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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AMDL, Inc.
(Name of Small Business Issuer in its charter)
Delaware 87-0188822
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(I.R.S. Employer
(State or other jurisdiction of Identification No.)
incorporation or organization)
2492 Walnut Avenue
Suite 100
Tustin, California 92780-6953
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 714-505-4460
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
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Part 1
Item 1. Description of Business
Business Development
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AMDL, Inc., (the "Company") was formed under the laws of the State of
Delaware on July 10, 1987 to engage in the business of developing and offering
for sale various immunodiagnostic kits for the detection of cancer and other
types of diseases. Since inception, the Company has primarily been engaged in
the commercial development of and the obtaining of various governmental
regulatory approvals for the marketing of its proprietary diagnostic tumor-
market test kit DR-70 to detect the presence of lung cancer. The Company has
recently broadened its scope and product line by developing a selection of
diagnostic test kits for allergy, autoimmune diseases, cancer, drugs of abuse,
fertility, gastrointestinal disease, infectious disease, pregnancy and other
immunoassays. The Company is still in the development stage and has not
generated significant revenues from product sales. The Company requires
substantial additional working capital for continuing research and development,
clinical trials for obtaining regulatory approvals and for commercialization and
marketing of its products.
In January 1989, the officers and stockholders of the Company entered into
a share exchange agreement (the "Agreement") with California Ventures, Inc.
("CVI") and its officers which provides for the combining of the two companies.
CVI was a development stage enterprise located in Colorado that was formed in
1988 for the purpose of engaging in mergers with or acquiring a single or small
number of private firms. Under the Agreement, the principal
officers/stockholders of the Company exchanged all of their shares of common
stock for shares of CVI common stock. Subsequently, the domicile of CVI was
changed to Delaware and its name was changed to AMDL, Inc.
In October 1998 after a meeting and vote of stockholders, the Company
amended its Certificate of Incorporation to provide for a one for 20 reverse
split of the outstanding shares of its $.001 par value common stock ("Common
Stock"). In March 1999, a majority of the Company's stockholders instructed the
Company to amend its Certificate of Incorporation to provide for a one for 10
reverse split of the outstanding shares of Common Stock. Unless indicated
otherwise, all share amounts contained in this Registration Statement have been
adjusted to provide for both the one for 20 reverse split and the one for 10
reverse split.
During the period commencing on February 26, 1999 and ending June 30, 1999,
the Company conducted a Regulation D, Rule 504 Offering ("Rule 504 Offering") of
Common Stock. As part of the Rule 504 Offering, in February 1999 the Company
sold 100,000 shares of Common Stock for aggregate cash consideration of $150,000
and on May 20, 1999 the Company sold 103,236 shares of Common Stock for cash and
cancellation of indebtedness aggregating $70,200. On June 17, 1999, the Company
sold 369,929 shares of Common Stock for cash and cancellation of indebtedness
aggregating $251,550. Of this consideration, a total of $105,300 was received on
June 25, 1999 and a total of $146,250 was received on or before September 24,
1999. Effective June 30, 1999, the Company contracted for and sold an additional
776,837 shares of Common Stock for aggregate cash consideration of $528,250 all
of which was received on or prior to October 12, 1999. In connection with this
Rule 504 offering, the Company also issued an aggregate of 132,653 shares of
Common Stock as payment of finders' fees. The shares issued as finders' fees
were issued pursuant to Rule 506 under the Securities Act of 1933, as amended
(the "1933 Act").
The total shares sold (exclusive of finder's fees) in the Rule 504 Offering
represented approximately 82% of the then issued and outstanding shares of
Common Stock as of June 30, 1999 without considering the dilutive effects of an
aggregate of 1,127,151 options and warrants. No individual investor who
participated in the Rule 504 Offering owns more than 10% of the currently issued
and outstanding shares of Common Stock. The total number of purchasers in the
Rule 504 Offering was 13 persons, all of whom represented they were accredited
investors as that term is defined in Rule 501(a) under the 1933 Act.
The Company's executive offices are located at 2492 Walnut Avenue, Suite
100, Tustin, California 92780, telephone number (714) 505-4460.
Business of the Issuer
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Certain terms used herein are defined below in the section "Glossary."
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Products
In addition to the proprietary test kits described below, the Company's
products include non-proprietary diagnostic test kits for allergy, autoimmune,
cancer markers, clinical chemistry, drugs of abuse, fertility, gastrointestinal
disease, serology, serum proteins, thyroid, urine chemistry and others that are
sold on an OEM basis. Since its inception, the Company has, however, operated
primarily as a research and development company, focusing its operations on the
development of in vitro diagnostic testing kits for the detection of various
diseases including different types of cancer and Helicobacter Pylori ("H.
pylori"), a bacterium associated with gastric and peptic ulcers. The Company's
proprietary test kits include the DR-70 for cancer detection and the PyloriProbe
for the detection of H. pylori.
DR-70. The DR-70 is the Company's proprietary diagnostic test kit which
the Company believes is capable of detecting at least 13 different common
cancers, including cancer of the lungs, breasts, stomach and liver. With just a
small amount of blood serum drawn from a patient, the DR-70 uses a common
microtiter format familiar to most laboratories in the diagnostic industry to
test for the presence of tumors. Management believes that the DR-70 is capable
of detecting different types of cancer with a degree of certainty and
specificity superior to any other cancer marker now on the market. The Company
has received marketing approval from Canada's Health Protection Branch, the
Canadian equivalent of the U.S. Food and Drug Administration ("FDA"). DR-70 is
not approved by the FDA for marketing and sale in the United States.
In 1993, a clinical trial protocol for the DR-70 for lung cancer was
approved by the Cross Cancer Institute in Edmonton, Alberta, Canada under the
auspices of the Alberta Cancer Board. The objective of the clinical trial at
the Cross Cancer Institute was to evaluate the sensitivity and specificity of
the DR-70 lung cancer tumor-marker and to determine if the level of the tumor-
marker correlates with the stage of lung cancer development. In the Cross
Cancer Institute clinical trial, 237 patients with newly diagnosed lung cancer
and 244 volunteers with no clinical evidence of disease were selected. The DR-
70 tumor-marker was measured in blood serum samples collected from both cancer
patients and the volunteers. The control group was composed of smokers and non-
smokers. The results showed sensitivity of the lung cancer test was 66% and
specificity was 92%. The Company believes these results, coupled with data
reported in continued studies at the Cross Cancer Institute, demonstrate the
value of the DR-70 lung cancer tumor-marker as a diagnostic test for detecting
lung cancer. These tests also helped determine the usefulness of DR-70 for
monitoring response to treatment and for predicting the recurrence of cancer.
Recent expanded clinical studies of DR-70 were also conducted in Wuhan,
China. The studies determined that the DR-70 immunoassay kit detected a number
of different cancers with a high degree of specificity and sensitivity. In these
tests, DR-70 was found to have an overall specificity of 95% and an overall
sensitivity of 83.8%. Thirteen different types of cancer, including cancers of
the lung, stomach, breast, colon, liver, uterus and pancreas were found in the
screening process, indicating that DR-70 has significant usefulness as a cancer-
screening tool.
Pylori Probe. Management believes PyloriProbe has several advantages over
competitors' test kits including color coded ready-to-use reagents, superior
reproducibility, durable breakaway wells, elimination of the calibration curve
requirement and significantly lower cost. In August 1998, the Company received
clearance from the U.S. Food and Drug Administration ("FDA") to market in the
United States its Pylori-Probe diagnostic kit.
Pylori-Probe is the first and currently the only product manufactured by
the Company to be cleared to market in the United States. Due to its lack of
working capital, however, the Company has not been able to commence active
marketing of this product.
Onco Chek. Onco Chek is another of the Company's proprietary cancer tumor
markers. Onco Chek is in pre-clinical trials. The Company has conducted
preliminary studies at the University of California, Irvine Medical Center to
investigate (i) the general ability of Onco Chek to detect various types of
cancer including colon, ovarian, breast, larynx, lung and lymph, and (ii) to
test interference by non-cancer diseases. The Company does not currently expend
any resources on the further development of Onco Chek, but may do so in the
future.
Current Operations
For the past eleven months, the Company's operations have consisted
primarily of the raising of working capital and, in connection therewith, the
Company conducted the recently concluded Rule 504 Offering. The
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Company now intends to focus its operations on the marketing of the DR-70 and
the PyloriProbe initially in Canada, Taiwan, China and South America. As a
result of its financial condition, the Company has been forced to suspend all
operations relating to the development of new products and instead has focused
its efforts on marketing its existing products in those jurisdictions in which
the Company has obtained, or believes it can expeditiously obtain, regulatory
approval. The Company has already obtained approval from the Canadian regulatory
authorities to market the DR-70 in Canada. Accordingly, the Company intends to
enter into agreements with distributors who will market the DR-70 throughout
Canada's provinces. The Company has commenced marketing of the DR-70 in Taiwan
and believes that it will be able to commence marketing of the DR-70 in Canada
and China by the beginning of 2000.
The Company currently produces only DR-70 and Pylori Probe and its OEM test
kits at its Tustin, California facilities. While sales during the recent past
have been primarily from OEM products of other manufacturers, during the next 12
months sales are expected to consist primarily of DR-70 and Pylori Probe.
The Company recently entered into a non-binding Memorandum of Understanding
with Union Medical & Pharmaceutical Group/Beijing Union Medical & Pharmaceutical
General Corporation ("Union") to establish a joint venture to market, distribute
and manufacture the Company's products in China. Pursuant to the Memorandum,
Union has agreed to assist the Company in obtaining approval from the Chinese
government to import, manufacture and sell the Company's products in China.
In an effort to obtain government approval, the board of directors of the
Company recently authorized the payment of $50,000 to Union to cover the
expenses they expect to incur in conducting clinical trials on the Company's
products in China. Once government approval is obtained, the Company and Union
intend to enter into a joint venture to promote, market and distribute the
Company's proprietary and non-proprietary products throughout China.
Ultimately, upon the successful introduction of the Company's products into
the Chinese market, the Company and Union intend to set up facilities to import
the Company's products in bulk and to license the manufacturing of the Company's
products in China. The Memorandum, however, is not binding on either party and,
accordingly, there can be no assurance that Union will perform any of the acts
it has agreed to perform in the Memorandum nor will the Company have any
recourse against Union should Union fail to so perform. Accordingly, there can
be no assurance that the Company will be able to obtain the necessary
governmental approvals to import, manufacture and sell the Company's products in
China or that the Company will ever generate any revenues from its efforts in
China.
Marketing
In addition to the activities in China and Canada described above, the
Company's strategy is to provide OEM or private label test kits to under-served
international markets through distributor relationships and to domestic markets
through relationships with larger diagnostic companies. The Company intends to
use the Internet, select journals, and industry trade shows for its marketing
activities, subject to the availability of working capital for such endeavors.
The Company recently regained world-wide marketing rights to the DR-70. In
February 1995, the Company and AMDL Canada, Inc., a wholly-owned subsidiary of
Briana Bio-Tech, Inc. (a significant stockholder of the Company), had executed a
joint venture agreement which led to the formation of ICD, LLC, a Delaware
limited liability corporation ("ICD"). ICD was granted the exclusive right to
market the DR-70 world-wide, excluding Canada and the United States. The Company
retained the marketing rights of the DR-70 for the United States and AMDL Canada
retained the marketing rights for Canada.
In September 1998, AMDL Canada assigned its interest in ICD and its
Canadian marketing rights for the DR-70 to JGT Management Services, Ltd.
("JGT"), an unrelated party. In July 1999, JGT and the Company agreed to
dissolve ICD and to assign all of its marketing rights to the DR-70 back to the
Company. As part of this agreement, the Company agreed to make eighteen monthly
payments of $750 each to JGT commencing October 1998, in addition to a royalty
fee equal to 2.5% of the gross sales of the DR-70 on a quarterly basis. The
agreement expires in August 2008; however, the Company may elect to pay a
$25,000 buy-out fee after October 1, 2003.
In January 1998, Gary L. Dreher joined the Company as Vice President of
Sales and Marketing. Mr. Dreher, with 27 years of biomedical and diagnostic
marketing experience, is implementing a marketing strategy that includes
identifying and contacting potential worldwide partners for distribution,
technology licensing and OEM product arrangements as well as increasing
corporate visibility through trade show representation and advertising. In
February 1999, Mr. Dreher was elected to serve as the Company's President and
CEO. Management believes that when the Company receives additional financing,
sales and marketing will be the areas in which most of the Company's resources
should be expended. Mr. Dreher will provide strategic direction in deployment of
those funds.
Regulation
The Company's products, to the extent they may be deemed medical devices or
biologics, are governed by the Federal Food, Drug and Cosmetics Act and by the
regulations promulgated thereunder by the FDA as well as the regulations of
state agencies and various foreign government agencies.
DR-70. The Company has not yet submitted an application to the FDA to sell
DR-70 in the United States. It is anticipated that DR-70 will require a formal
clearance route known as the Premarket Approval Application, or "PMA," in order
to obtain a Biologic Product License to market such a product in the United
States. A PMA for DR-70 would describe the components and the manufacturing
process of the test system, summarize clinical studies and provide other data
which demonstrate the efficacy and stability of the product. Due to the absence
of sufficient working capital, the Company has no plans at present to pursue FDA
approval of the DR-70; however, new FDA
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regulations may provide an opportunity for the Company to market DR-70 to
certain clinical reference laboratories in the United States in 2000.
In June 1995, the Company received approval from the Cross Cancer Institute
in Canada to apply for marketing clearance for its DR-70 lung cancer tumor-
marker from the Health Protection Branch in Ottawa, Canada. In August 1995, the
Company received marketing clearance from the Health Protection Branch in
Canada. In September 1995, the U.S. Food and Drug Administration ("FDA")
certified the Company for clearance to export the DR-70 lung cancer tumor-marker
diagnostic kit to Canada.
PyloriProbe. In July 1996, the Company filed a 510(k) Premarket
Notification with the FDA requesting approval to sell PyloriProbe in the United
States. In August 1998, the Company received clearance from the FDA to market
in the United States its Pylori-Probe diagnostic kit. Pylori-Probe is the first
product manufactured by the Company to be cleared to market in the United
States.
There can be no assurance that the Company will be able to obtain other
necessary regulatory approvals or clearances for DR-70 in the United States or
for other products developed in the future on a timely basis or at all, and
delays in receipt of or failure to receive such approvals, the loss of
previously received approvals, or failure to comply with existing or future
regulatory requirements would have a material adverse effect on the Company's
business, financial condition and results of operations.
Patents
The Company's success depends in part on its ability to obtain United
States and foreign patent protection for its products, preserve its trade
secrets, and operate without infringing upon the proprietary rights of third
parties. The Company has four patent applications pending in the United States
with respect to its methodology for detecting the presence of the ring shaped
particle and DR-70 tumor-markers as reliable indicators of the presence of
cancer. Two of the Company's patents, which describe methods for measuring
ring-shaped particles in extracellular fluid as a means for detecting cancer,
have been granted and issued by the United States Patent and Trademark Office.
Patents have also been issued directed to this technology in Taiwan, South
Africa, Australia, India, New Zealand, the Philippines, Russia, Israel, Korea
and Japan.
There can be no assurance, however, that any additional patents will be
issued to the Company or that, if issued, the breadth or degree of protection of
these patents will be adequate to protect the Company's interests. In addition,
there can be no assurance that others will not independently develop
substantially equivalent proprietary information or obtain access to the
Company's know-how. Further, there can be no assurance that others will not be
issued patents which may prevent the sale of the Company's test kits or require
licensing and the payment of significant fees or royalties by the Company in
order for it to be able to carry on its business. Finally, there can be no
guarantee that any patents issued to or licensed by the Company will not be
infringed by the products of others. Defense and prosecution of patent claims
can be expensive and time consuming, even in those instances in which the
outcome is favorable to the Company. If the outcome is adverse, it could subject
the Company to significant liabilities to third parties, require the Company to
obtain licenses from third parties or require the Company to cease its research
and development activities or sales.
Competition
A large number of companies are in both direct and indirect competition
with the Company. Many of these companies are larger, more firmly established,
have significant marketing and development budgets and have greater capital
resources than the Company. Therefore, there can be no assurance that the
Company will be able to achieve and maintain a competitive position in the
diagnostic test industry.
Many major medical device manufacturers including Abbott Diagnostics,
Baxter Healthcare Corp., Beckman Diagnostics, Boehringer Mannheim, Centocor,
Diagnostic Products Corporation, Bio-Rad Laboratories, Roche Diagnostic
Systems, Sigma Diagnostics and others are manufacturers or marketers of
diagnostic products. The Company is not aware of any efforts currently being
devoted to development of products such as the Company's DR-70; however, there
can be no assurance that such efforts are not being undertaken without the
Company's knowledge. The Company believes that most of the diagnostic products
currently manufactured by other companies are complimentary to the DR-70. In
addition, such companies could develop products similar to the Company's
products which are superior to those of the Company and could also prove to be
more successful than the Company in the marketing and manufacturing of their
products.
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Product Liability Insurance
The Company currently produces products for clinical studies and for
investigational purposes. The Company anticipates producing its products in
commercial sale quantities as it receives various regulatory approvals in the
future. There can be no assurance, however, that users will not claim that
effects other than those intended may result from the Company's products,
including, but not limited to claims alleged to be related to incorrect
diagnoses leading to improper or lack of treatment in reliance on test results.
In the event that liability claims arise out of allegations of defects in the
design or manufacture of the products of the Company, one or more claims for
damages may require the expenditure of funds in defense of such claims or one or
more substantial awards of damages against the Company, and may have a material
adverse effect on the Company by reason of its inability to defend against or
pay such claims. The Company is investigating the availability of product
liability insurance for its products and intends to obtain product liability
coverage, if available, on terms acceptable to the Company. However, there can
be no assurance that product liability insurance will be available to the
Company on terms that it can afford, or at all, or that the Company will ever
obtain such insurance.
Employees
The Company currently has four full-time employees. The Company from time
to time supplements its permanent staff with temporary laboratory personnel.
None of the employees of the Company is represented by a union or is subject to
a collective bargaining agreement, and the Company considers its relations with
its employees to be favorable. The Company has entered into certain agreements
with its employees regarding their services. See Item 6, "Executive
Compensation." The Company also utilizes the services of consultants for
research, testing and other services.
GLOSSARY OF MEDICAL AND SCIENTIFIC TERMS
Antibody:
An immunoglobulin molecule that has a specific ammo acid sequence by virtue of
which it interacts only with the antigen that induced its synthesis in cells of
the lymphoid series (especially plasma cells), or with an antigen closely
related to it.
Antigen:
Any substance which is capable, under appropriate conditions, of inducing a
specific immune response and of reacting with the products of that response.
Cancer:
A new and abnormal cell growth the natural course of which is fatal. Cancer
cells, unlike benign tumor cells, exhibit the properties of invasion and
metastasis and are highly anaplastic.
Clinical:
Used in the treatment of patients as opposed to academic or theoretical
applications.
Diagnosis:
The determination of the nature of the disease. The art of distinguishing one
disease from another.
Diagnostic:
Pertaining to or subserving diagnosis; distinctive of or serving as a criterion
of a disease, as signs and symptoms.
DR-70:
Refers to DR-70(TM), the name of the Company's lung cancer tumor-marker.
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Helicobacter Pylori (H. Pylori):
A gram-negative, helical shaped bacterium that colonizes the mucus lining of the
stomach and is associated with gastric and peptic ulcers.
Onco Chek:
Refers to the Company's cancer tumor marker test under investigation but not
currently being marketed.
PyloriProbe:
Refers to the PyloriProbe, a trademark for the Company's ELISA kit for measuring
antibody to Helicobacter pylori. An indicator of infection caused by H. pylori
bacteria.
Sensitivity:
The lowest concentration of tumor-marker a given test can detect. When used in
the context of analyzing cancer testing data, the percentage of malignant
samples correctly identified as malignant.
Serum:
Clear liquid that separates from blood on clotting.
Specificity:
When used in the context of analyzing cancer testing data, the percentage of
non-malignant samples correctly identified as non-malignant.
Tumor:
Swelling, one of the cardinal signs of inflammation, morbid enlargement. A new
growth of tissue in which the multiplication of cells is uncontrolled and
progressive; called also neoplasm.
Tumor-marker:
A biochemical substance indicative of neoplasia, ideally specific, sensitive,
and proportional to tumor load, used variously to screen, diagnose, assess
prognosis, follow response to treatment, and monitor for recurrence.
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Item 2. Management's Discussion and Analysis or Plan of Operation
General
Since inception, the Company has been in the development stage and has
devoted its resources to research and development, obtaining regulatory approval
and the raising of working capital. For the fiscal year ended December 31,
1998, the Company generated $155,157 in net sales of products. Historically,
the Company's income has come from the sale of licenses, royalties and options
to purchase marketing rights. The Company has incurred losses since inception,
including an operating loss of $1,554,405 for the fiscal year ended December 31,
1998. From July 10, 1987 (inception) through June 30, 1999 the Company has had
a cumulative loss of $13,609,310.
Liquidity and Capital Resources
The Company requires significant funding for continued operations,
development of its test kits, clinical trials and other actions necessary to
obtain regulatory approvals and to engage in continued marketing and sales
activities. The amount of expenditures required to maintain operations and to
continue product development far exceeds existing cash, which was $18,162 at
June 30, 1999.
During the period commencing on February 26, 1999 and ending June 30, 1999,
the Company conducted a Regulation D, Rule 504 Offering ("Rule 504 Offering") of
its Common Stock. As part of the Rule 504 Offering, in February 1999 the Company
sold 100,000 shares of Common Stock (adjusted for a stock split effected March
29, 1999) for aggregate cash consideration of $150,000 and on May 20, 1999 the
Company sold 103,236 shares of Common Stock for aggregate cash totalling $60,000
and cancellation of indebtedness totaling $10,200. On June 17, 1999, the Company
sold 369,929 shares of Common Stock for cash and cancellation of indebtedness
aggregating $251,550. Of this consideration, a total of $105,300 was received on
June 25, 1999 and a total of $146,250 was received on or before September 24,
1999. Effective June 30, 1999, the Company contracted for and sold an additional
776,837 shares of Common Stock for an aggregate cash consideration of $528,250
all of which was received on or before October 12, 1999. In connection with this
Rule 504 offering, the Company also issued an aggregate of 132,653 shares of
Common Stock as payment of finders' fees.
During the first nine months of 1999, the Company suspended production of
products due to lack of funds. Only recently has the Company recommenced
production of diagnostic test kits, and absent additional funding, will again be
in a similar position where it must curtail its operations.
From December 31, 1997 to December 31, 1998, the Company's cash and cash
equivalents decreased by approximately $1,424,000 as a result of working capital
requirements. As of October 1, 1999, cash is being depleted at the rate of
approximately $87,000 per month. The Company is hopeful of obtaining some
additional revenues from product sales, but there is no commitment by any person
for the purchase of any of the Company's products. In the absence of
significant sales and profits, the Company shall seek to raise additional funds
to meet its working capital needs principally through the sales of its
securities. However, there is no assurance that the Company will be able to
obtain sufficient additional funds when needed, or that such funds, if
available, will be available on terms satisfactory to the Company. The Company
can make no prediction as to when, if ever, it will be able to conduct its
operations on a profitable basis.
The Company believes that its present cash and cash equivalents balances
are sufficient only for operations through December 1999. Total outstanding
indebtedness of the Company, including accounts payable, was approximately
$480,500 at September 30, 1999. There can be no assurances as to the success of
the Company's efforts to raise needed additional capital to finance continuing
operations or to convert, extinguish or otherwise eliminate existing
indebtedness. The Company is continuing its efforts to raise capital to finance
its operations, including international market development for the Company's
products and obtaining the required regulatory approvals. There can be no
assurance, however, as to the success of these efforts, or, if successful, what
the cost or terms thereof will be. The report of the Company's independent
accountants for the fiscal year ended December 31, 1998 states that due to
recurring losses from operations, the absence of significant operating revenues
and the Company's limited capital resources, there is substantial doubt about
the Company's ability to continue as a going concern.
Although the Company does not anticipate any significant changes in the
number of employees, the Company may not be able to retain its present employees
if additional financing is not obtained. The loss of the Company's key
employees could have a material adverse effect upon the operations of the
Company. If such
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financing is obtained, the Company may also seek to add employees to further its
efforts to commercialize its products.
At December 31, 1998, the Company owed $727,354 in accrued salaries payable
to officers, employees and former employees. Previously, four of these persons
agreed to accept payments equal to their proportionate share of 5% of sales
revenues, if any, of the Company, but not less than $500 per month per person.
In addition, effective July 16, 1998, four former executives have agreed to
defer 50% of their compensation pursuant to written salary deferral agreements.
Currently there are only two executives receiving salary. In June 1999, these
accrued salaries were canceled as part of the debt restructuring described
below.
In July 1999, the Board of Directors of the Company approved a debt
restructuring with certain holders of accrued salaries and other forms of
indebtedness. The Company entered into debt restructuring agreements with eight
current and former officers, directors and employees of the Company
(collectively referred to as the "Holders"). Pursuant to these agreements, the
Holders agreed to cancel accrued salaries and other forms of indebtedness
totaling $850,060 in exchange for cash consideration in the aggregate amount of
$84,412 and warrants to purchase an aggregate of 510,937 shares of Common Stock
at an exercise price of $.68 per share. The Company recognized extra ordinary
gain of approximately $485,000 as a result of this transaction. The cash
consideration is payable in six equal monthly installments payable on the last
day of each of the next six months, commencing on August 31, 1999. The warrants
may be exercised at any time commencing on July 1, 1999 and expiring on July 1,
2004.
Results of Operations
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998.
Net Revenue. During the six months ended June 30, 1999, the Company
received revenues of only $21,765 from product sales compared to revenues for
the six months ended June 30, 1998 of $97,531. The reason for the decrease is
the receipt of one-time orders for its products in March 1998. In addition,
during the six months ended June 30, 1999, the Company curtailed its marketing
efforts as it focused its efforts on the raising of working capital. Total
operating expenses for the six months ended June 30, 1999 were $770,540 compared
to total operating expenses for the six months ended June 30, 1998 of $931,124.
The decrease resulted from cost cutting and curtailment of operations due to
limited cash resources. In the six months ended June 30, 1999, the Company's
net loss was $760,202, compared to a loss of $895,187 for the prior year period.
Research and Development and General and Administrative Expenses. Research
and development expenses for the six months ended June 30, 1999 aggregated
$173,599, a decrease of $207,966 as compared to $381,565 reported for the prior
year period. General and administrative expenses increased by $47,382 to
$596,941 for the six months ended June 30, 1999 as compared to the $549,559
reported in the prior year period. The decrease in research and development
expenses and the increase in general and administrative expenses were due to the
Company's lack of working capital which caused a general curtailment of product
development activities and an increase in expenditures relating the raising of
working capital.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997.
Net Revenue. During the year ended December 31, 1998, the Company received
revenues of $155,157 from product sales compared to revenues from product sales
of $42,436 in the prior year period. The Company also realized interest income
of $32,078 compared to $121,932 of interest income for the equivalent period in
the prior year. The reason for the increase in product sales was the expansion
of the Company's product lines in 1998. The decrease in interest income was due
to a reduction in available funds for investments. Total operating expenses for
the year ended December 31, 1998 were $1,646,852 compared to total operating
expenses for the year ended December 31, 1997 of $1,888,743. Expense categories
reflecting a decrease over the prior year include payroll, laboratory and rent
expense, none of which were extraordinary. The decrease resulted from conscious
cost cutting due to limited cash resources. In 1998, the Company's net loss was
$1,554,405, compared to a net loss of $1,747,414 in 1997.
Research and Development and General and Administrative Expenses. Research
and development expenses for the year ended December 31, 1998 were $686,845, a
decrease of $219,969 as compared to the $906,814 reported for the prior year
period. Expense categories reflecting decreases during 1998 include the
research and development expenses associated with the now completed additional
clinical trial data required for the PyloriProbe application resubmission to the
FDA and laboratory expense, the research and development portion of
-9-
<PAGE>
payroll and the credit for previously accrued consulting expenses reflecting the
Company's attempt to reduce these costs. General and administrative expenses
declined by $21,922 to $960,007 for the year ended December 31, 1998 as compared
to the $981,929 reported in the prior year period due to curtailment of
administrative and product development activities as the Company focused its
efforts on the raising of working capital.
Year 2000
The Company utilizes certain off-the-shelf computer software programs and
operating systems in connection with the development of its products and to
perform various administrative and billing functions. To the extent the
Company's software application contain source codes that are unable to
appropriately interpret the upcoming calendar year 2000, some level of
modification, or even possibly replacement of such applications, may be
necessary. As is described herein, the Company is a medical research and
development company that is not highly dependent on computer software for its
operations. Accordingly, the Company believes that it can modify or replace any
of its software that malfunctions as a result of the Year 2000 without
significant expenditures.
Forward Looking Statements
This Registration Statement on Form 10-SB contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements made by the Company involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Factors that could cause actual results to
differ materially from the forward looking statements include, but are not
limited to, risks associated with lack of significant operating history, demand
for the Company's products, international business operations, dependence on
licensees, governmental regulations, technological changes, intense competition,
dependence on management, and those other risks discussed below. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. The Company's management disclaims any obligation
to forward-looking statements contained herein to reflect any change in the
Company's expectation with regard thereto or any change in events, conditions,
circumstances or assumptions underlying such statements.
Item 3. Description of Property
The Company's offices, research laboratory and manufacturing facilities
consist of approximately 4,400 square feet and are located at 2492 Walnut
Avenue, Suite 100, Tustin, California. The Company has entered into a five year
lease for these facilities, with a rental rate of $5,757 per month, including
property taxes, insurance and maintenance.
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<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock as of October 12, 1999 by (i) each
person who is known by the Company to be the beneficial owner of more than five
percent (5%) of the issued and outstanding shares of Common Stock, (ii) each of
the Company's directors and executive officers and (iii) all directors and
executive officers as a group. Except as otherwise indicated, each stockholder
listed below has sole voting power and investment power with respect to the
shares beneficially owned by such person.
<TABLE>
<CAPTION>
Name and Address(1) Number of Shares Percentage Owned
- ------------------- ---------------- ----------------
<S> <C> <C>
William M. Thompson III, M.D........ 188,807(2) 10.2%
Douglas C. MacLellan................ 53,843(3) 3.2%
Gary L. Dreher...................... 250,936(4) 13.2%
Edward R. Arquilla, M.D., Ph.D...... 42,633(5) 2.5%
Vivian B. Frazier................... --(6) --
All Directors and Officers
as a group (5 persons).............. 536,219 24.5%
</TABLE>
_______________
(1) Address is 2492 Walnut Avenue, Suite 100, Tustin, California, 92780.
(2) Includes 188,283 shares of Common Stock issuable upon the exercise of
currently outstanding warrants and options, all with an exercise price of
$.68 per share.
(3) Includes 53,583 shares of Common Stock issuable upon the exercise of
currently outstanding warrants and options, all with an exercise price of
$.68 per share.
(4) Includes options to purchase 250,000 shares of Common Stock with an
exercise price of $.68 per share and options to purchase 936 shares of
Common Stock with an exercise price of $28.00 per share. Does not include
options to purchase up to 314 shares of Common Stock at an exercise price
of $28.00 per share that are subject to vesting.
(5) Includes 42,333 shares of Common Stock issuable upon the exercise of
currently outstanding warrants and options, all with an exercise price of
$.68 per share.
(6) Does not include options to purchase up to 15,000 shares of Common Stock
issuable upon the exercise of outstanding options that are subject to
vesting.
-11-
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Set forth below are the directors and officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
------ ----- ----------
<S> <C> <C>
William M. Thompson III, Ph.D. 72 Chairman of the Board of Directors
Gary L. Dreher 53 President, Chief Executive Officer and
Director
Douglas C. MacLellan 43 Director
Edward R. Arquilla, M.D., Ph.D. 77 Director
Vivian B. Frazier 38 Chief Financial Officer and Secretary
</TABLE>
Dr. Thompson has been a director of the Company since June 1989. From
1969 to the present, Dr. Thompson has been a practicing General Surgeon in
Orange County, California. From 1975 to the present, Dr. Thompson has also
served as Vice President for Medical Affairs and as a director of Beech Street
in Irvine, California.
Mr. Dreher joined the Company in January 1998 as Vice President of Sales
and Marketing. Mr. Dreher has served as President of the Company and as a
member of its board of directors since February 1999. From 1993 to 1997, Mr.
Dreher served as President of Medical Market International of Yorba Linda,
California, a marketing and management services company he co-founded. From 1991
to 1993, Mr. Dreher served as Vice President of Sales and Marketing for Apotex
Scientific of Arlington, Texas, a division of Canada's largest pharmaceutical
company. Mr. Dreher also currently serves on the board of directors of Optimum
Care Corporation.
Mr. MacLellan has been a director of the Company since September 1992.
From May 1992 to the present, Mr. MacLellan has served as President and Chief
Executive Officer of The MacLellan Group, Inc., a privately held financial
advisory firm. Since May 1997, Mr. MacLellan has also served as a director and
co-founder of Datalex Corporation, a Canadian based millennium software solution
provider. From November 1996 to February 1998, Mr. MacLellan was a member of
the Board of Directors and Investment Committee of the Strategic East European
Fund. From November 1995 to March 1998, Mr. MacLellan was President, Chief
Executive Officer and a director of PotraCom Wireless, Inc., a publicly held
Canadian company engaged in the business of developing and operating cellular
and wireless telecommunications ventures. From 1993 to 1995, Mr. MacLellan was
a principal and co-founder of Maroon Bells Capital Partners, Inc., a U.S. based
merchant bank. Mr. MacLellan is also currently a member of the Board of
Directors of Albion Offset Group, a privately held international trade advisory
firm.
Dr. Arquilla has been a director of the Company since February 1997. From
1959 until 1994, Dr. Arquilla was a full time faculty member in the Department
of Pathology at the University of Southern California, the University of
California at Los Angeles and the University of California, Irvine, ("UCI").
From 1968 to 1986, Dr. Arquilla also served as Professor and Chair of Pathology
at UCI and Chief of Pathology services at the UCI Medical Center.
Ms. Frazier joined the Company as its Chief Financial Officer in July 1999.
Except for a 15 month period during 1995 and 1996 when Ms. Frazier was a Senior
Manager for Ernst & Young LLP, for more than the last five years she was an
independent financial consultant for private clients. Ms. Frazier is a
certified public accountant, licensed in California and New York and received
her Bachelor of Science degree in accounting from New York University in 1983.
Each director holds office until his successor is elected and qualified or
until his earlier resignation in the manner provided in the Bylaws of the
Company. The Board of Directors has established a Compensation Committee
consisting of Dr. Thompson and Mr. MacLellan. The Compensation Committee
reviews and recommends to the Board of Directors the compensation and benefits
of all officers of the Company and reviews general policy matters relating to
compensation benefits of employees of the Company. The Board of Directors has
also established an Audit Committee consisting of Mr. MacLellan, Dr. Thompson
and Mr. Dreher. Mr. MacLellan serves as the Chairman of the Audit Committee.
-12-
<PAGE>
Item 6. Executive Compensation
Cash Compensation of Executive Officers. The following table sets forth
the total compensation earned by the Chief Executive Officer and all other
executive officers who earned in excess of $100,000 per annum during any of the
Company's last three fiscal years paid by the Company to its executive officers
for services rendered during the fiscal years ended December 31, 1998, 1997 and
1996.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------------- --------------------------
Common
Shares
Restricted Underlying
Other Stock Options
Annual Awards Granted All Other
Name and Position Year Salary Bonus Compensation ($) (# Shares) Compensation
- ----------------- ---- ------ ----- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gary L. Dreher, 1998 $100,000 -0- 11,791(2) -0- 1,250 -0-
President and 1997 N/A -0- -0- -0- -0- -0-
CEO(1) 1996 N/A -0- -0- -0- -0- -0-
That T. Ngo, 1998 $222,000(4) -0- -0- -0- -0- -0-
President and 1997 $222,000 -0- -0- -0- -0- -0-
CEO(3) 1996 $185,000 -0- -0- -0- 7,500 -0-
</TABLE>
(1) Mr. Dreher served as Vice President of Sales and Marketing of the
Company from January 1998 to February 1999. Effective February 26,
1999, Mr. Dreher became the President and Chief Executive Officer of
the Company.
(2) Represents commissions of $5,791 and a car allowance of $6,000 earned
by Mr. Dreher in 1998.
(3) Dr. Ngo resigned from his positions as President and director of the
Company effective February 26, 1999.
(4) Although Dr. Ngo earned $222,000 in 1998, he was actually paid only
$180,500 in 1998. The remaining unpaid portion was eventually canceled
in June 1999 as part of the Company's debt restructuring. For a more
complete description of the Company's debt restructuring, see "Certain
Relationships and Related Transactions."
Director Compensation
Certain members of the Board of Directors receive cash compensation for
their services on special committees. In 1998, the total cash compensation paid
to all members of the Board of Directors was $49,747. Effective January 1, 1999,
until further notice, payment to Directors for their services was suspended.
Employment Agreements
In January 1998, the Company entered into a two year employment
agreement with Gary L. Dreher to serve as Vice President of Sales and Marketing.
