the conversion or exchange
of those convertible or exchangeable securities as to which the conversion or
exchange rights shall not have expired or terminated unexercised.
(c) If any change shall occur in the price per share provided for
in any of the options, rights or warrants referred to in subsection (a) of this
Section 8.2, or in the price per share at which the securities referred to in
subsection (b) of this Section 8.2 are convertible or exchangeable, the options,
rights or warrants or conversion or exchange rights, as the case may be, shall
be deemed to have expired or terminated on the date when such price change
became effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be deemed to
have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
8.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.4 Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Article 8, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
8.5 Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a
-13-
<PAGE>
subdivision or combination), or in the case of any consolidation of the Company
with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the
Company as an entirety, the Holders shall thereafter have the right to purchase
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owners of the shares of Common Stock
underlying the Warrants immediately prior to any such events at a price equal to
the product of (x) the number of shares issuable upon exercise of the Warrants
and (y) the Exercise Price in effect immediately prior to the record date for
such reclassification, change, consolidation, merger, sale or conveyance as if
such Holders had exercised the Warrants.
8.6 No Adjustment of Exercise Price in Certain Cases. No adjustment of
the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock upon the
exercise of the Warrants;
(b) Upon (i) the issuance of options pursuant to any of the
Company's employee stock option plans in effect on the date hereof or
any employee stock option plan adopted after the date hereof by
stockholders of the Company the issuance or sale by the Company of any
shares of Common Stock pursuant to the exercise of any such options,
or (ii) the issuance or sale by the Company of any shares of Common
Stock pursuant to the exercise of any options or warrants previously
issued and outstanding on the date hereof;
(c) Upon issuance of any shares of Common Stock sold in the
Company's offerings of an aggregate of up to 4,000,000 shares of
Common Stock being conducted pursuant to the Company's Offering
Memoranda dated April 19, 1995 and April 21, 1995, respectively; or
(d) Upon the issuance of any shares of Common Stock in connection
with the Company's merger with AccuMed, Inc.
-14-
<PAGE>
8.7 Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend (other than a dividend consisting
solely of shares of Common Stock or a cash dividend or distribution payable out
of current or retained earnings) or otherwise distribute to its shareholders any
monies, assets, property, rights, evidences of indebtedness, securities (other
than shares of Common Stock), whether issued by the Company or by another person
or entity, or any other thing of value, the Holder or Holders of the unexercised
Warrants shall thereafter be entitled, in addition to the shares of Common Stock
or other securities receivable upon the exercise thereof, to receive, upon the
exercise of such Warrants, the same monies, property, assets, rights, evidences
of indebtedness, securities or any other thing of value that they would have
been entitled to receive at the time of such dividend or distribution. At the
time of any such dividend or distribution, the Company shall make appropriate
reserves to ensure the timely performance of the provisions of this Subsection
8.7.
8.8 Subscription Rights for Shares of Common Stock or Other
Securities. In the case the Company or an affiliate of the Company shall at any
time after the date hereof and prior to the exercise of all the Warrants issue
any rights to subscribe for shares of Common Stock or any other securities of
the Company or of such affiliate to all the shareholders of the Company, the
Holders of the unexercised Warrants shall be entitled, in addition to the shares
of Common Stock or other securities receivable upon the exercise of the
Warrants, to receive such rights at the time such rights are distributed to the
other shareholders of the Company.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
-15-
<PAGE>
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
11. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted by NASDAQ or listed on such national
securities exchanges as requested by Commonwealth.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring upon
the Holder or Holders the right to vote or to consent or to receive notice as a
shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting
-16-
<PAGE>
treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe
therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable securities or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
13. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of
this Agreement or to such other address as the Company may designate
by notice to the Holders.
14. Supplements and Amendments.
The Company and Commonwealth may from time to time supplement or amend this
Agreement without the approval of any
-17-
<PAGE>
Holders of Warrant Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and Commonwealth may deem
necessary or desirable and which the Company and Commonwealth deem not to
adversely affect the interests of the Holders of Warrant Certificates.
15. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company and the Holders inure to the benefit of their respective successors
and assigns hereunder.
16. Termination.
This Agreement shall terminate at the close of business on August 18, 2003.
Notwithstanding the foregoing, this Agreement will terminate on any earlier date
when all Warrants have been exercised and all the Shares issuable upon exercise
of the Warrants have been resold to the public; provided, however, that the
provisions of Section 7.5 shall survive such termination until the close of
business on August 18, 2006.
17. Governing Law.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.
18. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and Commonwealth and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and Commonwealth and
any other holder or holders of the Warrant Certificates, Warrants or the Shares.
19. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes
-18-
<PAGE>
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] ALAMAR BIOSCIENCES, INC.
By:____________________________
Name:
Title:
Attest:
__________________________
COMMONWEALTH ASSOCIATES
By: Commonwealth Associates
Management Company, Inc.,
General Partner
By:_____________________________
Name:
Title:
-19-
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK CITY TIME, AUGUST 22, 2000
No. W-__ 41,300 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Commonwealth Associates
("Commonwealth") or registered assigns, is the registered holder of 41,300
Warrants to purchase, at any time from August 22, 1995 until 5:00 P.M. New York
City time on August 22, 2000 (the "Expiration Date") up to 41,300 shares
("Shares") of fully-paid and non-assessable common stock, no par value ("Common
Stock"), of Alamar BioSciences, Inc., a California corporation (the "Company"),
at the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $0.625 per Share, upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of August 22, 1995 between the Company and Commonwealth (the
"Warrant Agreement"). Payment of the Exercise Price may be made in cash, or by
check payable to the order of the Company, or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the
<PAGE>
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and/or number of the Company's securities issuable thereupon
may, subject to certain conditions, be adjusted. In such event, the Company
will, at the request of the holder, issue a new Warrant Certificate evidencing
the adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificates shall not in any way
change, alter, or otherwise impair, the rights of the holder as set forth in the
Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: August 22, 1995 ALAMAR BIOSCIENCES, INC.
[SEAL] By:_____________________________
Name:
Title:
Attest:
________________________
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Shares and
herewith tenders in payment for such Shares in cash or a check payable to the
order of Alamar Biosciences, Inc. in the amount of $______ , all in accordance
with the terms hereof. The undersigned requests that a certificate for such
Shares be registered in the name of_______________ , whose address is
__________________, and that such Certificate be delivered to
__________________, whose address is _____________.
Dated: Signature:___________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
_________________________________
_________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such
holder desires to transfer the Warrant
Certificate.)
FOR VALUE RECEIVED__________________________________________
hereby sells, assigns and transfers unto
_____________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature:___________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
Exhibit Pursuant to Rule 13d-1(f)(1)
under the Securities Exchange Act of 1934
Each of the undersigned agrees that the Schedule 13D to which this
agreement is attached as an Exhibit is filed on behalf of each of them pursuant
to the above Rule.
Dated: as of October 7, 1996
Commonwealth Associates
By: Commonwealth Associates Management Company, Inc.,
its General Partner
By: /s/ Michael S. Falk
------------------------------------------
Michael S. Falk, President
Commonwealth Associates Management Company, Inc.,
By: /s/ Michael S. Falk
------------------------------------------
Michael S. Falk, President
By: /s/ Michael S. Falk
------------------------------------------
Michael S. Falk
