<PAGE>
As filed with the Securities and Exchange Commission on October 8, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
BIOCIRCUITS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3088884
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1324 CHESAPEAKE TERRACE
SUNNYVALE, CALIFORNIA 94089
(408) 745-1961
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
DONALD B. HAWTHORNE
CHIEF FINANCIAL OFFICER
1324 CHESAPEAKE TERRACE
SUNNYVALE, CALIFORNIA 94089
(408) 745-1961
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
DEBORAH A. MARSHALL, ESQ.
LANA K. HAWKINS, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE, PALO ALTO, CALIFORNIA 94306
(415) 843-5000
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is filed in a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement of the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock 2,903,321 shares $3.50 $10,161,624 $3,079.28
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</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of
computing the amount of the registration fee based on the average of the
high and low prices of the Company's Common Stock as reported on the Nasdaq
National Market System on October 3, 1996.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
BIOCIRCUITS CORPORATION
Cross Reference Sheet showing the location in the Prospectus of the
Items on Form S-3
Form S-3 Item and Caption Location in Prospectus
------------------------- ----------------------
1. Forepart of Registration Statement and
Outside Cover Page of Prospectus . . . . . . Outside Front Cover
Page
2. Inside Front and Outside Back Cover Pages of Inside Front and
Prospectus . . . . . . . . . . . . . . . . . Outside Back Cover
Pages
3. Summary Information, Risk Factors and Ratio The Company; Risk
of Earnings to Fixed Charges . . . . . . . . Factors
4. Use of Proceeds . . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price . . . . . . . *
6. Dilution . . . . . . . . . . . . . . . . . . *
7. Selling Security Holders . . . . . . . . . . Selling
Securityholders
8. Plan of Distribution . . . . . . . . . . . . Outside Front Cover
Page; Plan of
Distribution
9. Description of Securities to Be Registered . *
10. Interests of Named Experts and Counsel . . . *
11. Material Changes . . . . . . . . . . . . . . *
12. Incorporation of Certain Information by Inside Front Cover
Reference . . . . . . . . . . . . . . . . . . Page
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . . . . *
- -------------
* Such item is inapplicable or the answer thereto is in the negative.
<PAGE>
PROSPECTUS
2,903,321 Shares
BIOCIRCUITS CORPORATION
-----------------------------------
COMMON STOCK
-----------------------------------
This Prospectus relates to a total of 2,903,321 shares of Common Stock
(the "Shares"), with a par value of $0.001 (the "Common Stock") of
Biocircuits Corporation (the "Company") which are being offered and sold by
certain stockholders of the Company (the "Selling Securityholders"). Of such
Shares (i) 1,930,462 were issued by the Company in a private financing
pursuant to a Common Stock and Warrant Purchase Agreement dated as of
September 30, 1996 (the "Financing") (ii) 965,231 are issuable pursuant to
the exercise of warrants which were issued in connection with the Financing
(the "Financing Warrants") (iii) 2,500 are issuable pursuant to the exercise
of warrants which were issued in connection with a line of credit agreement
dated April 4, 1996 the ("Line of Credit Warrants") and (iv) 5,128 are
issuable pursuant to the exercise of warrants which were issued in connection
with a standby letter of credit issued on August 6, 1996 (the "Standby Letter
of Credit Warrants", and, together with the Line of Credit Warrants, the
"Credit Financing Warrants"). The Financing Warrants and the Credit Financing
Warrants are referred to herein collectively as the "Warrants".
The Shares may be offered by the Selling Securityholders from time to
time in transactions on the Nasdaq National Market System, in privately
negotiated transactions or a combination of such methods of sale, at fixed
prices that may be changed, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
The Selling Securityholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Securityholders or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they sell as principal or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Selling Securityholders" and "Plan of
Distribution."
The Company will receive all of the proceeds from the sale of the Common
Stock issued by the Company in the Financing and from the exercise of the
Warrants, but will not receive any of the proceeds from the sale of the Shares
by the Selling Securityholders hereof. See "Plan of Distribution."
The Selling Securityholders, directly or through agents, dealers or
underwriters, may sell the Shares offered hereby from time to time on
terms to be determined at the time of sale. The Company's Common Stock is
traded on the Nasdaq National Market System under the symbol BIOC.
------------------------------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 7.
------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No underwriting commissions or discounts will be paid by the Company in
connection with this offering. Estimated expenses payable by the Company in
connection with this offering are $30,070.66. The aggregate proceeds to the
Selling Securityholders from the sale of the Shares will be the purchase
price of the Shares sold less the aggregate agents' commissions and
underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. See "Plan of Distribution."
The Selling Securityholders and any broker-dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Act"), and any commission received by
them and any profit on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Act. The Company
has agreed to indemnify the Selling Securityholders and certain other persons
against certain liabilities, including liabilities under the Act.
The date of this Prospectus is October 8, 1996.
<PAGE>
No person is authorized in connection with any offering made hereby to give
any information or to make any representation not contained or incorporated by
reference in this Prospectus, and any information or representation not
contained or incorporated herein must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, by any person in any jurisdiction in
which it is unlawful for such person to make such offer or solicitation.
Neither the delivery of this Prospectus at any time nor any sale made hereunder
shall, under any circumstances, imply that the information herein is correct as
of any date subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
Commission's following Regional Offices: Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511;
and New York Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission. The address of such Web site is http://www.sec.gov. The
Company's Common Stock is quoted on the Nasdaq National Market System, and
such reports, proxy statements and other information can also be inspected at
the offices of The Nasdaq Operations, 1735 K Street, N.W., Washington, D.C.
20006.
Additional information regarding the Company and the Shares offered hereby
is contained in the Registration Statement on Form S-3 and the exhibits thereto
filed with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information
contained in such Registration Statement and the exhibits thereto. Statements
contained in this Prospectus regarding the contents of any document or contract
may be incomplete and, in each instance, reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement. For
further information pertaining to the Company and the Shares, reference is made
to the Registration Statement and the exhibits thereto, which may be inspected
without charge at, and copies thereof may be obtained at prescribed rates from,
the office of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are by this reference incorporated in and made a part of
this Prospectus:
(1) The Annual Report on Form 10-K for the fiscal year ended December 31,
1995 filed on March 31, 1996, including all matters incorporated by reference
therein;
(2) The Proxy Statement filed on April 18, 1996, including all matters
incorporated by reference therein;
(3) The Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1996, filed on May 14, 1996, including all matters incorporated by reference
therein; and
(4) The Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996, filed on August 13, 1996, including all matters incorporated by
reference therein.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference
herein and to be a part of this Prospectus from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or
2.
<PAGE>
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents or into this Prospectus) will be
provided without charge to each person, including any beneficial owner to whom
this Prospectus is delivered, upon a written or oral request to Biocircuits
Corporation, Attention: Donald Hawthorne, 1324 Chesapeake Terrace, Sunnyvale,
California, 94089, telephone number (408) 745-1961.
--------------------
3.
<PAGE>
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THE COMPANY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS.
Biocircuits was founded in 1989 to develop new immunodiagnostic testing
systems. Immunodiagnostic tests, or "assays," are performed on samples of
bodily fluids to diagnose a variety of infectious diseases and other conditions
such as endocrine dysfunctions, and to conduct therapeutic drug monitoring.
Immunodiagnostic tests utilize biological reagents, such as antibodies, and an
instrument to detect the presence of a substance of interest, or "analyte," such
as a virus or hormone.