That agreement terminated by its own terms when Mr. Dreher assumed the positions
of President and Chief Executive Officer of the Company in February 1999.
However, pursuant to that January 1998 employment agreement, Mr. Dreher received
options to purchase up to 1,250 shares of the Company's Common Stock at the
exercise price of $28.00 per share exercisable until December 2002. The options
vest in installments of 157 each at the end of each of the eight calendar
quarters after January 1, 1998. The Company is currently in the process of
negotiating a new employment agreement with Mr. Dreher and until the new
agreement is finalized, the Company has agreed to compensate Mr. Dreher at an
annual rate of $160,000 payable on a month-to-month basis.
Item 7. Certain Relationships and Related Transactions.
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<PAGE>
Cancellation of Indebtedness
- ----------------------------
In June 1999, the Board of Directors of the Company approved a debt
restructuring with certain holders of accrued salaries and other forms of
indebtedness. The Company entered into debt restructuring agreements with eight
current and former officers, directors and employees of the Company
(collectively referred to as the "Holders"). Pursuant to these agreements, the
Holders agreed to cancel accrued salaries and other forms of indebtedness
totaling $850,060 in exchange for cash consideration in the aggregate amount of
$84,412 and warrants to purchase an aggregate of 510,937 shares of Common Stock
at an exercise price of $.68 per share. The cash consideration is payable in six
equal monthly installments payable on the last day of each of the next six
months, commencing on August 31, 1999. The warrants may be exercised at any time
commencing on July 1, 1999 and expiring on July 1, 2004.
Licensing Agreements
- --------------------
In February 1995, the Company and AMDL Canada, Inc. ("AMDL Canada"), a
Canadian corporation and a wholly-owned subsidiary of Briana Bio-Tech, Inc.,
executed a joint venture agreement forming ICD, L.L.C. ("ICD"), to pursue world-
wide marketing (excluding Canada and the United States) of DR-70. During 1998,
the Company entered into an agreement with AMDL Canada to dissolve the ICD joint
venture and assign their respective world-wide marketing rights, excluding those
to the United States and Canada, to JGT Management Services, Inc. ("JGT").
Pursuant to the agreement, the Company agreed to make eighteen monthly payments
of $750 to JGT commencing October 1998, in addition to a royalty fee equal to
2.5% of gross sales on a quarterly basis. The agreement expires in August 2008;
however, the Company may elect to pay a $25,000 buy-out fee after October 1,
2003.
Item 8. Description of Securities.
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock,
$.001 par value, of which, as of October 12, 1999, 1,651,430 shares were issued
and outstanding and held by approximately 800 record holders. Holders of shares
of Common Stock are entitled to one vote per share on all matters to be voted
upon by the stockholders generally. The approval of proposals submitted to
stockholders at a meeting other than for the election of directors requires the
favorable vote of a majority of the shares voting, except in the case of certain
fundamental matters (such as certain amendments to the Certificate of
Incorporation, and certain mergers and reorganizations), in which cases Delaware
law and the Company's Bylaws require the favorable vote of at least a majority
of all outstanding shares. Stockholders are entitled to receive such dividends
as may be declared from time to time by the Board of Directors out of funds
legally available therefor, and in the event of liquidation, dissolution or
winding up of the Company to share ratably in all assets remaining after payment
of liabilities. The holders of shares of Common Stock have no preemptive,
conversion, subscription or cumulative voting rights.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred
stock, $.001 par value ("Preferred Stock"), none of which is issued or
outstanding. The Company's board of directors is authorized to issue from time
to time, without shareholder authorization, in one or more designated series or
classes, any or all of the authorized but unissued shares of Preferred Stock
with such dividend, redemption, conversion and exchange provisions as may be
provided in the particular series. Any series of Preferred Stock may possess
voting, dividend, liquidation and redemption rights superior to that of the
Common Stock. The rights of the holders of Common Stock will be subject to and
may be adversely affected by the rights of the holders of any Preferred Stock
that may be issued in the future. Issuance of a new series of Preferred Stock,
while providing desirable flexibility in connection with possible acquisition
and other corporate purposes, could make it more difficult for a third party to
acquire, or discourage a third party from acquiring, a majority of the
outstanding voting stock of the Company.
Stock Option Plan
The Company has adopted a 1999 Stock Option Plan ("Plan"), which
permits the Company to grant options to its employees, officers, directors,
consultants and independent contractors. The Company may issue an aggregate of
750,000 shares of common stock pursuant to the Plan. The Plan is governed by the
board of directors,
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<PAGE>
which has the power to determine the terms of any options granted, including the
exercise price, the number of shares subject to the option, and the
exercisability thereof. Options under the Plan generally are not transferable,
and each option is exercisable during the lifetime of the optionee only by such
optionee. Stock options can be exercised at any time before expiration after
they are vested.
As of the date of this Registration Statement, the Company has granted
under the Plan options to purchase an aggregate of 589,999 shares of common
stock, all at an exercise price of $.68 per share, to its employees, officers,
directors and consultants. In addition to those options granted under the Plan,
the Company has outstanding options to purchase a total of 24,465 shares of
Common Stock at exercise prices ranging from $50.00 to $300 per share.
Warrants
The Company has issued warrants to purchase shares of Common Stock to
certain current and former directors, officers and employees of the Company.
The warrants were issued as part of a debt restructuring plan amongst the
Company and certain holders of outstanding indebtedness. In connection with
this debt restructuring plan, the Company issued warrants to purchase an
aggregate of 510,937 shares of Common Stock at an exercise price of $.68 per
share. The warrants are immediately exercisable and expire on July 1, 2004.
For a more complete description of the Company's debt restructuring plan, see
"Certain Relationships and Related Transactions."
In addition to those warrants issued as part of the Company's debt
restructuring plan, as of the date of this Registration Statement, the Company
has outstanding warrants to purchase 1,750 shares of Common Stock at exercise
prices ranging from $32 and $150 per share. These warrants are held by
consultants and other service providers, stockholders and current and former
note holders.
-15-
<PAGE>
Part II
Item 1 Market Price of and Dividends on the Company's Common Equity and Other
Shareholder Matters.
The Company's Common Stock was listed on the OTC Bulletin Board under
the symbol "AMDD" until August 1999. Since August 1999, the Company's Common
Stock has been listed only on the "pink sheets." Set forth in the following
table are high and low bid quotations for the Company's Common Stock for each
quarter during the fiscal years ended December 31, 1997 and 1998 and for the
first two quarters of 1999. All share prices have been adjusted to provide for
both the one for 20 reverse split which was effected in October 1998 and the one
for 10 reverse split that was effected in March 1999 (i.e. they have been
increased 200 times to compare them to current prices). The Company considers
its Common stock to be thinly traded and that any reported bid or sale prices
may not be a true market-based valuation of the Common Stock. The quotations
represent inter-dealer quotations without retail markups, markdowns or
commissions and may not represent actual transactions.
<TABLE>
<CAPTION>
Quarter Ended High Low
- -------------------- ------- -------
<S> <C> <C>
March 31, 1997 $98.00 $56.00
June 30, 1997 $76.00 $30.00
September 30, 1997 $58.00 $30.00
December 31, 1997 $40.00 $18.00
March 31, 1998 $36.00 $16.00
June 30, 1998 $52.00 $22.00
September 30, 1998 $45.00 $ 9.00
December 31, 1998 $12.40 $ 0.35
March 31, 1999 $12.18 $ 0.81
June 30, 1999 $ 4.00 $ 1.00
</TABLE>
As of October 13, 1999, there were approximately 800 record holders of
the Company's Common Stock.
The Company has not paid any cash dividends since its inception and does
not contemplate paying dividends in the foreseeable future. It is anticipated
that earnings, if any, will be retained for the operation of the Company's
business.
Item 2. Legal Proceedings.
There are no pending legal proceedings to which the Company is a party
or to which the property interests of the Company are subject.
Item 3. Changes in and Disagreements with Accountants
On July 6, 1999 Arthur Andersen LLP ("Arthur Andersen") and the Company
agreed that Arthur Andersen would no longer be retained as the Company's
independent accountants for the fiscal year ended December 31, 1998.
Accordingly, the client-independent accountant relationship was terminated as of
that date. Arthur Andersen's report on the Company's financial statements for
the years ended December 31, 1997 and 1996 did not contain any adverse opinion
or a disclaimer of opinion, or was not qualified, but contained an explanatory
paragraph as to the Company's ability to continue as a going concern. During the
Company's fiscal years ended December 31, 1997 and 1996 and subsequent interim
periods, there were no disagreements with Arthur Andersen on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement, if not resolved to the satisfaction of
Arthur Andersen, would have caused Arthur Andersen to make a reference to the
subject matter of the disagreement(s) in connection with its reports.
On July 7, 1999 a new independent accounting firm, Corbin & Wertz,
Irvine, California, was engaged as the Company's independent accountants. During
the Company's fiscal years ended December 31, 1997 and 1996 and subsequent
interim periods, the Company did not consult Corbin & Wertz regarding (i) either
the application of accounting principles to a specified transaction or the type
of audit opinion that might be rendered on the Company's financial statements,
or (ii) any matter that was the subject of a disagreement or was a reportable
event.
-16-
<PAGE>
Item 4. Recent Sales of Unregistered Securities.
During the last three years the Company sold unregistered shares of its
Common Stock in the following transactions:
A. In March 1996, the Company issued 53 shares of Common Stock to one
individual upon the exercise of warrants. The exercise price paid to the
Company was $10.00 per share. There was no underwriter involved in this
issuance. The issuance was conducted pursuant to Section 4(2) of the 1933 Act.
B. In April 1996, the Company issued 98 shares of Common Stock to one
individual upon the exercise of warrants. The exercise price paid to the
Company was $10.00 per share. There was no underwriter involved in this
issuance. The issuance was conducted pursuant to Section 4(2) of the 1933 Act.
C. In May 1996, the Company issued 446 shares of Common Stock in
consideration of the cancellation of $22,282 of indebtedness. There was no
underwriter involved in this issuance. The Company paid a commission equal to
10% of the offering proceeds payable in cash and various warrants exercisable at
$10.00 per share. The issuance was conducted pursuant to Section 4(2) of the
1933 Act.
D. In June 1996, the Company issued 84 shares of Common Stock to one of
its creditors in consideration of the cancellation of $15,000 of indebtedness.
There was no underwriter involved in this issuance. The issuance was conducted
pursuant to Section 4(2) of the 1933 Act.
E. In July 1996, the Company issued 67 shares of Common Stock to one of
its creditors in consideration of the cancellation of $11,933 of indebtedness.
There was no underwriter involved in this issuance. The issuance was conducted
pursuant to Section 4(2) of the 1933 Act.
F. In September 1996, the Company issued 237 shares of Common Stock to
one of its affiliates in consideration of the cancellation of $11,833 of
indebtedness. There was no underwriter involved in this issuance. The issuance
was conducted pursuant to Section 4(2) of the 1933 Act.
G. In March 1997, the Company issued 500 shares of Common Stock upon
the exercise of warrants. The exercise price paid to the Company was $10.00 per
share. There was no underwriter involved in this issuance. The issuance was
conducted pursuant to Section 4(2) of the 1933 Act.
H. In June 1997, the Company issued 500 shares of Common Stock to one
individual in consideration for services on behalf of the Company valued at
$17,000. There was no underwriter involved in this issuance. The issuance was
conducted pursuant to Section 4(2) of the 1933 Act.
I. In December 1997, the Company issued 125 shares of Common Stock in
connection with the settlement with a former option holder. There was no
underwriter involved in this issuance. The issuance was conducted pursuant to
Section 4(2) of the 1933 Act.
J. Between February 26 and June 30, 1999, the Company conducted a
private placement of Common Stock. In the private placement, the Company sold an
aggregate of 1,350,002 shares of Common Stock for cash and cancellation of
indebtedness totaling $989,800. The placement was conducted pursuant to Rule 504
under the Act. All of the purchasers in the offering were residents of the state
of Colorado and were "accredited investors," as that term is defined in the 1933
Act. The shares were issued to the purchasers pursuant to Section 11-51-
308(1)(p) of the Colorado Securities Act. The Company utilized finders in the
private placement and issued a total of 132,653 shares of Common Stock as
finder's fees. The finder's fee shares were issued pursuant to Section 4(2) of
the 1933 Act.
Item 5. Indemnification of Directors and Officers.
Delaware Statutes
- -----------------
Section 145 of the Delaware General Corporation Law, as amended,
provides for the indemnification of the Company's officers, directors, employees
and agents under certain circumstances as follows:
"(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a
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<PAGE>
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to
-18-
<PAGE>
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Certificate of Incorporation
- ----------------------------
The Company's Certificate of Incorporation provides that the officers and
directors of the Company shall be protected from personal liability to the
fullest extent permitted by law. The Company's Bylaws also contain a provision
for the indemnification of the Company's directors (see "Indemnification of
Directors and Officers - Bylaws" below).
Bylaws
- ------
The Company's Bylaws provide for the indemnification of the Company's
directors, officers, employees, or agents under certain circumstances as
follows:
"8.01 Indemnification: Third Party Actions. The corporation shall
--------------------------------------
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by or in
the right of the corporation), by reason of the fact that he is or was a
director or officer of the corporation (and, in the discretion of the board of
directors, may so indemnify a person by reason of the fact that he is or was an
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise), against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with any such
action, suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
Section 8.02 Indemnification; Corporate Actions. The corporation shall
----------------------------------
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee, or agent of the corporation, or is or
was serving at. the request of the corporation as a director or officer of the
corporation (and, in the discretion of the board of directors, may so indemnify
a person by reason of the fact that he is or was an employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
-19-
<PAGE>
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no indemnification
shall be made in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
--------------
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in sections
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. Any other indemnification
under sections 8.01 or 8.02 hereof, unless ordered by a court, shall be made by
the corporation only in the specific case on a determination that
indemnification of the director, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
sections 8.01 or 8.02 hereof. Such determination shall be made either (i) by
the board of directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit, or proceeding, (ii) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders by a majority vote of a quorum of stockholders at any meeting duly
called for such purpose.
Section 8.04 Advances. Expenses incurred by an officer or director in
---------
defending a civil or criminal action, suit, or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding on receipt of an undertaking by or on behalf of such director or
officer to repay such amount of it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized by this section.
Such expenses incurred by other employees and agents may be so paid on such
terms and conditions, if any, as the board of directors deems appropriate.
Section 8.05 Scope of Indemnification. The indemnification and
-------------------------
advancement of expenses provided by, or granted pursuant to, sections 8.01,8.02,
and 8.04:
(a) Shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled, under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office; and
(b) Shall, unless otherwise provided when authorized or ratified, continue
as to a person who ceased to be a director, officer, employee, or agent of the
corporation and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
Section 8.06 Insurance. The corporation may purchase and maintain
----------
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against any such liability.
Section 8.07 Officer and Director Contracts. No contract or other
------------------------------
transaction between the corporation and one or more of its directors or
officers, or between the corporation and any corporation, partnership,
association, or other organization in which one or more of the corporation's
directors or officers are directors, officers, or have a financial interest, is
either void or voidable solely on the basis of such relationship or solely
because any such director or officer is present at or participates in the
meeting of the board of directors or a committee thereof which authorizes the
contract or transaction, or solely because the vote or votes of each director or
officer are counted for such purpose, if:
(a) The material facts of the relationship or interest are disclosed or
known to the board of directors or committee and the board or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors even though the disinterested directors
be less than a quorum;
(b) The material facts of the relationship or interest is disclosed or
known to the stockholders and they approve or ratify the contract or transaction
in good faith by a majority vote of the shares voted at a meeting of
stockholders called for such purpose or written consent of stockholders holding
a majority of the shares entitled to
-20-
<PAGE>
vote (the votes of the common or interested directors or officers shall be
counted in any such vote of stockholders); or
(c) The contract or transaction is fair as to the corporation at the time
it is authorized, approved, or ratified by the board of director's, a committee
thereof, or the stockholders.
-21-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Reports....................................... F-1
Balance Sheet dated December 31, 1998............................... F-3
Statements of Operations for the years ended December 31, 1998 and
1997 and for the period from July 10, 1987 (date of inception)
through December 31, 1998......................................... F-4
Statements of Stockholders' Equity (Deficit) for the year ended
December 31, 1998 and for the period from July 10, 1987
(date of inception) through December 31, 1998..................... F-5
Statements of Cash Flows for the years ended December 31, 1998 and
1997 and for the period from July 10, 1987 (date of inception)
through December 31, 1998......................................... F-10
Notes to Financial Statements....................................... F-12
Unaudited Balance Sheet at June 30, 1999............................ F-28
Unaudited Statements of Operations for the six month periods
ended June 30, 1999 and 1998 and for the period from
July 10, 1987 (date of inception) through June 30, 1999........... F-29
Unaudited Statements of Cash Flows for the six month periods
ended June 30, 1999 and 1998 and for the period from
July 10, 1987 (date of inception) through June 30, 1999........... F-30
Notes to Financial Statements....................................... F-32
</TABLE>
-22-
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
AMDL, Inc.
We have audited the accompanying balance sheet of AMDL, Inc. (the "Company") as
of December 31, 1998, and the related statements of operations, stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on the financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AMDL, Inc. as of December 31,
1998, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the accompanying financial
statements, the Company is a development stage company which has experienced
significant losses since inception with no significant revenues. These factors
and other factors discussed in Note 1 to the financial statements raise
substantial doubt about the ability of the Company to continue as a going
concern. Management's plans in regard to these matters are described in Note 1.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
CORBIN & WERTZ
Irvine, California
October 6, 1999.
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Shareholders of AMDL, Inc.:
We have audited the accompanying statements of operations and cash flows of
AMDL, INC. (a Delaware corporation), a development stage company, for the period
of inception (July 10, 1987) to December 31, 1997, and the related statements of
stockholders' equity from inception to date. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of AMDL, Inc.'s operations and cash flows for
the period from inception (July 10, 1987) to December 31, 1997, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the accompanying financial
statements, the Company is a development stage company which has experienced
significant losses since inception with no significant revenues. These factors
and other factors discussed in Note 1 to the financial statements raise a
substantial doubt about the ability of the Company to continue as a going
concern. Management's plans in regard to these matters are described in Note 1.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
ARTHUR ANDERSEN LLP
Orange County, California
February 13, 1998
F-2
<PAGE>
AMDL, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 74,566
Other current assets 18,462
----------------
$ 93,028
================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable $ 25,000
Accounts payable and accrued expenses 218,021
Accrued payroll and related expenses 727,354
Customer deposit 3,465
----------------
Total current liabilities 973,840
----------------
Commitments and contingencies
Stockholders' deficit:
Preferred stock, 10,000,000 shares authorized; no
shares issued or outstanding -
Common stock, $.001 par value; 50,000,000 shares
authorized, 168,775 shares issued and outstanding 169
Additional paid-in capital 11,968,127
Deficit accumulated during development stage (12,849,108)
----------------
Total stockholders' deficit (880,812)
----------------
$ 93,028
================
</TABLE>
See independent auditors' report and
accompanying notes to financial statements
F-3
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
July 10, 1987
Years Ended (Date of Inception)
--------------------------------------
December 31, December 31, Through
1998 1997 December 31, 1998
---------------- ------------------ ----------------------
<S> <C> <C> <C>
Revenues $ $ 155,157 $ 42,436 $ 197,593
Cost of sales 124,857 23,039 147,896
---------------- ------------------ ----------------------
Gross profit 30,300 19,397 49,697
---------------- ------------------ ----------------------
Operating expenses:
Research and development 686,845 906,814 6,580,483
General and administrative 960,007 981,929 7,680,705
---------------- ------------------ ----------------------
1,646,852 1,888,743 14,261,188
---------------- ------------------ ----------------------
Loss from operations (1,616,552) (1,869,346) (14,211,491)
---------------- ------------------ ----------------------
Other income (expense):
Interest expense (27,331) - (588,347)
Interest income 32,078 121,932 241,794
Other 57,400 - 1,708,936
---------------- ------------------ ----------------------
62,147 121,932 1,362,383
---------------- ------------------ ----------------------
Net loss $ (1,554,405) $ (1,747,414) $ (12,849,108)
================ ================== ======================
Basic and diluted loss per common share $ (9.21) $ (10.38)
================ ==================
Basic and diluted weighted average common
shares outstanding 168,775 168,303
================ ==================
</TABLE>
F-4
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For The Year Ended December 31, 1998 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
<TABLE>
<CAPTION>
Common Stock
Common Stock Subscribed
---------------------------------- ---------------------------
Shares Amount Shares Amount
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Balance, July 10, 1987 (date of inception) - $ - - $ -
Common stock issued 6 - - -
Net loss - - - -
------------ -------------- ----------- ------------
Balance, December 31, 1988 6 - - -
Restatement due to merger 44,326 44 - -
Common stock issued 6,739 7 - -
Net loss - - - -
------------ -------------- ----------- ------------
Balance, December 31, 1989 51,071 51 - -
Common stock issued for cash at $96.73 2,255 2 - -
Common stock issued at $50.00 to three officers
in lieu of salary 1,500 2 - -
Common stock issued for services at $200.00 150 - - -
Common stock issued for services at $100.00 70 - - -
Common stock issued for cash at $50.00 1,150 1 - -
Common stock issued at $8.00 to a member of the
board of directors 450 - - -
Common stock issued for cash at $8.00 75 - - -
Common stock issued for services at $50.00 2,500 3 - -
Common stock issued for consulting services
at $200.00 250 - - -
Net loss - - - -
------------ -------------- ----------- ------------
Balance, December 31, 1990 59,471 59 - -
<CAPTION>
Additional Deficit Accumulated
Paid-in During the
Capital Development Stage Total
------------- -------------------- -------------
<S> <C> <C> <C>
Balance, July 10, 1987 (date of inception) $ - $ - $ -
Common stock issued 1,275 - 1,275
Net loss - (37,323) (37,323)
------------- -------------------- -------------
Balance, December 31, 1988 1,275 (37,323) (36,048)
Restatement due to merger 55,748 - 55,792
Common stock issued 56,335 - 56,342
Net loss - (241,479) (241,479)
------------- -------------------- -------------
Balance, December 31, 1989 113,358 (278,802) (165,393)
Common stock issued for cash at $96.73 218,125 - 218,127
Common stock issued at $50.00 to three officers
in lieu of salary 74,998 - 75,000
Common stock issued for services at $200.00 30,000 - 30,000
Common stock issued for services at $100.00 7,000 - 7,000
Common stock issued for cash at $50.00 57,499 - 57,500
Common stock issued at $8.00 to a member of the
board of directors 3,600 - 3,600
Common stock issued for cash at $8.00 600 - 600
Common stock issued for services at $50.00 124,997 - 125,000
Common stock issued for consulting services
at $200.00 50,000 - 50,000
Net loss - (107,415) (107,415)
------------- -------------------- -------------
Balance, December 31, 1990 680,177 (386,217) 294,019
</TABLE>
Continued
F-5
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED
For The Year Ended December 31, 1998 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
<TABLE>
<CAPTION>
Common Stock
Common Stock Subscribed
------------------------------------ ---------------------------
Shares Amount Shares Amount
---------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Common stock issued for consulting services
at $24.00 250 - - -
Common stock issued at $50.00 for payment
of loan 50 - - -
Net loss - - - -
---------------- ---------------- ----------- ------------
Balance, December 31, 1991 59,771 59 - -
Common stock issued in exchange for notes
payable and accrued interest at $50.00 6,815 7 - -
Exercise of warrants at $0.20 7 - - -
Exercise of warrants at $99.90 286 - - -
Common stock issued to related party pursuant
to private placement at $178.80 3,200 3 - -
Warrants issued in connection with debt offering - - - -
Warrants issued for services - - - -
Net loss - - - -
---------------- ---------------- ------------ -------------
Balance, December 31, 1992 70,079 69 - -
Common stock issued to related party and
others pursuant to a private placement
at $178.80 7,391 7 - -
Exercise of warrants at $178.57 56 - - -
Common stock issued in exchange for notes
payable and accrued interest at $178.76 1,216 1 - -
Net loss - - - -
---------------- ---------------- ----------- -------------
Balance, December 31, 1993 78,742 77 - -
<CAPTION>
Additional Deficit Accumulated
Paid-in During the
Capital Development Stage Total
------------- -------------------- -------------
<S> <C> <C> <C>
Common stock issued for consulting services
at $24.00 6,000 - 6,000
Common stock issued at $50.00 for payment
of loan 2,500 - 2,500
Net loss - (1,044,395) (1,044,395)
------------- -------------------- -------------
Balance, December 31, 1991 688,677 (1,430,612) (741,876)
Common stock issued in exchange for notes
payable and accrued interest at $50.00 340,749 - 340,756
Exercise of warrants at $0.20 1 - 1
Exercise of warrants at $99.90 28,570 - 28,570
Common stock issued to related party pursuant
to private placement at $178.80 572,157 - 572,160
Warrants issued in connection with debt offering 312,000 - 312,000
Warrants issued for services 518,285 - 518,285
Net loss - (2,083,984) (2,083,984)
------------- -------------------- -------------
Balance, December 31, 1992 2,460,439 (3,514,596) (1,054,088)
Common stock issued to related party and
others pursuant to a private placement
at $178.80 1,321,484 - 1,321,491
Exercise of warrants at $178.57 10,000 - 10,000
Common stock issued in exchange for notes
payable and accrued interest at $178.76 217,377 - 217,378
Net loss - (1,348,254) (1,348,254)
------------- ------------------ -------------
Balance, December 31, 1993 4,009,300 (4,862,850) (853,473)
</TABLE>
Continued
F-6
<PAGE>
ADML, INC
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED
For The Year Ended December 31, 1998 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
<TABLE>
<CAPTION>
Common Stock
Common Stock Subscribed
------------------------------------ -------------------------------
Shares Amount Shares Amount
---------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Common stock issued to related party pursuant
to a private placement at $178.80 2,500 3 - -
Exercise of warrants at $50.00 750 1 - -
Common stock issued to various creditors at $178.72 794 1 - -
Exercise of options at $10.00 2,675 3 - -
Exercise of options at $200.00 80 - - -
Common stock issued for note payable and
accrued interest at $176.64 1,730 2 - -
Exercise of warrants at $200.00 200 - - -
Common stock issued to related party pursuant
to a private placement at $50.00 900 1 - -
Net loss - - - -
---------------- -------------- ------------- -------------
Balance, December 31, 1994 88,371 88 - -
Common stock issued for cash at $50.00 5,000 5 - -
Exercise of warrants at $90.00 2,500 2 - -
Common stock issued for cash at $60.00 5,000 5 - -
Exercise of warrants at $100.00 2,500 3 - -
Exercise of warrants at $196.74 164 - - -
Exercise of options at $10.00 325 - - -
Common stock issued for cash at $150.38 665 1 - -
Exercise of warrants at $50.00 50 - - -
Common stock issued for cash at $80.00 3,750 4 - -
Common stock issued in exchange for convertible
notes payable and accrued interest at $50.00 2,716 3 - -
Common stock subscribed at $120.00 - - 2,500 300,000
Net loss - - - -
---------------- -------------- ------------- -------------
Balance, December 31, 1995 111,041 111 2,500 300,000
</TABLE>
<TABLE>
<CAPTION>
Additional Deficit Accumulated
Paid-in During the
Capital Development Stage Total
----------------- ------------------- --------------
<S> <C> <C> <C>
Common stock issued to related party pursuant
to a private placement at $178.80 446,997 - 447,000
Exercise of warrants at $50.00 37,499 - 37,500
Common stock issued to various creditors at $178.72 141,901 - 141,902
Exercise of options at $10.00 26,747 - 26,750
Exercise of options at $200.00 16,000 - 16,000
Common stock issued for note payable and
accrued interest at $176.64 305,593 - 305,595
Exercise of warrants at $200.00 40,000 - 40,000
Common stock issued to related party pursuant -
to a private placement at $50.00 44,999 45,000
Net loss - (1,604,589) (1,604,589)
----------------- ------------------- --------------
Balance, December 31, 1994 5,069,036 (6,467,439) (1,398,315)
Common stock issued for cash at $50.00 249,995 - 250,000
Exercise of warrants at $90.00 224,998 - 225,000
Common stock issued for cash at $60.00 299,995 - 300,000
Exercise of warrants at $100.00 249,997 - 250,000
Exercise of warrants at $196.74 32,266 - 32,266
Exercise of options at $10.00 3,250 - 3,250
Common stock issued for cash at $150.38 99,999 - 100,000
Exercise of warrants at $50.00 2,500 - 2,500
Common stock issued for cash at $80.00 299,996 - 300,000
Common stock issued in exchange for convertible
notes payable and accrued interest at $50.00 135,808 - 135,811
Common stock subscribed at $120.00 - - 300,000
Net loss - (1,457,470) (1,457,470)
----------------- ------------------- --------------
Balance, December 31, 1995 6,667,840 (7,924,909) (956,958)
</TABLE>
Continued
F-7
<PAGE>
ADML, INC
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED
For The Year Ended December 31, 1998 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
<TABLE>
<CAPTION>
Common Stock
Common Stock Subscribed
-------------------------------------- ------------------------------
Shares Amount Shares Amount
---------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Common stock issued for cash at $70.00 22,500 23 - -
Common stock issued for cash at $80.00 5,000 5 - -
Common stock issued for cash at $95.00 20,000 20 - -
Exercise of warrants at $124.00 5,625 5 - -
Common stock issued for cash at $70.00 2,500 2 - -
Exercise of warrants at $49.53 53 - - -
Exercise of warrants at $49.74 98 - - -
Common stock issued to various creditors -
at $178.36 151 - - -
Common stock issued at $50.02 for converted -
notes payable and accrued interest 682 1 - -
Warrants issued for services - - - -
Common stock subscribed at $120.00 - - (2,500) (300,000)
Net loss - - - -
------------- ------------- ------------- -------------
-
Balance, December 31, 1996 167,650 167 - -
Exercise of warrants at $50.00 500 1 - -
Common stock issued for services at $34.00 500 1 - -
Common stock issued as settlement with former
option holder 125 - - -
Net loss - - - -
------------- ------------- ------------- -------------
Balance, December 31, 1997 168,775 169 - -
</TABLE>
<TABLE>
<CAPTION>
Additional Deficit Accumulated
Paid-in During the
Capital Development Stage Total
----------------- ------------------ --------------
<S> <C> <C> <C>
Common stock issued for cash at $70.00 1,574,977 - 1,575,000
Common stock issued for cash at $80.00 399,995 - 400,000
Common stock issued for cash at $95.00 1,899,980 - 1,900,000
Exercise of warrants at $124.00 697,495 - 697,500
Common stock issued for cash at $70.00 174,998 - 175,000
Exercise of warrants at $49.53 2,625 - 2,625
Exercise of warrants at $49.74 4,875 - 4,875
Common stock issued to various creditors
at $178.36 26,933 - 26,933
Common stock issued at $50.02 for converted
notes payable and accrued interest 34,114 - 34,115
Warrants issued for services 115,330 - 115,330
Common stock subscribed at $120.00 300,000 - -
Net loss - (1,622,380) (1,622,380)
--------------- ------------------ --------------
Balance, December 31, 1996 11,899,162 (9,547,289) 2,352,040
Exercise of warrants at $50.00 24,999 - 25,000
Common stock issued for services at $34.00 16,999 - 17,000
Common stock issued as settlement with former
option holder 2,125 - 2,125
Net loss - (1,747,414) (1,747,414)
---------------- ------------------ --------------
Balance, December 31, 1997 11,943,285 (11,294,703) 648,751
</TABLE>
Continued
F-8
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED
For The Year Ended December 31, 1998 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
<TABLE>
<CAPTION>
Common Stock
Common Stock Subscribed
-------------------------------- -----------------------
Shares Amount Shares Amount
------------ ------------ ------- --------
<S> <C> <C> <C> <C>
Warrants issued for services - - - -
Options issued for consulting services - - - -
Net loss - - - -
------------- ------------- -------- ---------
Balance, December 31, 1998 168,775 $ 169 - $ -
============= ============= ======== =========
</TABLE>
<TABLE>
<CAPTION>
Additional Deficit Accumulated
Paid-in During the
Capital Development Stage Total
<S> <C> <C> <C>
Warrants issued for services ----------- ---------------- ----------
Options issued for consulting services
Net loss 19,548 - 19,548
5,294 - 5,294
- (1,554,405) (1,554,405)
Balance, December 31, 1998 ----------- ---------------- ----------
$11,968,127 $ (12,849,108) $ (880,812)
=========== ================ ==========
</TABLE>
See independent auditors' report and
accompanying notes to financial statements
F-9
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
<TABLE>
<CAPTION>
Years Ended July 10, 1987
-------------------------------------- (Date of Inception)
December 31, December 31, Through
1998 1997 December 31, 1998
---------------- ------------------ -------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (1,554,405) $(1,747,414) $ (12,849,108)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization - - 497,743
Amortization of deferred interest - - 312,000
Common stock subscribed - - 300,000
Common stock issued for services - 19,125 312,541
Warrants and options issued for services 24,842 - 686,371
Equity loss in investment in SAM 7,500 - 7,500
Changes in operating assets and liabilities:
Other assets (10,599) - (18,462)
Accounts payable and accrued expenses 92,273 (66,988) 243,021
Accrued payroll and related expenses 52,685 (249,410) 727,354
Customer deposit (28,770) 32,235 3,465
--------------- --------------- ---------------
Net cash used in operating activities (1,416,474) (2,012,452) (9,777,575)
--------------- --------------- ---------------
Cash flows from investing activities:
Purchase of equipment - - (225,930)
Expenditures for patents - - (154,682)
Investment in SAM (7,500) - (7,500)
--------------- --------------- ---------------
Net cash used in investing activities (7,500) - (388,112)
--------------- --------------- ---------------
Cash flows from financing activities:
Borrowings (repayments) under notes payable, net - - 59,115
Repayments under capital lease obligation - (18,668) (116,676)
Proceeds from issuance of common stock - 25,000 10,240,747
Net effect of merger with CVI - - 57,067
--------------- --------------- ---------------
Net cash provided by financing activities - 6,332 10,240,253
--------------- --------------- ---------------
Net change in cash and cash equivalents (1,423,974) (2,006,120) 74,566
Cash and cash equivalents at beginning of period 1,498,540 3,504,660 -
--------------- --------------- ---------------
Cash and cash equivalents at end of period $ 74,566 $ 1,498,540 $ 74,566
=============== =============== ===============
</TABLE>
Continued
F-10
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS - CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
Supplemental schedule of non-cash investing and financing activities:
During the year ended December 31, 1998, the Company issued 750 warrants and
250 options to non-employees for services. The fair value of the warrants
and options issued was $19,548 and $5,294, respectively.
During the year ended December 31, 1997, the Company issued 625 shares of
common stock to non-employees for services. The fair value of the stock
issued was $19,125.
See independent auditors' report and
accompanying notes to financial statements
F-11
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1998 and 1997 and
For the Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
AMDL, Inc. (formerly Advanced Medical Diagnostic, Ltd.) (the "Company") was
incorporated July 10, 1987, in the state of Delaware; however, no financial
activity occurred until 1988.
Since inception, the Company has primarily been engaged in the commercial
development of, and the obtaining of various governmental regulatory approvals
for the marketing of both its proprietary diagnostic tumor-marker test kit (DR-
70) to detect the presence of lung and other types of cancer, and its
proprietory test kit (Pylori Probe) designed to detect antibodies to H pylori, a
bacterium associated with chronic gastritis and ulcers. The Company has recently
broadened its scope and product line and has a selection of diagnostic test kits
for several types of cancer, infectious diseases, endocrinology, diabetes,
nephrology and allergy. The Company is in the development stage and has not
generated significant revenues from product sales. PyloriProbe is designed to
detect antibodies to H. pylori, a bacterium associated with chronic gastritis
and ulcers which, if left untreated, may possibly lead to stomach cnacer.
The Company and AMDL Canada, Inc. ("AMDL Canada"), a Canadian corporation and a
wholly-owned subsidiary of Briana Bio-Tech, Inc. (a significant stockholder of
the Company), executed a joint venture agreement forming ICD, L.L.C. ("ICD"), to
pursue world-wide marketing (excluding Canada and the United States) of DR-70.
The operations of ICD during fiscal years 1998 and 1997 were insignificant and
are therefore not consolidated in the accompanying financial statements.
Effective September 11, 1998, the Company and AMDL Canada agreed to dissolve the
joint venture and assigned the world-wide marketing rights of DR-70 to JGT
Management Services, Inc. ("JGT"), an unrelated party (see Note 3).
Development Stage Company
The Company is in the development stage and has not generated significant
revenues from operations and has no assurance of any future revenues. The
Company will require substantial additional funding for continuing research and
development, obtaining regulatory approval, and for the commercialization of its
products. There is no assurance that the Company will be able to obtain
sufficient additional funds when needed, or that such funds, if available, will
be obtainable on terms satisfactory to the Company.
Management has taken action to address these matters. They include:
- - Retention of experienced management personnel with particular skills in the
commercialization of similar products;
F-12
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For the Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- - Attainment of technology to develop additional diagnostic products for
detecting cancer and other diseases; and
- - Raising additional funds through the sale of equity securities at terms
below market price quotations.
The Company's products, to the extent they may be deemed medical devices or
biologics, are governed by the Federal Food, Drug and Cosmetics Act and by the
regulations of state agencies and various foreign government agencies. The
Company's proposed diagnostic test systems for use with humans are subject to
certain clearance procedures administered by the above regulatory agencies.
There can be no assurance that the Company will receive the regulatory approvals
required to market its proposed products elsewhere or that the regulatory
authorities will review the product within the average period of time.
The Company hopes to obtain revenues from product sales, but there is no
commitment by any person for purchase of any of the Company's products. In the
absence of significant sales and profits, the Company may seek to raise
additional funds to meet its working capital needs principally through the
additional sales of its securities. However, there is no assurance that the
Company will be able to obtain sufficient additional funds when needed, or that
such funds, if available, will be obtainable on terms satisfactory to the
Company.
These circumstances raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Revenue Recognition
Revenue is recognized upon shipment of products to customers.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less when purchased to be cash equivalents.
F-13
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For the Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Investment in Sino-American Medical Inc.
The board of directors authorized the Company to make a $7,500 investment in a
newly-formed entity, Sino-American Medical, Inc. ("SAM"). This investment was
made in April 1998. Two of the Company's current employees have been authorized
by the board of directors to divide some of their employment time at AMDL for
SAM-related activities at no charge to SAM. At September 30, 1998, the Company
maintained a 17 percent ownership in SAM. Due to the Company's significant
presence at SAM, the investment has been accounted for under the equity method.
Among other provisions, the equity method requires the Company to recognize
unrealized gains/losses for their proportionate ownership share of the net
income/losses of SAM. Unrealized losses are limited to the investment made by
the Company in SAM. For the year ended December 31, 1998, the Company's
proportionate share of the loss in SAM was in excess of $7,500. Accordingly,
$7,500 has been included in operating expenses on the accompanying statement of
operations.
Equipment
Equipment is stated at cost. Depreciation is computed using the straight-line
method over the useful life of 5 years. During the years ended December 31,
1998 and 1997, the Company purchased an insignificant amount of equipment. The
Company elected to expense these purchases immediately.
Betterments, renewals, and extraordinary repairs that extend the lives of the
assets are capitalized; other repairs and maintenance charges are expensed as
incurred. The cost and related accumulated depreciation applicable to assets
retired are removed from the accounts, and the gain or loss on disposition is
recognized in current operations.
The Company has adopted Statement of Financial Accounting Standards No. 121
("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets To Be Disposed Of," which requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In accordance with the
provisions of SFAS 121, the Company regularly reviews long-lived assets and
intangible assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. Based on
its analysis, the Company believes that no impairment of the carrying value of
its long-lived assets existed at December 31, 1998.
F-14
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For the Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Patents
The Company has expended funds for patents that are in various stages of the
filing approval process. During 1998 and 1997, the Company expended
approximately $20,000 and $40,000, respectively, on patents. The Company
elected to expense these expenditures immediately due to their uncertain
realizability.
Common Stock Issued for Services Rendered
The Company periodically issues common stock for services rendered. Common
stock issued is valued at the estimated fair market value, as determined by
management and the board of directors of the Company. Management and the board
of directors consider market price quotations, recent stock offering prices and
other factors in determining fair market value for purposes of valuing the
common stock.
Common Stock - Reverse Stock Splits
In September 1998, the Company's board of directors approved a one-for-twenty
reverse stock split. Par value remained at $0.001 per share as a result.
Additionally, subsequent to the year ended December 31, 1998, the Company's
board of directors approved a one-for-ten reverse stock split. All references
throughout these financial statements to number of shares, per share amounts,
stock option data and market prices of the Company's common stock have been
restated to reflect both reverse stock splits.
Accounting for Stock-Based Compensation
The Company accounts for stock-based compensation issued to employees using the
intrinsic value based method as prescribed by APB Opinion No. 25 "Accounting for
Stock Issued to Employees" ("APB 25"). Under the intrinsic value based method,
compensation is the excess, if any, of the fair value of the stock at the grant
date or other measurement date over the amount an employee must pay to acquire
the stock. Compensation, if any, is recognized over the applicable service
period, which is usually the vesting period.
F-15
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For the Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
("SFAS 123"). This standard, if fully adopted, changes the method of accounting
for employee stock-based compensation plans to the fair value based method. For
stock options and warrants, fair value is determined using an option pricing
model that takes into account the stock price at the grant date, the exercise
price, the expected life of the option or warrant and the annual rate of
quarterly dividends. Compensation expense, if any, is recognized over the
applicable service period, which is usually the vesting period.
The adoption of the accounting methodology of SFAS 123 is optional and the
Company has elected to continue accounting for stock-based compensation issued
to employees using APB 25; however, pro forma disclosures, as if the Company
adopted the cost recognition requirements under SFAS 123, are required to be
presented (see Note 5).
Basic and Diluted Loss Per Share
The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS 128"). SFAS 128 changes the methodology of
calculating earnings per share and renamed the two calculations, basic earnings
per share (formally primary) and diluted earnings per share (formally fully
diluted). The calculations differ by eliminating any common stock equivalents
(such as stock options, warrants, etc.) from basic earnings per share and
changes certain calculations when computing diluted earnings per share. The
adoption of SFAS 128 has not materially impacted the Company's financial
position or results of operations.
Basic and diluted loss per share were computed based on the weighted average
number of shares outstanding for the period. Basic and diluted loss per share
are the same as the effect of stock options and warrants on loss per share are
antidilutive and thus not included in the diluted loss per share calculation.
F-16
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For the Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Income Taxes
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." Under SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely than not
that such assets will not be recovered.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Fair Value of Financial Instruments
The Company has adopted Statement of Financial Accounting Standards No. 107
("SFAS 107"), "Disclosures About Fair Value of Financial Instruments." SFAS 107
requires disclosure of fair value information about financial instruments when
it is practicable to estimate that value. The carrying amount of the Company's
cash, receivables, trade payables, accrued expenses and note payable
approximates their estimated fair values due to the short-term maturities of
those financial instruments.
Risks and Uncertainties
The Company is a start up company subject to the substantial business risks and
uncertainties inherent to such an entity, including the potential risk of
business failure.
F-17
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For the Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Year 2000
- ---------
The Year 2000 issue relates to limitations in computer systems and applications
that may prevent proper recognition of the Year 2000. The potential effect of
the Year 2000 issue on the Company and its business partners will not be fully
determinable until the Year 2000 and thereafter. If Year 2000 modifications are
not properly completed either by the Company or entities with which the Company
conducts business, the Company's revenues and financial condition could be
adversely impacted.
Reclassifications
Certain reclassifications have been made to the 1997 financial statements in
order to conform to classifications used in the current year.
Comprehensive Income
The Company has adopted Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income." SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set of general-
purpose financial statements. The adoption of SFAS 130 has not materially
impacted the Company's financial position or results of operations as the
Company has no items of comprehensive income.
Segments of an Enterprise and Related Information
The Company has adopted Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information." SFAS 131 changes the way public companies report information about
segments of their business in their annual financial statements and requires
them to report selected segment information in their quarterly reports issued to
shareholders. It also requires entity-wide disclosures about the products and
services an entity provides, the material countries in which it holds assets and
reports revenues and its major customers. The adoption of SFAS 131 has not
materially impacted the Company's financial position or results of operations as
the Company currently operates in one segment.
F-18
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For the Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
New Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities on the balance sheet
at their fair value. This statement is effective, as amended by SFAS 137, for
financial statements for all fiscal quarters of all fiscal years beginning after
June 15, 2000. The Company does not expect the adoption of this standard to have
a material impact on its results of operations, financial position or cash flows
as it currently does not engage in any derivative or hedging activities.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position No. 98-5 ("SOP 98-5"), "Reporting the Costs of Start-Up
Activities." SOP 98-5 requires that all non-governmental entities expense the
costs of start-up activities, including organization costs as those costs are
incurred. SOP 98-5 is effective for financial statements for fiscal years
beginning after December 15, 1998. The Company does not expect the adoption of
this standard to have a material effect on its results of operations, financial
position or cash flows.
NOTE 2 - INCOME TAXES
The tax effects of temporary differences that give rise to deferred taxes at
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax asset:
Net operating loss carryforward $ 4,720,000
Expenses recognized for granting of options and warrants 10,000
-----------
Total gross deferred tax asset 4,730,000
Less valuation allowance (4,730,000)
-----------
Net deferred tax asset $ -
===========
</TABLE>
F-19
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 2 - INCOME TAXES, continued
The valuation allowance increased by approximately $632,000 during the year
ended December 31, 1998. No current provision for income taxes for the years
ended December 31, 1998 and 1997 is required, except for minimum state taxes,
since the Company incurred taxable losses during such years.
The provision for income taxes for fiscal 1998 was $800 and differs from the
amount computed by applying the U.S. Federal income tax rate of 34% to loss
before income taxes as a result of the following:
1998 1997
---------- ----------
Computed tax benefit at federal statutory rate $(529,000) $(595,000)
State income tax benefit, net of federal effect (104,000) (115,000)
Increase in valuation allowance 632,000 709,000
Other 1,800 1,800
--------- ----------
$ 800 $ 800
========= ==========
As of December 31, 1998, the Company had net operating loss carryforwards of
approximately $12,648,000 and $4,745,000 for federal and state income tax
reporting purposes, which expire at various dates through 2013 and 2003,
respectively.
NOTE 3 - LICENSING AGREEMENTS
During 1998, the Company entered into an agreement with AMDL Canada to dissolve
the ICD joint venture and assign their respective world-wide marketing rights,
excluding those to the United States and Canada, to JGT. Pursuant to the
agreement, the Company agreed to make eighteen monthly payments of $750 to JGT
commencing October 1998, in addition to a royalty fee equal to 2.5% of gross
sales on a quarterly basis. The agreement expires in August 2008; however, the
Company may elect to pay a $25,000 buy-out fee after October 1, 2003. As of
December 31, 1998, the Company incurred $2,250 in connection with this
agreement.
F-20
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 4 - COMMITMENTS
Operating Lease
The Company leases its laboratory and manufacturing space under a non-cancelable
operating lease agreement that expires on November 30, 1999. Future minimum
commitments under this lease agreement are as follows:
<TABLE>
<CAPTION>
Years Ending December 31,
-------------------------
<S> <C>
1999 $ 77,000
2000 69,000
2001 69,000
2002 69,000
2003 35,000
-------
$319,000
=======
</TABLE>
Rent expense was approximately $90,000 and $113,000 for the years ended December
31, 1998 and 1997, respectively.
Employment Agreements
The Company had a two-year employment agreement with Dr. Ngo. The agreement
provided for an annual base salary of $222,000, of which one-half shall be paid
in accordance with the Company's practice and the remaining one-half shall be
deferred and accrue interest at 8.5% until paid, as defined. Among other
provisions, Dr. Ngo received options to purchase up to 7,500 shares of the
Company's common stock at the exercise price of $131.40 per share exercisable
until September 2001. The options were fully vested at December 31, 1998.
Effective February 1999, Dr. Ngo resigned from the Company. As of December 31,
1998, total accrued salary due to Dr. Ngo was approximately $121,000.
The Company had a two-year employment agreement with Gary L. Dreher, president
and chief executive officer. The agreement, which was to expire May 21, 2000,
provided for automatic one-year renewals and specified an annual base salary of
$100,000. Among other provisions, Mr. Dreher received options to purchase up to
1,250 shares of the Company's stock at the exercise price of $28.00 per share,
exercisable until December 2002. The options vest over a two-year period.
Subsequent to year end and pursuant to the promotion of Mr. Dreher, the Company
is in the process of renegotiating the employment agreement.
F-21
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 4 - COMMITMENTS, continued
The Company had an employment agreement with Harry Berk, chief financial
officer. The agreement provided for an annual base salary of $80,000, of which
one-half was to be paid in accordance with the Company's practice and the
remaining one-half shall be deferred and accrue interest at 8.5%, until paid, as
defined. Effective September 30, 1998, Mr. Berk resigned from the Company. As of
December 31, 1998, total accrued salary due to Mr. Berk was approximately
$90,000.
The stock options granted in the above employment agreements did not result in
compensation expense as the exercise price of the stock options was equal to the
quoted market price of the Company's stock on the date of grant. All accrued
salaries under employment agreements were settled after year end. See Note 9.
Accrued Payroll and Related Expenses
Accrued payroll and related expenses consists primarily of amounts incurred
during the current year and prior years by officers and other employees and
former employees (collectively referred to as "employees"). The Company has
made payment arrangements with most of these employees by agreeing to pay each
employee their proportionate share of five percent of sales revenues, if any, of
the Company, but not less than $500 per month per employee. In addition, if an
employee currently employed by the Company is terminated under certain
circumstances, the minimum monthly payment would be increased. All amounts must
be paid no later than February 28, 2001.
Commencing on July 16, 1998, certain deferred amounts accrued interest at the
rate of 8.50% per annum until the payment of such deferred salaries were paid in
full.
Accrued payroll and related accrued interest as of December 31, 1998 were
approximately $726,150 and $1,250, respectively, which were settled after year
end. See Note 9.
F-22
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 4 - COMMITMENTS, continued
Consulting Agreements
During 1998, the Company entered into various agreements with consultants
whereby the consultants will perform corporate development services of
attracting investors. Pursuant to the agreements, the Company will pay the
consultants varying amounts of cash, options and/or stock for services rendered
when capital amounts are raised. As of December 31, 1998, no capital has been
raised pursuant to these agreements and therefore no amounts are owing to any of
these consultants.
NOTE 5 - STOCK-BASED COMPENSATION PLANS
The Company has previously adopted the 1992 Stock Option Plan (the "Plan").
Under the Plan, incentive stock options and nonqualified options may be granted
to officers and key employees of the Company for the purchase of up to 13,113
(adjusted for reverse stock splits in 1998 and 1997) shares of the Company's
common stock. Additionally, specific option grants may also be made.
Expiration dates for the grants may not exceed 10 years from the date of grant.
In October 1994, the Company terminated the Plan. However, 1,900 options
(adjusted for reverse stock splits in 1998 and 1999) to purchase common stock
were outstanding under the Plan and the Company elected not to cancel these
options prior to their expiration dates through April 2002.
From time to time, the Company issues stock options pursuant to various
agreements and other compensatory arrangements. Under the terms of a consulting
agreement with an outside consultant, the Company issued options to purchase 250
shares of the Company's common stock at an exercise price equal to the fair
market value at the date the option was granted (estimated by the Company to be
$26 at January 1, 1998). The option vested on the date of grant is exercisable
through December 31, 2001. Total consulting expense of $5,294 was recognized
through December 31, 1998.
F-23
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 5 - STOCK-BASED COMPENSATION PLANS, continued
The following is a status of the stock options outstanding at December 31, 1998
and 1997 and the changes during the years then ended:
<TABLE>
<CAPTION>
1998 1997
------------------------- -----------------------
Wtd Avg Wtd Avg
Shares Ex Price Shares Ex Price
------ -------- ------ --------
<S> <C> <C> <C> <C>
Outstanding,
beginning of year 23,250 $ 164.8 28,050 $ 183.0
Granted 1,500 28.0 750 82.0
Exercised - - - -
Expired/forfeited (285) (160.4) (5,550) (246.0)
------ ------- ------ -------
Outstanding,
end of year 24,465 $ 156.4 23,250 $ 164.8
====== ======= ====== =======
Exercisable at end
of year 23,805 $ 159.9 21,315 $ 168.6
====== ======= ====== =======
Wtd avg fair value
of options granted $ 26.0 $ 62.4
======= =======
</TABLE>
20,465 of the options outstanding at December 31, 1998 have exercise prices
between $50 and $200, with a weighted average exercise price of $134 and a
weighted average remaining contractual life of 1.8 years. The remaining 4,000
options have exercise prices between $202 and $300, with a weighted average
exercise price of $135 and a weighted average remaining contractual life of 5
years. All of these options are exercisable.
The fair value of each option granted during 1998 and 1997 to employees and
directors is estimated using the Black-Scholes option-pricing model on the date
of grant using the following assumptions: (i) no dividend yield, (ii) average
volatility of 110 percent and 105.2 percent, respectively, (iii) weighted-
average risk-free interest rate of approximately 6.5 percent, and (iv) expected
life of 5 years.
F-24
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS-CONTINUED
For The Years Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 5 - STOCK-BASED COMPENSATION PLANS, continued
Had compensation cost for the Company's 1998 and 1997 options been determined
consistent with SFAS No. 123, the Company's net loss and net loss per share for
the year ended December 31, 1998 and 1997 would approximate the pro forma
amounts below:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------- -----------------------------------
As Reported Pro Forma As Reported Pro Forma
------------------- ---------------- ----------------- --------------
<S> <C> <C> <C> <C>
Net loss $(1,554,405) $(1,741,849) $(1,747,414) $(1,996,838)
=========== =========== =========== ===========
Basic and diluted loss
per share $ (9.21) $ (10.32) $ (10.38) $ (13.71)
=========== =========== =========== ===========
</TABLE>
NOTE 6 - WARRANTS
- -----------------
From time to time, the Company issues warrants pursuant to various consulting
agreements. Under the terms of finder agreements with outside consultants, the
Company issued warrants to purchase 750 shares of the Company's stock at an
exercise price equal to the fair market value at the date the warrant was
granted (estimated by the Company to be $32 at May 21, 1998). The warrants
vested on the date of grant and are exercisable through May 21, 2001. Total
consulting expense of $19,548 was recognized at December 31, 1998.
The fair value of each warrant granted during 1998 and 1997 to consultants and
other service providers is estimated using the Black-Scholes option-pricing
model on the date of grant using the following assumptions: (i) no dividend
yield, (ii) average volatility of 110 percent and 105.2 percent, respectively,
(iii) weighted-average risk-free interest rate of approximately 6.5 percent, and
(iv) expected life of 5 years.
The following represents a summary of the warrants outstanding for the years
ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------- -----------------------------------
Wtd Avg Wtd Avg
Shares Ex Price Shares Ex Price
------------------- ---------------- ----------------- --------------
<S> <C> <C> <C> <C>
Outstanding,
beginning of year 9,445 $ 167.2 12,130 $ 148.2
Granted 750 32.0 - -
Exercised - - (500) (50.0)
Expired/forfeited (8,445) (158.6) (2,185) (88.4)
----- -------- ------ --------
Outstanding,
end of year 1,750 $ 92.6 9,445 $ 167.2
===== ======== ====== ========
</TABLE>
NOTE 6 - WARRANTS, continued
- ----------------------------
The warrants outstanding at December 31, 1998 have exercise prices between $32
and $150. All of the warrants are exercisable and have a weighted average
remaining contractual life of 1.4 years.
The outstanding warrants at December 31, 1998 are held by consultants and other
service providers, shareholders, and current and former note holders.
NOTE 7 - COMMON STOCK ISSUED
F-25
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Year Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
During the year ended December 31, 1997, the Company received $25,000 for the
exercise of 500 warrants. Additionally, the Company issued 625 shares of common
stock for services totaling $19,125.
NOTE 8 - EARNINGS PER SHARE
- ---------------------------
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Numerator for basic and diluted earnings per share:
Net loss charged to common stockholders $1,554,405 $1,747,414
Denominator for basic and diluted earnings per share:
Weighted average shares 168,775 168,303
---------- ----------
Basic and diluted earnings per share $ (9.21) $ (10.38)
========== ==========
</TABLE>
NOTE 9 - SUBSEQUENT EVENTS
- --------------------------
Subsequent to year end, the Company raised $887,250 (net of issuance costs of
$112,750) from outside investors for 1,482,655 shares of common stock (including
132,653 shares issued to consultants for finders fees).
Effective June 30, 1999, the Company adopted the 1999 Stock Option Plan (the
"Plan"). Under the Plan, incentive stock options and nonqualified options may
be granted to officers and employees of the Company for the purchase of up to
750,000 shares of the Company's common stock. The exercise price per share
under the incentive stock option plan shall not be less than 110% of the fair
market value per share on the date of grant. The exercise price per share under
F-26
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Year Ended December 31, 1998 and 1997 and
For The Period From July 10, 1987 (Date of Inception)
Through December 31, 1998
NOTE 9 - SUBSEQUENT EVENTS, continued
- -------------------------------------------------
the non-qualified stock option plan shall not be less than 85% of the fair
market value per share on the date of grant. Expiration dates for the grants may
not exceed 10 years from the date of grant. The Plan terminates on June 30,
2009. Under terms of the Plan, the Company subsequently granted options to
employees to purchase 385,000 shares of the Company's common stock and to
directors and consultants to purchase 104,999 shares of the Company's common
stock. All options granted have an exercise price equal to the fair market value
at the date of grant (estimated by the Company to be $.68 at June 30, 1999),
vest on various dates through June 30, 2002 and expire five years from the date
of grant. Pursuant to FSAS No. 123 total compensation expense to be recognized
over the vesting period for options granted to directors and consultants will be
approximately $113,000.
Effective July 1, 1999, the Company entered into various mutual release
agreements with eight individuals (which consisted of officers, employees and
former employees) whereby deferred salaries and other related liabilities in the
amount of $850,060 were exchanged for $84,412 in cash and warrants to purchase
510,937 shares of the Company's common stock at the fair market value on the
date of grant (estimated by the Company to be $.68 per share). The Company
recognized extra ordinary gains of approximately $485,000 as a result of these
transactions.
F-27
<PAGE>
AMDL, INC.
(A Development Stage Company)
Balance Sheet
(Unaudited)
June 30, 1999
ASSETS
Current assets:
Cash $18,162
Other current assets 16,333
-------
$34,495
=======
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 390,810
Note payable 25,000
Accrued payroll and related expenses 877,950
----------
Total current liabilities 1,293,760
----------
Commitments and contingencies
Stockholders' deficit:
Common stock, $0.001 par value; 50,000,000
shares authorized;556,991 shares issued
and outstanding 557
Additional paid-in capital 12,349,488
Deficit accumulated during development stage (13,609,310)
-----------
Total stockholders' deficit (1,259,265)
-----------
$ 34,495
===========
F-28
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
July 10, 1987
Six Months Ended (Date of Inception)
------------------------------ Through
June 30, 1999 June 30, 1998 June 30, 1999
------------- ------------- -------------------
<S> <C> <C> <C>
Revenues $ 21,765 $ 97,531 $ 219,358
Cost of sales 21,742 79,832 169,638
------------- ------------- -------------------
Gross profit (loss) 23 17,699 49,720
------------- ------------- -------------------
Operating expenses:
Research and development 173,599 381,565 6,754,082
General & administrative 596,941 549,559 8,277,646
------------- ------------- -------------------
770,540 931,124 15,031,728
------------- ------------- -------------------
Loss from operations (770,517) (913,425) (14,982,008)
------------- ------------- -------------------
Other income (expense):
Interest expense - - (588,347)
Interest income 10,315 18,238 252,109
Other - - 1,708,936
------------- ------------- -------------------
10,315 18,238 1,372,698
------------- ------------- -------------------
Net loss $ (760,202) $(895,187) $(13,609,310)
============= ============= ===================
Basic and diluted loss per
Share $(2.89) $(5.30)
============= =============
Weighted average shares
outstanding 262,983 168,775
============= =============
</TABLE>
F-29
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
July 10, 1987
Six Months Ended (Date of Inception)
---------------------------------- Through
June 30, 1999 June 30, 1998 June 30, 1999
----------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $(760,202) $ (895,187) $(13,609,310)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization - - 497,743
Amortization of deferred interest - - 312,000
Common stock subscribed - - 300,000
Common stock issued for services - - 312,541
Warrants and options issued for
services 71,499 24,842 757,870
Equity loss in investment in SAM - 7,500 7,500
Changes in operating assets and
liabilities:
Other assets 2,129 - (16,333)
Accounts payable and accrued
expenses 172,789 (1,104) 415,810
Accrued payroll and related expenses 150,596 (29,737) 877,950
Customer deposit (3,465) (28,500) -
--------- ---------- ------------
Net cash used in operating activities (366,654) (922,186) (10,144,229)
--------- ---------- ------------
Cash flows from investing activities:
Purchase of equipment - - (225,930)
Expenditures for patents - - (154,682)
Investment in SAM - (7,500) (7,500)
--------- ---------- ------------
Net cash used in investing activities - (7,500) (388,112)
--------- ---------- ------------
</TABLE>
F-30
<PAGE>
AMDL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
July 10, 1987
Six Months Ended (Date of Inception)
------------------------------ Through
June 30, 1999 June 30, 1998 June 30, 1999
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of common stock $ 310,250 - $ 10,550,997
Borrowings (repayments) under notes
payable, net - - 59,115
Repayments under capital lease
obligation - - (116,676)
Net effect of merger with CVI - - 57,067
--------- ---------- ------------
Net cash provided by financing activities 310,250 - 10,550,503
--------- ---------- ------------
Net change in cash (56,404) (929,686) 18,162
Cash at beginning of period 74,566 1,498,540 -
--------- ---------- ------------
Cash at end of period $ 18,162 $ 568,854 $ 18,162
========= ========== ============
</TABLE>
F-31
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
For The Period July 10, 1987 (Date of Inception)
Through June 30, 1999
NOTE 1 - MANAGEMENT'S REPRESENTATION
- ------------------------------------
The financial statements included herein have been prepared by AMDL, Inc. (the
"Company"), without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information normally included in
the financial statements prepared in accordance with generally accepted
accounting principles has been omitted pursuant to such rules and regulations.
However, the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that the financial
statements be read in conjunction with the financial statements and notes
thereto included elsewhere in this Form 10-SB for the fiscal year ended December
31, 1998.
NOTE 2 - DEVELOPMENT STAGE
- --------------------------
The Company is in the development stage and has not generated significant
revenues from operations and has no assurance of any future revenues. The
Company will require substantial additional funding for continuing research and
development, obtaining regulatory approval, and for the commercialization of its
products. There is no assurance that the Company will be able to obtain
sufficient additional funds when needed, or that such funds, if available, will
be obtainable on terms satisfactory to the Company.
Management has taken action to address these matters. They include:
- - Retention of experienced management personnel with particular skills in the
commercialization of similar products;
- - Attainment of technology to develop additional diagnostic products for
detecting cancer and other diseases; and
- - Raising additional funds through the sale of equity securities at terms below
market price quotations.
The Company's products, to the extent they may be deemed medical devices or
biologics, are governed by the Federal Food, Drug and Cosmetics Act and by the
regulations of state agencies and various foreign government agencies. The
Company's proposed diagnostic test systems for use with humans are subject to
certain clearance procedures administered by the above regulatory agencies.
There can be no assurance that the Company will receive the regulatory approvals
required to market its proposed products elsewhere or that the regulatory
authorities will review the product within the average period of time.
F-32
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
For The Period July 10, 1987 (Date of Inception)
Through June 30, 1999
NOTE 2 - DEVELOPMENT STAGE, continued
- -------------------------------------
The Company hopes to obtain revenues from product sales, but there is no
commitment by any person for purchase of any of the Company's products. In the
absence of significant sales and profits, the Company may seek to raise
additional funds to meet its working capital needs principally through the
additional sales of its securities. However, there is no assurance that the
Company will be able to obtain sufficient additional funds when needed, or that
such funds, if available, will be obtainable on terms satisfactory to the
Company.
There circumstances raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
NOTE 3 - STOCK ISSUANCE
- -----------------------
During the period ended June 30, 1999, the Company raised $310,250 (net of
issuance cost of $15,250) from outside investors for 388,216 shares of common
stock (including 30,494 shares issued to consultants for finders fees).
NOTE 4 - STOCK OPTIONS
- ----------------------
Effective June 30, 1999, the Company adopted the 1999 Stock Option Plan (the
"Plan"). Under the Plan, incentive stock options and nonqualified options may be
granted to officers and employees of the Company for the purchase of up to
750,000 shares of the Company's common stock. The exercise price per share under
the incentive stock option plan shall not be less than 110% of the fair market
value per share on the date of grant. The exercise price per share under the
non-qualified stock option plan shall not be less than 85% of the fair market
value per share on the date of grant. Expiration dates for the grants may not
exceed 10 years from the date of grant. The Plan terminates on June 30, 2009.
Under terms of the Plan, the Company granted options to employees to purchase
385,000 shares of the Company's common stock and to directors and consultants to
purchase 204,999 shares of the Company's common stock. All options granted have
an exercise price equal to the fair market value at the date of grant (estimated
by the Company to be $.68 at June 30, 1999), vest on various dates through June
30, 2002 and expire five years from the date of grant. Pursuant to SFAS No. 123,
total compensation expense to be recognized over the vesting period for options
issued to directors and consultants will be approximately $113,000, of which
$71,499 was recognized as of June 30, 1999.
F-33
<PAGE>
AMDL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
For The Period July 10, 1987 (Date of Inception)
Through June 30, 1999
NOTE 5 - STOCK SPLIT
- --------------------
Effective March 29, 1999, the Company's board of directors approved a one-for-
ten reverse stock split. All references throughout this report to number of
shares, per share amounts, stock option data and market prices of the Company's
common stock have been restated to reflect the reverse stock split.
NOTE 6 - SUBSEQUENT EVENTS
- --------------------------
Subsequent to the period ended June 30, 1999, the Company raised $577,000 (net
of issuance costs of $97,500) from outside investors for 1,094,439 shares of
common stock (including 102,159 shares issued to consultants for finders fees).
Effective July 1, 1999, the Company entered into various mutual release
agreements with eight individuals (which consisted of officers, employees and
former employees) whereby deferred salaries and other related liabilities in the
amount of $850,060 were exchanged for $84,412 in cash and warrants to purchase
510,937 shares of the Company's common stock at the fair market value on the
date of grant (estimated by the Company to be $.68 per share). The Company
recognized an extraordinary gain of approximately $485,000 as a result of this
transaction.
F-34
<PAGE>
PART III
Item 1. Index To Exhibits
Exhibit No.
-----------
3.1 Certificate of Incorporation of the Company(1)
3.2 Bylaws of the Company(2)
3.3 Certificate of Amendment(3)
4.1 Specimen of Common Stock Certificate(2)
10.1 Amendments to License Agreement between the Company and AMDL Canada,
Inc., dated September 20, 1989, June 16, 1990 and July 5, 1990(4)
10.2 Option for Marketing Rights between the Company and Biotech Marketing
Group, Inc., dated June 29, 1990, as amended November 20, 1990(4)
10.2(a) Second Amendment between the Company and Biotech Marketing Group,
Inc., dated February 4, 1991(2)
10.3 Agreement between the Company and AMDL Canada, Inc., dated January 21,
1992(2)
10.4 The Company's 1988 Incentive Stock Option Plan(4)
10.5 The Company's 1992 Stock Option Plan(2)
10.6 Research Agreement between the Company, The Alberta Cancer Board and
AMDL Canada, Inc., dated September 10, 1991(2)
10.7 Employment Agreement between the Company and Dr. Robert R. Guerrero,
dated September 1, 1991(2)
10.8 Employment Agreement between the Company and Dr. Donald E. Rounds,
dated September 1, 1991(2)
10.9 Restated Employment Agreement between the Company and Louis R. Dilts,
dated August 22, 1991(2)
10.10 Agreement for the Termination of Employment between the Company and
Dr. Richard Anderson, dated September 1, 1991(2)
10.11 Agreement for the Termination of Employment between the Company and
Thomas V. Tilton, dated September 1, 1991(2)
10.12 Contract for Performance of Services between the Company and Glen R.
Justice, M.D., dated May 15, 1991, as amended by letter dated May 26,
1992(2)
10.13 Contract for Performance of Services between the Company and Sally Ann
Kraensel, dated May 15, 1991, as amended by letter dated June 30,
1992(5)
10.14 Employment Agreement between the Company and Edward L. Stephen, D.V.M.
dated January 15, 1993(5)
10.15 Employment Agreement between the Company and William M. Thompson III,
M.D., dated February 22, 1993(5)
10.16 Employment Agreement between the Company and Harry Berk, dated March
10, 1993(5)
10.17 The Company's 1994 Stock Option Plan(6)
10.18 Independent Contract Agreement between the Company and Roger Lallone
doing business as Brookwood Biomed(6)
10.19 Assignment Agreement between Roger Lallone, doing business as
Brookwood Biomedical, and the Company dated December 22, 1993(6)
10.20 Employment Agreement between the Company and That T. Ngo, dated June
1, 1994(7)
10.21 Employment Agreement between the Company and Robert R. Guerrero, dated
September 1, 1994(7)
III-1
<PAGE>
10.22 Employment Agreement between the Company and Harry R. Berk, dated
January 3, 1995(7)
10.23 Operating Agreement of ICD, L.L.C.(7)
10.24 Letter Agreement between the Company and Briana Bio-Tech, Inc. and
Canada, Inc., dated February 7, 1995(7)
10.25 Sub-Lease Agreement between UniSyn Technologies, Inc., and the
Company, dated February 1995, regarding the premises located at 14272
Franklin Avenue, Tustin, California(7)
10.26 Nonstatutory Stock Option Agreement between the Company and Donald E.
Rounds, dated March 16, 1994(7)
10.27 The Company's Stock Bonus Plan(8)
10.28 Form of International Distribution Agreement of ICD, L.L.C.(8)
10.29 Employment Agreement between the Company and Harry Berk, dated January
1, 1996(8)
10.30 Form of Accrued Salary Payment Agreement between the Company and
Various Employees and Former Employees dated September 20, 1996(9)
10.31 Employment Agreement between the Company and That T. Ngo, dated
October 1, 1996(7)
10.32 Employment Agreement between the Company and Ronald J. Moore, dated
October 23, 1996(9)
10.33 Employment Agreement between the Company and Harry Berk, dated January
1, 1997(9)
10.34 Employment Agreement between the Company and Donald C. Swanson, dated
May 5, 1997(10)
10.35 Employment Agreement between the Company and Gary L. Dreher, dated
January 15, 1998(10)
10.36 Salary Continuation Agreement between the Company and That T. Ngo,
Ph.D., dated May 21, 1998(11)
10.37 Salary Continuation Agreement between the Company and Thomas V.
Tilton, dated May 21, 1998(11)
10.38 Salary Continuation Agreement between the Company and Harry Berk,
dated May 21, 1998(11)
10.39 Salary Continuation Agreement between the Company and Gary L. Dreher,
dated May 21, 1998(11)
10.40 Agreement between the Company and William M. Thompson, M.D., dated May
21, 1998(11)
10.41 Amendment No. 1 to Employment Agreement with That T. Ngo, Ph.D., dated
July 1, 1998(11)
10.42 Agreement Relating to Salary deferral between the Company and Thomas
V. Tilton, dated July 1, 1998(11)
10.43 Agreement Relating to Salary deferral between the Company and Harry
Berk, dated July 1, 1998(11)
10.44 Securities Purchase Agreement between the Company and the Purchasers
listed on the Purchaser Signature Pages attached thereto, dated
May 5, 1999.
10.45 The Company's 1999 Stock Option Plan.
10.46 Agreement Regarding Cancellation of Indebtedness between the Company
and William M. Thompson, III, M.D., dated July 1, 1999.
10.47 Agreement Regarding Cancellation of Indebtedness between the Company
and Harry Berk, dated July 1, 1999.
10.48 Agreement Regarding Cancellation of Indebtedness between the Company
and Edward Arquilla, M.D., dated July 1, 1999.
10.49 Agreement Regarding Cancellation of Indebtedness between the Company
and Thomas V. Tilton, dated July 1, 1999.
III-2
<PAGE>
10.50 Agreement Regarding Cancellation of Indebtedness between the Company
and Donald Rounds, dated July 1, 1999.
10.51 Agreement Regarding Cancellation of Indebtedness between the Company
and That T. Ngo, Ph.D, dated July 1, 1999.
10.52 Agreement Regarding Cancellation of Indebtedness between the Company
and Gary L. Dreher, dated July 1, 1999.
10.53 Agreement Regarding Cancellation of Indebtedness between the Company
and Douglas C. MacLellan, dated July 1, 1999.
21.1 Subsidiaries(9)
27.1 Financial Data Schedule
_____________________________
(1) Incorporated by reference to the Company's Report on Form 10-K for the
year ended December 31, 1989.
(2) Incorporated by reference to the Company's Report on Form 10-K for the
year ended December 31, 1991.
(3) Incorporated by reference to the Company's Report on Form 10-QSB for
the period ended September 30, 1998.
(4) Incorporated by reference to the Company's Report on Form 10-K for the
year ended December 31, 1990.
(5) Incorporated by reference to the Company's Report on Form 10-K for the
year ended December 31, 1992.
(6) Incorporated by reference to the Company's Report on Form 10-KSB for
the year ended December 31, 1993.
(7) Incorporated by reference to the Company's Report on Form 10-KSB for
the year ended December 31, 1994.
(8) Incorporated by reference to the Company's Report on Form 10-KSB for
the year ended December 31, 1995.
(9) Incorporated by reference to the Company's Report on Form 10-KSB for
the year ended December 31, 1996.
(10) Incorporated by reference to the Company's Report on Form 10-KSB for
the year ended December 31, 1997.
(11) Incorporated by reference to the Company's Report on Form 10-QSB for
the period ended June 30, 1998.
III-3
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMDL, INC.,
a Delaware corporation
Date: October 12, 1999 By: /s/ Gary L. Dreher
---------------------------------------------
Gary L. Dreher, President and Chief Executive
Officer
III-4
<PAGE>
EXHIBIT 10.44
AMDL, INC.