The Company's IOS point-of-care immunodiagnostic testing system consists
of a compact, inexpensive instrument and disposable test cartridges that can
be operated by a user with no special skills or training. The system enables
users to perform tests at many locations, including physicians' offices,
ambulatory clinics and small clinical laboratories. In the first quarter of
1996, the Company began marketing its IOS system with cartridges capable of
performing T4 and T Uptake tests, two of the most commonly requested
immunodiagnostic tests for determining thyroid dysfunction. In April 1996,
the company filed a 510(k) pre-market notification with the United States
Food and Drug Administration (the "FDA") for a Thyroid Stimulating Hormone
("TSH") assay. The Company currently anticipates that it will obtain FDA
clearance for the TSH assay in the fourth quarter of 1996, although FDA
clearance may actually take longer. In September 1996, the Company announced
FDA clearance to market a qualitative serum pregnancy assay, a test designed
to allow physicians to perform this common pregnancy test in their office
during the patient visit where they can provide more immediate pre-natal care
to patients. Also in September 1996, the Company filed a 510(k) pre-market
notification with the FDA for a quantitative hCG assay, a test to track the
progress of early pregnancies. The Company is in the process of developing an
improved second generation cartridge for the new assays as well as existing
assays. The Company believes this modified design will be required for the
market launch of the TSH, qualitative serum pregnancy and quantitative hCG
tests. The Company currently expects the improved cartridge to be available
in the fourth quarter of 1996. The Company plans to launch the serum
pregnancy test and the TSH assay, pending FDA clearance, upon completion of
the second generation cartridge.
Biocircuits is currently developing three additional assays: a prostrate
specific antigen ("PSA") test for management of prostate cancer patients, a
Digoxin test for monitoring the therapeutic usage of this drug in the
treatment of heart disease and a Free T4 test for diagnosing true clinical
thyroid status. The Company plans to continue to develop additional
immunodiagnostic assays commonly requested by office-based physicians.
The Company believes that its IOS system is the first low-cost,
commercially available product which permits a physician to perform
immunodiagnostic tests at the point of patient care. Performing tests with
current immunodiagnostic testing systems is time consuming, expensive and
requires multiple steps and skilled technicians. The Company believes that the
IOS system reduces the cost of immunodiagnostic testing by providing test
results more rapidly than other current testing procedures.
Biocircuits is targeting the approximately 41,000 small- to medium-sized
physician office practices and free-standing alternate site laboratories which
are licensed under the Clinical Laboratories Improvement Act of 1967 and
Amendments of 1988 ("CLIA") for high or moderate complexity testing. Most of
these sites do not currently have an immunodiagnostic testing capability. The
IOS system is approved for moderately complex testing.
To perform a test, the operator inserts the test cartridge into the IOS
instrument, which then reads the relevant assay information contained on the
cartridge's bar code. The cartridge is then partially released from the
instrument, enabling the operator to place the specimen (blood, urine or other
samples) into one to two wells in the cartridge, depending on the test. The
sample automatically flows to the test zone, where it produces a signal that the
instrument uses to determine the test results. The IOS instrument provides a
liquid crystal display and a printed output in approximately 20 to 30 minutes,
although the time varies by test. Receiving results within this time frame
enables the doctor to make a treatment decision before the patient leaves the
office, facilitating earlier treatment and obviating the need for an additional
visit or telephone call.
The Company also believes that other diagnostic testing systems may be
developed using a combination of its IOS cartridge, lipid/polymer biomaterial
and rapid automated particle-based technologies, either by Biocircuits alone or
in conjunction with strategic partners. Biocircuits has developed significant
knowledge about lipid/polymer
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4.
<PAGE>
biomaterials in the past seven years that the Company believes could be
useful in other diagnostic system applications. In August 1995, the Company
entered into a collaborative agreement (the "Agreement") with Beckman
Instruments, Inc. ("Beckman") and received $3,500,000 in the form of
convertible debt (the "Note") in exchange for granting Beckman certain
options for licensing and marketing rights to testing applications using the
Company's proprietary lipid/polymer technology. Pursuant to the terms of the
Agreement, Biocircuits retains rights to market products based upon the
technology to the blood banking, allergy, environmental and veterinary
testing markets, as well as for quantitative testing in U.S. physicians'
offices and to all other non-Beckman fields. Beckman was granted the right to
commercialize the technology applicable to immunoassays and nucleic
acid-binding assays for the reference and clinical laboratory markets, the
cardiac market, qualitative testing in U.S. physicians' offices, and the
biological and industrial research markets.
Pursuant to the terms of the Agreement, the Company completed a feasibility
study in August 1996 (the "Completion Date"). Beckman has ninety days from
the Completion Date to exercise its development license option ("Development
Option") in order to retain rights to the technology. If Beckman elects to
exercise its Development Option in order to retain its rights to the
technology, it is required to invest certain minimum funds to develop the
technology prior to commercialization. In such event, upon the first
commercial sale of any products derived from such technology, the Note will
automatically convert to a royalty-bearing license fee. After exercising its
Development Option, should Beckman decide not to invest further funds to
develop the technology, it must convert the Note to Common Stock of the
Company at a specified premium rate based upon the then current market price
of the Company's Common Stock. In the event Beckman fails to exercise its
Development Option, it may, at its option, either convert the Note to Common
Stock of the Company at a specified premium rate based upon the then current
market price of the Company's Common Stock or require the Company to repay
the Note, with interest, in August 2000. Should Beckman decline to exercise
its Development Option, the Company would regain full rights to the
technology, including all improvements made during the feasibility study.
5.
<PAGE>
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THE OFFERING
Shares offered . . . . . Up to 2,903,321 Shares, all of which are being
offered by the Selling Securityholders.(1)
Use of Proceeds. . . . . Proceeds to the Company from the sale of the
Common Stock issued by the Company in the
Financing and from the exercise of
the Warrants will be used for general corporate
purposes, including sales and marketing and
research and development. The Company will not
receive any of the proceeds from the sale of
the Shares by the Selling Securityholders.
Nasdaq Symbol. . . . . . BIOC.
(1) Includes (i) 1,930,462 shares of Common Stock issued by the Company
in the Financing (ii) 965,231 shares of Common Stock issuable pursuant to
the exercise of the Financing Warrants (iii) 2,500 Shares of Common Stock
issuable pursuant to the exercise of the Line of Credit Warrants and
(iv) 5,128 shares of Common Stock issuable pursuant to the exercise
of the Standby Letter of Credit Warrants. Assumes the exercise
of all of the Warrants.
------------------------
Biocircuits Corporation and IOS are registered trademarks of the Company.
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6.
<PAGE>
RISK FACTORS
The following factors should be considered carefully with the information
provided elsewhere in this Prospectus in evaluating an investment in the Shares
offered hereby.
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors and elsewhere in this
Prospectus.
DEVELOPMENT STAGE COMPANY; PRODUCTS UNDER DEVELOPMENT
Biocircuits was founded in 1989 and is a development stage company. To
achieve profitable operations, the Company, alone or with others, must, among
other things, successfully develop, obtain regulatory approval for, introduce
and market its current and potential products. The time frame necessary to
develop the Company's diagnostic instruments and tests is uncertain. The
Company has experienced delays in the scheduled completion of its IOS
point-of-care instrument and test cartridges, and there can be no assurance that
further product development delays will not occur in the future.
The Company's first sale and shipment of its IOS system, with cartridges
capable of performing two of the most commonly requested immunodiagnostic
tests, T4 and T Uptake, occurred in March 1996. In April 1996, the Company
filed a 510(k) pre-market notification with the FDA for a TSH assay. In
September 1996, the Company announced FDA clearance to market a qualitative
serum pregnancy assay. Also in September 1996, the Company filed a 510(k)
pre-market notification with the FDA for a quantitative hCG assay.
Biocircuits is currently developing three additional assays: a PSA test, a
Digoxin test, and a Free T4 test. Beginning in the second quarter of 1996,
the Company developed and initiated testing of a modified cartridge design.
The Company believes this second generation cartridge design will be required
for the market launch of the TSH, qualitative serum pregnancy and
quantitative hCG tests. Any cartridge design typically requires certain
changes to the mold prior to finalization of the cartridge design. The
Company currently believes the modified cartridge will be completed for a
market launch of the qualitative serum pregnancy tests in the fourth quarter
of 1996 and for the market launch of the TSH assay upon FDA clearance, which
the Company currently expects to occur in the fourth quarter of 1996,
although FDA clearance may take longer. Even if the Company receives timely
clearance of the TSH test from the FDA, the Company does not expect to realize
any significant revenue from related instrument sales until at least
late in the fourth quarter of 1996.
There can be no assurance that the IOS point-of-care system and tests will
perform in accordance with the Company's specifications, that the Company will
be able to develop successfully or obtain regulatory clearance for additional
tests or any other future products, that the second generation cartridge will be
developed in a timely manner and perform as planned, that any of the Company's
products can be manufactured in sufficient quantity, at acceptable cost and with
appropriate quality, or that any products, if and when approved, can be
successfully marketed. Failure to meet one or more of these challenges could
have a material adverse effect on the Company.
UNCERTAIN MARKET ACCEPTANCE OF POINT-OF-CARE PRODUCT
Substantially all immunodiagnostic testing currently is performed at
large clinical laboratories rather than the point-of-care site. There can be
no assurance that the Company will be successful in developing and
penetrating the point-of-care market for immunodiagnostic testing. In order
to be successful, the Company must establish a sales force and further
develop its relationships with distributors which currently supply a
substantial portion of medical and test products to physicians. The selling
process typically requires the Company's sales force to work closely with
distributors, generate qualified physician leads and perform demonstrations
for the IOS system in physicians' offices. The selling process can be
time-consuming and there can be no assurance that the Company will be
successful in marketing the IOS system, that the rate of sales growth will
meet expectations or that the marketing programs of the Company will achieve
the desired results. To date, the number of instrument sales to distributors
and placements in physicians' offices have been significantly less than the
Company's initial expectations.
7.
<PAGE>
In general, market acceptance of the Company's initial point-of-care system
will depend upon the Company's ability to demonstrate the accuracy and value
of its system and to persuade physicians to perform the Company's initial
tests in their own facilities rather than send those tests to clinical
laboratories. More specifically, in order for the Company to have success in
penetrating the point-of-care immunodiagnostic market and to achieve
significant sales of IOS systems and test cartridges, the Company believes it
will need to expand its menu of tests beyond the T4 and T Uptake tests. The
Company's initial marketing efforts indicate that offering a TSH test may be
a key element in penetrating the physicians' office market. There can be no
assurance that the TSH test will have the desired impact in increasing the
market acceptance of the Company's IOS system.
LACK OF MARKETING EXPERIENCE; INTERNATIONAL SALES
The Company plans to target the estimated 41,000 physician practices and
alternate site laboratories that are licensed under the Clinical Laboratories
Improvement Act of 1967 and Amendments of 1988 (CLIA) for high or moderate
complexity testing, most of which currently do not have an immunodiagnostic
testing capability. The Company plans to market its IOS point-of-care system
to physicians' offices and alternative site laboratories through distributors
supported by its own sales force in the United States and through
distributors and marketing partners outside the United States. The Company
has entered into agreements with medical supply distributors with
distribution sites throughout the United States and sales representatives
with expertise in selling testing and other medical equipment to the
physicians' office laboratory market. Although the Company's first sale and
shipment of its IOS system occurred in March 1996, there can be no assurance
that the Company will be successful in marketing its products, directly or
through distributors. In addition, since the Company first established
relationships with its distributors, some of the distributors of the
Company's products have consolidated with companies that distribute products
that may compete with the Company's products. There can be no assurance that
such consolidation will not continue, and if it does continue, that such
consolidation will not have an adverse impact on the Company's operations.
In addition to its relationships with distributors, the Company must
establish marketing and customer service programs and a small sales force in
order to penetrate successfully the point-of-care market for immunodiagnostic
testing. In order to compete successfully, the Company will be required to
provide prompt service to its customers. However, there can be no assurance
that the Company will be able to establish the necessary programs or that such
programs and service will be consistently reliable.
The Company expects that international sales will represent a portion of
its net sales and that the Company's success will be dependent upon, among
other things, its ability to form relationships with established
international marketing partners. To date, no such relationships have been
established. The Company will be subject to normal risks of international
sales, such as currency fluctuations, export controls and other regulations.
In addition, the laws of certain foreign countries may not protect the
Company's intellectual property rights to the same extent as do the laws of
the United States.
RELATIONSHIP WITH BECKMAN AND OTHER POTENTIAL LICENSEES
In August 1995, the Company entered into an Agreement with Beckman and
received $3,500,000 in the form of a Note in exchange for granting Beckman
certain options for licensing and marketing rights to testing applications
using the Company's proprietary lipid/polymer technology. Pursuant to the
terms of the Agreement, the Company retains rights to market products derived
from the technology to the blood banking, allergy, environmental and
veterinary testing markets, as well as for quantitative testing in U.S.
physicians' offices and to all other non-Beckman fields. Beckman also was
granted the right to commercialize the technology applicable to immunoassays
and nucleic acid-binding assays for the reference and clinical laboratory
markets, the cardiac market, qualitative testing in U.S. physicians' offices,
and the biological and industrial research markets. Pursuant to the terms of
the Agreement, the Company completed a feasibility study on the
Completion Date.
8.
<PAGE>
Beckman has ninety days from the Completion Date to exercise its
Development Option. If Beckman elects to exercise its Development Option in
order to retain its rights to the technology, it is required to invest
certain minimum funds to develop the technology prior to commercialization.
In such event, upon the first commercial sale of any products derived from
such technology, the Note will automatically convert to a royalty-bearing
license fee. After exercising its Development Option, should Beckman decide
not to invest further funds to develop the technology, it must convert the
Note to Common Stock of the Company at a specified premium rate based upon
the then current market price of the Company's Common Stock. In the event
Beckman fails to exercise its Development Option, it may, at its option,
convert the Note to Common Stock of the Company at a specified premium rate
based upon the then current market price of the Company's Common Stock, or
require the Company to repay the Note, with interest, in August 2000. Should
Beckman decline to exercise its Development Option, the Company would regain
full rights to the technology, including all improvements made during the
feasibility study. There can be no assurance that Beckman will exercise its
Development Option or that Beckman or the Company will be successful in
developing or obtaining regulatory approval for or marketing this technology
alone or with third parties. The failure of Beckman to exercise its
Development Option may have an adverse effect on the Company's ability to
develop the lipid/polymer technology.
The Company also is exploring opportunities to license its technologies to
marketing partners for use in areas of interest other than the point-of-care
immunodiagnostic market being pursued by Biocircuits. The Company expects that
such agreements could include technology licenses, research funding, milestone
payments, collaborative product development, royalties and/or equity investments
in Biocircuits. There can be no assurance that the Company will be able to
enter into any such collaborative agreements or that any such collaborative
agreements would be successful.
LACK OF MANUFACTURING EXPERIENCE; RELIANCE ON CONTRACT MANUFACTURERS
Biocircuits has developed a proprietary manufacturing process for producing
the test cartridges for its IOS point-of-care system. The Company has
established its initial manufacturing capability for the single-use cartridges.
Various plastic components and other materials for the cartridges are and will
be obtained from contract manufacturers. The Company's near term cartridge
manufacturing milestones include improving manufacturing efficiencies, expanding
mold and cartridge manufacturing capacity as both the test menu and test
manufacturing volume expand, initiating manufacturing automation efforts and
manufacturing the cartridge at the Company's targeted cost. There can be no
assurance that the Company will be successful in achieving these milestones or
that these milestones will be achieved on a timely basis. This automation
effort will be critical to meeting the Company's longer-term cartridge
manufacturing demands and cost targets. The cartridge manufacturing scale-up
process will require the Company to develop advanced manufacturing techniques
and rigorous process controls. There can be no assurance that the Company will
be successful in these efforts or that such efforts will result in the Company
meeting expected cartridge demand or achieving the Company's longer-term
cartridge manufacturing cost targets.
The Company has registered its manufacturing facility with the FDA and with
the Department of Health Services of the State of California, and will be
subject to state and federal inspections confirming the Company's compliance
with good manufacturing practice ("GMP") guidelines. Prior to the first sale
and shipment of its IOS point-of-care system in March 1996, the Company believes
it finished setting up this initial manufacturing capability in compliance with
GMP requirements. No assurance can be given as to the ability of the Company to
produce commercial quantities of cartridges in compliance with applicable
regulations at an acceptable cost.