SECURITIES PURCHASE AGREEMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
1. PURCHASE AND SALE OF SHARES...........................................1
1.1 Sale of Shares..................................................1
1.2 Purchase of Shares..............................................1
1.3 Separate Agreements.............................................1
1.4 Deliveries by Purchasers........................................2
2. CLOSING(S)............................................................2
2.1 Date and Time...................................................2
2.2 Deliveries......................................................2
2.3 Each Closing Identical..........................................2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................2
3.1 Organization and Good Standing..................................2
3.2 Capitalization..................................................2
3.3 Validity of Transactions........................................3
3.4 No Violation....................................................3
3.5 SEC Reports and Financial Statements............................3
3.6 Subsidiaries....................................................3
3.7 Litigation......................................................3
3.8 Taxes...........................................................4
3.9 Securities Law Compliance.......................................4
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS......................4
4.1 Legal Power.....................................................4
4.2 Due Execution...................................................4
4.3 Investment Representations......................................4
4.4 Receipt and Review of SEC Reports...............................5
4.5 Residence of Purchaser..........................................5
4.6 Accredited Investor.............................................5
4.7 Non-Affiliate; Resales by Affiliates............................5
5. CONDITIONS TO CLOSING.................................................6
5.1 Conditions to Obligations of the Purchaser......................6
5.2 Conditions to Obligations of the Company........................6
6. MISCELLANEOUS.........................................................7
6.1 Governing Law...................................................7
6.2 Successors and Assigns..........................................7
6.3 Entire Agreement................................................7
6.4 Separability....................................................7
6.5 Amendment and Waiver............................................7
6.6 Notices.........................................................7
6.7 Titles and Subtitles............................................8
</TABLE>
-i-
<PAGE>
Exhibits:
A. [Form of] Escrow Agreement
B. AMDL SEC Reports: Form 10-KSB for the Year Ended December 31, 1997 and
Form 10-QSB for the Quarter Ended September 30, 1998
-ii-
<PAGE>
AMDL, INC.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement ("Agreement") is made as of May 5, 1999,
but is only effective as of the date of acceptance of each "Purchaser Signature
Page" by and between AMDL, Inc., a Delaware corporation (the "Company"), with
its principal office at 14272 Franklin Avenue, Suite 106, Tustin, California
92680 and the Purchasers (described herein). When each of the purchasers who
become signatories hereto (individually, a "Purchaser" and collectively, the
"Purchasers") execute a Purchaser Signature Page hereto, it shall form a
separate agreement between such Purchaser.
R E C I T A L S
- - - - - - - -
A. The Company desires to obtain funds from the Purchasers in order to
further the operations of the Company.
B. In order to obtain such funds, the Company is offering (the
"Offering") up to 1,250,000 shares of $.001 par value common stock ("Common
Stock") on the terms and subject to the conditions set forth herein.
A G R E E M E N T
- - - - - - - - -
It is agreed as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 Sale of Shares. The Company has authorized the sale and issuance of up
to 1,250,000 shares of Common Stock at a purchase price of $.68 per share (the
"Purchase Price").
1.2 Purchase of Shares. In reliance upon the representations and
warranties of the Company and each Purchaser contained herein and subject to the
terms and conditions set forth herein, each Purchaser hereby agrees to purchase
shares of Common Stock in the tranches ("Tranches") set forth on the Purchaser
Signature Page bearing such Purchaser's name at the Purchase Price. Each
Purchaser shall severally, and not jointly, be liable only for the purchase of
the number of shares of Common Stock that relates to the subscription of such
Purchaser as set forth on the Purchaser Signature Page.
1.3 Separate Agreements. The Company's agreement with each of the
Purchasers is a separate agreement, and the sale of the shares of Common Stock
to each of the Purchasers is a separate sale.
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1.4 Deliveries by Purchasers.
1.4.1 Each Purchaser shall deliver an executed completed
Purchaser Signature Page;
1.4.2 Each Purchaser shall deliver an executed signature page to
the Escrow Agreement in the form attached hereto as Exhibit "A."
2. CLOSING(S).
2.1 Date and Time. The purchase and sale of each Tranche shall take
place at the office of the Escrow Agent, on the date set forth on the Purchase
Signature Page for each Tranche (each a "Closing Date"); provided that no
Tranche shall be sold after May 31, 1999 (the "Final Closing Date"), unless
otherwise extended by the Company.
2.2 Deliveries. On each Closing Date, the Escrow Agent (as defined in
the Escrow Agreement) shall deliver notice ("Notice") to the Company that it has
received good funds in the amount of the Purchase Price for each Tranche set
forth on the Purchaser Signature Page. Upon receipt of the Notice, the Company
shall cause to be issued and shall deliver to the Escrow Agent the certificates
representing the shares of Common Stock purchased by the Purchaser. Each such
share shall be in definitive form and registered in the name of each Purchaser,
as set forth on the Purchaser Signature Page. The delivery of the shares of
Common Stock to the Purchasers and the delivery of the Purchase Price to the
Company shall be completed in accordance with the terms of the Escrow Agreement.
2.3 Each Closing Identical. Each Closing shall be upon substantially
identical terms and conditions to those contained herein. Each Closing may be
effected at the Company's sole election until 1,250,000 shares of Common Stock
have been sold, provided that all of such Closings are held on or prior to the
Final Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As a material inducement to the Purchasers to enter into this Agreement and
to purchase the shares of Common Stock, the Company represents and warrants that
the following statements are true and correct in all material respects as of the
date hereof and will be true and correct in all material respects at Closing,
except as expressly qualified or modified herein.
3.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has full corporate power and authority to enter into and perform
its obligations under this Agreement, and to own its properties and to carry on
its business as presently conducted and as proposed to be conducted. The Company
is duly qualified to do business as a foreign corporation in every jurisdiction
in which the failure to so qualify would have a material adverse effect upon the
Company.
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3.2 Capitalization. The authorized capital stock of the Company as of
May 4, 1999 consists of 50,000,000 shares of Common Stock and 10,000,000 shares
of preferred stock, $.001 par value, of which approximately 270,000 shares of
Common Stock are issued and outstanding and no shares of preferred stock are
issued or outstanding. All share amounts contained herein have been adjusted to
reflect the one for 10 reverse split of the Company's Common Stock effected in
March 1999. All outstanding shares of Common Stock have been duly authorized and
validly issued, and are fully paid, nonassessable, and free of any preemptive
rights. Except as is set forth in the SEC Reports (as hereinafter defined) at
Closing, there will not be outstanding, nor will the Company be subject to any
agreement under which there may become outstanding, any right to purchase, or
security convertible into or exchangeable for, any capital stock of the Company,
including, but not limited to, options, warrants, or rights. Except as set forth
herein, the Company is under no obligation (contingent or otherwise) to purchase
or otherwise acquire or retire any of its securities. There are no agreements in
existence which require the Company to elect any person to its Board of
Directors or otherwise pertain to the voting of any capital stock of the
Company.
3.3 Validity of Transactions. This Agreement, and each document
executed and delivered by the Company in connection with the transactions
contemplated by this Agreement, have been duly authorized, executed and
delivered by the Company and is each the valid and legally binding obligation of
the Company, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency reorganization and moratorium laws and other
laws affecting enforcement of creditor's rights generally and by general
principles of equity.
3.4 No Violation. The execution, delivery and performance of this
Agreement has been duly authorized by the Company's Board of Directors and, to
the extent necessary, the shareholders of the Company, will not violate any law
or any order of any court or government agency applicable to the Company, as the
case may be, or the Certificate of Incorporation or Bylaws of the Company, and
will not result in any breach of or default under, or, except as expressly
provided herein, result in the creation of any encumbrance upon any of the
assets of the Company pursuant to the terms of any agreement or instrument by
which the Company or any of its assets may be bound. No approval of or filing
with any governmental authority is required for the Company to enter into,
execute or perform this Agreement.
3.5 SEC Reports and Financial Statements. The Company has delivered
to the Purchaser its annual report on Form 10-KSB for the fiscal year ended
December 31, 1997 and its report on Form 10-QSB for the quarter ended September
30, 1998 filed with the U.S. Securities and Exchange Commission (collectively,
the "SEC Reports") attached hereto as Exhibit "B." As of May 5, 1999, the
Company has no cash or other liquid assets and total liabilities in excess of
$1,000,000. No financial statements of the Company have been prepared since
September 30, 1998. The information in the SEC Reports, taken as a whole, is
true and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except for the following: (i) That T. Ngo has
resigned as President and as a director of the Company; (ii) Gary L. Dreher has
been elected as President of the Company; and (iii) Mr. Dreher and Ira Leemon
have been elected as directors of the Company.
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3.6 Subsidiaries. The Company does not own, directly or indirectly,
any equity or debt securities of any corporation, partnership, or other entity,
other than its equity interests in Advanced Medical Diagnostics, Ltd. and ICD,
L.L.C. (the "Subsidiaries") and an approximate ten percent (10%) equity interest
in the common stock of Sino-American Medical, Inc.
3.7 Litigation. Except as set forth in the SEC Reports, there are no
suits or proceedings (including without limitation, proceedings by or before any
arbitrator, government commission, board, bureau or other administrative agency)
pending or, to the knowledge of the Company, threatened against or affecting the
Company or its Subsidiaries which, if adversely determined, would have a
material adverse effect on the consolidated financial condition, results of
operations, prospects or business of the Company, and neither the Company nor
the Subsidiaries are subject to or in default with respect to any order, writ,
injunction or decree of any federal, state, local or other governmental
department.
3.8 Taxes. Federal income tax returns and state and local income tax
returns for the Company and the Subsidiaries have been filed as required by law,
except that no state or federal income tax returns have been prepared or filed
for the year ended December 31, 1998; all taxes as shown on such returns or on
any assessment received subsequent to the filing of such returns have been paid,
and there are no pending assessments or adjustments or any income tax payable
for which reserves, which are reasonably believed by the Company to be adequate
for the payment of any additional taxes that may come due, have not been
established. All other taxes imposed on the Company and the Subsidiaries have
been paid and any reports or returns due in connection herewith have been filed.
3.9 Securities Law Compliance. Assuming the accuracy of the
representations and warranties of Purchasers set forth in Section 4 of this
Agreement, the offer, issue, sale and delivery of the shares of Common Stock
will constitute an exempted transaction under the Securities Act of 1933, as
amended and now in effect ("Securities Act"), and registration of the shares of
Common Stock under the Securities Act is not required. The Company shall make
such filings as may be necessary to comply with the Federal securities laws and
the Blue Sky laws of any state, which filings will be made in a timely manner
prior to the offer and sale of the shares of Common Stock.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents, warrants and covenants with the Company
as follows:
4.1 Legal Power. Purchaser has the requisite individual, corporate,
partnership, trust or fiduciary power, as appropriate, and is authorized, if
Purchaser is a corporation, partnership or trust, to enter into this Agreement,
to purchase the shares of Common Stock hereunder, and to carry out and perform
its obligations under the terms of this Agreement.
4.2 Due Execution. This Agreement has been duly authorized, if
Purchaser is a corporation, partnership, trust or fiduciary, executed and
delivered by Purchaser, and, upon due
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execution and delivery by the Company, this Agreement will be a valid and
binding agreement of Purchaser.
4.3 Investment Representations. Each Purchaser represents and agrees
that Purchaser is acquiring the shares of Common Stock for his or its own
account, not as a nominee or agent, for investment and not with a view to or for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act, except pursuant to an effective registration
statement under the Securities Act;
4.4 Receipt and Review of SEC Reports. Each Purchaser represents that
Purchaser has received and reviewed the SEC Reports and has been given full and
complete access to the Company for the purpose of obtaining such information as
the Purchaser or its qualified representative has reasonably requested in
connection with the decision to purchase shares of the Company's Common Stock.
Each Purchaser represents that such Purchaser has been afforded the opportunity
to ask questions of the officers of the Company regarding its business prospects
and the shares of the Company's Common Stock, all as Purchaser or Purchaser's
qualified representative have found necessary to make an informed investment
decision to purchase the shares of the Company's Common Stock.
4.5 Residence of Purchaser. Purchaser is a legal resident of the
state set forth on the Purchaser Signature Page.
4.6 Accredited Investor. Each Purchaser is an "accredited investor"
as defined in Rule 501(a) under the Securities Act of 1933, as amended, and
comes within at least one category as set forth in said Rule. The Purchaser
agrees to complete the Purchaser Signature Page truthfully and to furnish any
additional information which the Company deems necessary in order to verify that
each such Purchaser is an accredited investor.
4.7 Non-Affiliate; Resales by Affiliates.
4.7.1 Non-Affiliates. Each Purchaser represents, warrants and
covenants that it is not an "affiliate" of the Company, as that term is defined
in Rule 144(a)(1) of the Securities Act. Each Purchaser further represents,
warrants and covenants that:
(a) it is not acquiring the shares of Common Stock as part
of a group within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended;
(b) it does not directly, or indirectly through one or more
intermediaries, control, or is controlled by, or is under common control with,
the Company;
(c) it does not exercise any control over management of the
Company other than in connection with its position as a stockholder of the
Company; and
(d) it does not have any relationship with the Company
other in connection with its position as a stockholder of the Company.
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4.7.2 Resales by Affiliates. Each Purchaser represents,
warrants and covenants that in the event Purchaser becomes an affiliate of the
Company, Purchaser shall resell the shares of Common Stock only in accordance
with the provisions of Rule 144 of the Securities Act.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Obligations of the Purchaser. Each Purchaser's
obligation to purchase the shares of Common Stock at the Closing is subject to
the fulfillment, at or prior to such Closing, of all of the following
conditions:
5.1.1 Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects on the Closing Date
with the same force and effect as if they had been made on and as of said date;
and the Company shall have performed all obligations and conditions herein
required to be performed by it on or prior to the Closing Date.
5.1.2 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchaser.
5.1.3 Qualifications, Legal and Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States including "blue sky" filings in any state that are required
in connection with the lawful sale and issuance of the shares of Common Stock
pursuant to this Agreement shall have been duly obtained and shall be effective
on and as of the Closing Date. No stop order or other order enjoining the sale
of the shares of Common Stock or the Company's Common Stock shall have been
issued and no proceedings for such purpose shall be pending or, to the knowledge
of the Company, threatened by the SEC, or any commissioner of corporations or
similar officer of any state having jurisdiction over this transaction. At the
time of the Closing, the sale and issuance of the shares of Common Stock shall
be legally permitted by all laws and regulations to which the Purchaser and the
Company are subject.
5.2 Conditions to Obligations of the Company. The Company's
obligation to issue and sell the shares of Common Stock at the Closing is
subject to the fulfillment to the Company's satisfaction, on or prior to the
Closing, of the following conditions:
5.2.1 Representations and Warranties True. The representations
and warranties made by each Purchaser in Section 4 hereof shall be true and
correct at the Closing Date with the same force and effect as if they had been
made on and as of the Closing Date.
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5.2.2 Performance of Obligations. Each Purchaser shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by them on or before the Closing Date, and each
Purchaser shall have delivered payment to the Company in respect of its purchase
of shares of Common Stock.
5.2.3 Qualifications, Legal and Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States including "blue sky" filings in any state that are required
in connection with the lawful sale and issuance of the shares of Common Stock
pursuant to this Agreement shall have been duly obtained and shall be effective
on and as of the Closing Date. No stop order or other order enjoining the sale
of the shares of Common Stock shall have been issued and no proceedings for such
purpose shall be pending or, to the knowledge of the Company, threatened by the
SEC, or any commissioner of corporations or similar officer of any state having
jurisdiction over this transaction. At the time of the Closing, the sale and
issuance of the shares of Common Stock shall be legally permitted by all laws
and regulations to which each Purchaser and the Company are subject.
6. MISCELLANEOUS.
6.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware.
6.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto.
6.3 Entire Agreement. This Agreement and the Exhibits hereto and
thereto, and the other documents delivered pursuant hereto and thereto,
constitute the full and entire understanding and agreement among the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other party in any manner by any representations, warranties, covenants, or
agreements except as specifically set forth herein or therein. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
6.4 Separability. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6.5 Amendment and Waiver. Except as otherwise provided herein, any
term of this Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and the Purchasers, or,
to the extent such amendment affects only one Purchaser, by the Company and such
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individual Purchaser. Any amendment or waiver effected in accordance with this
Section shall be binding upon each future holder of any security purchased under
this Agreement (including securities into which such securities have been
converted) and the Company.
6.6 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be effective when delivered
personally, or sent by telex or telecopier (with receipt confirmed), provided
that a copy is mailed by registered mail, return receipt requested, or when
received by the addressee, if sent by Express Mail, Federal Express or other
express delivery service (receipt requested) in each case to the appropriate
address set forth below:
If to the Company: AMDL, Inc.
14272 Franklin Avenue, Suite 106
Tustin, California 92680
Attention: Gary L. Dreher, President
If to a Purchaser: At the address set forth on each Purchaser's
Signature Page
6.7 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth on the Purchase Signature Page hereto.
PURCHASERS
(By Counterpart Form - SP Pages)
COMPANY
AMDL, INC.
By:_______________________________________
Gary L. Dreher, President
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<PAGE>
PURCHASER SIGNATURE PAGE
The undersigned Purchaser has read the Securities Purchase Agreement dated
as of May 5, 1999 and acknowledges that execution of this Purchaser Signature
Page shall constitute the undersigned's execution of such agreement.
I hereby subscribe for an aggregate of _________ shares at $.68 per share
and shall deliver good funds for the shares in the following Tranches:
Number of Shares Closing Date* Aggregate Purchase Price
----------------- ------------- ------------------------
*No later than May 31, 1999
I have executed and delivered the Escrow Agreement, Exhibit "A" hereto.
I am a resident of the State of __________________.
- --------------------------------------------------------------------------------
Please print above the exact name(s) in which the shares of Common Stock
are to be held
My address is:
-----------------------------------------------------------------
-----------------------------------------------------------------
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PURCHASERS (Please initial one)
Category I The undersigned is an individual (not a partnership,
---------- corporation, etc.) whose individual net worth, or joint
net worth with the undersigned's spouse, presently
exceeds $1,000,000.
Explanation. In calculation of net worth the
undersigned may include equity in personal property and
real estate, including the undersigned's principal
residence, cash, short term investments, stocks and
securities. Equity in personal property and real estate
SP-1
<PAGE>
should be based on the fair market value of such
property less debt secured by such property.
Category II The undersigned is an individual (not a partnership,
---------- corporation, etc.) who had an individual income in
excess of $200,000 in 1997 and 1998, or joint income
with the undersigned's spouse in excess of $300,000 in
1997 and 1998, and has a reasonable expectation of
reaching the same income level in 1999.
Category III The undersigned is a bank as defined in Section
---------- 3(a)(2) of the Securities Act or any savings and loan
association or other institution as defined in Section
3(a)(5)(A) of the 1933 Act, whether acting in its
individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities
Exchange Act of 1934; an insurance company as defined
in Section 2(13) of the Securities Act; an investment
company registered under the Investment Company Act of
1940, or a business development company as defined in
Section 2(a)(48) of that Securities Act; Small Business
Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its
political subdivisions for the benefit of its
employees, if such plan has total assets in excess of
$5,000,000; an employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974
if the investment decision is made by the plan
fiduciary, as defined in Section 3(21) of such act,
which is either a bank, savings and loan association,
insurance company, or registered investment advisor, or
if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons who are
"Accredited Investors" as defined in Section 230.501(a)
of the Securities Act.
-------------------------------------------------------
-------------------------------------------------------
(describe entity)
Category IV The undersigned is a private business development
---------- company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
-------------------------------------------------------
-------------------------------------------------------
(describe entity)
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<PAGE>
Category V The undersigned is an organization described in Section
--------- 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in
excess of $5,000,000.
-------------------------------------------------------
-------------------------------------------------------
(describe entity)
Category VI --------- The undersigned is a director or executive officer of
the Company.
Category VII The undersigned is a trust, with total assets in
--------- excess of $5,000,000, not formed for the specific
purpose of acquiring the Notes offered, whose purchase
is directed by a "Sophisticated Person" as described in
Section 230.506(b)(2)(ii) of the Securities Act.
Category VIII The undersigned is an entity in which all of the
--------- equity owners are "accredited investors" as defined in
Section 230.501(a) of the Securities Act.
-------------------------------------------------------
-------------------------------------------------------
(describe entity)
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Executed this _____ day of _____________________, 1999 at ____________________,
________________.
SIGNATURES
INDIVIDUAL
<TABLE>
<CAPTION>
<S> <C>
Address to Which Correspondence Should be
Directed
____________________________________ __________________________________________
Signature (Individual) Name
__________________________________________
Street address
__________________________________________ __________________________________________
Signature (All record holders should sign) City, State and Zip Code
__________________________________________ ____________________________________________
Name(s) Typed or Printed Tax Identification or Social Security Number
( )
____________________________________________
Telephone Number
CORPORATION, PARTNERSHIP, TRUST, OR OTHER ENTITY
Address to Which Correspondence Should be
Directed:
__________________________________________
Name of Entity
__________________________________________ ____________________________________________
Type of Entity (i.e., corporation, Street Address
partnership, etc.)
__________________________________________ _____________________________________________
State of Formation of Entity City, State and Zip Code
By: ______________________________________ _____________________________________________
*Signature Tax Identification or Social Security Number
( )
Its:______________________________________ _____________________________________________
Title Telephone Number
__________________________________________
Name Typed or Printed
</TABLE>
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<PAGE>
*If shares of Common Stock are being subscribed for by an entity, the
Certificate of Signatory must also be completed.
CERTIFICATE OF SIGNATORY
To be completed if shares of Common Stock are being subscribed for by an
entity.
I,___________________________________, am the ___________________________
of______________________________________(the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute
and carry out the terms of the Securities Purchase Agreement and to purchase and
hold the shares of Common Stock. The Securities Purchase Agreement has been duly
and validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have hereto set my hand this ______ day of
_____________________, 1999.
_________________________
Signature
ACCEPTANCE
AGREED AND ACCEPTED:
AMDL, INC.
By:__________________________________________
Gary L. Dreher, President
Date: _________________________, 1999
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<PAGE>
EXHIBIT "A"
ESCROW AGREEMENT
THIS ESCROW AGREEMENT made and entered into this 12th day of May, 1999, by and
between AMDL, Inc., a Delaware Corporation, (hereinafter called "AMDL"); the
several Purchasers under the AMDL, Inc. Securities Purchase Agreement dated May
5, 1999 (hereinafter called "Purchasers" and the "Purchase Agreement"); San
Rafael Consulting Group and Greenwich Avenue Finance, Inc. (hereinafter
"Purchasers Agents") and Dennis Brovarone, Attorney at Law, (hereinafter called
the "Escrow Agent").
WHEREAS, AMDL and the Purchasers have entered into the Purchase Agreement
attached hereto as Exhibit A and incorporated herein by reference. Terms defined
therein have the identical meaning when used herein unless other stated. ; and
WHEREAS, Section 2 of the Purchase Agreement entitled CLOSING(S) sets for that
AMDL shall deliver certificates registered in the name the Purchaser(s) upon
receipt of Notice to AMDL of the receipt of good funds by the Escrow Agent for
the respective Purchaser(s) and that the delivery of the shares of Common Stock
to the Purchaser(s) and the delivery of the Purchase Price to AMDL shall be
completed in accordance with the terms of this Escrow Agreement; and
WHEREAS, AMDL and the Purchasers Agents entered into a Financial Consulting
Agreements dated February 4, 1999 attached hereto as Exhibit B and C and
incorporated herein by reference. Terms defined therein have the identical
meaning when used herein unless other stated wherein the Purchasers Agents are
to receive compensation in cash and/or securities pursuant to the terms thereof.
NOW THEREFORE, in consideration of the premises and agreements set forth herein,
the parties hereto agree as follows:
1. Upon execution of this Escrow Agreement by all parties, AMDL and the
Purchasers Agents shall provide the Escrow Agent with written Wire Transfer
Instructions for the disbursement of funds thereto. In addition, the Escrow
Agent shall have established the following separate Colorado Lawyers Trust
Account Foundation Account for the receipt of the Purchase Price from the
Purchasers:
Bank One Colorado ABA # 102 001 017
Dennis Brovarone Attorney at Law Trust Account # 190 783 306
2. Thereafter, upon receipt of a duly executed Purchaser Signature Page and
receipt of good funds corresponding thereto, the Escrow Agent shall that
same day provide a
<PAGE>
written Notice of Receipt of Funds and Intended Disbursement to AMDL with a
copy to the Purchasers Agents. Said Notice shall set forth the intended
disbursement of funds and securities to AMDL, the Purchasers and the
Purchasers Agents.
3. On or before the next business day, AMDL and the Purchasers Agents shall
provide a written Notice of Revision to the Escrow Agent of any revisions
to the intended disbursement. In the absence of such Notice of Revision,
the Notice of Receipt of Funds and Intended Disbursement shall be deemed
accepted by AMDL and the Purchasers Agents.
4. On or before the next business day following the delivery of the Notice of
Receipt of Funds and Intended Disbursement, the Purchasers Agents shall
deliver to the Escrow Agent and AMDL written notice ("Agent Notice") of
their election to receive payment of the cash portion of the Financing
Bonus in cash or Shares, pursuant to Section 3.2.1 of the Financial
Consulting Agreements, Exhibits B and C hereto. If the payment is to be
made in cash, the Financing Bonus shall be delivered to the respective
Purchasers Agent out of funds held by the Escrow Agent simultaneously with
the delivery of the Purchase Price to AMDL pursuant to Paragraph 5 herein.
If the payment of the cash portion of the Financing Bonus is to be made in
Shares, the Purchasers Agent shall deliver with the Agent Notice a
completed Purchasers Agent Signature Page in the form attached hereto as
Exhibit E. Upon receipt of the Agent Notice and the completed Purchasers
Agent Signature Page, AMDL shall deliver the corresponding number of Shares
registered in the name of the Purchasers Agent to the Escrow Agent for
delivery to the Purchasers Agent in accordance with Paragraph 5, herein.
5. Within three business days of delivery of the Notice of Receipt of Funds
and Intended Disbursement by the Escrow Agent and the Agent Notice to AMDL,
AMDL shall deliver to the Escrow Agent the following: (i) stock
certificates free of restrictive legend or notation representing the
corresponding number of Shares registered in the name of each Purchaser,
(ii) the restricted securities to be issued to either Purchasers Agent
registered in the name thereof pursuant to section 3.1.2 of the Financial
Consulting Agreements, Exhibits B and C hereto, and, if applicable, (iii)
stock certificates free of restrictive legend or notation representing the
corresponding number of Shares registered in the name of each Purchasers
Agent. Upon receipt of items (i) and (ii) and, if applicable (iii), the
Escrow Agent shall by the next business day wire transfer the Purchase
Price to AMDL less only the disbursement of funds to either Purchasers
Agent, if applicable, the cost of the wires and delivery of the
certificates to the Purchaser and the Purchasers Agent, by overnight
courier to the address specified by the Purchaser or Purchasers Agents and
less any fees owed to the Escrow Agent pursuant to paragraph 6, below. In
addition, the Escrow Agent shall wire transfer an aggregate of $6,000 to
Oppenheimer Wolff & Donnelley LLP out of the first funds received by the
Escrow Agent from the Purchasers. In the event, the certificates are not
received within three business days of Notice by the Escrow Agent of
receipt of good funds, or said certificates do not conform in all respects
to the
<PAGE>
Purchaser Signature Page or the Purchasers Agent Signature Page, the Escrow
Agent shall notify the Purchasers Agent in writing by fax with a copy to
AMDL and upon written request of the Purchasers Agent, with a copy to AMDL,
return the Purchase Price to the Purchaser less the cost of returning the
funds.
6. The Escrow Agent shall receive a fee of $2,000 for his services under this
Agreement, which fee is deemed to be full and valid consideration to the
Stock Escrow Agent for its services hereunder upon execution of this
Agreement. The parties agree that the fees payable to the Escrow Agent
pursuant to this Paragraph 6 shall be paid out of the first funds received
by the Escrow Agent from the Purchasers.
7. AMDL, the Purchaser(s) and the Purchasers Agents shall indemnify and hold
harmless the Escrow Agent from any and all liability for performance under
this Agreement. The Escrow Agent shall have the right to file an
Interpleader Action in the Colorado State courts should any dispute arise
between the parties as to the right, title or interest in any funds or
securities deposited with the Escrow Agent as a result of this Agreement.
8. This Escrow Agreement shall terminate on May 31, 1999, unless extended by
AMDL, in its sole discretion, by written notice by AMDL to the Escrow Agent
and the Purchasers Agent.
9. Notices pursuant to this Agreement shall be sent as follows:
AMDL: Gary L. Dreher, President
AMDL, Inc.
14272 Franklin Avenue, Suite 106
Tustin, CA 92680
Phone: 714 505 4460 Fax: 714 505 4464
cc: Richard H. Bruck, Esq.
Oppenheimer Wolff & Donnelly LLP
500 Newport Center Dr., Suite 700
Newport Beach, CA 92660-7007
Phone: 949 719 6000 Fax: 949 719 6020
Escrow Agent: Dennis Brovarone, Esq.
11249 W. 103rd Dr.
Westminster, CO 80021
Phone: 303 466 4092 Fax: 303 466 4826
Purchasers Agents: Isabel Wright, General Manager
San Rafael Consulting Group
<PAGE>
130 Trellis Dr.
San Rafael, CA 94903
Phone: 415 479 8400 Fax: 415 479 5762
Carl Patino, President
Greenwich Avenue Finance, Inc.
2460 Elm Street
Stratford, CT 06615
Phone: 203 380 2989 Fax: 203 380 0312
IN WITNESS WHEREOF the parties have caused this Escrow Agreement to be executed
and so each hereby warrant and represent that each respective signatory whose
signature appears below has been and is on the date of the Agreement, as and
when signed by them, duly authorized by all necessary and appropriate action to
execute the Agreement which shall be effective as to them as of the date so
indicated by each such party.
AMDL, INC. SAN RAFAEL CONSULTING GROUP
_________________________ _______________________________
Gary L. Dreher, President Isabel Wright, General Manager
Dated: May __, 1999 Dated: May __, 1999
ESCROW AGENT GREENWICH AVENUE FINANCE, INC.
______________________ _______________________________
Dennis Brovarone Carl Patino, President
Dated: May __, 1999 Dated: May __, 1999
PURCHASERS
By execution of the Purchaser Escrow Signature Page
In the Form Attached hereto as Exhibit D.
<PAGE>
Exhibit D
PURCHASER ESCROW SIGNATURE PAGE
The undersigned Purchaser has read the Escrow Agreement, dated May 12,
1999, and acknowledges that the execution of this Purchaser Escrow Signature
Page shall constitute the undersigned's execution of such Agreement.
___________________________________
(Signature of Purchaser)
___________________________________
(Print Name of Purchaser)
$__________ Amount of Purchase Obligation
____________ Aggregate Number of Shares Issuable in Respect of
Such Purchase Obligation
<PAGE>
Exhibit E
PURCHASERS AGENT SIGNATURE PAGE
The undersigned Purchasers Agent has read the Securities Purchase Agreement
dated as of May 5, 1999 and acknowledges that execution of this Purchasers Agent
Signature Page shall constitute the undersigned's execution of such agreement.
I hereby subscribe for an aggregate of _________ shares at $.68 per share
in consideration for the cancellation of indebtedness in the amount of
$___________________ payable by the Company pursuant to that certain Financial
Consulting Agreement dated February 4, 1999 between the undersigned and the
Company.
I have executed and delivered the Escrow Agreement, Exhibit "A" hereto.
I am a resident of the State of __________________.
________________________________________________________________________________
Please print above the exact name(s) in which the shares of Common Stock
are to be held
My address is: ___________________________________________
___________________________________________
___________________________________________
PURCHASERS AGENT (Please initial one)
Category I __________ The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint
net worth with the undersigned's spouse, presently
exceeds $1,000,000.
Explanation. In calculation of net worth the undersigned
may include equity in personal property and real estate,
including the undersigned's principal residence, cash,
short term investments, stocks and securities. Equity in
personal property and real estate should be based on the
fair market value of such property less debt secured by
such property.
Category II __________ The undersigned is an individual (not a partnership,
corporation, etc.) who had an individual income in
excess of $200,000 in 1997 and 1998, or joint income
with the undersigned's spouse in excess of
<PAGE>
$300,000 in 1997 and 1998, and has a reasonable
expectation of reaching the same income level in 1999.
Category III __________ The undersigned is a bank as defined in Section
3(a)(2) of the Securities Act or any savings and loan
association or other institution as defined in Section
3(a)(5)(A) of the 1933 Act, whether acting in its
individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities
Exchange Act of 1934; an insurance company as defined
in Section 2(13) of the Securities Act; an investment
company registered under the Investment Company Act of
1940, or a business development company as defined in
Section 2(a)(48) of that Securities Act; Small
Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a
state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess
of $5,000,000; an employee benefit plan within the
meaning of the Employee Retirement Income Security Act
of 1974 if the investment decision is made by the plan
fiduciary, as defined in Section 3(21) of such act,
which is either a bank, savings and loan association,
insurance company, or registered investment advisor,
or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons who are
"Accredited Investors" as defined in Section
230.501(a) of the Securities Act.
______________________________________________________
______________________________________________________
(describe entity)
Category IV __________ The undersigned is a private business development
company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
______________________________________________________
______________________________________________________
(describe entity)
Category V __________ The undersigned is an organization described in
Section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in
excess of $5,000,000.
<PAGE>
_____________________________________________________
_____________________________________________________
(describe entity)
Category VI __________ The undersigned is a director or executive officer of
the Company.
Category VII __________ The undersigned is a trust, with total assets in
excess of $5,000,000, not formed for the specific
purpose of acquiring the Notes offered, whose
purchase is directed by a "Sophisticated Person" as
described in Section 230.506(b)(2)(ii) of the
Securities Act.
Category VIII __________ The undersigned is an entity in which all of the
equity owners are "accredited investors" as defined
in Section 230.501(a) of the Securities Act.
_____________________________________________________
_____________________________________________________
(describe entity)
Executed this _____ day of _____________________, 1999 at ____________________,
________________.
SIGNATURES
INDIVIDUAL
Address to Which Correspondence Should be
Directed
____________________________________ __________________________________________
Signature (Individual) Name
__________________________________________
Street address
____________________________________ __________________________________________
Signature (All record holders should City, State and Zip Code
sign)
____________________________________ ____________________________________
Name(s) Typed or Printed Tax Identification or Social Security
Number
(_______)_________________________________
Telephone Number
<PAGE>
CORPORATION, PARTNERSHIP, TRUST, OR OTHER ENTITY
Address to Which Correspondence Should be
Directed:
____________________________________
Name of Entity
____________________________________ _________________________________________
Type of Entity (i.e., corporation, Street Address
partnership, etc.)
____________________________________ _________________________________________
State of Formation of Entity City, State and Zip Code
By: _________________________________ _________________________________________
*Signature Tax Identification or Social Security
Number
Its: ________________________________ (_______)_______________________________
Title Telephone Number
______________________________________
Name Typed or Printed
*If shares of Common Stock are being subscribed for by an entity, the
Certificate of Signatory must also be completed.
CERTIFICATE OF SIGNATORY
To be completed if shares of Common Stock are being subscribed for by an entity.
I,________________________________, am the ___________________________ of
_____________________________________________(the "Entity").
I certify that I am empowered and duly authorized by the Entity to execute
and carry out the terms of the Securities Purchase Agreement and to purchase and
hold the shares of Common Stock. The Securities Purchase Agreement has been duly
and validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have hereto set my hand this ______ day of
_____________________, 1999.
____________________________________
Signature
<PAGE>
ACCEPTANCE
AGREED AND ACCEPTED:
AMDL, INC.
By: ___________________________
Gary L. Dreher, President
Date: _________________________, 1999
<PAGE>
EXHIBIT "B"
[AMDL SEC REPORTS]
<PAGE>
EXHIBIT 10.45
AMDL, INC.
1999 STOCK OPTION PLAN
1. PURPOSE. The purpose of the AMDL, Inc. 1999 Stock Option Plan (the
-------
"Plan") is to strengthen AMDL, Inc., a Delaware corporation ("Corporation"), by
providing to employees, officers, directors, consultants and independent
contractors of the Corporation or any of its subsidiaries (including dealers,
distributors, and other business entities or persons providing services on
behalf of the Corporation or any of its subsidiaries) added incentive for high
levels of performance and unusual efforts to increase the earnings of the
Corporation. The Plan seeks to accomplish this purpose by enabling specified
persons to purchase shares of the Corporation's common stock, $.001 par value,
thereby increasing their proprietary interest in the Corporation's success and
encouraging them to remain in the employ or service of the Corporation.
2. CERTAIN DEFINITIONS. As used in this Plan, the following words and
-------------------
phrases shall have the respective meanings set forth below, unless the context
clearly indicates a contrary meaning:
2.1 "Board of Directors" The Board of Directors of the Corporation.
------------------
2.2 "Code" The Internal Revenue Code of 1986, as amended.
----
2.3 "Committee" The Committee which shall administer the Plan shall
---------
consist of a committee of all members of the Board of Directors.
2.4 "Fair Market Value Per Share" The fair market value per share of
---------------------------
the Shares as determined by the Committee in good faith. The Committee is
authorized to make its determination as to the fair market value per share of
the Shares on the following basis: (i) if the Shares are traded only otherwise
than on a securities exchange and are not quoted on the National Association of
Securities Dealers' Automated Quotation System ("NASDAQ"), but are quoted on the
bulletin board or in the "pink sheets" published by the National Daily Quotation
Bureau, the greater of (a) the average of the mean between the average daily bid
and average daily asked prices of the Shares during the thirty (30) day period
preceding the date of grant of an Option, as quoted on the bulletin board or in
the "pink sheets" published by the National Daily Quotation Bureau, or (b) the
mean between the average daily bid and average daily asked prices of the Shares
on the date of grant, as published on the bulletin board or in such "pink
sheets;" (ii) if the Shares are traded on a securities exchange or on the
NASDAQ, the greater of (a) the average of the daily closing prices of the Shares
during the ten (10) trading days preceding the date of grant of an Option, as
quoted in the Wall Street Journal, or (b) the daily closing price of the Shares
on the date of grant of an Option, as quoted in the Wall Street Journal; or
(iii) if the Shares are traded only otherwise than as described in (i) or (ii)
above, or if the Shares are not
<PAGE>
publicly traded, the value determined by the Committee in good faith based upon
the fair market value as determined by completely independent and well qualified
experts.
2.5 "Incentive Stock Option" An Option intended to qualify for
----------------------
treatment as an incentive stock option under Code Sections 421 and 422, and
designated as an Incentive Stock Option.
2.6 "Nonqualified Option" An Option not qualifying as an Incentive
-------------------
Stock Option.
2.7 "Option" A stock option granted under the Plan.
------
2.8 "Optionee" The holder of an Option.
--------
2.9 "Option Agreement" The document setting forth the terms and
----------------
conditions of each Option.
2.10 "Shares" The shares of common stock, $.001 par value, of the
------
Corporation.
2.11 "Subsidiary" Any corporation of which fifty percent (50%) or more
----------
of the total combined voting power of all classes of stock of such corporation
is owned by the Corporation or another Subsidiary (as so defined).
3. ADMINISTRATION OF PLAN.
----------------------
3.1 In General. This Plan shall be administered by the Committee. Any
----------
action of the Committee with respect to administration of the Plan shall be
taken pursuant to (i) a majority vote at a meeting of the Committee (to be
documented by minutes), or (ii) the unanimous written consent of its members.
3.2 Authority. Subject to the express provisions of this Plan, the
---------
Committee shall have the authority to: (i) construe and interpret the Plan,
decide all questions and settle all controversies and disputes which may arise
in connection with the Plan and to define the terms used therein; (ii)
prescribe, amend and rescind rules and regulations relating to administration of
the Plan; (iii) determine the purchase price of the Shares covered by each
Option and the method of payment of such price, individuals to whom, and the
time or times at which, Options shall be granted and exercisable and the number
of Shares covered by each Option; (iv) determine the terms and provisions of
the respective Option Agreements (which need not be identical); (v) determine
the duration and purposes of leaves of absence which may be granted to
participants without constituting a termination of their employment for purposes
of the Plan; and (vi) make all other determinations necessary or advisable to
the administration of the Plan. Determinations of the Committee on matters
referred to in this Section 3 shall be conclusive and binding on all parties
howsoever concerned. With respect to Incentive Stock Options, the Committee
shall administer the Plan in compliance with the provisions of Code Section 422
as
-2-
<PAGE>
the same may hereafter be amended from time to time. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option.
4. ELIGIBILITY AND PARTICIPATION.
-----------------------------
4.1 In General. Only officers, employees and directors who are also
----------
employees of the Corporation or any Subsidiary shall be eligible to receive
grants of Incentive Stock Options. Officers, employees and directors (whether
or not they are also employees) of the Corporation or any Subsidiary, as well as
consultants, independent contractors or other service providers of the
Corporation or any Subsidiary shall be eligible to receive grants of
Nonqualified Options. Within the foregoing limits, the Committee, from time to
time, shall determine and designate persons to whom Options may be granted. All
such designations shall be made in the absolute discretion of the Committee and
shall not require the approval of the stockholders. In determining (i) the
number of Shares to be covered by each Option, (ii) the purchase price for such
Shares and the method of payment of such price (subject to the other sections
hereof), (iii) the individuals of the eligible class to whom Options shall be
granted, (iv) the terms and provisions of the respective Option Agreements, and
(v) the times at which such Options shall be granted, the Committee shall take
into account such factors as it shall deem relevant in connection with
accomplishing the purpose of the Plan as set forth in Section 1. An individual
who has been granted an Option may be granted an additional Option or Options if
the Committee shall so determine. No Option shall be granted under the Plan
after June 5, 2008 but Options granted before such date may be exercisable after
such date.
4.2 Certain Limitations. In no event shall Incentive Stock Options be
-------------------
granted to an Optionee such that the sum of (i) aggregate fair market value
(determined at the time the Incentive Stock Options are granted) of the Shares
subject to all Options granted under the Plan which are exercisable for the
first time during the same calendar year, plus (ii) the aggregate fair market
value (determined at the time the options are granted) of all stock subject to
all other incentive stock options granted to such Optionee by the Corporation,
its parent and Subsidiaries which are exercisable for the first time during such
calendar year, exceeds One Hundred Thousand Dollars ($100,000). For purposes of
the immediately preceding sentence, fair market value shall be determined as of
the date of grant based on the Fair Market Value Per Share as determined
pursuant to Section 2.3.
5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
---------------------------------------------------------------
5.1 Shares. Subject to adjustment as provided in Section 5.2 below,
------
the total number of Shares to be subject to Options granted pursuant to this
Plan shall not exceed Seven Hundred Fifty Thousand (750,000) Shares. Shares
subject to the Plan may be either authorized but unissued shares or shares that
were once issued and subsequently reacquired by the Corporation; the Committee
shall be empowered to take any appropriate action required to make Shares
available for Options granted under this Plan. If any Option is surrendered
before exercise or lapses without exercise in full or for any other reason
ceases to be exercisable, the Shares reserved therefore shall continue to be
available under the Plan.
-3-
<PAGE>
5.2 Adjustments. As used herein, the term "Adjustment Event" means an
-----------
event pursuant to which the outstanding Shares of the Corporation are increased,
decreased or changed into, or exchanged for a different number or kind of shares
or securities, without receipt of consideration by the Corporation, through
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, stock consolidation or otherwise. Upon the
occurrence of an Adjustment Event, (i) appropriate and proportionate adjustments
shall be made to the number and kind of Shares and exercise price for the Shares
subject to the Options which may thereafter be granted under this Plan, (ii)
appropriate and proportionate adjustments shall be made to the number and kind
of and exercise price for the Shares subject to the then outstanding Options
granted under this Plan, and (iii) appropriate amendments to the Option
Agreements shall be executed by the Corporation and the Optionees if the
Committee determines that such an amendment is necessary or desirable to reflect
such adjustments. If determined by the Committee to be appropriate, in the event
of an Adjustment Event which involves the substitution of securities of a
corporation other than the Corporation, the Committee shall make arrangements
for the assumptions by such other corporation of any Options then or thereafter
outstanding under the Plan. Notwithstanding the foregoing, such adjustment in an
outstanding Option shall be made without change in the total exercise price
applicable to the unexercised portion of the Option, but with an appropriate
adjustment to the number of Shares, kind of shares and exercise price for each
Share subject to the Option. The determination by the Committee as to what
adjustments, amendments or arrangements shall be made pursuant to this Section
5.2, and the extent thereof, shall be final and conclusive. No fractional Shares
shall be issued under the Plan on account of any such adjustment or arrangement.
6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
6.1 Intended Treatment as Incentive Stock Options. Incentive Stock
---------------------------------------------
Options granted pursuant to this Plan are intended to be "incentive stock
options" to which Code Sections 421 and 422 apply, and the Plan shall be
construed and administered to implement that intent. If all or any part of an
Incentive Stock Option shall not be an "incentive stock option" subject to
Sections 421 or 422 of the Code, such Option shall nevertheless be valid and
carried into effect. All Options granted under this Plan shall be subject to
the terms and conditions set forth in this Section 6 (except as provided in
Section 5.2) and to such other terms and conditions as the Committee shall
determine to be appropriate to accomplish the purpose of the Plan as set forth
in Section 1.
6.2 Amount and Payment of Exercise Price.
------------------------------------
6.2.1 Exercise Price. The exercise price per Share for each
--------------
Share which the Optionee is entitled to purchase under a Nonqualified Option
shall be determined by the Committee but shall not be less than eighty-five
percent (85%) of the Fair Market Value Per Share on the date of the grant of the
Nonqualified Option. The exercise price per Share for each Share which the
Optionee is entitled to purchase under an Incentive Stock Option shall be
determined by the Committee but shall not be less than the Fair Market Value Per
Share on the date of the grant of the Incentive Stock Option; provided, however,
that the exercise price shall
-4-
<PAGE>
not be less than one hundred and ten percent (110%) of the Fair Market Value Per
Share on the date of the grant of the Incentive Stock Option in the case of an
individual then owning (within the meaning of Code Section 425(d)) more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Corporation or of its parent or Subsidiaries.
6.2.2 Payment of Exercise Price. The consideration to be paid for the
-------------------------
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Committee and may consist of promissory notes, shares
of the common stock of the Corporation or such other consideration and method of
payment for the Shares as may be permitted under applicable state and federal
laws.
6.3 Exercise of Options.
-------------------
6.3.1 Each Option granted under this Plan shall be exercisable at
such times and under such conditions as may be determined by the Committee at
the time of the grant of the Option and as shall be permissible under the terms
of the Plan; provided, however, in no event shall an Option be exercisable after
the expiration of ten (10) years from the date it is granted, and in the case of
an Optionee owning (within the meaning of Code Section 425(d)), at the time an
Incentive Stock Option is granted, more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation or of its
parent or Subsidiaries, such Incentive Stock Option shall not be exercisable
later than five (5) years after the date of grant.
6.3.2 An Optionee may purchase less than the total number of Shares
for which the Option is exercisable, provided that a partial exercise of an
Option may not be for less than One Hundred(100) Shares and shall not include
any fractional Shares.
6.4 Nontransferability of Options. All Options granted under this Plan
-----------------------------
shall be nontransferable, either voluntarily or by operation of law, otherwise
than by will or the laws of descent and distribution, and shall be exercisable
during the Optionee's lifetime only by such Optionee.
6.5 Effect of Termination of Employment or Other Relationship. Except as
---------------------------------------------------------
otherwise determined by the Committee in connection with the grant of
Nonqualified Options, the effect of termination of an Optionee's employment or
other relationship with the Corporation on such Optionee's rights to acquire
Shares pursuant to the Plan shall be as follows:
6.5.1 Termination for Other than Disability or Cause. If an Optionee
----------------------------------------------
ceases to be employed by, or ceases to have a relationship with, the Corporation
for any reason other than for disability or cause, such Optionee's Options shall
expire not later than three (3) months thereafter. During such three (3) month
period and prior to the expiration of the Option by its terms, the Optionee may
exercise any Option granted to him, but only to the extent such Options were
exercisable on the date of termination of his employment or relationship and
except as so exercised, such Options shall expire at the end of such three (3)
month period unless such Options by their terms expire before such date. The
decision as to whether a termination for a reason other than disability, cause
or death has occurred shall be made by the Committee, whose
-5-
<PAGE>
decision shall be final and conclusive, except that employment shall not be
considered terminated in the case of sick leave or other bona fide leave of
absence approved by the Corporation.
6.5.2 Disability. If an Optionee ceases to be employed by, or ceases
----------
to have a relationship with, the Corporation by reason of disability (within the
meaning of Code Section 22(e)(3)), such Optionee's Options shall expire not
later than one (1) year thereafter. During such one (1) year period and prior to
the expiration of the Option by its terms, the Optionee may exercise any Option
granted to him, but only to the extent such Options were exercisable on the date
the Optionee ceased to be employed by, or ceased to have a relationship with,
the Corporation by reason of disability and except as so exercised, such Options
shall expire at the end of such one (1) year period unless such Options by their
terms expire before such date. The decision as to whether a termination by
reason of disability has occurred shall be made by the Committee, whose decision
shall be final and conclusive.
6.5.3 Termination for Cause. If an Optionee's employment by, or
---------------------
relationship with, the Corporation is terminated for cause, such Optionee's
Option shall expire immediately; provided, however, the Committee may, in its
sole discretion, within thirty (30) days of such termination, waive the
expiration of the Option by giving written notice of such waiver to the Optionee
at such Optionee's last known address. In the event of such waiver, the
Optionee may exercise the Option only to such extent, for such time, and upon
such terms and conditions as if such Optionee had ceased to be employed by, or
ceased to have a relationship with, the Corporation upon the date of such
termination for a reason other than disability, cause, or death. Termination
for cause shall include termination for malfeasance or gross misfeasance in the
performance of duties or conviction of illegal activity in connection therewith
or any conduct detrimental to the interests of the Corporation. The
determination of the Committee with respect to whether a termination for cause
has occurred shall be final and conclusive.
6.6 Withholding of Taxes. As a condition to the exercise, in whole or in
--------------------
part, of any Options the Board of Directors may in its sole discretion require
the Optionee to pay, in addition to the purchase price of the Shares covered by
the Option an amount equal to any Federal, state or local taxes that may be
required to be withheld in connection with the exercise of such Option.
6.7 No Rights to Continued Employment or Relationship. Nothing contained
-------------------------------------------------
in this Plan or in any Option Agreement shall obligate the Corporation to employ
or have another relationship with any Optionee for any period or interfere in
any way with the right of the Corporation to reduce such Optionee's compensation
or to terminate the employment of or relationship with any Optionee at any time.
6.8 Time of Granting Options. The time an Option is granted, sometimes
------------------------
referred to herein as the date of grant, shall be the day the Corporation
executes the Option Agreement; provided, however, that if appropriate
resolutions of the Committee indicate that an Option is to be granted as of and
on some prior or future date, the time such Option is granted shall be such
prior or future date.
-6-
<PAGE>
6.9 Privileges of Stock Ownership. No Optionee shall be entitled to the
-----------------------------
privileges of stock ownership as to any Shares not actually issued and delivered
to such Optionee. No Shares shall be purchased upon the exercise of any Option
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws or governmental or regulatory agencies
having jurisdiction and of any exchanges upon which the stock of the Corporation
may be listed shall have been fully complied with.
6.10 Securities Laws Compliance. The Corporation will diligently endeavor
--------------------------
to comply with all applicable securities laws before any Options are granted
under the Plan and before any Shares are issued pursuant to Options. Without
limiting the generality of the foregoing, the Corporation may require from the
Optionee such investment representation or such agreement, if any, as counsel
for the Corporation may consider necessary or advisable in order to comply with
the Securities Act of 1933 as then in effect, and may require that the Optionee
agree that any sale of the Shares will be made only in such manner as is
permitted by the Committee. The Committee in its discretion may cause the
Shares underlying the Options to be registered under the Securities Act of 1933,
as amended, by the filing of a Form S-8 Registration Statement covering the
Options and Shares underlying such Options. Optionee shall take any action
reasonably requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.
6.11 Option Agreement. Each Incentive Stock Option and Nonqualified
----------------
Option granted under this Plan shall be evidenced by the appropriate written
Stock Option Agreement ("Option Agreement") executed by the Corporation and the
Optionee in a form substantially the same as the appropriate form of Option
Agreement attached as Exhibit I or II hereto (and made a part hereof by this
reference) and shall contain each of the provisions and agreements specifically
required to be contained therein pursuant to this Section 6, and such other
terms and conditions as are deemed desirable by the Committee and are not
inconsistent with the purpose of the Plan as set forth in Section 1.
7. PLAN AMENDMENT AND TERMINATION.
------------------------------
7.1 Authority of Committee. The Committee may at any time discontinue
----------------------
granting Options under the Plan or otherwise suspend, amend or terminate the
Plan and may, with the consent of an Optionee, make such modification of the
terms and conditions of such Optionee's Option as it shall deem advisable;
provided that, except as permitted under the provisions of Section 5.2, the
Committee shall have no authority to make any amendment or modification to this
Plan or any outstanding Option thereunder which would: (i) increase the maximum
number of Shares which may be purchased pursuant to Options granted under the
Plan, either in the aggregate or by an Optionee (except pursuant to Section
5.2); (ii) change the designation of the class of the employees eligible to
receive Incentive Stock Options; (iii) extend the term of the Plan or the
maximum Option period thereunder; (iv) decrease the minimum Incentive Stock
Option price or permit reductions of the price at which Shares may be purchased
for Incentive Stock Options granted under the Plan; or (v) cause Incentive Stock
Options issued under the Plan to fail to meet the requirements of incentive
stock options under Code Section 422. An amendment or modification made pursuant
to the provisions of this Section 7 shall be
-7-
<PAGE>
deemed adopted as of the date of the action of the Committee effecting such
amendment or modification and shall be effective immediately, unless otherwise
provided therein, subject to approval thereof (1) within twelve (12) months
before or after the effective date by stockholders of the Corporation holding
not less than a majority vote of the voting power of the Corporation voting in
person or by proxy at a duly held stockholders meeting when required to maintain
or satisfy the requirements of Code Section 422 with respect to Incentive Stock
Options, and (2) by any appropriate governmental agency. No Option may be
granted during any suspension or after termination of the Plan.
7.2 Ten (10) Year Maximum Term. Unless previously terminated by the
--------------------------
Committee, this Plan shall terminate on June 5, 2008 and no Options shall be
granted under the Plan thereafter.
7.3 Effect on Outstanding Options. Amendment, suspension or
-----------------------------
termination of this Plan shall not, without the consent of the Optionee, alter
or impair any rights or obligations under any Option theretofore granted.
8. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of June 30,
----------------------
1999, the date the Plan was adopted by the Board of Directors, subject to the
approval of the Plan by the affirmative vote of a majority of the issued and
outstanding Shares of common stock of the Corporation represented and voting at
a duly held meeting at which a quorum is present within twelve (12) months
thereafter. The Committee shall be authorized and empowered to make grants of
Options pursuant to this Plan prior to such approval of this Plan by the
stockholders; provided, however, in such event the Option grants shall be made
subject to the approval of both this Plan and such Option grants by the
stockholders in accordance with the provisions of this Section 8.
9. MISCELLANEOUS PROVISIONS.
------------------------
9.1 Exculpation and Indemnification. The Corporation shall indemnify
-------------------------------
and hold harmless the Committee from and against any and all liabilities, costs
and expenses incurred by such persons as a result of any act, or omission to
act, in connection with the performance of such persons' duties,
responsibilities and obligations under the Plan, other than such liabilities,
costs and expenses as may result from the gross negligence, bad faith, willful
conduct and/or criminal acts of such persons.
9.2 Governing Law. The Plan shall be governed and construed in
-------------
accordance with the laws of the State of Delaware and the Code.
9.3 Compliance with Applicable Laws. The inability of the Corporation
to obtain from any regulatory body having jurisdiction authority deemed by the
Corporation's counsel to be necessary to the lawful issuance and sale of any
Shares upon the exercise of an Option shall relieve the Corporation of any
liability in respect of the non-issuance or sale of such Shares as to which such
requisite authority shall not have been obtained.
-8-
<PAGE>
EXHIBIT I
[FORM OF]
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") is entered into as of
_____________, _______, by and between AMDL, INC., a Delaware corporation
("Corporation"), and ____________________________ ("Optionee").
R E C I T A L S
- - - - - - - -
A. On June 30, 1999, the Board of Directors of the Corporation adopted,
subject to the approval of the Corporation's shareholders, AMDL, Inc. 1999 Stock
Option Plan (the "Plan").
B. Pursuant to the Plan, on ________________, the members of the Board of
Directors of the Corporation serving on the Committee authorized granting to
Optionee options to purchase shares of the Corporation's common stock, $.001 par
value ("Shares") for the term and subject to the terms and conditions
hereinafter set forth.
A G R E E M E N T
- - - - - - - - -
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
-------------------
otherwise clearly requires, terms with initial capital letters used herein shall
have the meanings assigned to such terms in the Plan.
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, Options
----------------
to purchase all or any part of ___________ Shares, upon and subject to the
terms and conditions of the Plan, which is incorporated in full herein by this
reference, and upon the other terms and conditions set forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time during the
-------------
period commencing on the following dates (subject to the provisions of Section
17) and expiring on the date __________ (__) years from the date of grant,
unless earlier terminated pursuant to Section 7:
[Terms of option vesting to be set forth here]
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
------------------
giving written notice to the Corporation of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied by
such other executed instruments or documents as may be required by the Committee
pursuant to this Agreement, and unless
I-1
<PAGE>
otherwise directed by the Committee, Optionee shall at the time of such exercise
tender the purchase price of the Shares he has elected to purchase. An Optionee
may purchase less than the total number of Shares for which the Option is
exercisable, provided that a partial exercise of an Option may not be for less
than ______________ (___________) Shares. If Optionee shall not purchase all of
the Shares which he is entitled to purchase under the Options, his right to
purchase the remaining unpurchased Shares shall continue until expiration of the
Options. The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each Share
------------------------
which Optionee is entitled to purchase under the Options shall be $_________ per
Share.
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
-------------------------
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased. Provided, however, the Board of Directors may, in its
sole discretion, permit payment by the Corporation of the purchase price in
whole or in part with Shares. If the Optionee is so permitted, and the Optionee
elects to make payment with Shares, the Optionee shall deliver to the
Corporation certificates representing the number of Shares in payment for new
Shares, duly endorsed for transfer to the Corporation, together with any written
representations relating to title, liens and encumbrances, securities laws,
rules and regulatory compliance, or other matters, reasonably requested by the
Board of Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF EMPLOYMENT. If an Optionee's employment or
-----------------------------------
other relationship with the Corporation (or a Subsidiary) terminates, the effect
of the termination on the Optionee's rights to acquire Shares shall be as
follows:
7.1 Termination For Other Than Disability Or Cause. If an Optionee
----------------------------------------------
ceases to be employed by, or ceases to have a relationship with, the Corporation
or a Subsidiary for any reason other than for disability or cause, such
Optionee's Options shall expire not later than three (3) months thereafter.
During such three (3) month period and prior to the expiration of the Option by
its terms, the Optionee may exercise any Option granted to him, but only to the
extent such Options were exercisable on the date of termination of his
employment or relationship and except as so exercised, such Options shall expire
at the end of such three (3) month period unless such Options by their terms
expire before such date. The decision as to whether a termination for a reason
other than disability, cause or death has occurred shall be made by the
Committee, whose decision shall be final and conclusive, except that employment
shall not be considered terminated in the case of sick leave or other bona fide
leave of absence approved by the Corporation.
7.2 Disability. If an Optionee ceases to be employed by, or ceases to
----------
have a relationship with, the Corporation or a Subsidiary by reason of
disability (within the meaning of Code Section 22(e)(3)), such Optionee's
Options shall expire not later than one (1) year thereafter. During such one
(1) year period and prior to the expiration of the Option by its terms,
I-2
<PAGE>
the Optionee may exercise any Option granted to him, but only to the extent such
Options were exercisable on the date the Optionee ceased to be employed by, or
ceased to have a relationship with, the Corporation or Subsidiary by reason of
disability. The decision as to whether a termination by reason of disability has
occurred shall be made by the Committee, whose decision shall be final and
conclusive.
7.3 Termination For Cause. If an Optionee's employment by, or
---------------------
relationship with, the Corporation or a Subsidiary is terminated for cause, such
Optionee's Option shall expire immediately; provided, however, the Committee
may, in its sole discretion, within thirty (30) days of such termination, waive
the expiration of the Option by giving written notice of such waiver to the
Optionee at such Optionee's last known address. In the event of such waiver,
the Optionee may exercise the Option only to such extent, for such time, and
upon such terms and conditions as if such Optionee had ceased to be employed by,
or ceased to have a relationship with, the Corporation or a Subsidiary upon the
date of such termination for a reason other than disability, cause or death.
Termination for cause shall include termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith or any conduct detrimental to the interests of the
Corporation or a Subsidiary. The determination of the Committee with respect to
whether a termination for cause has occurred shall be final and conclusive.
8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable,
-----------------------------
either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution and shall be exercisable during the Optionee's lifetime
only by Optionee.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
------------------------------------------
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of an
Adjustment Event, (i) appropriate and proportionate adjustments shall be made to
the number and kind and exercise price for the Shares subject to the Options,
and (ii) appropriate amendments to this Agreement shall be executed by the
Corporation and Optionee if the Committee determines that such an amendment is
necessary or desirable to reflect such adjustments. If determined by the
Committee to be appropriate, in the event of an Adjustment Event which involves
the substitution of securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other corporation
of the Options. Notwithstanding the foregoing, any such adjustment to the
Options shall be made without change in the total exercise price applicable to
the unexercised portion of the Options, but with an appropriate adjustment to
the number of Shares, kind of Shares and exercise price for each Share subject
to the Options. The determination by the Committee as to what adjustments,
amendments or arrangements shall be made pursuant to this Section 10, and the
extent thereof, shall be final and conclusive. No fractional Shares shall be
issued on account of any such adjustment or arrangement.
I-3
<PAGE>
10. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing contained
-------------------------------------------------
in this Agreement shall obligate the Corporation to employ or have another
relationship with Optionee for any period or interfere in any way with the right
of the Corporation to reduce Optionee's compensation or to terminate the
employment of or relationship with Optionee at any time.
11. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
------------------------
granted, sometimes referred to herein as the "date of grant," shall be
______________________.
12. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
-----------------------------
privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
13. SECURITIES LAWS COMPLIANCE. The Corporation will diligently endeavor
--------------------------
to comply with all applicable securities laws before any Shares are issued
pursuant to the Options. Without limiting the generality of the foregoing, the
Corporation may require from the Optionee such investment representation or such
agreement, if any, as counsel for the Corporation may consider necessary in
order to comply with the Securities Act of 1933 as then in effect, and may
require that the Optionee agree that any sale of the Shares will be made only in
such manner as is permitted by the Committee. The Committee may in its
discretion cause the Shares underlying the Options to be registered under the
Securities Act of 1933, as amended, by filing a Form S-8 Registration Statement
covering the Options and the Shares underlying the Options. Optionee shall take
any action reasonably requested by the Corporation in connection with
registration or qualification of the Shares under federal or state securities
laws.
14. INTENDED TREATMENT AS INCENTIVE STOCK OPTIONS. The Options granted
---------------------------------------------
herein are intended to be "incentive stock options" to which Sections 421 and
422 of the Internal Revenue Code of 1986, as amended from time to time ("Code")
apply, and shall be construed to implement that intent. If all or any part of
the Options shall not be subject to Sections 421 and 422 of the Code, the
Options shall nevertheless be valid and carried into effect.
15. PLAN CONTROLS. The Options shall be subject to and governed by the
-------------
provisions of the Plan. All determinations and interpretations of the Plan made
by the Committee shall be final and conclusive.
16. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
------------------------
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
I-4
<PAGE>
17. CONDITIONS TO OPTIONS.
---------------------
17.1 Compliance with Applicable Laws. The Corporation's obligation to
-------------------------------
issue Shares of its common stock upon exercise of the Options is expressly
conditioned upon the completion by the Corporation of any registration or other
qualification of such Shares under any state and/or Federal law or rulings or
regulations of any governmental regulatory body, or the making of such
investment representations or other representations and undertakings by the
Optionee or any person entitled to exercise the Option in order to comply with
the requirements of any exemption from any such registration or other
qualification of such Shares which the Committee shall, in its sole discretion,
deem necessary or advisable. Such required representations and undertakings may
include representations and agreements that the Optionee or any person entitled
to exercise the Option (i) is not purchasing such Shares for distribution and
(ii) agrees to have placed upon the face and reverse of any certificates a
legend setting forth any representations and undertakings which have been given
to the Committee or a reference thereto.
17.2 Shareholder Approval of Plan. If the Options granted hereby are
-----------------------------
granted prior to approval of the Plan by the shareholders of the Corporation
pursuant to Section 8 of the Plan, the grant of the Options made hereby is
expressly conditioned upon and such Options shall not be exercisable until the
approval of the Plan by the shareholders of the Corporation in accordance with
the provisions of Section 8 of the Plan.
17.3 Maximum Exercise Period. Notwithstanding any provision of this
-----------------------
Agreement to the contrary, the Options shall expire no later than ten (10) years
from the date hereof or five (5) years if, as of the date hereof, the Optionee
owns or is considered to own by reason of Code Section 425(d) more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Corporation or any Subsidiary or parent corporation of the Corporation.
18. MISCELLANEOUS.
--------------
18.1 Binding Effect. This Agreement shall bind and inure to the
--------------
benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
18.2 Further Acts. Each party agrees to perform any further acts and
------------
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
18.3 Amendment. This Agreement may be amended at any time by the
---------
written agreement of the Corporation and the Optionee.
18.4 Syntax. Throughout this Agreement, whenever the context so
------
requires, the singular shall include the plural, and the masculine gender shall
include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and
I-5
<PAGE>
they shall not limit, expand or otherwise affect the construction or
interpretation of this Agreement.
18.5 Choice of Law. The parties hereby agree that this Agreement has been
-------------
executed and delivered in the State of California and shall be construed,
enforced and governed by the laws thereof. This Agreement is in all respects
intended by each party hereto to be deemed and construed to have been jointly
prepared by the parties and the parties hereby expressly agree that any
uncertainty or ambiguity existing herein shall not be interpreted against either
of them.
18.6 Severability. In the event that any provision of this Agreement shall
------------
be held invalid or unenforceable, such provision shall be severable from, and
such invalidity or unenforceability shall not be construed to have any effect
on, the remaining provisions of this Agreement.
18.7 Notices. All notices and demands between the parties hereto shall be
-------
in writing and shall be served either by registered or certified mail, and such
notices or demands shall be deemed given and made forty-eight (48) hours after
the deposit thereof in the United States mail, postage prepaid, addressed to the
party to whom such notice or demand is to be given or made, and the issuance of
the registered receipt therefor. If served by telegraph, such notice or demand
shall be deemed given and made at the time the telegraph agency shall confirm to
the sender, delivery thereof to the addressee. All notices and demands to
Optionee or the Corporation may be given to them at the following addresses:
If to Optionee: ____________________________
____________________________
____________________________
If to Corporation: AMDL, Inc.
14272 Franklin Avenue, Suite 106
Tustin, California 92780
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
18.8 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto pertaining to the subject matter hereof, this
Agreement supersedes all prior and contemporaneous agreements and understandings
of the parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
I-6
<PAGE>
18.9 Attorneys' Fees. In the event that any party to this Agreement
---------------
institutes any action or proceeding, including, but not limited to, litigation
or arbitration, to preserve, to protect or to enforce any right or benefit
created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
"CORPORATION"
AMDL, INC.,
a Delaware corporation
By:________________________________
_______________________________
"OPTIONEE"
___________________________________
I-7
<PAGE>
EXHIBIT II
[FORM OF]
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered into as
of _________________, _______, by and between AMDL, INC., a Delaware corporation
("Corporation"), and _______________ ("Optionee").
R E C I T A L S
- - - - - - - -
A. On June 30, 1999, the Board of Directors of the Corporation adopted,
subject to the approval of the Corporation's shareholders, the AMDL, Inc. 1999
Stock Option Plan (the "Plan").
B. Pursuant to the Plan, on ___________, the members of the Board of
Directors of the Corporation serving on the Committee authorized granting to
Optionee options to purchase shares of the common stock, $.001 par value, of the
Corporation ("Shares") for the term and subject to the terms and conditions
hereinafter set forth.
A G R E E M E N T
- - - - - - - - -
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
-------------------
otherwise clearly requires, terms with initial capital letters used herein shall
have the meanings assigned to such terms in the Plan.
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, Options
----------------
to purchase all or any part of ____________ Shares, upon and subject to the
terms and conditions of the Plan, which is incorporated in full herein by this
reference, and upon the other terms and conditions set forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time during the
-------------
period commencing on the following dates (subject to the provisions of Section
17) and expiring on the date ________ (__) years from the date of grant, unless
earlier terminated pursuant to Section 7:
Number of Options Date First Exercisable
----------------- ----------------------
[Terms of option vesting to be set forth here]
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
------------------
giving written notice to the Corporation of the election to purchase and of the
number of Shares
II-1
<PAGE>
Optionee elects to purchase, such notice to be accompanied by such other
executed instruments or documents as may be required by the Committee pursuant
to this Agreement, and unless otherwise directed by the Committee, Optionee
shall at the time of such exercise tender the purchase price of the Shares he
has elected to purchase. An Optionee may purchase less than the total number of
Shares for which the Option is exercisable, provided that a partial exercise of
an Option may not be for less than ________________ (______) Shares. If Optionee
shall not purchase all of the Shares which he is entitled to purchase under the
Options, his right to purchase the remaining unpurchased Shares shall continue
until expiration of the Options. The Options shall be exercisable with respect
of whole Shares only, and fractional Share interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each Share
------------------------
which Optionee is entitled to purchase under the Options shall be $____ per
Share.
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of exercise
-------------------------
of the Options, Optionee shall tender in cash or by certified or bank cashier's
check payable to the Corporation, the purchase price for all Shares then being
purchased. Provided, however, the Board of Directors may, in its sole
discretion, permit payment by the Corporation of the purchase price in whole or
in part with Shares. If the Optionee is so permitted, and the Optionee elects
to make payment with Shares, the Optionee shall deliver to the Corporation
certificates representing the number of Shares in payment for new Shares, duly
endorsed for transfer to the Corporation, together with any written
representations relating to title, liens and encumbrances, securities laws,
rules and regulatory compliance, or other matters, reasonably requested by the
Board of Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF RELATIONSHIP OR DEATH. If Optionee's
----------------------------------------------
relationship with the Corporation as an employee terminates (whether voluntarily
or involuntarily because he is not re-elected by the shareholders), or if
Optionee dies, all Options which have previously vested shall expire six (6)
months thereafter. All unvested Options shall lapse and automatically expire.
During such six (6) month period (or such shorter period prior to the expiration
of the Option by its own terms), such Options may be exercised by the Optionee,
his executor or administrator or the person or persons to whom the Option is
transferred by will or the applicable laws of descent and distribution, as the
case may be, but only to the extent such Options were exercisable on the date
Optionee ceased to have a relationship with the Corporation as a director or
died.
8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable,
-----------------------------
either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution and shall be exercisable during the Optionee's lifetime
only by Optionee.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
------------------------------------------
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through
II-2
<PAGE>
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, stock consolidation or otherwise. Upon the
occurrence of an Adjustment Event, (i) appropriate and proportionate adjustments
shall be made to the number and kind and exercise price for the Shares subject
to the Options, and (ii) appropriate amendments to this Agreement shall be
executed by the Corporation and Optionee if the Committee determines that such
an amendment is necessary or desirable to reflect such adjustments. If
determined by the Committee to be appropriate, in the event of an Adjustment
Event which involves the substitution of securities of a corporation other than
the Corporation, the Committee shall make arrangements for the assumptions by
such other corporation of the Options. Notwithstanding the foregoing, any such
adjustment to the Options shall be made without change in the total exercise
price applicable to the unexercised portion of the Options, but with an
appropriate adjustment to the number of Shares, kind of Shares and exercise
price for each Share subject to the Options. The determination by the Committee
as to what adjustments, amendments or arrangements shall be made pursuant to
this Section 10, and the extent thereof, shall be final and conclusive. No
fractional Shares shall be issued on account of any such adjustment or
arrangement.
10. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing contained
-------------------------------------------------
in this Agreement shall obligate the Corporation to employ or have another
relationship with Optionee for any period or interfere in any way with the right
of the Corporation to reduce Optionee's compensation or to terminate the
employment of or relationship with Optionee at any time.
11. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
------------------------
granted, sometimes referred to herein as the "date of grant," shall be
______________.
12. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
-----------------------------
privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
13. SECURITIES LAWS COMPLIANCE. The Corporation will diligently endeavor
--------------------------
to comply with all applicable securities laws before any stock is issued
pursuant to the Options. Without limiting the generality of the foregoing, the
Corporation may require from the Optionee such investment representation or such
agreement, if any, as counsel for the Corporation may consider necessary in
order to comply with the Securities Act of 1933 as then in effect, and may
require that the Optionee agree that any sale of the Shares will be made only in
such manner as is permitted by the Committee. The Committee may in its
discretion cause the Shares underlying the Options to be registered under the
Securities Act of 1933, as amended, by filing a Form S-8 Registration Statement
covering the Options and the Shares underlying the Options. Optionee shall take
any action reasonably requested by the Corporation in connection with
registration or qualification of the Shares under federal or state securities
laws.
II-3
<PAGE>
14. INTENDED TREATMENT AS NON-QUALIFIED STOCK OPTIONS. The Options
-------------------------------------------------
granted herein are intended to be non-qualified stock options described in U.S.
Treasury Regulation ("Treas. Reg.") (S)1.83-7 to which Sections 421 and 422 of
the Internal Revenue Code of 1986, as amended from time to time ("Code") do not
apply, and shall be construed to implement that intent. If all or any part of
the Options shall not be described in Treas. Reg. (S)1.83-7 or be subject to
Sections 421 and 422 of the Code, the Options shall nevertheless be valid and
carried into effect.