In August and December 1995, the Company entered into agreements with Nalge
Nunc International, Inc. ("Nunc") to manufacture the plastic components of its
disposable test cartridges. Under the terms of the agreement, Nunc has the
exclusive right to supply the plastic components for the test cartridges for all
sales in North America. The Company will be entirely dependent on Nunc as the
sole source for the plastic components and the molding thereof. There can be no
assurance that Nunc will be able to deliver the required quantities of test
cartridge components on schedule or at costs acceptable to the Company.
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In December 1992, the Company entered into an agreement with KMC Systems,
Inc. ("Kollsman") pursuant to which Kollsman was appointed the exclusive
North American suppliers of the IOS instrument. The agreement with Kollsman
contained certain minimum purchase requirements and expired three years from
the date of first commercial production, subject to certain rights of earlier
termination. In April 1996, the Company and Kollsman executed a letter
agreement to amend the 1992 agreement (the "Letter Agreement"), pursuant to
which Kollsman will be the exclusive supplier of the IOS instrument through
1997, the minimum purchase requirements were eliminated and the Company and
Kollsman agreed to an acceptable fixed transfer price to be paid through
1997, the revised term of the agreement. Also pursuant to the Letter
Agreement, the Company agreed to issue Kollsman a warrant to purchase 250,000
shares of Common Stock, subject to an increase of 50,000 shares under certain
circumstances. The warrant expires at year end 1997, subject to certain
extension rights, and has an exercise price of $7.00 per share. In order to
secure an adequate supply of IOS instruments, the Company has established a
standby letter of credit for the benefit of Kollsman. The Company is
entirely dependent on Kollsman as the sole source of production of its IOS
instruments. Kollsman, in turn, relies upon sole-source suppliers for
certain components. Failure of Kollsman's suppliers to deliver the required
quantities on a timely basis and at commercially reasonable prices, or
Kollsman's failure to deliver the IOS instruments to the Company on a timely
basis or at commercially reasonable costs could materially adversely affect
the Company.
The Company has experienced delays from Kollsman in the past, resulting
in delays in the development of the TSH, qualitative serum pregnancy and
quantitative hCG assays and delays in the introduction of the IOS system and
initial assays. There can be no assurance that similar delays will not be
encountered in the future. In the event that shipments are delayed and
orders for the IOS point-of-care system become significantly backlogged, the
delay could have a material adverse impact on the Company.
HISTORY OF LOSSES; EXPECTATION OF FUTURE LOSSES
At June 30, 1996, the Company's accumulated deficit was approximately $44.8
million. Biocircuits expects to incur additional losses over the next several
years. The Company expects that currently available funds will be used
primarily for the continued launch of the IOS point-of-care system and
development of additional tests for the IOS point-of-care system. The losses
may vary from period to period, including from quarter to quarter, and are
generally expected to increase, due to the recent launch of the Company's IOS
point-of-care system. Accordingly, the Company believes that quarter-to-quarter
results are not a useful indicator of the Company's performance. There can be
no assurance that any products will be manufactured or marketed successfully, or
that profitability will ever be achieved.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING; MAINTENANCE OF NASDAQ
LISTING
Additional funds will be required in 1997 to carry the Company beyond the
initial sales of the IOS system and to enable the Company to develop and
obtain regulatory approval for additional tests. The Company believes that
its existing capital resources will be adequate to satisfy its requirements
into the second quarter of 1997, assuming no exercise of outstanding
warrants. If the remaining warrants issued in June 1995, which expire on
December 18, 1996, are exercised in full for cash, the Company would receive
an aggregate amount of $2.1 million, which the Company estimates would
satisfy the Company's cash requirements until late second quarter 1997. If
the Financing Warrants are exercised prior to the end of second quarter 1997,
the Company believes its cash resources will be adequate to satisfy its
requirements into the fourth quarter of 1997. However, since the Financing
Warrants expire in October 1997, there can be no assurance that they will be
exercised prior to the end of second quarter 1997. The Company has the right
to call the Financing Warrants in the second half of their one year life if the
Common Stock price equals or exceeds $5.25 per share. The Company's ability to
continue its planned operations will be dependent upon its ability to obtain
additional funds from existing investors, new investors or corporate
partners. The Company intends to pursue all of these financing options, but
there can be no assurance that the Company will be successful. If not
successful in obtaining financing, the Company's business will be materially
and adversely affected.
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The Company believes that maintaining its listing on the Nasdaq National
Market System ("Nasdaq") is central to its ability to raise additional funds
as well as to provide liquidity to investors. The proceeds from the sale of
the Common Stock issued by the Company in the Financing will allow the
Company to meet Nasdaq listing requirements, on a pro forma basis, for the
third quarter of 1996. If the warrants which expire in December 1996 are
exercised for cash, the Company believes it will meet Nasdaq listing
requirements through the end of first quarter 1997. If the Financing
Warrants are exercised prior to the end of second quarter 1997, the Company
believes it will meet Nasdaq listing requirements at the end of the second
quarter of 1997. Thereafter, the Company will be required to generate
sufficient revenues or raise additional capital to maintain Nasdaq listing
requirements.
The Company expects its cash requirements to increase significantly in
future periods due to higher expenses. The Company expects to incur substantial
additional costs, including costs related to ongoing research and development
activities, either alone or in collaboration with strategic partners, clinical
trials, expansion of manufacturing, research and development and administrative
facilities, development of manufacturing capabilities, obtaining regulatory
approvals and establishing sales, marketing and distribution capabilities. The
Company's long-term capital requirements will depend on numerous factors,
including the progress of the Company's research and product development, the
timing and cost of obtaining regulatory approvals, the costs associated with
patents and other intellectual property rights, the levels of resources devoted
to the development of manufacturing and marketing capabilities and potential
collaborative partnerships. The Company intends to seek additional funding
through collaborative relationships and public or private financings. Other
methods of financing the acquisition of capital equipment, including lease
financing, may be utilized if available on attractive terms. Raising additional
funds from public or private financings may result in further dilution to
then-existing shareholders. The Company also may attempt to obtain funds
through arrangements with strategic partners or others that may require the
Company to relinquish rights to certain of its technologies, products or
marketing territories in exchange for funding. If adequate funds are not
available from these sources, the Company will be required to curtail its
operations significantly. No assurance can be given that any additional
financing will be available, or, if available, that it will be available on
acceptable terms.
COMPETITION
Human immunodiagnostics is an intensely competitive field in which there
are a number of well-established companies. Many of the Company's competitors
have substantially greater financial resources and larger, more established
sales, marketing, and service organizations. The primary bases of competition in
the immunodiagnostic testing market are throughput, ease-of-use, price, breadth
of test menu, quality of results and service. There can be no assurance that the
Company will be able to compete successfully on any of these bases.
The Company believes that its principal competitors will be large companies
with a diagnostic division such as Abbott Laboratories, Becton, Dickinson and
Company, Boehringer Mannheim, GmbH, Chiron/Ciba-Corning Diagnostics Corporation
and Johnson & Johnson. Each of these companies has an established position in
the clinical laboratory test market with systems based on traditional
immunoassay technology. No assurance can be given that the Company's products
will compete successfully with existing or future products of such competitors
or that new competitors will not enter the market with competing technologies.
The Company expects that in the future, one or more of these companies or others
will develop and introduce new systems for the point-of-care market. If any such
company is able to develop or acquire rights to a better immunodiagnostic
testing system, the Company's business would be materially adversely affected.
UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY TECHNOLOGY
The Company has aggressively pursued the development of a patent portfolio
to protect its technology. However, the patent positions of any medical device
manufacturer, including Biocircuits, are uncertain and involve complex legal and
factual questions for which important legal principles are largely unresolved.
In addition, the coverage claimed in a patent application can be significantly
reduced before a patent is issued. Consequently, there can be no assurance that
any patent applications will result in the issuance of patents or, with respect
to issued
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patents, whether they will provide significant proprietary protection or will be
circumvented or invalidated. Since patent applications in the United States are
maintained in secrecy until patents issue, and since publication of discoveries
in the scientific or patent literature often lag behind actual discoveries, the
Company cannot be certain that it or any licenser was the first to file a patent
application for such invention. Moreover, the Company might have to participate
in interference proceedings declared by the United States Patent and Trademark
Office to eventually determine priority of invention, which could result in
substantial costs to the Company, even if the patents, if issued, would be held
valid by a court or if a competitor's technology or product would be found to
infringe such patents.
The Company also relies upon trade secret protection for its confidential
and proprietary information. There can be no assurance that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets or disclose
such technology or that the Company can meaningfully protect its trade secrets.
Biocircuits requires its employees, consultants and advisors to execute
confidentiality agreements upon the commencement of an employment or consulting
relationship with the Company. Each agreement provides that all confidential
information developed or made known to the individual during the course of the
relationship will be kept confidential and not disclosed to third parties except
in specified circumstances. In the case of employees, the agreements provide
that all inventions conceived by an individual shall be the exclusive property
of the Company, other than inventions unrelated to the Company's business and
developed entirely on the employee's own time. There can be no assurance,
however, that these agreements will provide meaningful protection or adequate
remedies for the Company's trade secrets in the event of unauthorized use or
disclosure of such information.
GOVERNMENT REGULATION
The Biocircuits IOS point-of-care system is regulated in the United States
as a medical device by the FDA and as such, requires regulatory clearance or
approval prior to commercialization. Pursuant to the Federal Food, Drug and
Cosmetic Act (the "FDC Act"), and the regulations promulgated thereunder, the
FDA regulates, among other things, the clinical testing, manufacture, labeling,
promotion, distribution, sale and use of medical devices in the United States.
Failure of the Company to comply with applicable regulatory requirements can
result in, among other things, warning letters, fines, injunctions, civil
penalties, recall or seizure of products, total or partial suspension of
production, the government's refusal to grant premarket clearance or premarket
approval of devices, withdrawal of marketing approvals, and criminal
prosecution.
In the United States, medical devices are classified into one of three
classes, Class I, II or III, based on the controls necessary to reasonably
ensure their safety and effectiveness. Class I devices are those devices whose
safety and effectiveness can reasonably be ensured through general controls,
such as adequate labeling, pre-market notification, and adherence to GMP
regulations. Class II devices are those devices whose safety and effectiveness
can reasonably be ensured through the use of general special controls, such as
performance standards, post-market surveillance, patient registries, and FDA
guidelines. Class III devices are devices which must receive pre-market approval
by the FDA to ensure their safety and effectiveness. Generally, Class III
devices are life-sustaining, life-supporting or implantable devices, or new
devices which have been found not to be substantially equivalent to legally
marketed devices.
Before a new medical device may be introduced into the market in the United
States, the manufacturer or distributor generally must obtain either FDA
clearance of a section 510(k) premarket notification or FDA approval of a
premarket approval ("PMA") application.
If the manufacturer or distributor can establish that the device is
"substantially equivalent" to a legally marketed Class I or Class II medical
device or to a Class III medical device for which the FDA has not required a PMA
(the "predicated device"), the manufacturer or distributor may seek FDA
marketing clearance for the device by filing a 510(k) notification. In a 510(k)
filing, the manufacturer or distributor is required to demonstrate that the
device
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has the same intended use and the same technological characteristics as the
predicate device or has different technological characteristics that do not
raise different questions of safety and efficacy than the predicate device. A
510(k) notification must contain information to support the claim of substantial
equivalence, which may include laboratory test results or the results of
clinical studies. Following submission of a 510(k) notification, the
manufacturer or distributor may not place the device into commercial
distribution until an order of substantial equivalence is issued by the FDA. The
Company understands that the FDA has been requiring a more rigorous
demonstration of substantial equivalence in connection with 510(k)
notifications. Although it generally takes from four to twelve months from the
date of submission to obtain a 510(k) clearance, it may take longer. FDA
regulations do not specify the time in which it must respond to a 510(k)
submission. The FDA may determine that the proposed device is not substantially
equivalent to a legally marketed device, or may require further information,
such as additional test data, before the FDA is able to make a substantial
equivalence determination. Such determination or request for additional
information could delay the Company's market introduction of its future products
and could have a materially adverse effect on the Company's continued
operations. Further, for any of the Company's devices cleared through the 510(k)
process, modifications or enhancements that could significantly change safety or
effectiveness or constitute a major change in the intended use of the device
will require a new 510(k) submission. The Company's IOS point-of-care instrument
tests (except for the PSA test which is currently regulated as Class III medical
device) currently are regulated as Class II medical devices. The Company has
received 510(k) clearances for the instrument and the T4 and T Uptake tests,
the T4-only test and the qualitative serum pregnancy test in 1995 and 1996.
If a manufacturer or distributor cannot establish that a proposed device is
substantially equivalent to another legally marketed predicate device, the
manufacturer or distributor must seek pre-market approval of the proposed device
through submission of a PMA application. A PMA application must be supported by
extensive data, including pre-clinical and clinical trial data to prove the
safety and efficacy of the device, as well as extensive manufacturing
information. If human clinical trials are required and the device presents "a
significant risk," the sponsor of the trial (usually the manufacturer or
distributor) is required to file an investigational device exemption ("IDE")
application with the FDA before commencing human clinical trials. The IDE
application must be supported by data, typically including the results of
laboratory and animal testing. If the IDE application is approved by the FDA and
one or more appropriate institutional review boards ("IRBs"), human clinical
trials may begin at a specific number of investigational sites with a specific
number of subjects, as approved by FDA. If the device presents a "nonsignificant
risk" to subjects, a sponsor may begin the clinical trial after obtaining
approval of one or more appropriate IRBs without the need for FDA approval. An
IDE supplement must be submitted to and approved by the FDA before a sponsor or
investigator may make a change to the investigational plan that may affect its
scientific soundness or the rights, safety or welfare of human subjects.
A PMA application must contain the results of clinical trials, the results
of any relevant bench tests, laboratory and animal studies, a complete
description of the device and its components, and a detailed description of the
methods, facilities and controls used to manufacture the device. The submission
also must include the proposed labeling, advertising and training methods, if
required. Upon receipt, the FDA conducts a preliminary review of the PMA
application to determine whether the submission is sufficiently complete to
permit a substantive review. If sufficiently complete, the submission is
declared fileable by the FDA. By statute, the FDA has 180 days to review a PMA
application, although the review time often is extended significantly by the FDA
asking for more information or clarification of information already provided in
the submission. While the FDA has responded to PMA applications within the
allotted time period, PMA reviews more often occur over a significantly
protracted time period and generally take approximately 12 to 24 months or more
from the date of filing to approval. The FDA also will inspect the manufacturing
facilities to ensure compliance with the FDA's GMP requirements prior to
approval of a PMA. This is a lengthy and expensive process, and there can be no
assurance that such approval will be obtained for any future product the Company
may develop which may be determined to be subject to such requirements. A number
of devices for which PMA marketing clearance has been sought by others have
never been cleared for marketing. Modifications to a device that is subject of
an approved PMA, its labeling or manufacturing process may require FDA approval
of new PMAs or PMA supplements, which often require submission of the same
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type of information required for the initial PMA. There can be no assurance that
any of the Company's future products will ever obtain the necessary FDA
regulatory clearance for commercial distribution.
Any products distributed by Biocircuits pursuant to the above described
clearances are subject to pervasive and continuing regulation by the FDA. The
Company also will be required to manufacture its products in registered
establishments and in accordance with GMP regulations. There can be no assurance
that the Company or its OEM suppliers' facilities will meet GMP requirements.