15. PLAN CONTROLS. The Options shall be subject to and governed by the
-------------
provisions of the Plan. All determinations and interpretations of the Plan made
by the Committee shall be final and conclusive.
16. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
------------------------
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
17. CONDITIONS TO OPTIONS.
---------------------
17.1 Compliance with Applicable Laws. The Corporation's obligation to
-------------------------------
issue Shares upon exercise of the Options is expressly conditioned upon the
completion by the Corporation of any registration or other qualification of such
Shares under any state and/or Federal law or rulings or regulations of any
governmental regulatory body, or the making of such investment representations
or other representations and undertakings by the Optionee or any person entitled
to exercise the Option in order to comply with the requirements of any exemption
from any such registration or other qualification of such Shares which the
Committee shall, in its sole discretion, deem necessary or advisable. Such
required representations and undertakings may include representations and
agreements that the Optionee or any person entitled to exercise the Option (i)
is not purchasing such Shares for distribution and (ii) agrees to have placed
upon the face and reverse of any certificates a legend setting forth any
representations and undertakings which have been given to the Committee or a
reference thereto.
17.2 Shareholder Approval of Plan. If the Options granted hereby are
----------------------------
granted prior to approval of the Plan by the shareholders of the Corporation
pursuant to Section 8 of the Plan, the grant of the Options made hereby is
expressly conditioned upon and such Options shall not be exercisable until the
approval of the Plan by the shareholders of the Corporation in accordance with
the provisions of Section 8 of the Plan.
18. MISCELLANEOUS.
-------------
18.1 Binding Effect. This Agreement shall bind and inure to the
--------------
benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
II-4
<PAGE>
18.2 Further Acts. Each party agrees to perform any further acts and
------------
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
18.3 Amendment. This Agreement may be amended at any time by the written
---------
agreement of the Corporation and the Optionee.
18.4 Syntax. Throughout this Agreement, whenever the context so requires,
------
the singular shall include the plural, and the masculine gender shall include
the feminine and neuter genders. The headings and captions of the various
Sections hereof are for convenience only and they shall not limit, expand or
otherwise affect the construction or interpretation of this Agreement.
18.5 Choice of Law. The parties hereby agree that this Agreement has been
-------------
executed and delivered in the State of California and shall be construed,
enforced and governed by the laws thereof. This Agreement is in all respects
intended by each party hereto to be deemed and construed to have been jointly
prepared by the parties and the parties hereby expressly agree that any
uncertainty or ambiguity existing herein shall not be interpreted against either
of them.
18.6 Severability. In the event that any provision of this Agreement shall
------------
be held invalid or unenforceable, such provision shall be severable from, and
such invalidity or unenforceability shall not be construed to have any effect
on, the remaining provisions of this Agreement.
18.7 Notices. All notices and demands between the parties hereto shall be
-------
in writing and shall be served either by registered or certified mail, and such
notices or demands shall be deemed given and made forty-eight (48) hours after
the deposit thereof in the United States mail, postage prepaid, addressed to the
party to whom such notice or demand is to be given or made, and the issuance of
the registered receipt therefor. If served by telegraph, such notice or demand
shall be deemed given and made at the time the telegraph agency shall confirm to
the sender, delivery thereof to the addressee. All notices and demands to
Optionee or the Corporation may be given to them at the following addresses:
If to Optionee: _________________________
_________________________
_________________________
If to Corporation: AMDL, Inc.
14272 Franklin Avenue, Suite 106
Tustin, California 92780
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
II-5
<PAGE>
18.8 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto pertaining to the subject matter hereof, this
Agreement supersedes all prior and contemporaneous agreements and understandings
of the parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
18.9 Attorneys' Fees. In the event that any party to this Agreement
---------------
institutes any action or proceeding, including, but not limited to, litigation
or arbitration, to preserve, to protect or to enforce any right or benefit
created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
"CORPORATION"
AMDL, INC.,
a Delaware corporation
By:__________________________
________________________
"OPTIONEE"
_____________________________
II-6
<PAGE>
EXHIBIT 10.46
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is
made as of this 1st day of July, 1999 by and between William M. Thompson, III,
M.D. ("Holder") and AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
A. Holder currently serves as a director of the Company. The Company
and Holder acknowledge that as of the date of this Agreement, the Company is
indebted to Holder in the amount of $258,250 (the "Indebtedness") for accrued
fees due Holder by the Company.
B. The Company and Holder are both parties to that certain Salary
Continuation Agreement dated May 21, 1998 ("Salary Continuation Agreement")
which entitled Holder to a severance package following a "Change in Control" of
the Company and the occurrence of a "Termination Event" (as those terms are
defined in the Salary Continuation Agreement).
C. The Company and Holder now wish to cancel the Indebtedness and to
terminate the Salary Continuation Agreement in exchange for the consideration
set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
-------------------------
incorporated by this reference.
2 Cancellation of Indebtedness. Holder hereby agrees to cancel and
----------------------------
extinguish the Indebtedness in exchange for the consideration set forth in
Section 4 of this Agreement (the "Consideration"). Holder further acknowledges
and agrees that the payment of the Consideration shall constitute full
satisfaction of $258,250 of the Indebtedness represented thereby and that the
Corporation shall have no further obligation to repay same.
3. Termination of Agreement. The Company and Holder hereby mutually
------------------------
agree to the termination of, and hereby mutually terminate, any and all
agreements existing between them and any of them, including the Salary
Continuation Agreement, including the termination and nonsurvival of all
representations, warranties and covenants thereunder.
4. Consideration In exchange for the cancellation of the
-------------
Indebtedness pursuant to Section 2 of the Agreement and the termination of the
Salary Continuation Agreement pursuant to Section 3 of the Agreement, the
Company shall deliver to the Holder the following consideration:
<PAGE>
(a) Cash Consideration. The Company shall pay the Holder $25,825 in
-------------------
cash (the "Cash Consideration"). The Cash Consideration shall be payable in six
installments of $4,304.17 each with the first payment to be made on August 31,
1999 and the remaining payments to be made on or before the last day of each of
the next five calendar months.
(b) Warrant. Upon the execution of this Agreement, the Company shall
-------
issue to Holder a stock purchase warrant ("Warrant") to purchase up to 154,950
shares of Common Stock at an exercise price of $.68 per share, pursuant to the
form of Warrant attached hereto as Exhibit A.
5. General Release. The Company and Holder agree to execute and deliver
---------------
the General Release in the form attached hereto as Exhibit B.
6. Arbitration and Fees. Any controversy or claim arising out of or
--------------------
relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
attorneys' fees in such arbitration or other proceeding which may be determined
by the arbitrator or other officer in such proceeding. If collection is
required for any payment not made when due, the creditor shall collect statutory
interest and the cost of collection, including attorney's fees whether or not
court action is required for enforcement.
7. Miscellaneous. This Agreement contains the entire agreement between
-------------
Holder and the Company and may not be modified, altered or changed in any manner
whatsoever, except by a written agreement signed by all of the parties hereto.
Any agreement or representation concerning the subject matter of this Agreement
not set forth in this Agreement or a subsequent written agreement signed by all
of the parties hereto is null and void. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. The rights and obligation of either party to this Agreement may not be
assigned by such party without the prior written consent of the other party.
This Agreement may be executed in two or more counterparts, each signed by one
of the parties and all of said counterparts together shall constitute one and
the same instrument. The parties agree that facsimile signatures may be relied
upon by each of the parties hereto as original signatures.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
"The Company"
AMDL, INC.,
a Delaware corporation
By:_____________________________________
Gary L. Dreher, President
"Holder"
By:_____________________________________
William M. Thompson, III, M.D.
-3-
<PAGE>
EXHIBIT A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., PACIFIC TIME ON JULY 1, 2004.
STOCK PURCHASE WARRANT
----------------------
For the Purchase of 154,950
Shares of Common Stock, $.001 Par Value
of
AMDL, INC.
A Delaware Corporation
THIS CERTIFIES THAT, for value received, William M. Thompson, III, M.D.
(the "Holder"), as registered owner of this Stock Purchase Warrant ("Warrant"),
is entitled to at any time or from time to time after July 1, 1999 and before
5:00 P.M., Pacific Time, July 1, 2004, but not thereafter, to subscribe for,
purchase and receive 154,950 fully paid and nonassessable shares of the common
stock, $.001 par value (the "Common Stock"), of AMDL, INC., a Delaware
corporation (the "Company"), at a price equal to $.68 per share of the Common
Stock (the "Exercise Price"), upon presentation and surrender of this Warrant
and upon payment by cashier's check or wire transfer of the Exercise Price for
such shares of the Common Stock to the Company at the principal office of the
Company; provided, however, that upon the occurrence of any of the events
specified in the Statement of Rights of Warrant Holder, a copy of which is
attached as Annex I hereto and by this reference made a part hereof, the rights
granted by this Warrant shall be adjusted as therein specified. Upon exercise
of this Warrant, the form of election hereinafter provided for must be duly
executed and the instructions for registration of the Common Stock acquired by
such exercise must be completed. If the subscription rights represented hereby
shall not be exercised at or before 5:00 P.M., Pacific Time, on July 1, 2004,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
A-1
<PAGE>
This Warrant may be exercised in accordance with its terms in whole or in
part. In the event of the exercise or assignment hereof in part only, the
Company shall cause to be delivered to the Holder a new Warrant of like tenor to
this Warrant in the name of the Holder evidencing the right of the Holder to
purchase the number of shares of the Common Stock purchasable hereunder as to
which this Warrant has not been exercised or assigned.
In no event shall this Warrant (or the shares of the Common Stock issuable
upon full or partial exercise hereof) be offered or sold except in conformity
with the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 1st day of July, 1999.
AMDL, INC.
By:___________________________________
Gary L. Dreher, President
A-2
<PAGE>
Form to be used to exercise Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: __________________
The Undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase shares of the Common Stock of the Company called for
thereby, and hereby makes payment by cashier's check of $___________ (at the
rate of $______ per share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to which this
Warrant is exercised in the name of:
(Name)
(Address)
(Taxpayer Number)
and if said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, issue a new Warrant Certificate for the balance
remaining of such Warrants to the undersigned at the address stated below.
Name of Holder:_________________________________
(Please Print)
Signature:______________________________________
____________________________________
(Address)
Signature Guaranteed: ____
NOTICE: The signature to the form to exercise must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-3
<PAGE>
Form to be used to transfer Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: _________________
For value received, __________ hereby sells, assigns and transfers unto
_______________________ said Warrant Certificate together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint the
Secretary of AMDL, Inc. attorney, to transfer said Warrant Certificate on the
books of the corporation, with full power of substitution in the premises.
Name of Holder:______________________________
(Please Print)
Signature:___________________________________
_________________________________
(Address)
Signature Guaranteed: ____
NOTICE: The signature to the form to transfer must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-4
<PAGE>
ANNEX I TO AMDL, INC.
STOCK PURCHASE WARRANT DATED JULY 1, 1999
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exercise of Warrant. This Warrant may be exercised in whole or in
-------------------
part at any time or from time to time after July 1, 1999 and before 5:00 p.m.,
Pacific Time, on July 1, 2004, by presentation and surrender hereof to the
Company, with the Exercise Form annexed hereto duly executed and accompanied by
payment by cashier's check or wire transfer of the Exercise Price for the number
of shares specified in such form, together with all federal and state taxes
applicable upon such exercise. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price at the office or agency of the Company, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder.
2. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
3. Adjustment in Number of Shares.
------------------------------
(A) Adjustment for Reclassifications. In case at any time or from
--------------------------------
time to time after July 1, 1999 ("the Issue Date") the holders of the Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the Issue Date he had been the
holder of record of the number of shares of Common Stock of the Company called
for on the face of this Warrant and had thereafter, during the period from the
Issue Date, to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period.
(B) Adjustment for Reorganization, Consolidation, Merger. In case of
----------------------------------------------------
reorganization of the Company (or any other corporation the stock or other
securities of which are
A-5
<PAGE>
at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Holder of this Warrant, upon the exercise hereof as provided in Section
1 at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would be entitled had the Holder exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
4. Notices to Warrant Holders. So long as this Warrant shall be
--------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
5. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
6. Restrictions on Transfer. The Holder of this Warrant, by acceptance
------------------------
thereof, agrees that, absent an effective notification under Regulation A or
registration statement, in either case under the Securities Act of 1933 (the
"Act"), covering the disposition of this Warrant or the Common Stock issued or
issuable upon exercise hereof, such Holder will not sell or transfer any or all
of this Warrant or such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the effect that
such sale or transfer will be
A-6
<PAGE>
exempt from the registration and prospectus delivery requirements of the Act.
Such Holder agrees that the Company may issue instructions to its transfer agent
to place, or may itself place, a "stop order" on transfers with respect to the
Warrant and Common Stock and that the certificates evidencing the Warrant and
Common Stock which will be delivered to such Holder by the Company shall bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN
MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Holder of this Warrant, at the time all or a portion of such
Warrant is exercised, agrees to make such written representations to the Company
as counsel for the Company may reasonably request, in order that the Company may
be reasonably satisfied that such exercise of the Warrant and consequent
issuance of Common Shares will not violate the registration and prospectus
delivery requirements of the Act, or other applicable state securities laws.
7. Piggyback Registration Rights. If, at any time after July 1, 1999
-----------------------------
and expiring July 1, 2004, the Company proposes to register any of its
securities under the Securities Act of 1933, as amended ("Act") (except for
registrations on Forms S-8 or S-4 or their equivalent), it will give written
notice by registered mail, at least thirty (30) days prior to the filing of each
such registration statement, to Holder of its intention to do so. If Holder
notifies the Company within twenty (20) days after receipt of any such notice of
its desire to include any such shares of Common Stock issuable upon exercise of
this Warrant in such proposed registration statement, the Company shall afford
Holder the opportunity to have any such shares of Common Stock registered under
such registration statement at the Company's sole cost and expense. These
rights may be exercised at any time on an unlimited number of occasions prior to
July 1, 2004, subject to the absolute discretion of any underwriter of the
Company's securities requesting that the shares of Common Stock held by the
Holder not be sold for a period not to exceed 180 days from the effective date
of the Company's initial underwritten public offering. If the underwriter
believes that the total amount of securities sought to be registered by the
Holder and any other holder of similar rights exceeds the amount of securities
that the underwriter deems advisable to include in the offering, only the pro
rata number of shares of Common Stock requested by the Holder with all other
holders of shares of
A-7
<PAGE>
Common Stock requesting registration pursuant to piggyback registration rights,
if any, shall be so registerable. If the Company files a registration statement
on Form S-8 and this Warrant may be registered under the Act at that time, the
Company agrees to include the Warrant and Common Shares in such registration.
8. Loss or Mutilation. Upon receipt by the Company of evidence
------------------
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
9. Reservation of Common Stock. The Company shall at all times reserve
---------------------------
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
10. Notices. All notices and other communications from the Company to
-------
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing.
11. Change; Waiver. Neither this Warrant nor any term hereof may be
--------------
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. Law Governing. This Warrant shall be construed and enforced in
-------------
accordance with and governed by the laws of Delaware.
DATED: July 1, 1999
AMDL, INC.
A Delaware Corporation
By:_________________________________
Gary L. Dreher, President
A-8
<PAGE>
EXHIBIT B
GENERAL RELEASE
---------------
WHEREAS, William M. Thompson, III, M.D. ("Releasor") and AMDL, INC., a
Delaware corporation ("Releasee") have entered into that certain Agreement
Regarding Cancellation of Indebtedness dated as of July 1, 1999 (the
"Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
-------
(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
B-1
<PAGE>
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
-------------
Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
_________________________________________
William M. Thompson, III, M.D.
"Releasee"
AMDL, INC.,
a Delaware corporation
By:______________________________________
Gary L. Dreher, President
B-2
<PAGE>
EXHIBIT 10.47
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is
made as of this 1st day of July, 1999 by and between Harry Berk ("Holder") and
AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
A. Holder is a former officer of the Company. The Company and Holder
acknowledge that as of the date of this Agreement, the Company is indebted to
Holder in the amount of $90,839.84 (the "Indebtedness") for accrued wages due
Holder by the Company.
B. The Company and Holder are also both parties to that certain
Agreement Relating to Salary Deferral dated July 1, 1998 ("Salary Deferral
Agreement") pursuant to which Holder agreed to defer payment of a portion of his
salary pending the receipt by the Company of additional financing.
C. The Company and Holder now wish to cancel the Indebtedness and to
terminate the the Salary Deferral Agreement in exchange for the consideration
set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
-------------------------
incorporated by this reference.
2. Cancellation of Indebtedness. Holder hereby agrees to cancel and
----------------------------
extinguish the Indebtedness in exchange for the consideration set forth in
Section 4 of this Agreement (the "Consideration"). Holder further acknowledges
and agrees that the payment of the Consideration shall constitute full
satisfaction of $90,839.84 of the Indebtedness represented thereby and that the
Corporation shall have no further obligation to repay same.
3. Termination of Agreements. The Company and Holder hereby mutually
-------------------------
agree to the termination of, and hereby mutually terminate, any and all
agreements existing between them and any of them, including the Salary Deferral
Agreement, including the termination and nonsurvival of all representations,
warranties and covenants thereunder.
4. Consideration In exchange for the cancellation of the
-------------
Indebtedness pursuant to Section 2 of the Agreement and the termination of the
Salary Deferral Agreement pursuant to
<PAGE>
Section 3 of the Agreement, the Company shall deliver to the Holder the
following consideration:
(a) Cash Consideration. The Company shall pay the Holder $9,840 in
-------------------
cash (the "Cash Consideration"). The Cash Consideration shall be payable in six
installments of $1,640 each with the first payment to be made on August 31, 1999
and the remaining payments to be made on or before the last day of each of the
next five calendar months.
(b) Warrant. Upon the execution of this Agreement, the Company shall
-------
issue to Holder a stock purchase warrant ("Warrant") to purchase up to 54,504
shares of Common Stock at an exercise price of $.68 per share, pursuant to the
form of Warrant attached hereto as Exhibit A.
5. General Release. The Company and Holder agree to execute and deliver
---------------
the General Release in the form attached hereto as Exhibit B.
6. Arbitration and Fees. Any controversy or claim arising out of or
--------------------
relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
attorneys' fees in such arbitration or other proceeding which may be determined
by the arbitrator or other officer in such proceeding. If collection is
required for any payment not made when due, the creditor shall collect statutory
interest and the cost of collection, including attorney's fees whether or not
court action is required for enforcement.
7. Miscellaneous. This Agreement contains the entire agreement between
-------------
Holder and the Company and may not be modified, altered or changed in any manner
whatsoever, except by a written agreement signed by all of the parties hereto.
Any agreement or representation concerning the subject matter of this Agreement
not set forth in this Agreement or a subsequent written agreement signed by all
of the parties hereto is null and void. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. The rights and obligation of either party to this Agreement may not be
assigned by such party without the prior written consent of the other party.
This Agreement may be executed in two or more counterparts, each signed by one
of the parties and all of said counterparts together shall constitute one and
the same instrument. The parties agree that facsimile signatures may be relied
upon by each of the parties hereto as original signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
"The Company"
AMDL, INC.,
-2-
<PAGE>
a Delaware corporation
By:________________________________
Gary L. Dreher, President
"Holder"
By:________________________________
Harry Berk
-3-
<PAGE>
EXHIBIT A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., PACIFIC TIME ON JULY 1, 2004.
STOCK PURCHASE WARRANT
----------------------
For the Purchase of 54,504
Shares of Common Stock, $.001 Par Value
of
AMDL, INC.
A Delaware Corporation
THIS CERTIFIES THAT, for value received, Harry Berk (the "Holder"), as
registered owner of this Stock Purchase Warrant ("Warrant"), is entitled to at
any time or from time to time after July 1, 1999 and before 5:00 P.M., Pacific
Time, July 1, 2004, but not thereafter, to subscribe for, purchase and receive
54,504 fully paid and nonassessable shares of the common stock, $.001 par value
(the "Common Stock"), of AMDL, INC., a Delaware corporation (the "Company"), at
a price equal to $.68 per share of the Common Stock (the "Exercise Price"), upon
presentation and surrender of this Warrant and upon payment by cashier's check
or wire transfer of the Exercise Price for such shares of the Common Stock to
the Company at the principal office of the Company; provided, however, that upon
the occurrence of any of the events specified in the Statement of Rights of
Warrant Holder, a copy of which is attached as Annex I hereto and by this
reference made a part hereof, the rights granted by this Warrant shall be
adjusted as therein specified. Upon exercise of this Warrant, the form of
election hereinafter provided for must be duly executed and the instructions for
registration of the Common Stock acquired by such exercise must be completed.
If the subscription rights represented hereby shall not be exercised at or
before 5:00 P.M., Pacific Time, on July 1, 2004, this Warrant shall become and
be void without further force or effect, and all rights represented hereby shall
cease and expire.
A-1
<PAGE>
This Warrant may be exercised in accordance with its terms in whole or in
part. In the event of the exercise or assignment hereof in part only, the
Company shall cause to be delivered to the Holder a new Warrant of like tenor to
this Warrant in the name of the Holder evidencing the right of the Holder to
purchase the number of shares of the Common Stock purchasable hereunder as to
which this Warrant has not been exercised or assigned.
In no event shall this Warrant (or the shares of the Common Stock issuable
upon full or partial exercise hereof) be offered or sold except in conformity
with the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 1st day of July, 1999.
AMDL, INC.
By:________________________________
Gary L. Dreher, President
A-2
<PAGE>
Form to be used to exercise Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: __________________
The Undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase ___________ shares of the Common Stock of the Company called for
thereby, and hereby makes payment by cashier's check of $___________ (at the
rate of $______ per share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to which this
Warrant is exercised in the name of:
(Name)
(Address)
(Taxpayer Number)
and if said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, issue a new Warrant Certificate for the balance
remaining of such Warrants to the undersigned at the address stated below.
Name of Holder:________________________________
(Please Print)
Signature:_____________________________________
____________________________________
(Address)
Signature Guaranteed: ______________________
NOTICE: The signature to the form to exercise must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-3
<PAGE>
Form to be used to transfer Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: _________________
For value received, ________ hereby sells, assigns and transfers unto
_______________________ said Warrant Certificate together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint the
Secretary of AMDL, Inc. attorney, to transfer said Warrant Certificate on the
books of the corporation, with full power of substitution in the premises.
Name of Holder:___________________________________
(Please Print)
Signature:________________________________________
_____________________________________
(Address)
Signature Guaranteed: ____________________________
NOTICE: The signature to the form to transfer must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-4
<PAGE>
ANNEX I TO AMDL, INC.
STOCK PURCHASE WARRANT DATED JULY 1, 1999
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exercise of Warrant. This Warrant may be exercised in whole or in
-------------------
part at any time or from time to time after July 1, 1999 and before 5:00 p.m.,
Pacific Time, on July 1, 2004, by presentation and surrender hereof to the
Company, with the Exercise Form annexed hereto duly executed and accompanied by
payment by cashier's check or wire transfer of the Exercise Price for the number
of shares specified in such form, together with all federal and state taxes
applicable upon such exercise. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price at the office or agency of the Company, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder.
2. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
3. Adjustment in Number of Shares.
------------------------------
(A) Adjustment for Reclassifications. In case at any time or from
--------------------------------
time to time after July 1, 1999 ("the Issue Date") the holders of the Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the Issue Date he had been the
holder of record of the number of shares of Common Stock of the Company called
for on the face of this Warrant and had thereafter, during the period from the
Issue Date, to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period.
(B) Adjustment for Reorganization, Consolidation, Merger. In case of
----------------------------------------------------
any reorganization of the Company (or any other corporation the stock or other
securities of which are
A-5
<PAGE>
at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Holder of this Warrant, upon the exercise hereof as provided in Section
1 at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would be entitled had the Holder exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
4. Notices to Warrant Holders. So long as this Warrant shall be
--------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
5. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
6. Restrictions on Transfer. The Holder of this Warrant, by acceptance
------------------------
thereof, agrees that, absent an effective notification under Regulation A or
registration statement, in either case under the Securities Act of 1933 (the
"Act"), covering the disposition of this Warrant or the Common Stock issued or
issuable upon exercise hereof, such Holder will not sell or transfer any or all
of this Warrant or such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the effect that
such sale or transfer will be
A-6
<PAGE>
exempt from the registration and prospectus delivery requirements of the Act.
Such Holder agrees that the Company may issue instructions to its transfer agent
to place, or may itself place, a "stop order" on transfers with respect to the
Warrant and Common Stock and that the certificates evidencing the Warrant and
Common Stock which will be delivered to such Holder by the Company shall bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN
MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Holder of this Warrant, at the time all or a portion of such
Warrant is exercised, agrees to make such written representations to the Company
as counsel for the Company may reasonably request, in order that the Company may
be reasonably satisfied that such exercise of the Warrant and consequent
issuance of Common Shares will not violate the registration and prospectus
delivery requirements of the Act, or other applicable state securities laws.
7. Piggyback Registration Rights. If, at any time after July 1, 1999
-----------------------------
and expiring July 1, 2004, the Company proposes to register any of its
securities under the Securities Act of 1933, as amended ("Act") (except for
registrations on Forms S-8 or S-4 or their equivalent), it will give written
notice by registered mail, at least thirty (30) days prior to the filing of each
such registration statement, to Holder of its intention to do so. If Holder
notifies the Company within twenty (20) days after receipt of any such notice of
its desire to include any such shares of Common Stock issuable upon exercise of
this Warrant in such proposed registration statement, the Company shall afford
Holder the opportunity to have any such shares of Common Stock registered under
such registration statement at the Company's sole cost and expense. These
rights may be exercised at any time on an unlimited number of occasions prior to
July 1, 2004, subject to the absolute discretion of any underwriter of the
Company's securities requesting that the shares of Common Stock held by the
Holder not be sold for a period not to exceed 180 days from the effective date
of the Company's initial underwritten public offering. If the underwriter
believes that the total amount of securities sought to be registered by the
Holder and any other holder of similar rights exceeds the amount of securities
that the underwriter deems advisable to include in the offering, only the pro
rata number of shares of Common Stock requested by the Holder with all other
holders of shares of
A-7
<PAGE>
Common Stock requesting registration pursuant to piggyback registration rights,
if any, shall be so registerable. If the Company files a registration statement
on Form S-8 and this Warrant may be registered under the Act at that time, the
Company agrees to include the Warrant and Common Shares in such registration.
8. Loss or Mutilation. Upon receipt by the Company of evidence
------------------
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
9. Reservation of Common Stock. The Company shall at all times reserve
---------------------------
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
10. Notices. All notices and other communications from the Company to
-------
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing.
11. Change; Waiver. Neither this Warrant nor any term hereof may be
--------------
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. Law Governing. This Warrant shall be construed and enforced in
-------------
accordance with and governed by the laws of Delaware.
DATED: July 1, 1999
AMDL, INC.
A Delaware Corporation
By:_________________________________
Gary L. Dreher, President
A-8
<PAGE>
EXHIBIT B
GENERAL RELEASE
---------------
WHEREAS, Harry Berk ("Releasor") and AMDL, INC., a Delaware corporation
("Releasee") have entered into that certain Agreement Regarding Cancellation of
Indebtedness dated as of July 1, 1999 (the "Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
-------
(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
B-1
<PAGE>
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
-------------
Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
_________________________________
Harry Berk
"Releasee"
AMDL, INC.,
a Delaware corporation
By:______________________________
Gary L. Dreher, President
B-2
<PAGE>
EXHIBIT 10.48
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is
made as of this 1st day of July, 1999 by and between Edward Arquilla, M.D.
("Holder") and AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
A. Holder currently serves as a director of the Company. The Company
and Holder acknowledge that as of the date of this Agreement, the Company is
indebted to Holder in the amount of $13,500 (the "Indebtedness") for accrued
fees due Holder by the Company.
B. The Company and Holder now wish to cancel the Indebtedness in
exchange for the consideration set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
-------------------------
incorporated by this reference.
2. Cancellation of Indebtedness. Holder hereby agrees to cancel and
----------------------------
extinguish the Indebtedness in exchange for the consideration set forth in
Section 3 of this Agreement (the "Consideration"). Holder further acknowledges
and agrees that the payment of the Consideration shall constitute full
satisfaction of $13,500 of the Indebtedness represented thereby and that the
Corporation shall have no further obligation to repay same.
3. Consideration. In exchange for the cancellation of the
-------------
Indebtedness pursuant to Section 2 of the Agreement, the Company upon execution
of this Agreement shall issue to Holder a stock purchase warrant ("Warrant") to
purchase up to 9,000 shares of Common Stock at an exercise price of $.68 per
share, pursuant to the form of Warrant attached hereto as Exhibit A.
4. General Release. The Company and Holder agree to execute and
---------------
deliver the General Release in the form attached hereto as Exhibit B.
5. Arbitration and Fees. Any controversy or claim arising out of or
--------------------
relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted,
<PAGE>
to a reasonable sum as and for attorneys' fees in such arbitration or other
proceeding which may be determined by the arbitrator or other officer in such
proceeding. If collection is required for any payment not made when due, the
creditor shall collect statutory interest and the cost of collection, including
attorney's fees whether or not court action is required for enforcement.
6. Miscellaneous. This Agreement contains the entire agreement
-------------
between Holder and the Company and may not be modified, altered or changed in
any manner whatsoever, except by a written agreement signed by all of the
parties hereto. Any agreement or representation concerning the subject matter of
this Agreement not set forth in this Agreement or a subsequent written agreement
signed by all of the parties hereto is null and void. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The rights and obligation of either party to this
Agreement may not be assigned by such party without the prior written consent of
the other party. This Agreement may be executed in two or more counterparts,
each signed by one of the parties and all of said counterparts together shall
constitute one and the same instrument. The parties agree that facsimile
signatures may be relied upon by each of the parties hereto as original
signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
"The Company"
AMDL, INC.,
a Delaware corporation
By:_____________________________
Gary L. Dreher, President
"Holder"
By:_____________________________
Edward Arquilla, M.D.
-2-
<PAGE>
EXHIBIT A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., PACIFIC TIME ON JULY 1, 2004.
STOCK PURCHASE WARRANT
----------------------
For the Purchase of 9,000
Shares of Common Stock, $.001 Par Value
of
AMDL, INC.
A Delaware Corporation
THIS CERTIFIES THAT, for value received, Edward Arquilla, M.D. (the
"Holder"), as registered owner of this Stock Purchase Warrant ("Warrant"), is
entitled to at any time or from time to time after July 1, 1999 and before 5:00
P.M., Pacific Time, July 1, 2004, but not thereafter, to subscribe for, purchase
and receive 9,000 fully paid and nonassessable shares of the common stock, $.001
par value (the "Common Stock"), of AMDL, INC., a Delaware corporation (the
"Company"), at a price equal to $.68 per share of the Common Stock (the
"Exercise Price"), upon presentation and surrender of this Warrant and upon
payment by cashier's check or wire transfer of the Exercise Price for such
shares of the Common Stock to the Company at the principal office of the
Company; provided, however, that upon the occurrence of any of the events
specified in the Statement of Rights of Warrant Holder, a copy of which is
attached as Annex I hereto and by this reference made a part hereof, the rights
granted by this Warrant shall be adjusted as therein specified. Upon exercise
of this Warrant, the form of election hereinafter provided for must be duly
executed and the instructions for registration of the Common Stock acquired by
such exercise must be completed. If the subscription rights represented hereby
shall not be exercised at or before 5:00 P.M., Pacific Time, on July 1, 2004,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
A-1
<PAGE>
This Warrant may be exercised in accordance with its terms in whole or in
part. In the event of the exercise or assignment hereof in part only, the
Company shall cause to be delivered to the Holder a new Warrant of like tenor to
this Warrant in the name of the Holder evidencing the right of the Holder to
purchase the number of shares of the Common Stock purchasable hereunder as to
which this Warrant has not been exercised or assigned.
In no event shall this Warrant (or the shares of the Common Stock issuable
upon full or partial exercise hereof) be offered or sold except in conformity
with the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 1st day of July, 1999.
AMDL, INC.
By:_________________________________
Gary L. Dreher, President
A-2
<PAGE>
Form to be used to exercise Warrant:
- -----------------------------------
TO: AMDL, INC. DATE:____________________
The Undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase ______ shares of the Common Stock of the Company called for
thereby, and hereby makes payment by cashier's check of $___________ (at the
rate of $______ per share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to which this
Warrant is exercised in the name of:
_______________________
(Name)
_______________________
(Address)
_______________________
(Taxpayer Number)
and if said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, issue a new Warrant Certificate for the balance
remaining of such Warrants to the undersigned at the address stated below.
Name of Holder:________________________________
(Please Print)
Signature:_____________________________________
__________________________________
(Address)
Signature Guaranteed:__________________________
NOTICE: The signature to the form to exercise must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-3
<PAGE>
Form to be used to transfer Warrant:
- -----------------------------------
TO: AMDL, INC. DATE:__________________
For value received, ___________ hereby sells, assigns and transfers unto
_______________________ said Warrant Certificate together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint the
Secretary of AMDL, Inc. attorney, to transfer said Warrant Certificate on the
books of the corporation, with full power of substitution in the premises.
Name of Holder:_______________________________
(Please Print)
Signature:____________________________________
_________________________________
(Address)
Signature Guaranteed:_________________________
NOTICE: The signature to the form to transfer must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-4
<PAGE>
ANNEX I TO AMDL, INC.
STOCK PURCHASE WARRANT DATED JULY 1, 1999
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exercise of Warrant. This Warrant may be exercised in whole or in
-------------------
part at any time or from time to time after July 1, 1999 and before 5:00 p.m.,
Pacific Time, on July 1, 2004, by presentation and surrender hereof to the
Company, with the Exercise Form annexed hereto duly executed and accompanied by
payment by cashier's check or wire transfer of the Exercise Price for the number
of shares specified in such form, together with all federal and state taxes
applicable upon such exercise. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price at the office or agency of the Company, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder.
2. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
3. Adjustment in Number of Shares.
------------------------------
(A) Adjustment for Reclassifications. In case at any time or from
--------------------------------
time to time after July 1, 1999 ("the Issue Date") the holders of the Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the Issue Date he had been the
holder of record of the number of shares of Common Stock of the Company called
for on the face of this Warrant and had thereafter, during the period from the
Issue Date, to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period.
(B) Adjustment for Reorganization, Consolidation, Merger. In case of
----------------------------------------------------
any reorganization of the Company (or any other corporation the stock or other
securities of which are
A-5
<PAGE>
at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Holder of this Warrant, upon the exercise hereof as provided in Section
1 at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would be entitled had the Holder exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
4. Notices to Warrant Holders. So long as this Warrant shall be
--------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
5. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
6. Restrictions on Transfer. The Holder of this Warrant, by acceptance
------------------------
thereof, agrees that, absent an effective notification under Regulation A or
registration statement, in either case under the Securities Act of 1933 (the
"Act"), covering the disposition of this Warrant or the Common Stock issued or
issuable upon exercise hereof, such Holder will not sell or transfer any or all
of this Warrant or such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the effect that
such sale or transfer will be
A-6
<PAGE>
exempt from the registration and prospectus delivery requirements of the Act.
Such Holder agrees that the Company may issue instructions to its transfer agent
to place, or may itself place, a "stop order" on transfers with respect to the
Warrant and Common Stock and that the certificates evidencing the Warrant and
Common Stock which will be delivered to such Holder by the Company shall bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN
MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Holder of this Warrant, at the time all or a portion of such
Warrant is exercised, agrees to make such written representations to the Company
as counsel for the Company may reasonably request, in order that the Company may
be reasonably satisfied that such exercise of the Warrant and consequent
issuance of Common Shares will not violate the registration and prospectus
delivery requirements of the Act, or other applicable state securities laws.
7. Piggyback Registration Rights. If, at any time after July 1, 1999
-----------------------------
and expiring July 1, 2004, the Company proposes to register any of its
securities under the Securities Act of 1933, as amended ("Act") (except for
registrations on Forms S-8 or S-4 or their equivalent), it will give written
notice by registered mail, at least thirty (30) days prior to the filing of each
such registration statement, to Holder of its intention to do so. If Holder
notifies the Company within twenty (20) days after receipt of any such notice of
its desire to include any such shares of Common Stock issuable upon exercise of
this Warrant in such proposed registration statement, the Company shall afford
Holder the opportunity to have any such shares of Common Stock registered under
such registration statement at the Company's sole cost and expense. These
rights may be exercised at any time on an unlimited number of occasions prior to
July 1, 2004, subject to the absolute discretion of any underwriter of the
Company's securities requesting that the shares of Common Stock held by the
Holder not be sold for a period not to exceed 180 days from the effective date
of the Company's initial underwritten public offering. If the underwriter
believes that the total amount of securities sought to be registered by the
Holder and any other holder of similar rights exceeds the amount of securities
that the underwriter deems advisable to include in the offering, only the pro
rata number of shares of Common Stock requested by the Holder with all other
holders of shares of
A-8
<PAGE>
Common Stock requesting registration pursuant to piggyback registration rights,
if any, shall be so registerable. If the Company files a registration statement
on Form S-8 and this Warrant may be registered under the Act at that time, the
Company agrees to include the Warrant and Common Shares in such registration.