Failure to meet such requirements could result in certain actions by the FDA,
including the possible shutdown of the Company's manufacturing facilities. In
addition, the FDA has proposed changes to the GMP regulations that may increase
the cost of compliance with GMPs. The Company's facility will be subject to
periodic inspections by the FDA for compliance with GMP and other applicable
requirements. Labeling and promotional activities are subject to scrutiny by
the FDA and, in certain instances, by the Federal Trade Commission. Current FDA
enforcement policy strictly prohibits marketing of medical devices for
unapproved uses. The export of medical devices also is subject to regulation in
certain instances. In addition, the use of the Company's products may be
regulated by various state agencies. For example, the Company was required to
obtain a license from the State of California to manufacture its proposed
products. There can be no assurance that the Company's proposed products will be
able to comply successfully with any such requirements or regulations.
The potential market for the Company's products may be affected by the
CLIA. The CLIA establishes requirements for any facility that performs
laboratory testing on human specimens for the purpose of providing information
for diagnosis or treatment of human beings. The CLIA covers such testing in
virtually all settings, including physicians' offices. Final regulations to
implement the CLIA were published in February 1992, effective September 1, 1992,
except for participation in proficiency testing which for previously unregulated
laboratories became effective in January 1994. In January 1993, the U.S.
Department of Health and Human Services ("HHS") published certain revisions to
these regulations. The regulations establish requirements for laboratories in
such areas as administration, participation in proficiency testing, patient test
management, quality control, personnel, quality assurance and inspection. Under
these regulations, the specific requirements that a laboratory must meet depend
upon the complexity of the tests performed by the laboratory. Laboratory tests
are categorized as either waived tests, tests of moderate complexity or tests of
high complexity. Laboratories that perform either moderate or high complexity
tests must meet standards in all areas, with the major difference in
requirements between moderate and high complexity testing concerning quality
control and personnel standards. Quality control standards for moderate
complexity testing are being implemented in stages. Laboratories performing high
complexity testing must meet all the quality control requirements by the
effective date of the regulations. Personnel standards for high complexity
testing are more rigorous than those for moderate complexity testing. In
general, personnel conducting high complexity testing will need more education
and experience than those doing moderate complexity testing. Under the CLIA
regulations, all laboratories performing moderately complex or highly complex
tests will be required to obtain either a registration certificate or
certification of accreditation from the Health Care Financing Administration
("HCFA").
The Company's IOS system has been classified as testing of moderate
complexity, and thus any laboratory using such products would have to meet the
regulatory requirements for testing of moderate complexity. Because the
regulations are new and their interpretation is uncertain, it is possible that
the Company's products could be categorized as tests of high complexity in the
future, in which case the Company's penetration of the point-of-care market
would be reduced since not all laboratories would meet the standards required to
conduct such tests. The Company understands that laboratories, including
physician office laboratories, will be evaluating the requirements of the CLIA
in determining whether to perform certain types of moderate and high complexity
diagnostic tests. The Company believes that the sale of its proposed products
will not be adversely affected by the CLIA. However, no assurances can be given
that the statute and its implementing regulations will not have a material
adverse impact on the Company and its ability to market and sell its IOS system
or any future products that the Company may develop.
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Although Biocircuits believes that it will be able to comply with all
applicable regulations regarding the manufacture and sale of diagnostic devices,
such regulations are always subject to change and depend heavily upon
administrative interpretations. There can be no assurance that future changes in
regulations or interpretations made by the HHS, FDA, HCFA or other regulatory
bodies, with possible retroactive effect, will not adversely affect the Company.
In addition to the foregoing, Biocircuits is subject to numerous federal, state
and local laws and regulations relating to such matters as safe working
conditions, laboratory and manufacturing practices, environmental, fire hazard
control, and disposal of hazardous or potentially hazardous substances. To date,
compliance with these laws and regulations has not had a material effect on the
Company's financial results, capital requirements or competitive position, and
the Company has no plans for material capital expenditures relating to such
matters. However, there can be no assurance that it will not be required to
incur significant costs to comply with such laws and regulations in the future,
or that such laws or regulations will not have a materially adverse effect upon
the Company's ability to do business.
Sales of medical devices outside the United States are subject to foreign
regulatory requirements that vary widely from country to country. The time
required to obtain registrations or approvals required by foreign countries may
be longer or shorter than that required for FDA clearance or approval, and
requirements for licensing may differ significantly from FDA requirements. Some
countries historically have permitted human studies earlier in the product
development cycle than regulations in the United States permit. Other countries
have requirements similar to those of the United States. This disparity in the
regulation of medical devices may result in slower product clearance in certain
countries than in others. Furthermore, the introduction of the Company's IOS
system or any future products in foreign markets might require obtaining foreign
regulatory clearances. There can be no assurance that the Company will be able
to obtain regulatory clearances for its current or any future products in the
United States or in foreign markets.
NEED TO RETAIN AND ATTRACT KEY EMPLOYEES
The Company is highly dependent upon the principal members of its
management and scientific staff, the loss of whose services might impede the
achievement of the Company's business objectives. Furthermore, recruiting and
retaining additional qualified scientific, manufacturing, marketing and sales
personnel also will be critical to the Company's success. The Company faces
competition for qualified individuals from numerous manufacturers of medical
products and other high technology products, as well as universities and
academic institutions. There can be no assurance that such insurance will be
sufficient to compensate the Company in the event of a loss of one of these
individuals or that the Company will be able to attract and retain qualified
personnel on acceptable terms.
POTENTIAL ADVERSE IMPACT OF REIMBURSEMENT POLICIES
Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. Although Congress has
failed to pass comprehensive health care reform legislation to date, the Company
anticipates that Congress, state legislatures and the private sector will
continue to review and assess alternative benefits, controls on health care
spending through limitations on the growth of private health insurance premiums
and Medicare and Medicaid spending, the creation of large insurance purchasing
groups, price controls on pharmaceuticals and other fundamental changes to the
health care delivery system. Any such proposed or actual changes could cause any
potential partners of the Company to limit or eliminate spending on
collaborative development projects. Legislative debate is expected to continue
in the future, market forces are expected to demand reduced costs and
Biocircuits cannot predict what impact the adoption of any federal or state
health care reform measures or future private sector reforms may have on its
business.
In both domestic and foreign markets, sales of the Company's IOS
point-of-care system and other potential products, if any, will depend in part
on the availability of reimbursement from third-party payors such as government
health administration authorities, private health insurers and other
organizations. Third-party payors are increasingly challenging the price and
cost effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products.
There can be no assurance that the
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Company's products will be considered cost effective or that adequate third-
party reimbursement will be available to enable Biocircuits to maintain price
levels sufficient to realize an appropriate return on its investment in product
development. Legislation and regulations affecting the pricing of health care
services may change, which could affect the Company's products and could further
limit reimbursement for medical products and services.
RISK OF PRODUCT LIABILITY; POSSIBLE UNAVAILABILITY OF INSURANCE
Testing, manufacturing and marketing of the Company's potential products
will entail risk of product liability. The Company currently has product
liability insurance. However, there can be no assurance that the Company will
be able to maintain such insurance at a reasonable cost or in sufficient amounts
to protect the Company against losses due to product liability. An inability to
maintain insurance at an acceptable cost or to otherwise protect against
potential product liability could prevent or inhibit the commercialization of
the Company's products. In addition, a product liability claim or recall could
have a material adverse effect on the business or financial condition of
Biocircuits.
HAZARDOUS MATERIALS
The Company's research and development involves the controlled use of
hazardous materials and chemicals. Although the Company believes that its
safety procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated.
In the event of such an accident, the Company could be held liable for any
damages that result and any such liability could exceed the resources of the
Company. The Company may incur substantial costs to comply with environmental
regulations.
ANTI-TAKEOVER EFFECT OF DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Board of Directors has authority to issue up to 10,000,000 shares of
Preferred Stock, in addition to the 30,000,000 designated shares of Series A
Preferred Stock, and to fix the rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further
vote or action by the stockholders. The rights of the holders of the Common
Stock will be subject to, and may be adversely affected by, the rights of the
holders of the outstanding Series A Preferred Stock and any other Preferred
Stock that may be issued in the future. The outstanding Series A Preferred
Stock could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock of the Company.