8. Loss or Mutilation. Upon receipt by the Company of evidence
------------------
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
9. Reservation of Common Stock. The Company shall at all times reserve
---------------------------
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
10. Notices. All notices and other communications from the Company to
-------
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing.
11. Change; Waiver. Neither this Warrant nor any term hereof may be
--------------
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. Law Governing. This Warrant shall be construed and enforced in
-------------
accordance with and governed by the laws of Delaware.
DATED: July 1, 1999
AMDL, INC.
A Delaware Corporation
By:_________________________________
Gary L. Dreher, President
A-8
<PAGE>
EXHIBIT B
GENERAL RELEASE
---------------
WHEREAS, _____________________________________ ("Releasor") and AMDL, INC.,
a Delaware corporation ("Releasee") have entered into that certain Agreement
Regarding Cancellation of Indebtedness dated as of July 1, 1999 (the
"Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
-------
(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
B-1
<PAGE>
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
-------------
Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
___________________________________
Edward Arquilla, M.D.
"Releasee"
AMDL, INC.,
a Delaware corporation
By:________________________________
Gary L. Dreher, President
B-2
<PAGE>
EXHIBIT 10.49
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is made
as of this 1st day of July, 1999 by and between Thomas V. Tilton ("Holder") and
AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
A. Holder is currently an employee of the Company. The Company and
Holder acknowledge that as of the date of this Agreement, the Company is
indebted to Holder in the amount of $153,869.31 (the "Indebtedness") for accrued
wages due Holder by the Company.
B. The Company and Holder are both parties to that certain Salary
Continuation Agreement dated May 21, 1998 ("Salary Continuation Agreement")
which entitled Holder to a severance package following a "Change in Control" of
the Company and the occurrence of a "Termination Event" (as those terms are
defined in the Salary Continuation Agreement).
C. The Company and Holder are also both parties to that certain Agreement
Relating to Salary Deferral dated July 1, 1998 ("Salary Deferral Agreement")
pursuant to which Holder agreed to defer payment of a portion of his salary
pending the receipt by the Company of additional financing.
D. The Company and Holder now wish to cancel the Indebtedness and to
terminate the Salary Continuation Agreement and the Salary Deferral Agreement in
exchange for the consideration set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
-------------------------
incorporated by this reference.
2 Cancellation of Indebtedness. Holder hereby agrees to cancel and
----------------------------
extinguish the Indebtedness in exchange for the consideration set forth in
Section 4 of this Agreement (the "Consideration"). Holder further acknowledges
and agrees that the payment of the Consideration shall constitute full
satisfaction of $153,869.31 of the Indebtedness represented thereby and that the
Corporation shall have no further obligation to repay same.
3. Termination of Agreements. The Company and Holder hereby mutually
-------------------------
agree to the termination of, and hereby mutually terminate, any and all
agreements existing between them and any of them, including the Salary
Continuation Agreement and the Salary Deferral
<PAGE>
Agreement, including the termination and nonsurvival of all representations,
warranties and covenants thereunder.
4. Consideration In exchange for the cancellation of the Indebtedness
-------------
pursuant to Section 2 of the Agreement and the termination of the Salary
Continuation Agreement and the Salary Deferral Agreement pursuant to Section 3
of the Agreement, the Company shall deliver to the Holder the following
consideration:
(a) Cash Consideration. The Company shall pay the Holder $15,387 in
-------------------
cash (the "Cash Consideration"). The Cash Consideration shall be payable in six
installments of $2,564.50 each with the first payment to be made on the earlier
of (i) the first business day following the date on which the Company receives
Offering Proceeds of at least $250,000, or (ii) August 31, 1999. The remaining
payments shall be made on or before the last day of each of the next five
calendar months following August 31, 1999. For purposes of this Section 4(a),
the term Offering Proceeds refers to the cash consideration received by the
Company from the sale of 776,837 shares ("Shares") of Common Stock in the
Company's private placement pursuant to Rule 504 under the Securities Act of
1933, as amended. The Shares were contracted for by the purchasers and were
delivered into escrow on June 30, 1999.
(b) Warrant. Upon the execution of this Agreement, the Company shall
-------
issue to Holder a stock purchase warrant ("Warrant") to purchase up to 92,322
shares of Common Stock at an exercise price of $.68 per share, pursuant to the
form of Warrant attached hereto as Exhibit A.
5. General Release. The Company and Holder agree to execute and deliver
---------------
the General Release in the form attached hereto as Exhibit B.
6. Arbitration and Fees. Any controversy or claim arising out of or
--------------------
relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
attorneys' fees in such arbitration or other proceeding which may be determined
by the arbitrator or other officer in such proceeding. If collection is
required for any payment not made when due, the creditor shall collect statutory
interest and the cost of collection, including attorney's fees whether or not
court action is required for enforcement.
7. Miscellaneous. This Agreement contains the entire agreement between
-------------
Holder and the Company and may not be modified, altered or changed in any manner
whatsoever, except by a written agreement signed by all of the parties hereto.
Any agreement or representation concerning the subject matter of this Agreement
not set forth in this Agreement or a subsequent written agreement signed by all
of the parties hereto is null and void. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. The rights and obligation of either party to this Agreement may
not be assigned by such party without the prior written consent of the other
party. This Agreement may be executed in two or more
-2-
<PAGE>
counterparts, each signed by one of the parties and all of said counterparts
together shall constitute one and the same instrument. The parties agree that
facsimile signatures may be relied upon by each of the parties hereto as
original signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
"The Company"
AMDL, INC.,
a Delaware corporation
By:______________________________
Gary L. Dreher, President
"Holder"
By:______________________________
Thomas V. Tilton
-3-
<PAGE>
EXHIBIT A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., PACIFIC TIME ON JULY 1, 2004.
STOCK PURCHASE WARRANT
----------------------
For the Purchase of 92,322
Shares of Common Stock, $.001 Par Value
of
AMDL, INC.
A Delaware Corporation
THIS CERTIFIES THAT, for value received, Thomas V. Tilton (the "Holder"),
as registered owner of this Stock Purchase Warrant ("Warrant"), is entitled to
at any time or from time to time after July 1, 1999 and before 5:00 P.M.,
Pacific Time, July 1, 2004, but not thereafter, to subscribe for, purchase and
receive 92,322 fully paid and nonassessable shares of the common stock, $.001
par value (the "Common Stock"), of AMDL, INC., a Delaware corporation (the
"Company"), at a price equal to $.68 per share of the Common Stock (the
"Exercise Price"), upon presentation and surrender of this Warrant and upon
payment by cashier's check or wire transfer of the Exercise Price for such
shares of the Common Stock to the Company at the principal office of the
Company; provided, however, that upon the occurrence of any of the events
specified in the Statement of Rights of Warrant Holder, a copy of which is
attached as Annex I hereto and by this reference made a part hereof, the rights
granted by this Warrant shall be adjusted as therein specified. Upon exercise
of this Warrant, the form of election hereinafter provided for must be duly
executed and the instructions for registration of the Common Stock acquired by
such exercise must be completed. If the subscription rights represented hereby
shall not be exercised at or before 5:00 P.M., Pacific Time, on July 1, 2004,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
A-1
<PAGE>
This Warrant may be exercised in accordance with its terms in whole or in
part. In the event of the exercise or assignment hereof in part only, the
Company shall cause to be delivered to the Holder a new Warrant of like tenor to
this Warrant in the name of the Holder evidencing the right of the Holder to
purchase the number of shares of the Common Stock purchasable hereunder as to
which this Warrant has not been exercised or assigned.
In no event shall this Warrant (or the shares of the Common Stock issuable
upon full or partial exercise hereof) be offered or sold except in conformity
with the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 1st day of July, 1999.
AMDL, INC.
By:___________________________
Gary L. Dreher, President
A-2
<PAGE>
Form to be used to exercise Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: __________________
The Undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase ___________ shares of the Common Stock of the Company called for
thereby, and hereby makes payment by cashier's check of $___________ (at the
rate of $______ per share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to which this
Warrant is exercised in the name of:
(Name)
(Address)
(Taxpayer Number)
and if said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, issue a new Warrant Certificate for the balance
remaining of such Warrants to the undersigned at the address stated below.
Name of Holder:__________________________________
(Please Print)
Signature:_______________________________________
____________________________________
(Address)
Signature Guaranteed:____________________________
NOTICE: The signature to the form to exercise must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-3
<PAGE>
Form to be used to transfer Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: _________________
For value received, __________ hereby sells, assigns and transfers unto
_______________________ said Warrant Certificate together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint the
Secretary of AMDL, Inc. attorney, to transfer said Warrant Certificate on the
books of the corporation, with full power of substitution in the premises.
Name of Holder:____________________________________
(Please Print)
Signature:_________________________________________
______________________________________
(Address)
Signature Guaranteed:______________________________
NOTICE: The signature to the form to transfer must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-4
<PAGE>
ANNEX I TO AMDL, INC.
STOCK PURCHASE WARRANT DATED JULY 1, 1999
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exercise of Warrant. This Warrant may be exercised in whole or in
-------------------
part at any time or from time to time after July 1, 1999 and before 5:00 p.m.,
Pacific Time, on July 1, 2004, by presentation and surrender hereof to the
Company, with the Exercise Form annexed hereto duly executed and accompanied by
payment by cashier's check or wire transfer of the Exercise Price for the number
of shares specified in such form, together with all federal and state taxes
applicable upon such exercise. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price at the office or agency of the Company, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder.
2. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
3. Adjustment in Number of Shares.
------------------------------
(A) Adjustment for Reclassifications. In case at any time or from
--------------------------------
time to time after July 1, 1999 ("the Issue Date") the holders of the Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the Issue Date he had been the
holder of record of the number of shares of Common Stock of the Company called
for on the face of this Warrant and had thereafter, during the period from the
Issue Date, to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period.
(B) Adjustment for Reorganization, Consolidation, Merger. In case of
----------------------------------------------------
any reorganization of the Company (or any other corporation the stock or other
securities of which are
A-5
<PAGE>
at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Holder of this Warrant, upon the exercise hereof as provided in Section
1 at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would be entitled had the Holder exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
4. Notices to Warrant Holders. So long as this Warrant shall be
--------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
5. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
6. Restrictions on Transfer. The Holder of this Warrant, by acceptance
------------------------
thereof, agrees that, absent an effective notification under Regulation A or
registration statement, in either case under the Securities Act of 1933 (the
"Act"), covering the disposition of this Warrant or the Common Stock issued or
issuable upon exercise hereof, such Holder will not sell or transfer any or all
of this Warrant or such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the effect that
such sale or transfer will be
A-6
<PAGE>
exempt from the registration and prospectus delivery requirements of the Act.
Such Holder agrees that the Company may issue instructions to its transfer agent
to place, or may itself place, a "stop order" on transfers with respect to the
Warrant and Common Stock and that the certificates evidencing the Warrant and
Common Stock which will be delivered to such Holder by the Company shall bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN
MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Holder of this Warrant, at the time all or a portion of such
Warrant is exercised, agrees to make such written representations to the Company
as counsel for the Company may reasonably request, in order that the Company may
be reasonably satisfied that such exercise of the Warrant and consequent
issuance of Common Shares will not violate the registration and prospectus
delivery requirements of the Act, or other applicable state securities laws.
7. Registration.
-------------
(a) Form S-8. As soon as practicable after the Company becomes a
--------
reporting company under the Securities Exchange Act of 1934, as amended, the
Company shall use its best efforts to cause the shares of Common Stock
underlying the Warrants to be registered under the Securities Act of 1933, as
amended (the "Act"), by filing a Form S-8 Registration Statement covering the
Warrants and the shares of Common Stock underlying the Warrants; provided,
however, that Form S-8 is available for purposes of registering the Warrants and
the underlying shares under the Act.
(b) Piggyback Registration Rights. If, at any time after July 1,
-----------------------------
1999 and expiring July 1, 2004, the Company proposes to register any of its
securities under the Act (except for registrations on Forms S-8 or S-4 or their
equivalent), it will give written notice by registered mail, at least thirty
(30) days prior to the filing of each such registration statement, to Holder of
its intention to do so. If Holder notifies the Company within twenty (20) days
after receipt of any such notice of its desire to include any such shares of
Common Stock issuable upon exercise of this
A-7
<PAGE>
Warrant in such proposed registration statement, the Company shall afford Holder
the opportunity to have any such shares of Common Stock registered under such
registration statement at the Company's sole cost and expense. These rights may
be exercised at any time on an unlimited number of occasions prior to July 1,
2004, subject to the absolute discretion of any underwriter of the Company's
securities requesting that the shares of Common Stock held by the Holder not be
sold for a period not to exceed 180 days from the effective date of the
Company's initial underwritten public offering. If the underwriter believes that
the total amount of securities sought to be registered by the Holder and any
other holder of similar rights exceeds the amount of securities that the
underwriter deems advisable to include in the offering, only the pro rata number
of shares of Common Stock requested by the Holder with all other holders of
shares of Common Stock requesting registration pursuant to piggyback
registration rights, if any, shall be so registerable.
8. Loss or Mutilation. Upon receipt by the Company of evidence
------------------
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
9. Reservation of Common Stock. The Company shall at all times reserve
---------------------------
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
10. Notices. All notices and other communications from the Company to
-------
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing.
11. Change; Waiver. Neither this Warrant nor any term hereof may be
--------------
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. Law Governing. This Warrant shall be construed and enforced in
-------------
accordance with and governed by the laws of Delaware.
DATED: July 1, 1999
AMDL, INC.
A Delaware Corporation
By:______________________________
Gary L. Dreher, President
A-8
<PAGE>
EXHIBIT B
GENERAL RELEASE
---------------
WHEREAS, Thomas V. Tilton ("Releasor") and AMDL, INC., a Delaware
corporation ("Releasee") have entered into that certain Agreement Regarding
Cancellation of Indebtedness dated as of July 1, 1999 (the "Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
-------
(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
B-1
<PAGE>
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
-------------
Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
___________________________________
Thomas V. Tilton
"Releasee"
AMDL, INC.,
a Delaware corporation
By:________________________________
Gary L. Dreher, President
B-2
<PAGE>
EXHIBIT 10.50
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is
made as of this 1st day of July, 1999 by and between Donald Rounds ("Holder")
and AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
A. Holder is a former employee of the Company. The Company and
Holder acknowledge that as of the date of this Agreement, the Company is
indebted to Holder in the amount of $81,499.99 (the "Indebtedness") for accrued
wages due Holder by the Company.
B. The Company and Holder now wish to cancel the Indebtedness in
exchange for the consideration set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
-------------------------
incorporated by this reference.
2. Cancellation of Indebtedness. Holder hereby agrees to cancel and
----------------------------
extinguish the Indebtedness in exchange for the consideration set forth in
Section 3 of this Agreement (the "Consideration"). Holder further acknowledges
and agrees that the payment of the Consideration shall constitute full
satisfaction of $81,499.99 of the Indebtedness represented thereby and that the
Corporation shall have no further obligation to repay same.
3. Consideration. In exchange for the cancellation of the
-------------
Indebtedness pursuant to Section 2 of the Agreement, the Company shall deliver
to the Holder the following consideration:
(a) Cash Consideration. The Company shall pay the Holder $8,150 in
-------------------
cash (the "Cash Consideration"). The Cash Consideration shall be payable in six
installments of $1,358.33 each with the first payment to be made on August 31,
1999 and the remaining payments to be made on or before the last day of each of
the next five calendar months.
(b) Warrant. Upon the execution of this Agreement, the Company
-------
shall issue to Holder a stock purchase warrant ("Warrant") to purchase up to
48,900 shares of Common Stock at an exercise price of $.68 per share, pursuant
to the form of Warrant attached hereto as Exhibit A.
<PAGE>
4. General Release. The Company and Holder agree to execute and
---------------
deliver the General Release in the form attached hereto as Exhibit B.
5. Arbitration and Fees. Any controversy or claim arising out of or
--------------------
relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
attorneys' fees in such arbitration or other proceeding which may be determined
by the arbitrator or other officer in such proceeding. If collection is
required for any payment not made when due, the creditor shall collect statutory
interest and the cost of collection, including attorney's fees whether or not
court action is required for enforcement.
6. Miscellaneous. This Agreement contains the entire agreement
-------------
between Holder and the Company and may not be modified, altered or changed in
any manner whatsoever, except by a written agreement signed by all of the
parties hereto. Any agreement or representation concerning the subject matter of
this Agreement not set forth in this Agreement or a subsequent written agreement
signed by all of the parties hereto is null and void. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The rights and obligation of either party to this
Agreement may not be assigned by such party without the prior written consent of
the other party. This Agreement may be executed in two or more counterparts,
each signed by one of the parties and all of said counterparts together shall
constitute one and the same instrument. The parties agree that facsimile
signatures may be relied upon by each of the parties hereto as original
signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
"The Company"
AMDL, INC.,
a Delaware corporation
By:_____________________________________
Gary L. Dreher, President
"Holder"
By:_____________________________________
Donald Rounds
-2-
<PAGE>
EXHIBIT A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., PACIFIC TIME ON JULY 1, 2004.
STOCK PURCHASE WARRANT
----------------------
For the Purchase of 48,900
Shares of Common Stock, $.001 Par Value
of
AMDL, INC.
A Delaware Corporation
THIS CERTIFIES THAT, for value received, Donald Rounds (the "Holder"), as
registered owner of this Stock Purchase Warrant ("Warrant"), is entitled to at
any time or from time to time after July 1, 1999 and before 5:00 P.M., Pacific
Time, July 1, 2004, but not thereafter, to subscribe for, purchase and receive
48,900 fully paid and nonassessable shares of the common stock, $.001 par value
(the "Common Stock"), of AMDL, INC., a Delaware corporation (the "Company"), at
a price equal to $.68 per share of the Common Stock (the "Exercise Price"), upon
presentation and surrender of this Warrant and upon payment by cashier's check
or wire transfer of the Exercise Price for such shares of the Common Stock to
the Company at the principal office of the Company; provided, however, that upon
the occurrence of any of the events specified in the Statement of Rights of
Warrant Holder, a copy of which is attached as Annex I hereto and by this
reference made a part hereof, the rights granted by this Warrant shall be
adjusted as therein specified. Upon exercise of this Warrant, the form of
election hereinafter provided for must be duly executed and the instructions for
registration of the Common Stock acquired by such exercise must be completed.
If the subscription rights represented hereby shall not be exercised at or
before 5:00 P.M., Pacific Time, on July 1, 2004, this Warrant shall become and
be void without further force or effect, and all rights represented hereby shall
cease and expire.
A-1
<PAGE>
This Warrant may be exercised in accordance with its terms in whole or in
part. In the event of the exercise or assignment hereof in part only, the
Company shall cause to be delivered to the Holder a new Warrant of like tenor to
this Warrant in the name of the Holder evidencing the right of the Holder to
purchase the number of shares of the Common Stock purchasable hereunder as to
which this Warrant has not been exercised or assigned.
In no event shall this Warrant (or the shares of the Common Stock issuable
upon full or partial exercise hereof) be offered or sold except in conformity
with the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 1st day of July, 1999.
AMDL, INC.
By:_____________________________
Gary L. Dreher, President
A-2
<PAGE>
Form to be used to exercise Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: __________________
The Undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase ___________ shares of the Common Stock of the Company called for
thereby, and hereby makes payment by cashier's check of $___________ (at the
rate of $______ per share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to which this
Warrant is exercised in the name of:
(Name)
(Address)
(Taxpayer Number)
and if said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, issue a new Warrant Certificate for the balance
remaining of such Warrants to the undersigned at the address stated below.
Name of Holder:_______________________________________
(Please Print)
Signature:____________________________________________
_________________________________________
(Address)
Signature Guaranteed: ____
NOTICE: The signature to the form to exercise must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-3
<PAGE>
Form to be used to transfer Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: _________________
For value received, ___________ hereby sells, assigns and transfers unto
_______________________ said Warrant Certificate together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint the
Secretary of AMDL, Inc. attorney, to transfer said Warrant Certificate on the
books of the corporation, with full power of substitution in the premises.
Name of Holder:______________________________________
(Please Print)
Signature:___________________________________________
________________________________________
(Address)
Signature Guaranteed: ____
NOTICE: The signature to the form to transfer must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-4
<PAGE>
ANNEX I TO AMDL, INC.
STOCK PURCHASE WARRANT DATED JULY 1, 1999
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exercise of Warrant. This Warrant may be exercised in whole or in
-------------------
part at any time or from time to time after July 1, 1999 and before 5:00 p.m.,
Pacific Time, on July 1, 2004, by presentation and surrender hereof to the
Company, with the Exercise Form annexed hereto duly executed and accompanied by
payment by cashier's check or wire transfer of the Exercise Price for the number
of shares specified in such form, together with all federal and state taxes
applicable upon such exercise. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price at the office or agency of the Company, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder.
2. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
3. Adjustment in Number of Shares.
------------------------------
(A) Adjustment for Reclassifications. In case at any time or from
--------------------------------
time to time after July 1, 1999 ("the Issue Date") the holders of the Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the Issue Date he had been the
holder of record of the number of shares of Common Stock of the Company called
for on the face of this Warrant and had thereafter, during the period from the
Issue Date, to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period.
(B) Adjustment for Reorganization, Consolidation, Merger. In case of
----------------------------------------------------
any reorganization of the Company (or any other corporation the stock or other
securities of which are
A-5
<PAGE>
at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Holder of this Warrant, upon the exercise hereof as provided in Section
1 at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would be entitled had the Holder exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
4. Notices to Warrant Holders. So long as this Warrant shall be
--------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
5. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
6. Restrictions on Transfer. The Holder of this Warrant, by acceptance
------------------------
thereof, agrees that, absent an effective notification under Regulation A or
registration statement, in either case under the Securities Act of 1933 (the
"Act"), covering the disposition of this Warrant or the Common Stock issued or
issuable upon exercise hereof, such Holder will not sell or transfer any or all
of this Warrant or such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the effect that
such sale or transfer will be
A-6
<PAGE>
exempt from the registration and prospectus delivery requirements of the Act.
Such Holder agrees that the Company may issue instructions to its transfer agent
to place, or may itself place, a "stop order" on transfers with respect to the
Warrant and Common Stock and that the certificates evidencing the Warrant and
Common Stock which will be delivered to such Holder by the Company shall bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN
MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Holder of this Warrant, at the time all or a portion of such
Warrant is exercised, agrees to make such written representations to the Company
as counsel for the Company may reasonably request, in order that the Company may
be reasonably satisfied that such exercise of the Warrant and consequent
issuance of Common Shares will not violate the registration and prospectus
delivery requirements of the Act, or other applicable state securities laws.
7. Piggyback Registration Rights. If, at any time after July 1, 1999
-----------------------------
and expiring July 1, 2004, the Company proposes to register any of its
securities under the Securities Act of 1933, as amended ("Act") (except for
registrations on Forms S-8 or S-4 or their equivalent), it will give written
notice by registered mail, at least thirty (30) days prior to the filing of each
such registration statement, to Holder of its intention to do so. If Holder
notifies the Company within twenty (20) days after receipt of any such notice of
its desire to include any such shares of Common Stock issuable upon exercise of
this Warrant in such proposed registration statement, the Company shall afford
Holder the opportunity to have any such shares of Common Stock registered under
such registration statement at the Company's sole cost and expense. These
rights may be exercised at any time on an unlimited number of occasions prior to
July 1, 2004, subject to the absolute discretion of any underwriter of the
Company's securities requesting that the shares of Common Stock held by the
Holder not be sold for a period not to exceed 180 days from the effective date
of the Company's initial underwritten public offering. If the underwriter
believes that the total amount of securities sought to be registered by the
Holder and any other holder of similar rights exceeds the amount of securities
that the underwriter deems advisable to include in the offering, only the pro
rata number of shares of Common Stock requested by the Holder with all other
holders of shares of
A-7
<PAGE>
Common Stock requesting registration pursuant to piggyback registration rights,
if any, shall be so registerable. If the Company files a registration statement
on Form S-8 and this Warrant may be registered under the Act at that time, the
Company agrees to include the Warrant and Common Shares in such registration.
8. Loss or Mutilation. Upon receipt by the Company of evidence
------------------
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
9. Reservation of Common Stock. The Company shall at all times reserve
---------------------------
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
10. Notices. All notices and other communications from the Company to
-------
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing.
11. Change; Waiver. Neither this Warrant nor any term hereof may be
--------------
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. Law Governing. This Warrant shall be construed and enforced in
-------------
accordance with and governed by the laws of Delaware.
DATED: July 1, 1999
AMDL, INC.
A Delaware Corporation
By:_________________________________
Gary L. Dreher, President
A-8
<PAGE>
EXHIBIT B
GENERAL RELEASE
---------------
WHEREAS, Donlad Rounds ("Releasor") and AMDL, INC., a Delaware corporation
("Releasee") have entered into that certain Agreement Regarding Cancellation of
Indebtedness dated as of July 1, 1999 (the "Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
-------
(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
B-1
<PAGE>
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
-------------
Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
____________________________________
Donald Rounds
"Releasee"
AMDL, INC.,
a Delaware corporation
By:_________________________________
Gary L. Dreher, President
B-2
<PAGE>
EXHIBIT 10.51
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is
made as of this 1st day of July, 1999 by and between That T. Ngo, Ph.D.
("Holder") and AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
A. Holder served as an officer of the Company until February 1999.
The Company and Holder acknowledge that as of the date of this Agreement, the
Company is indebted to Holder in the amount of $218,351.30 (the "Indebtedness")
for accrued wages due Holder by the Company.
B. The Company and Holder are also both parties to that certain
Agreement Relating to Salary Deferral dated July 1, 1998 ("Salary Deferral
Agreement") pursuant to which Holder agreed to defer payment of a portion of his
salary pending the receipt by the Company of additional financing.
C. The Company and Holder now wish to cancel the Indebtedness and to
terminate the the Salary Deferral Agreement in exchange for the consideration
set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
-------------------------
incorporated by this reference.
2. Cancellation of Indebtedness. Holder hereby agrees to cancel and
----------------------------
extinguish the Indebtedness in exchange for the consideration set forth in
Section 4 of this Agreement (the "Consideration"). Holder further acknowledges
and agrees that the payment of the Consideration shall constitute full
satisfaction of $218,351.30 of the Indebtedness represented thereby and that the
Corporation shall have no further obligation to repay same.
3. Termination of Agreements. The Company and Holder hereby mutually
-------------------------
agree to the termination of, and hereby mutually terminate, any and all
agreements existing between them and any of them, the Salary Deferral Agreement,
including the termination and nonsurvival of all representations, warranties and
covenants thereunder; provided, however, that this Agreement shall not cover the
Company's agreement to pay consulting fees accrued by Holder totalling $14,775
as of June 30, 1999.
4. Consideration In exchange for the cancellation of the
-------------
Indebtedness pursuant to Section 2 of the Agreement and the termination of the
Salary Deferral Agreement pursuant to
<PAGE>
Section 3 of the Agreement, the Company shall deliver to the Holder the
following consideration:
(a) Cash Consideration. The Company shall pay the Holder $21,835 in
-------------------
cash (the "Cash Consideration"). The Cash Consideration shall be payable in six
installments of $3,639.17 each with the first payment to be made on the earlier
of (i) the first business day following the date on which the Company receives
Offering Proceeds of at least $250,000, or (ii) August 31, 1999. The remaining
payments shall be made on or before the last day of each of the next five
calendar months following August 31, 1999. For purposes of this Section 4(a),
the term Offering Proceeds refers to the cash consideration received by the
Company from the sale of 776,837 shares ("Shares") of Common Stock in the
Company's private placement pursuant to Rule 504 under the Securities Act of
1933, as amended. The Shares were contracted for by the purchasers and were
delivered into escrow on June 30, 1999.
(b) Warrant. Upon the execution of this Agreement, the Company shall
-------
issue to Holder a stock purchase warrant ("Warrant") to purchase up to 131,011
shares of Common Stock at an exercise price of $.68 per share, pursuant to the
form of Warrant attached hereto as Exhibit A.
5. General Release. The Company and Holder agree to execute and deliver
---------------
the General Release in the form attached hereto as Exhibit B.
6. Arbitration and Fees. Any controversy or claim arising out of or
--------------------
relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
attorneys' fees in such arbitration or other proceeding which may be determined
by the arbitrator or other officer in such proceeding. If collection is
required for any payment not made when due, the creditor shall collect statutory
interest and the cost of collection, including attorney's fees whether or not
court action is required for enforcement.
7. Miscellaneous. This Agreement contains the entire agreement between
-------------
Holder and the Company and may not be modified, altered or changed in any manner
whatsoever, except by a written agreement signed by all of the parties hereto.
Any agreement or representation concerning the subject matter of this Agreement
not set forth in this Agreement or a subsequent written agreement signed by all
of the parties hereto is null and void. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. The rights and obligation of either party to this Agreement may not be
assigned by such party without the prior written consent of the other party.
This Agreement may be executed in two or more counterparts, each signed by one
of the parties and all of said counterparts together shall constitute one and
the same instrument. The parties agree that facsimile signatures may be relied
upon by each of the parties hereto as original signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
-2-
<PAGE>
"The Company"
AMDL, INC.,
a Delaware corporation
By:__________________________________
Gary L. Dreher, President
"Holder"
By:__________________________________
That T. Ngo, Ph.D.
-3-
<PAGE>
EXHIBIT A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., PACIFIC TIME ON JULY 1, 2004.
STOCK PURCHASE WARRANT
----------------------
For the Purchase of 131,011
Shares of Common Stock, $.001 Par Value
of
AMDL, INC.
A Delaware Corporation
THIS CERTIFIES THAT, for value received, That T. Ngo, Ph.D. (the "Holder"),
as registered owner of this Stock Purchase Warrant ("Warrant"), is entitled to
at any time or from time to time after July 1, 1999 and before 5:00 P.M.,
Pacific Time, July 1, 2004, but not thereafter, to subscribe for, purchase and
receive 131,011 fully paid and nonassessable shares of the common stock, $.001
par value (the "Common Stock"), of AMDL, INC., a Delaware corporation (the
"Company"), at a price equal to $.68 per share of the Common Stock (the
"Exercise Price"), upon presentation and surrender of this Warrant and upon
payment by cashier's check or wire transfer of the Exercise Price for such
shares of the Common Stock to the Company at the principal office of the
Company; provided, however, that upon the occurrence of any of the events
specified in the Statement of Rights of Warrant Holder, a copy of which is
attached as Annex I hereto and by this reference made a part hereof, the rights
granted by this Warrant shall be adjusted as therein specified. Upon exercise
of this Warrant, the form of election hereinafter provided for must be duly
executed and the instructions for registration of the Common Stock acquired by
such exercise must be completed. If the subscription rights represented hereby
shall not be exercised at or before 5:00 P.M., Pacific Time, on July 1, 2004,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
A-1
<PAGE>
This Warrant may be exercised in accordance with its terms in whole or in
part. In the event of the exercise or assignment hereof in part only, the
Company shall cause to be delivered to the Holder a new Warrant of like tenor to
this Warrant in the name of the Holder evidencing the right of the Holder to
purchase the number of shares of the Common Stock purchasable hereunder as to
which this Warrant has not been exercised or assigned.
In no event shall this Warrant (or the shares of the Common Stock issuable
upon full or partial exercise hereof) be offered or sold except in conformity
with the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 1st day of July, 1999.
AMDL, INC.
By:______________________________
Gary L. Dreher, President
A-2
<PAGE>
Form to be used to exercise Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: __________________
The Undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase shares of the Common Stock of the Company called for
thereby, and hereby makes payment by cashier's check of $___________ (at the
rate of $______ per share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to which this
Warrant is exercised in the name of:
(Name)
(Address)
(Taxpayer Number)
and if said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, issue a new Warrant Certificate for the balance
remaining of such Warrants to the undersigned at the address stated below.
Name of Holder:________________________________
(Please Print)
Signature:_____________________________________
___________________________________
(Address)
Signature Guaranteed: _________________________
NOTICE: The signature to the form to exercise must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-3
<PAGE>
Form to be used to transfer Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: _________________
For value received, ____________ hereby sells, assigns and transfers
unto _______________________ said Warrant Certificate together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
the Secretary of AMDL, Inc. attorney, to transfer said Warrant Certificate on
the books of the corporation, with full power of substitution in the premises.
Name of Holder:___________________________________
(Please Print)
Signature:________________________________________
______________________________________
(Address)
Signature Guaranteed: ___________________________
NOTICE: The signature to the form to transfer must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-4
<PAGE>
ANNEX I TO AMDL, INC.
STOCK PURCHASE WARRANT DATED JULY 1, 1999
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exercise of Warrant. This Warrant may be exercised in whole or in
-------------------
part at any time or from time to time after July 1, 1999 and before 5:00 p.m.,
Pacific Time, on July 1, 2004, by presentation and surrender hereof to the
Company, with the Exercise Form annexed hereto duly executed and accompanied by
payment by cashier's check or wire transfer of the Exercise Price for the number
of shares specified in such form, together with all federal and state taxes
applicable upon such exercise. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price at the office or agency of the Company, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder.
2. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
3. Adjustment in Number of Shares.
------------------------------
(A) Adjustment for Reclassifications. In case at any time or from
--------------------------------
time to time after July 1, 1999 ("the Issue Date") the holders of the Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the Issue Date he had been the
holder of record of the number of shares of Common Stock of the Company called
for on the face of this Warrant and had thereafter, during the period from the
Issue Date, to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period.
(B) Adjustment for Reorganization, Consolidation, Merger. In case of
----------------------------------------------------
any reorganization of the Company (or any other corporation the stock or other
securities of which are
A-5
<PAGE>
at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Holder of this Warrant, upon the exercise hereof as provided in Section
1 at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would be entitled had the Holder exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
4. Notices to Warrant Holders. So long as this Warrant shall be
--------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
5. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
6. Restrictions on Transfer. The Holder of this Warrant, by acceptance
------------------------
thereof, agrees that, absent an effective notification under Regulation A or
registration statement, in either case under the Securities Act of 1933 (the
"Act"), covering the disposition of this Warrant or the Common Stock issued or
issuable upon exercise hereof, such Holder will not sell or transfer any or all
of this Warrant or such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the effect that
such sale or transfer will be
A-6
<PAGE>
exempt from the registration and prospectus delivery requirements of the Act.
Such Holder agrees that the Company may issue instructions to its transfer agent
to place, or may itself place, a "stop order" on transfers with respect to the
Warrant and Common Stock and that the certificates evidencing the Warrant and
Common Stock which will be delivered to such Holder by the Company shall bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN
MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Holder of this Warrant, at the time all or a portion of such
Warrant is exercised, agrees to make such written representations to the Company
as counsel for the Company may reasonably request, in order that the Company may
be reasonably satisfied that such exercise of the Warrant and consequent
issuance of Common Shares will not violate the registration and prospectus
delivery requirements of the Act, or other applicable state securities laws.
7. Registration.
-------------
(a) Form S-8. As soon as practicable after the Company becomes a
--------
reporting company under the Securities Exchange Act of 1934, as amended, the
Company shall use its best efforts to cause the shares of Common Stock
underlying the Warrants to be registered under the Securities Act of 1933, as
amended (the "Act"), by filing a Form S-8 Registration Statement covering the
Warrants and the shares of Common Stock underlying the Warrants; provided,
however, that Form S-8 is available for purposes of registering the Warrants and
the underlying shares under the Act.
(b) Piggyback Registration Rights. If, at any time after July 1,
-----------------------------
1999 and expiring July 1, 2004, the Company proposes to register any of its
securities under the Act (except for registrations on Forms S-8 or S-4 or their
equivalent), it will give written notice by registered mail, at least thirty
(30) days prior to the filing of each such registration statement, to Holder of
its intention to do so. If Holder notifies the Company within twenty (20) days
after receipt of any such notice of its desire to include any such shares of
Common Stock issuable upon exercise of this
A-8
<PAGE>
Warrant in such proposed registration statement, the Company shall afford Holder
the opportunity to have any such shares of Common Stock registered under such
registration statement at the Company's sole cost and expense. These rights may
be exercised at any time on an unlimited number of occasions prior to July 1,
2004, subject to the absolute discretion of any underwriter of the Company's
securities requesting that the shares of Common Stock held by the Holder not be
sold for a period not to exceed 180 days from the effective date of the
Company's initial underwritten public offering. If the underwriter believes that
the total amount of securities sought to be registered by the Holder and any
other holder of similar rights exceeds the amount of securities that the
underwriter deems advisable to include in the offering, only the pro rata number
of shares of Common Stock requested by the Holder with all other holders of
shares of Common Stock requesting registration pursuant to piggyback
registration rights, if any, shall be so registerable.
8. Loss or Mutilation. Upon receipt by the Company of evidence
------------------
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
9. Reservation of Common Stock. The Company shall at all times reserve
---------------------------
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
10. Notices. All notices and other communications from the Company to
-------
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing.
11. Change; Waiver. Neither this Warrant nor any term hereof may be
--------------
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. Law Governing. This Warrant shall be construed and enforced in
-------------
accordance with and governed by the laws of Delaware.
DATED: July 1, 1999
AMDL, INC.