Furthermore, certain provisions of the Company's Amended and Restated
Certificate of Incorporation, such as a classified Board of Directors, its
Amended and Restated Bylaws and of Delaware law could delay or make more
difficult a merger, tender offer or proxy contest involving the Company.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock, like that of the common
stock of many other medical device and other high technology companies, has been
highly volatile. Factors such as delays in obtaining FDA approval for the IOS
point-of-care system, fluctuations in the Company's actual or anticipated
operating results, announcements of technological innovations or new commercial
products by the Company or its competitors, governmental regulation, changes in
the current structure of the health care financing and payment systems in the
United States, developments in or disputes regarding patent or other proprietary
rights, economic and other external factors and general market conditions may
have a significant effect on the market price of the Common Stock.
CONCENTRATION OF SHARE OWNERSHIP
Based upon the shares outstanding as of September 30, 1996, the Company's
officers, directors and their affiliates as a group beneficially owned
approximately 52.54% of the Company's outstanding Common Stock and Series A
Preferred Stock (on an as-converted basis). As a result, these stockholders
will be able to exercise significant influence over all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions.
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THE COMPANY
Biocircuits Corporation was incorporated in Delaware in March 1989. The
Company's executive offices are located at 1324 Chesapeake Terrace, Sunnyvale,
California 94089, and its telephone number is (408) 745-1961.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Securityholders. The net proceeds from the sale of the
Common Stock issued by the Company in the Financing and from the exercise
of the Warrants received by the Company will be considered uncommitted funds
that may be used by the Company for general corporate purposes, including
sales and marketing and research and development.
DIVIDEND POLICY
The Company has never paid cash dividends. The Company's Board of
Directors currently intends to retain any earnings for use in the Company's
business and does not anticipate paying any cash dividends in the foreseeable
future. The Company's agreement with Beckman restricts the payment of dividends
through August 15, 2000, unless prior thereto, Beckman exercises its equity
conversion option or Development Option under the agreement with the Company.
18.
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth the names of the Selling Securityholders,
the number of shares of Common Stock owned by each Selling Securityholder
prior to this offering, the number of shares of Common Stock being offered
for the account of each Selling Securityholder and the number of shares of
Common Stock to be owned by each Selling Securityholder after completion of
this offering. This information is based upon information provided by the
Selling Securityholders. Because the Selling Securityholders may offer all,
some or none of their Common Stock, no definitive estimate as to the number
of Shares thereof that will be held by the Selling Securityholders after such
offering can be provided.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BEING SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING (1)(2) OFFERED(2) OWNED AFTER OFFERING(1)(3)
--------------------------------- ------------ ---------------------------
SELLING SECURITYHOLDER
- --------------------------------------- ------------- ------------ ------------
<S> <C> <C> <C>
Apex Limited Partners, LP 43,749 43,749 0
Julie T. Berlacher 35,001 35,001 0
Bulldog Capital Partners, L.P. 174,999 174,999 0
Cascade Capital Partners 174,999 174,999 0
John C. Coleman, Jr. 17,499 17,499 0
Collins Group Trust (I) 38,499 38,499 0
Collins Group Trust III 63,000 63,000 0
Collins Investment LLC 8,751 8,751 0
Collins Non Core Equity LLC VI 115,500 115,500 0
Collins Partners III, L.P. 26,250 26,250 0
Cove Investments Limited Partnership 375,000 375,000 0
Curran Partners, L.P. 100,014 100,014 0
John P. Curran 50,049 50,049 0
Doran Capital Management, L.P. 63,000 63,000 0
EDJ Limited 65,625 65,625 0
Glenbrook Partners 126,000 126,000 0
Larry Haimovitch 25,002 25,002 0
Thomas J. Kumbatovic 8,751 8,751 0
Lancaster Investment Partners 105,000 105,000 0
Mary M. Losty 35,001 35,001 0
Stephen J. Massocca 26,250 26,250 0
Pacific Growth Equities, Inc. 401(k)
Profit Sharing Plan (Stephen J. Massocca) 26,250 26,250 0
John Murray & Coralie Eddy Murray,
as Trustees, Murray Family Trust 17,499 17,499 0
Richard H. Osgood 35,001 35,001 0
Porter Partners, L.P. 131,250 131,250 0
Gary Ross, as Trustee,
Gary William Ross Trust 75,000 75,000 0
Steven W. Silver 35,001 35,001 0
Special Situations Cayman Fund, L.P. 153,126 153,126 0
Special Situations Fund III, L.P. 485,625 459,375 26,250
Pacific Growth Equities, Inc. 401(k) 35,001 35,001 0
Profit Sharing Plan (C. Fred Toney, Jr.)
WR Biocircuits Investors, LLC 250,251 250,251 0
Venture Lending, a division of Cupertino
National Bank & Trust Company 7,628 7,628 0
</TABLE>
- ----------------
(1) Unless otherwise indicated below, the persons named in the table have or
will have sole voting and investment power with respect to all shares
beneficially owned by them, subject to community property laws
where applicable.
(2) Assumes exercise of the Warrants.
(3) Assumes the sale of all Shares offered hereby.
The Company has agreed to pay all reasonable fees and expenses incident to
the filing of this offering. See "Plan of Distribution."
Each of John C. Coleman, Jr., Thomas J. Kumbatovic, Stephen J. Massoca,
John Murray, Richard H. Osgood, Gary W. Ross and C. Fred Toney Jr. is an
employee, principal and/or shareholder of Pacific Growth Equities, Inc.
("Pacific Growth"). Pacific Growth acted as Placement Agent in connection
with the Financing and currently makes a market in the Company's Common Stock.
19.
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be offered by the Selling Securityholders from time to time
in transactions on the Nasdaq National Market System, in privately negotiated
transactions or a combination of such methods of sale, at fixed prices that may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Shares directly or
by or through agents or broker-dealers who may receive compensation in the form
of discounts, concessions or commissions from the Selling Securityholders or the
purchasers of the Shares for whom such broker-dealers may act as agent or to
whom they sell as principal or both (which compensation to a particular
broker-dealer might be in excess of customary commissions).
The Selling Securityholders and any underwriters, dealers or agents that
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by them and any provided pursuant to the sale of the Shares
by them might be deemed to be underwriting discounts and commissions under the
Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless it has been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage
in market making activities with respect to such Shares for a period of
nine business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Securityholder will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, rules 10b-2, 10b-6 and
10b-7, which may limit the timing of purchases and sales of the Shares by the
Selling Securityholders. Certain employees, principals and/or shareholders
of Pacific Growth may coordinate selling efforts with Pacific Growth. All of
the foregoing may affect the marketability of the Shares.
The Company entered into agreements with the Selling Securityholders to
register their Shares under applicable federal and state securities laws.
The Company will pay substantially all of the expenses incident to the
offering and sale of the Shares to the public, other than commissions,
concessions and discounts of underwriters, dealers or agents. Such expenses
(excluding such commissions and discounts) are estimated to be $30,079.28.
Such agreements provide for cross-indemnification of the Selling
Securityholders and the Company to the extent permitted by law, for losses,
claims, damages, liabilities and expenses arising, under certain
circumstances, out of any registration of the Shares.
20.
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Cooley Godward LLP, Palo Alto, California.
EXPERTS
The financial statements of Biocircuits Corporation appearing in
Biocircuits Corporation's Annual Report (Form 10-K) for the year ended December
31, 1995 have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are, and audited financial statements to
be included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst & Young LLP pertaining to such financial
statements (to the extent covered by consents filed with the Securities and
Exchange Commission) given upon the authority of such firm as experts in
accounting and auditing.