A Delaware Corporation
By:______________________________
Gary L. Dreher, President
A-8
<PAGE>
EXHIBIT B
GENERAL RELEASE
---------------
WHEREAS, THAT T. NGO, Ph.D. ("Releasor") and AMDL, INC., a Delaware
corporation ("Releasee") have entered into that certain Agreement Regarding
Cancellation of Indebtedness dated as of July 1, 1999 (the "Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
-------
(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
B-1
<PAGE>
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
-------------
Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
______________________________________
That T. Ngo, Ph.D.
"Releasee"
AMDL, INC.,
a Delaware corporation
By:___________________________________
Gary L. Dreher, President
B-2
<PAGE>
EXHIBIT 10.52
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is
made as of this 1st day of July, 1999 by and between Gary L. Dreher ("Holder")
and AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
A. Holder has served as an officer of the Company since January 1998.
The Company and Holder are both parties to that certain Salary Continuation
Agreement dated May 21, 1998 ("Salary Continuation Agreement") which entitled
Holder to a severance package following a "Change in Control" of the Company and
the occurrence of a "Termination Event" (as those terms are defined in the
Salary Continuation Agreement).
B. The Company and Holder are also both parties to that certain
Employment Agreement ("Employment Agreement") dated January 15, 1998.
C. The Company and Holder now wish to terminate the Salary
Continuation Agreement and the Employment Agreement in exchange for the
consideration set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
-------------------------
incorporated by this reference.
2. Termination of Agreements. The Company and Holder hereby mutually
-------------------------
agree to the termination of, and hereby mutually terminate, any and all
agreements existing between them and any of them, including the Salary
Continuation Agreement and the Employment Agreement, including the termination
and nonsurvival of all representations, warranties and covenants thereunder.
3. Consideration In exchange for the termination of the Salary
-------------
Continuation Agreement and the Employment Agreement pursuant to Section 2 of the
Agreement, the Company and Holder shall enter into an incentive stock option
agreement and a non-qualified stock option agreement, both in the forms attached
hereto as Exhibit A.
4. General Release. The Company and Holder agree to execute and
---------------
deliver the General Release in the form attached hereto as Exhibit B.
<PAGE>
5. Arbitration and Fees. Any controversy or claim arising out of or
--------------------
relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
attorneys' fees in such arbitration or other proceeding which may be determined
by the arbitrator or other officer in such proceeding. If collection is
required for any payment not made when due, the creditor shall collect statutory
interest and the cost of collection, including attorney's fees whether or not
court action is required for enforcement.
6. Miscellaneous. This Agreement contains the entire agreement
-------------
between Holder and the Company and may not be modified, altered or changed in
any manner whatsoever, except by a written agreement signed by all of the
parties hereto. Any agreement or representation concerning the subject matter of
this Agreement not set forth in this Agreement or a subsequent written agreement
signed by all of the parties hereto is null and void. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The rights and obligation of either party to this
Agreement may not be assigned by such party without the prior written consent of
the other party. This Agreement may be executed in two or more counterparts,
each signed by one of the parties and all of said counterparts together shall
constitute one and the same instrument. The parties agree that facsimile
signatures may be relied upon by each of the parties hereto as original
signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
"The Company"
AMDL, INC.,
a Delaware corporation
By:____________________________________________
Vivian B. Frazier, Chief Financial Officer
"Holder"
By:____________________________________________
Gary L. Dreher
-2-
<PAGE>
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") is entered into as of
June 30, 1999, by and between AMDL, INC., a Delaware corporation
("Corporation"), and GARY L. DREHER ("Optionee").
R E C I T A L S
- - - - - - - -
A. On June 30, 199 the Board of Directors of the Corporation adopted,
subject to the approval of the Corporation's shareholders, the AMDL, INC. 1999
Stock Option Plan (the "Plan").
B. Pursuant to the Plan, on June 30, 1999, the members of the Board of
Directors of the Corporation serving on the Committee authorized granting to
Optionee options to purchase shares of the Corporation's common stock, $.001 par
value ("Shares") for the term and subject to the terms and conditions
hereinafter set forth.
A G R E E M E N T
- - - - - - - - -
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
-------------------
otherwise clearly requires, terms with initial capital letters used herein shall
have the meanings assigned to such terms in the Plan.
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, Options
----------------
to purchase all or any part of 147,058 Shares, upon and subject to the terms and
conditions of the Plan, which is incorporated in full herein by this reference,
and upon the other terms and conditions set forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time after the
-------------
date hereof (subject to the provisions of Section 17) and expiring on the date
five (5) years from the date of grant, unless earlier terminated pursuant to
Section 7.
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
------------------
giving written notice to the Corporation of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied by
such other executed instruments or documents as may be required by the Committee
pursuant to this Agreement, and unless otherwise directed by the Committee,
Optionee shall at the time of such exercise tender the purchase price of the
Shares he has elected to purchase. An Optionee may purchase less than the total
number of Shares for which the Option is exercisable, provided that a partial
exercise of an Option may not be for less than one hundred (100) Shares. If
Optionee shall not purchase all of the Shares which he is entitled to purchase
under the Options, his right to
B-1
<PAGE>
purchase the remaining unpurchased Shares shall continue until expiration of the
Options. The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each Share
------------------------
which Optionee is entitled to purchase under the Options shall be $.68 per
Share.
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
-------------------------
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased. Provided, however, the Board of Directors may, in its
sole discretion, permit payment by the Corporation of the purchase price in
whole or in part with Shares. If the Optionee is so permitted, and the Optionee
elects to make payment with Shares, the Optionee shall deliver to the
Corporation certificates representing the number of Shares in payment for new
Shares, duly endorsed for transfer to the Corporation, together with any written
representations relating to title, liens and encumbrances, securities laws,
rules and regulatory compliance, or other matters, reasonably requested by the
Board of Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF EMPLOYMENT. If an Optionee's employment or
-----------------------------------
other relationship with the Corporation (or a Subsidiary) terminates, the effect
of the termination on the Optionee's rights to acquire Shares shall be as
follows:
7.1 Termination For Other Than Disability Or Cause. If an Optionee
----------------------------------------------
ceases to be employed by, or ceases to have a relationship with, the Corporation
or a Subsidiary for any reason other than for disability or cause, such
Optionee's Options shall expire not later than three (3) months thereafter.
During such three (3) month period and prior to the expiration of the Option by
its terms, the Optionee may exercise any Option granted to him, but only to the
extent such Options were exercisable on the date of termination of his
employment or relationship and except as so exercised, such Options shall expire
at the end of such three (3) month period unless such Options by their terms
expire before such date. The decision as to whether a termination for a reason
other than disability, cause or death has occurred shall be made by the
Committee, whose decision shall be final and conclusive, except that employment
shall not be considered terminated in the case of sick leave or other bona fide
leave of absence approved by the Corporation.
7.2 Disability. If an Optionee ceases to be employed by, or ceases
----------
to have a relationship with, the Corporation or a Subsidiary by reason of
disability (within the meaning of Code Section 22(e)(3)), such Optionee's
Options shall expire not later than one (1) year thereafter. During such one
(1) year period and prior to the expiration of the Option by its terms, the
Optionee may exercise any Option granted to him, but only to the extent such
Options were exercisable on the date the Optionee ceased to be employed by, or
ceased to have a relationship with, the Corporation or Subsidiary by reason of
disability. The decision as to whether a termination by reason of disability
has occurred shall be made by the Committee, whose decision shall be final and
conclusive.
<PAGE>
7.3 Termination For Cause. If an Optionee's employment by, or
---------------------
relationship with, the Corporation or a Subsidiary is terminated for cause, such
Optionee's Option shall expire immediately; provided, however, the Committee
may, in its sole discretion, within thirty (30) days of such termination, waive
the expiration of the Option by giving written notice of such waiver to the
Optionee at such Optionee's last known address. In the event of such waiver,
the Optionee may exercise the Option only to such extent, for such time, and
upon such terms and conditions as if such Optionee had ceased to be employed by,
or ceased to have a relationship with, the Corporation or a Subsidiary upon the
date of such termination for a reason other than disability, cause or death.
Termination for cause shall include termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith or any conduct detrimental to the interests of the
Corporation or a Subsidiary. The determination of the Committee with respect to
whether a termination for cause has occurred shall be final and conclusive.
8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable,
-----------------------------
either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution and shall be exercisable during the Optionee's lifetime
only by Optionee.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
------------------------------------------
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of an
Adjustment Event, (i) appropriate and proportionate adjustments shall be made to
the number and kind and exercise price for the Shares subject to the Options,
and (ii) appropriate amendments to this Agreement shall be executed by the
Corporation and Optionee if the Committee determines that such an amendment is
necessary or desirable to reflect such adjustments. If determined by the
Committee to be appropriate, in the event of an Adjustment Event which involves
the substitution of securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other corporation
of the Options. Notwithstanding the foregoing, any such adjustment to the
Options shall be made without change in the total exercise price applicable to
the unexercised portion of the Options, but with an appropriate adjustment to
the number of Shares, kind of Shares and exercise price for each Share subject
to the Options. The determination by the Committee as to what adjustments,
amendments or arrangements shall be made pursuant to this Section 10, and the
extent thereof, shall be final and conclusive. No fractional Shares shall be
issued on account of any such adjustment or arrangement.
10. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing contained
-------------------------------------------------
in this Agreement shall obligate the Corporation to employ or have another
relationship with Optionee for any period or interfere in any way with the right
of the
<PAGE>
Corporation to reduce Optionee's compensation or to terminate the employment of
or relationship with Optionee at any time.
11. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
------------------------
granted, sometimes referred to herein as the "date of grant," shall be June 30,
1999.
12. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
-----------------------------
privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
13. SECURITIES LAWS COMPLIANCE. The Corporation will diligently endeavor
--------------------------
to comply with all applicable securities laws before any Shares are issued
pursuant to the Options. Without limiting the generality of the foregoing, the
Corporation may require from the Optionee such investment representation or such
agreement, if any, as counsel for the Corporation may consider necessary in
order to comply with the Securities Act of 1933 as then in effect, and may
require that the Optionee agree that any sale of the Shares will be made only in
such manner as is permitted by the Committee. The Committee may in its
discretion cause the Shares underlying the Options to be registered under the
Securities Act of 1933, as amended, by filing a Form S-8 Registration Statement
covering the Options and the Shares underlying the Options. Optionee shall take
any action reasonably requested by the Corporation in connection with
registration or qualification of the Shares under federal or state securities
laws.
14. INTENDED TREATMENT AS INCENTIVE STOCK OPTIONS. The Options granted
---------------------------------------------
herein are intended to be "incentive stock options" to which Sections 421 and
422 of the Internal Revenue Code of 1986, as amended from time to time ("Code")
apply, and shall be construed to implement that intent. If all or any part of
the Options shall not be subject to Sections 421 and 422 of the Code, the
Options shall nevertheless be valid and carried into effect.
15. PLAN CONTROLS. The Options shall be subject to and governed by the
-------------
provisions of the Plan. All determinations and interpretations of the Plan made
by the Committee shall be final and conclusive.
16. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
------------------------
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
17. CONDITIONS TO OPTIONS.
---------------------
17.1 Compliance with Applicable Laws. The Corporation's obligation to
-------------------------------
issue Shares of its common stock upon exercise of the Options is expressly
conditioned upon
<PAGE>
the completion by the Corporation of any registration or other qualification of
such Shares under any state and/or Federal law or rulings or regulations of any
governmental regulatory body, or the making of such investment representations
or other representations and undertakings by the Optionee or any person entitled
to exercise the Option in order to comply with the requirements of any exemption
from any such registration or other qualification of such Shares which the
Committee shall, in its sole discretion, deem necessary or advisable. Such
required representations and undertakings may include representations and
agreements that the Optionee or any person entitled to exercise the Option (i)
is not purchasing such Shares for distribution and (ii) agrees to have placed
upon the face and reverse of any certificates a legend setting forth any
representations and undertakings which have been given to the Committee or a
reference thereto.
17.2 Shareholder Approval of Plan. If the Options granted hereby are
-----------------------------
granted prior to approval of the Plan by the shareholders of the Corporation
pursuant to Section 8 of the Plan, the grant of the Options made hereby is
expressly conditioned upon and such Options shall not be exercisable until the
approval of the Plan by the shareholders of the Corporation in accordance with
the provisions of Section 8 of the Plan.
17.3 Maximum Exercise Period. Notwithstanding any provision of this
-----------------------
Agreement to the contrary, the Options shall expire no later than ten (10) years
from the date hereof or five (5) years if, as of the date hereof, the Optionee
owns or is considered to own by reason of Code Section 425(d) more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Corporation or any Subsidiary or parent corporation of the Corporation.
18. MISCELLANEOUS.
--------------
18.1 Binding Effect. This Agreement shall bind and inure to the
--------------
benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
18.2 Further Acts. Each party agrees to perform any further acts and
------------
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
18.3 Amendment. This Agreement may be amended at any time by the
---------
written agreement of the Corporation and the Optionee.
18.4 Syntax. Throughout this Agreement, whenever the context so
------
requires, the singular shall include the plural, and the masculine gender shall
include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
<PAGE>
18.5 Choice of Law. The parties hereby agree that this Agreement has
-------------
been executed and delivered in the State of California and shall be construed,
enforced and governed by the laws thereof. This Agreement is in all respects
intended by each party hereto to be deemed and construed to have been jointly
prepared by the parties and the parties hereby expressly agree that any
uncertainty or ambiguity existing herein shall not be interpreted against either
of them.
18.6 Severability. In the event that any provision of this Agreement
------------
shall be held invalid or unenforceable, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement.
18.7 Notices. All notices and demands between the parties hereto
-------
shall be in writing and shall be served either by registered or certified mail,
and such notices or demands shall be deemed given and made forty-eight (48)
hours after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made, and
the issuance of the registered receipt therefor. If served by telegraph, such
notice or demand shall be deemed given and made at the time the telegraph agency
shall confirm to the sender, delivery thereof to the addressee. All notices and
demands to Optionee or the Corporation may be given to them at the following
addresses:
If to Optionee: Gary L. Dreher
6301 Acacia Hill Drive
Yorba Linda, California 92886
If to Corporation: AMDL, Inc.
14272 Franklin Avenue, Suite 106
Tustin, California 92780
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
18.8 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement supersedes all prior and contemporaneous agreements and
understandings of the parties, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. No supplement, modification
or waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall constitute a waiver of any other provision hereof (whether
or not similar) nor shall such waiver constitute a continuing waiver.
18.9 Attorneys' Fees. In the event that any party to this Agreement
---------------
institutes any action or proceeding, including, but not limited to, litigation
or arbitration, to preserve, to protect or to enforce any right or benefit
created by or granted under this Agreement, the
<PAGE>
prevailing party in each respective such action or proceeding shall be entitled,
in addition to any and all other relief granted by a court or other tribunal or
body, as may be appropriate, to an award in such action or proceeding of that
sum of money which represents the attorneys' fees reasonably incurred by the
prevailing party therein in filing or otherwise instituting and in prosecuting
or otherwise pursuing or defending such action or proceeding, and, additionally,
the attorneys' fees reasonably incurred by such prevailing party in negotiating
any and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
"CORPORATION"
AMDL, INC.,
a Delaware corporation
By:______________________________
Vivian B. Frazier,
Chief Financial Officer
"OPTIONEE"
_________________________________
Gary L. Dreher
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered into as
of June 30, 1999, by and between AMDL, INC., a Delaware corporation
("Corporation"), and GARY L. DREHER ("Optionee").
R E C I T A L S
- - - - - - - -
A. On June 30, 1999, the Board of Directors of the Corporation adopted,
subject to the approval of the Corporation's shareholders, the AMDL, Inc. 1999
Stock Option Plan (the "Plan").
B. Pursuant to the Plan, on June 30, 1999, the members of the Board of
Directors of the Corporation serving on the Committee authorized granting to
Optionee options to purchase shares of the common stock, $.001 par value, of the
Corporation ("Shares") for the term and subject to the terms and conditions
hereinafter set forth.
A G R E E M E N T
- - - - - - - - -
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
-------------------
otherwise clearly requires, terms with initial capital letters used herein shall
have the meanings assigned to such terms in the Plan.
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, Options
----------------
to purchase all or any part of 102,942 Shares, upon and subject to the terms and
conditions of the Plan, which is incorporated in full herein by this reference,
and upon the other terms and conditions set forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time after the
-------------
date hereof (subject to the provisions of Section 17) and expiring on the date
five (5) years from the date of grant, unless earlier terminated pursuant to
Section 7.
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
------------------
giving written notice to the Corporation of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied by
such other executed instruments or documents as may be required by the Committee
pursuant to this Agreement, and unless otherwise directed by the Committee,
Optionee shall at the time of such exercise tender the purchase price of the
Shares he has elected to purchase. An Optionee may purchase less than the total
number of Shares for which the Option is exercisable, provided that a partial
exercise of an Option may not be for less than one hundred (100) Shares. If
Optionee shall not purchase all of the Shares which he is entitled to purchase
under the Options, his right to purchase the remaining unpurchased Shares shall
continue until expiration of the Options. The
<PAGE>
Options shall be exercisable with respect of whole Shares only, and fractional
Share interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each Share
------------------------
which Optionee is entitled to purchase under the Options shall be $.68 per
Share.
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
-------------------------
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased. Provided, however, the Board of Directors may, in its
sole discretion, permit payment by the Corporation of the purchase price in
whole or in part with Shares. If the Optionee is so permitted, and the Optionee
elects to make payment with Shares, the Optionee shall deliver to the
Corporation certificates representing the number of Shares in payment for new
Shares, duly endorsed for transfer to the Corporation, together with any written
representations relating to title, liens and encumbrances, securities laws,
rules and regulatory compliance, or other matters, reasonably requested by the
Board of Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF RELATIONSHIP OR DEATH. If Optionee's
----------------------------------------------
relationship with the Corporation as an employee terminates (whether voluntarily
or involuntarily because he is not re-elected by the shareholders), or if
Optionee dies, all Options which have previously vested shall expire six (6)
months thereafter. All unvested Options shall lapse and automatically expire.
During such six (6) month period (or such shorter period prior to the expiration
of the Option by its own terms), such Options may be exercised by the Optionee,
his executor or administrator or the person or persons to whom the Option is
transferred by will or the applicable laws of descent and distribution, as the
case may be, but only to the extent such Options were exercisable on the date
Optionee ceased to have a relationship with the Corporation as a director or
died.
8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable,
-----------------------------
either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution and shall be exercisable during the Optionee's lifetime
only by Optionee.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
------------------------------------------
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of an
Adjustment Event, (i) appropriate and proportionate adjustments shall be made to
the number and kind and exercise price for the Shares subject to the Options,
and (ii) appropriate amendments to this Agreement shall be executed by the
Corporation and Optionee if the Committee determines that such an amendment is
necessary or desirable to reflect such adjustments. If determined by the
Committee to be appropriate, in the event of an Adjustment Event which involves
the
<PAGE>
substitution of securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other corporation
of the Options. Notwithstanding the foregoing, any such adjustment to the
Options shall be made without change in the total exercise price applicable to
the unexercised portion of the Options, but with an appropriate adjustment to
the number of Shares, kind of Shares and exercise price for each Share subject
to the Options. The determination by the Committee as to what adjustments,
amendments or arrangements shall be made pursuant to this Section 10, and the
extent thereof, shall be final and conclusive. No fractional Shares shall be
issued on account of any such adjustment or arrangement.
10. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing contained
-------------------------------------------------
in this Agreement shall obligate the Corporation to employ or have another
relationship with Optionee for any period or interfere in any way with the right
of the Corporation to reduce Optionee's compensation or to terminate the
employment of or relationship with Optionee at any time.
11. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
------------------------
granted, sometimes referred to herein as the "date of grant," shall be June
30,1999.
12. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
-----------------------------
privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
13. SECURITIES LAWS COMPLIANCE. The Corporation will diligently endeavor
--------------------------
to comply with all applicable securities laws before any stock is issued
pursuant to the Options. Without limiting the generality of the foregoing, the
Corporation may require from the Optionee such investment representation or such
agreement, if any, as counsel for the Corporation may consider necessary in
order to comply with the Securities Act of 1933 as then in effect, and may
require that the Optionee agree that any sale of the Shares will be made only in
such manner as is permitted by the Committee. The Committee may in its
discretion cause the Shares underlying the Options to be registered under the
Securities Act of 1933, as amended, by filing a Form S-8 Registration Statement
covering the Options and the Shares underlying the Options. Optionee shall take
any action reasonably requested by the Corporation in connection with
registration or qualification of the Shares under federal or state securities
laws.
14. INTENDED TREATMENT AS NON-QUALIFIED STOCK OPTIONS. The Options
-------------------------------------------------
granted herein are intended to be non-qualified stock options described in U.S.
Treasury Regulation ("Treas. Reg.") (S)1.83-7 to which Sections 421 and 422 of
the Internal Revenue Code of 1986, as amended from time to time ("Code") do not
apply, and shall be construed to implement that intent. If all or any part of
the Options shall not be described in
<PAGE>
Treas. Reg. (S)1.83-7 or be subject to Sections 421 and 422 of the Code, the
Options shall nevertheless be valid and carried into effect.
15. PLAN CONTROLS. The Options shall be subject to and governed by the
-------------
provisions of the Plan. All determinations and interpretations of the Plan made
by the Committee shall be final and conclusive.
16. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
------------------------
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
17. CONDITIONS TO OPTIONS.
---------------------
17.1 Compliance with Applicable Laws. The Corporation's obligation to
-------------------------------
issue Shares upon exercise of the Options is expressly conditioned upon the
completion by the Corporation of any registration or other qualification of such
Shares under any state and/or Federal law or rulings or regulations of any
governmental regulatory body, or the making of such investment representations
or other representations and undertakings by the Optionee or any person entitled
to exercise the Option in order to comply with the requirements of any exemption
from any such registration or other qualification of such Shares which the
Committee shall, in its sole discretion, deem necessary or advisable. Such
required representations and undertakings may include representations and
agreements that the Optionee or any person entitled to exercise the Option (i)
is not purchasing such Shares for distribution and (ii) agrees to have placed
upon the face and reverse of any certificates a legend setting forth any
representations and undertakings which have been given to the Committee or a
reference thereto.
17.2 Shareholder Approval of Plan. If the Options granted hereby are
----------------------------
granted prior to approval of the Plan by the shareholders of the Corporation
pursuant to Section 8 of the Plan, the grant of the Options made hereby is
expressly conditioned upon and such Options shall not be exercisable until the
approval of the Plan by the shareholders of the Corporation in accordance with
the provisions of Section 8 of the Plan.
18. MISCELLANEOUS.
-------------
18.1 Binding Effect. This Agreement shall bind and inure to the
--------------
benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
18.2 Further Acts. Each party agrees to perform any further acts and
------------
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
18.3 Amendment. This Agreement may be amended at any time by the
---------
written agreement of the Corporation and the Optionee.
<PAGE>
18.4 Syntax. Throughout this Agreement, whenever the context so
------
requires, the singular shall include the plural, and the masculine gender shall
include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
18.5 Choice of Law. The parties hereby agree that this Agreement has
-------------
been executed and delivered in the State of California and shall be construed,
enforced and governed by the laws thereof. This Agreement is in all respects
intended by each party hereto to be deemed and construed to have been jointly
prepared by the parties and the parties hereby expressly agree that any
uncertainty or ambiguity existing herein shall not be interpreted against either
of them.
18.6 Severability. In the event that any provision of this Agreement
------------
shall be held invalid or unenforceable, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement.
18.7 Notices. All notices and demands between the parties hereto
-------
shall be in writing and shall be served either by registered or certified mail,
and such notices or demands shall be deemed given and made forty-eight (48)
hours after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made, and
the issuance of the registered receipt therefor. If served by telegraph, such
notice or demand shall be deemed given and made at the time the telegraph agency
shall confirm to the sender, delivery thereof to the addressee. All notices and
demands to Optionee or the Corporation may be given to them at the following
addresses:
If to Optionee: Gary L. Dreher
6301 Acacia Hill Drive
Yorba Linda, California 92886
If to Corporation: AMDL, Inc.
14272 Franklin Avenue, Suite 106
Tustin, California 92780
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
18.8 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement supersedes all prior and contemporaneous agreements and
understandings of the parties, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. No supplement, modification
or
<PAGE>
waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall constitute a waiver of any other provision hereof (whether
or not similar) nor shall such waiver constitute a continuing waiver.
18.9 Attorneys' Fees. In the event that any party to this Agreement
---------------
institutes any action or proceeding, including, but not limited to, litigation
or arbitration, to preserve, to protect or to enforce any right or benefit
created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
"CORPORATION"
AMDL, INC.,
a Delaware corporation
By:______________________________________________
Vivian B. Frazier, Chief Financial Officer
"OPTIONEE"
_________________________________________________
Gary L. Dreher
<PAGE>
EXHIBIT B
GENERAL RELEASE
---------------
WHEREAS, Gary L. Dreher ("Releasor") and AMDL, INC., a Delaware corporation
("Releasee") have entered into that certain Agreement Regarding Cancellation of
Indebtedness dated as of July 1, 1999 (the "Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
-------
(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
<PAGE>
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
-------------
Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
__________________________________
Gary L. Dreher
"Releasee"
AMDL, INC.,
a Delaware corporation
By:_______________________________
Vivian B. Frazier
Chief Financial Officer
<PAGE>
EXHIBIT 10.53
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is
made as of this 1st day of July, 1999 by and between Douglas C. MacLellan
("Holder") and AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
- - - - - - - -
A. Holder currently serves as a director of the Company. The Company
and Holder acknowledge that as of the date of this Agreement, the Company is
indebted to Holder in the amount of $33,750 (the "Indebtedness") for accrued
fees due Holder by the Company.
B. The Company and Holder now wish to cancel the Indebtedness in
exchange for the consideration set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
-------------------------
incorporated by this reference.
2. Cancellation of Indebtedness. Holder hereby agrees to cancel and
----------------------------
extinguish the Indebtedness in exchange for the consideration set forth in
Section 3 of this Agreement (the "Consideration"). Holder further acknowledges
and agrees that the payment of the Consideration shall constitute full
satisfaction of $33,750 of the Indebtedness represented thereby and that the
Corporation shall have no further obligation to repay same.
3. Consideration. In exchange for the cancellation of the
-------------
Indebtedness pursuant to Section 2 of the Agreement, the Company shall deliver
to the Holder the following consideration:
(a) Cash Consideration. The Company shall pay the Holder $3,375 in
-------------------
cash (the "Cash Consideration"). The Cash Consideration shall be payable in six
installments of $562.50 each with the first payment to be made on August 31,
1999 and the remaining payments to be made on or before the last day of each of
the next five calendar months.
(b) Warrant. Upon the execution of this Agreement, the Company
-------
shall issue to Holder a stock purchase warrant ("Warrant") to purchase up to
20,250 shares of Common Stock at an exercise price of $.68 per share, pursuant
to the form of Warrant attached hereto as Exhibit A.
-1-
<PAGE>
4. General Release. The Company and Holder agree to execute and
---------------
deliver the General Release in the form attached hereto as Exhibit B.
5. Arbitration and Fees. Any controversy or claim arising out of or
--------------------
relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
attorneys' fees in such arbitration or other proceeding which may be determined
by the arbitrator or other officer in such proceeding. If collection is
required for any payment not made when due, the creditor shall collect statutory
interest and the cost of collection, including attorney's fees whether or not
court action is required for enforcement.
6. Miscellaneous. This Agreement contains the entire agreement
-------------
between Holder and the Company and may not be modified, altered or changed in
any manner whatsoever, except by a written agreement signed by all of the
parties hereto. Any agreement or representation concerning the subject matter of
this Agreement not set forth in this Agreement or a subsequent written agreement
signed by all of the parties hereto is null and void. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The rights and obligation of either party to this
Agreement may not be assigned by such party without the prior written consent of
the other party. This Agreement may be executed in two or more counterparts,
each signed by one of the parties and all of said counterparts together shall
constitute one and the same instrument. The parties agree that facsimile
signatures may be relied upon by each of the parties hereto as original
signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
"The Company"
AMDL, INC.,
a Delaware corporation
By:__________________________________
Gary L. Dreher, President
"Holder"
By:__________________________________
Douglas C. MacLellan
-2-
<PAGE>
EXHIBIT A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., PACIFIC TIME ON JULY 1, 2004.
STOCK PURCHASE WARRANT
----------------------
For the Purchase of 20,250
Shares of Common Stock, $.001 Par Value
of
AMDL, INC.
A Delaware Corporation
THIS CERTIFIES THAT, for value received, Douglas C. MacLellan (the
"Holder"), as registered owner of this Stock Purchase Warrant ("Warrant"), is
entitled to at any time or from time to time after July 1, 1999 and before 5:00
P.M., Pacific Time, July 1, 2004, but not thereafter, to subscribe for, purchase
and receive 20,250 fully paid and nonassessable shares of the common stock,
$.001 par value (the "Common Stock"), of AMDL, INC., a Delaware corporation (the
"Company"), at a price equal to $.68 per share of the Common Stock (the
"Exercise Price"), upon presentation and surrender of this Warrant and upon
payment by cashier's check or wire transfer of the Exercise Price for such
shares of the Common Stock to the Company at the principal office of the
Company; provided, however, that upon the occurrence of any of the events
specified in the Statement of Rights of Warrant Holder, a copy of which is
attached as Annex I hereto and by this reference made a part hereof, the rights
granted by this Warrant shall be adjusted as therein specified. Upon exercise
of this Warrant, the form of election hereinafter provided for must be duly
executed and the instructions for registration of the Common Stock acquired by
such exercise must be completed. If the subscription rights represented hereby
shall not be exercised at or before 5:00 P.M., Pacific Time, on July 1, 2004,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
A-1
<PAGE>
This Warrant may be exercised in accordance with its terms in whole or in
part. In the event of the exercise or assignment hereof in part only, the
Company shall cause to be delivered to the Holder a new Warrant of like tenor to
this Warrant in the name of the Holder evidencing the right of the Holder to
purchase the number of shares of the Common Stock purchasable hereunder as to
which this Warrant has not been exercised or assigned.
In no event shall this Warrant (or the shares of the Common Stock issuable
upon full or partial exercise hereof) be offered or sold except in conformity
with the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 1st day of July, 1999.
AMDL, INC.
By:______________________________
Gary L. Dreher, President
A-2
<PAGE>
Form to be used to exercise Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: __________________
The Undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase _______ shares of the Common Stock of the Company called for
thereby, and hereby makes payment by cashier's check of $___________ (at the
rate of $______ per share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to which this
Warrant is exercised in the name of:
(Name)
(Address)
(Taxpayer Number)
and if said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, issue a new Warrant Certificate for the balance
remaining of such Warrants to the undersigned at the address stated below.
Name of Holder:___________________________________
(Please Print)
Signature:________________________________________
______________________________________
(Address)
Signature Guaranteed: ____
NOTICE: The signature to the form to exercise must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-3
<PAGE>
Form to be used to transfer Warrant:
- -----------------------------------
TO: AMDL, INC. DATE: _________________
For value received, ____________ hereby sells, assigns and transfers
unto _______________________ said Warrant Certificate together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
the Secretary of AMDL, Inc. attorney, to transfer said Warrant Certificate on
the books of the corporation, with full power of substitution in the premises.
Name of Holder:___________________________________
(Please Print)
Signature:________________________________________
_____________________________________
(Address)
Signature Guaranteed: ____
NOTICE: The signature to the form to transfer must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
A-4
<PAGE>
ANNEX I TO AMDL, INC.
STOCK PURCHASE WARRANT DATED JULY 1, 1999
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exercise of Warrant. This Warrant may be exercised in whole or in
-------------------
part at any time or from time to time after July 1, 1999 and before 5:00 p.m.,
Pacific Time, on July 1, 2004, by presentation and surrender hereof to the
Company, with the Exercise Form annexed hereto duly executed and accompanied by
payment by cashier's check or wire transfer of the Exercise Price for the number
of shares specified in such form, together with all federal and state taxes
applicable upon such exercise. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price at the office or agency of the Company, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder.
2. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
3. Adjustment in Number of Shares.
------------------------------
(A) Adjustment for Reclassifications. In case at any time or from
--------------------------------
time to time after July 1, 1999 ("the Issue Date") the holders of the Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the Issue Date he had been the
holder of record of the number of shares of Common Stock of the Company called
for on the face of this Warrant and had thereafter, during the period from the
Issue Date, to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period.
(B) Adjustment for Reorganization, Consolidation, Merger. In case of
----------------------------------------------------
any reorganization of the Company (or any other corporation the stock or other
securities of which are
A-5
<PAGE>
at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Holder of this Warrant, upon the exercise hereof as provided in Section
1 at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would be entitled had the Holder exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
4. Notices to Warrant Holders. So long as this Warrant shall be
--------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
5. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
6. Restrictions on Transfer. The Holder of this Warrant, by acceptance
------------------------
thereof, agrees that, absent an effective notification under Regulation A or
registration statement, in either case under the Securities Act of 1933 (the
"Act"), covering the disposition of this Warrant or the Common Stock issued or
issuable upon exercise hereof, such Holder will not sell or transfer any or all
of this Warrant or such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the effect that
such sale or transfer will be
A-6
<PAGE>
exempt from the registration and prospectus delivery requirements of the Act.
Such Holder agrees that the Company may issue instructions to its transfer agent
to place, or may itself place, a "stop order" on transfers with respect to the
Warrant and Common Stock and that the certificates evidencing the Warrant and
Common Stock which will be delivered to such Holder by the Company shall bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN
MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Holder of this Warrant, at the time all or a portion of such
Warrant is exercised, agrees to make such written representations to the Company
as counsel for the Company may reasonably request, in order that the Company may
be reasonably satisfied that such exercise of the Warrant and consequent
issuance of Common Shares will not violate the registration and prospectus
delivery requirements of the Act, or other applicable state securities laws.
7. Piggyback Registration Rights. If, at any time after July 1, 1999
-----------------------------
and expiring July 1, 2004, the Company proposes to register any of its
securities under the Securities Act of 1933, as amended ("Act") (except for
registrations on Forms S-8 or S-4 or their equivalent), it will give written
notice by registered mail, at least thirty (30) days prior to the filing of each
such registration statement, to Holder of its intention to do so. If Holder
notifies the Company within twenty (20) days after receipt of any such notice of
its desire to include any such shares of Common Stock issuable upon exercise of
this Warrant in such proposed registration statement, the Company shall afford
Holder the opportunity to have any such shares of Common Stock registered under
such registration statement at the Company's sole cost and expense. These
rights may be exercised at any time on an unlimited number of occasions prior to
July 1, 2004, subject to the absolute discretion of any underwriter of the
Company's securities requesting that the shares of Common Stock held by the
Holder not be sold for a period not to exceed 180 days from the effective date
of the Company's initial underwritten public offering. If the underwriter
believes that the total amount of securities sought to be registered by the
Holder and any other holder of similar rights exceeds the amount of securities
that the underwriter deems advisable to include in the offering, only the pro
rata number of shares of Common Stock requested by the Holder with all other
holders of shares of Common Stock requesting registration pursuant to piggyback
registration rights, if any, shall be so
A-7
<PAGE>
registerable. If the Company files a registration statement on Form S-8 and this
Warrant may be registered under the Act at that time, the Company agrees to
include the Warrant and Common Shares in such registration.
8. Loss or Mutilation. Upon receipt by the Company of evidence
------------------
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
9. Reservation of Common Stock. The Company shall at all times reserve
---------------------------
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
10. Notices. All notices and other communications from the Company to
-------
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing.
11. Change; Waiver. Neither this Warrant nor any term hereof may be
--------------
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. Law Governing. This Warrant shall be construed and enforced in
-------------
accordance with and governed by the laws of Delaware.
DATED: July 1, 1999
AMDL, INC.
A Delaware Corporation
By:_____________________________________________
Gary L. Dreher, President
A-8
<PAGE>
EXHIBIT B
GENERAL RELEASE
---------------
WHEREAS, DOUGLAS C. MacLELLAN ("Releasor") and AMDL, INC., a Delaware
corporation ("Releasee") have entered into that certain Agreement Regarding
Cancellation of Indebtedness dated as of July 1, 1999 (the "Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
-------
(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
B-1
<PAGE>
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
-------------
Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
__________________________________
Douglas C. MacLellan
"Releasee"
AMDL, INC.,
a Delaware corporation
By:_______________________________
Gary L. Dreher, President
B-2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 JUN-30-1999
<CASH> 74,566 18,162
<SECURITIES> 0 0
<RECEIVABLES> 10,599 8,469
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 93,028 34,495
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 93,028 34,495
<CURRENT-LIABILITIES> 973,840 1,293,760
<BONDS> 0 0
0 0
0 0
<COMMON> 169 557
<OTHER-SE> (880,981) (1,259,822)
<TOTAL-LIABILITY-AND-EQUITY> 93,028 34,495
<SALES> 155,157 21,765
<TOTAL-REVENUES> 155,157 21,765
<CGS> 124,857 21,742
<TOTAL-COSTS> 124,857 21,742
<OTHER-EXPENSES> 0 0<F1>
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 27,331 0
<INCOME-PRETAX> (1,554,405) (760,202)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,616,552) (770,517)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,554,405) (760,202)
<EPS-BASIC> (9.21) (2.89)
<EPS-DILUTED> (9.21) (2.89)
<FN>
<F1>Other expenses not specifically broken out in the finacial statements.
</FN>
</TABLE>