21.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
--------------------
TABLE OF CONTENTS
Page
----
Available Information ....................................................... 2
Incorporation of Certain Documents by Reference ............................. 2
Summary Information ......................................................... 4
The Offering ................................................................ 6
Risk Factors ................................................................ 7
The Company ................................................................ 18
Use of Proceeds ............................................................ 18
Dividend Policy ............................................................ 18
Selling Securityholders .................................................... 19
Plan of Distribution ....................................................... 20
Legal Matters .............................................................. 21
Experts .................................................................... 21
--------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,903,321 SHARES
BIOCIRCUITS CORPORATION
COMMON STOCK
------------
PROSPECTUS
------------
October 8, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Company in
connection with the sale, issuance and distribution of the securities being
registered, other than underwriting discounts and commissions. All amounts are
estimates except the SEC registration fee. None of these expenses will be paid
by the Selling Securityholders.
SEC Registration Fee . . . . . . . . . . . . . . . . . $ 3,079.28
Printing and Engraving Expenses. . . . . . . . . . . . 3,500.00
Legal Fees and Expenses. . . . . . . . . . . . . . . . 15,000.00
Accounting Fees and Expenses . . . . . . . . . . . . . 7,500.00
Blue Sky Fees and Expenses . . . . . . . . . . . . . . 1,000.00
----------
Total $30,079.28
----------
----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws include provisions to (i) eliminate the personal
liability of its directors for monetary damages resulting from breaches of
their fiduciary duty to the extent permitted by Section 102(b)(7) of the
General Corporation Law of Delaware (the "Delaware Law") and (ii) require the
Registrant to indemnify its directors and officers to the fullest extent
permitted by Section 145 of the Delaware Law, including circumstances in
which indemnification is otherwise discretionary. Pursuant to Section 145 of
the Delaware Law, a corporation generally has the power to indemnify its
present and former directors, officers, employees and agents against expenses
incurred by them in connection with any suit to which they are, or are
threatened to be made, a party by reason of their serving in such positions
so long as they acted in good faith and in a manner they reasonably believed
to be in, or not opposed to, the best interests of a corporation, and, with
respect to any criminal action, they had no reasonable cause to believe their
conduct was unlawful. The Registrant believes that these provisions are
necessary to attract and retain qualified persons as directors and officers.
These provisions do not eliminate liability for breach of the director's duty
of loyalty to the Registrant or its stockholders, for acts or omissions not
in good faith or involving intentional misconduct or knowing violations of
law, for any transaction from which the director derived an improper personal
benefit or for any willful or negligent payment of any unlawful dividend or
any unlawful stock purchase agreement or redemption.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Registrant or any of its listed enterprises, provided such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Registrant and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The indemnification agreements also set forth certain procedures that will apply
in the event of a claim for indemnification thereunder.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit
Number Description
------- -----------
4.1 Amended and Restated Certificate of Incorporation.(1)
4.2 Amended and Restated Bylaws.(2)
4.3 Specimen Stock Certificate.
4.4 Form of Common Stock and Warrant Purchase Agreement.
4.5 Form of Warrant.
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to 5.1.
24.1 Power of Attorney (included on signature page II-3).
- ---------------------------
(1) Filed as an exhibit to the Registration Statement on Form S-3 (No.
33-93736), incorporated herein by reference.
(2) Filed as an exhibit to the Registration Statement on Form S-1 (No.
33-46587), as amended, and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF SUNNYVALE, STATE OF CALIFORNIA, ON OCTOBER 7, 1996.
BIOCIRCUITS CORPORATION
By /s/ John Kaiser
---------------------------------
John Kaiser
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald Hawthorne and John Kaiser, and
each or either of them, his true and lawful attorneys-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place,
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
II-3
<PAGE>
SIGNATURE TITLE DATE
/s/ John Kaiser President and October 7, 1996
- --------------------------
John Kaiser Chief Executive Officer
and Director
/s/ Donald Hawthorne Vice President, Chief October 7, 1996
- --------------------------
Donald Hawthorne Financial Officer and
Secretary
/s/ Hans O. Ribi, Ph.D. Director October 7, 1996
- --------------------------
Hans O. Ribi, Ph.D.
/s/ Robert Curry, Ph.D. Director October 7, 1996
- --------------------------
Robert Curry, Ph.D.
/s/ Patrick Latterell Director October 7, 1996
- --------------------------
Patrick Latterell
/s/ Harry F. Hixson, Ph.D. Director October 7, 1996
- --------------------------
Harry F. Hixson, Ph.D.
II-4
<PAGE>
<PAGE>
EXHIBIT 4.3
COMMON STOCK COMMON STOCK
NUMBER SHARES
BIOCIRCUITS CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS SEE REVERSE FOR CERTAIN
TRANSFERABLE IN BOSTON, DEFINITIONS AND A
MA AND NEW YORK, NY INCORPORATED UNDER STATEMENT AS TO THE RIGHTS,
THE LAWS OF THE PREFERENCES, PRIVILEGES AND
STATE OF DELAWARE RESTRICTIONS OF SHARES
THIS CERTIFIES THAT
SPECIMEN
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE OF $.001 PER
SHARE OF
BIOCIRCUITS CORPORATION
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signature
of its duly authorized officers.
Dated
BIOCIRCUITS CORPORATION
INCORPORATED
MARCH 7,
1989
DELAWARE
/s/ Donald B. Hawthorne /s/ John Kaiser
SECRETARY PRESIDENT AND CEO
<PAGE>
BIOCIRCUITS CORPORATION
The Corporation is authorized to issue Common Stock and Preferred Stock.
The Board of Directors of the Corporation has authority to fix the number of
shares and the designation of any series of Preferred Stock and to determine or
alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any unissued shares of Preferred Stock.
The Corporation will furnish to any stockholder, upon request and without
charge, a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights, so far as the same shall have been fixed, and of the authority
of the Board of Directors to designate and fix any preferences, rights and
limitations of any wholly unissued series. Any such request should be addressed
to the Secretary of the Corporation at its principal office.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT _____ Custodian _____
TEN ENT--as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act _______________
tenant in common (State)
UNIF TRF MIN ACT____ Custodian (until age)___
_______ under Uniform Transfers
(Minor)
to Minors Act _______
(State)
Additional abbreviations may also be used though not in the above list.
For Value received, _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF TRANSFEREE SHOULD BE
PRINTED OR TYPEWRITTEN)
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said Shares on the books of the within-named Corporation, with
full power of substitution in the premises.
Dated ________________________________
_____________________________________________
SIGNATURE
_____________________________________________
SIGNATURE
Signature Guaranteed:
___________________________________________________
THE SIGNATURE SHOULD BE GUARANTEED BY A COMMERCIAL
BANK OR A MEMBER BROKER OF EITHER THE NEW YORK STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, MIDWEST
STOCK EXCHANGE OR PACIFIC STOCK EXCHANGE
____________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
<PAGE>
EXHIBIT 4.4
FORM OF
COMMON STOCK AND WARRANT
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the ____ day of ______________,
1996 (the "Effective Date"), by and among BIOCIRCUITS CORPORATION, a Delaware
corporation with its principal place of business at 1324 Chesapeake Terrace,
Sunnyvale, California 94089 (the "Company"), Pacific Growth Equities, Inc. (the
"Placement Agent") and each of those persons and entities, severally and not
jointly, listed as a Purchaser on the Schedule of Purchasers attached as
EXHIBIT A hereto. Such persons and entities are hereinafter collectively
referred to herein as "Purchasers" and each individually as a "Purchaser."
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company, the Placement Agent and each Purchaser (severally and
not jointly) hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SECURITIES. Subject to the
terms and conditions of this Agreement, the Company has or before the Closing
(as defined below) will have authorized the sale and issuance of (a) up to
1,775,000 shares of its Common Stock (the "Common Stock"), (b) Warrants, each in
substantially the form attached hereto as EXHIBIT B (each a "Warrant" and
collectively the "Warrants"), to purchase up to 887,500 shares the "Warrant
Shares") of the Company's Common Stock, and (c) Warrants to purchase up to
142,000 shares of the Company's Common Stock for delivery to the Placement Agent
(the "PGE Warrants"). The shares of Common Stock sold hereunder and the Common
Stock issuable upon exercise of the Warrants and the PGE Warrants together shall
be referred to herein as the "Shares." The Shares, the Warrants and the PGE
Warrants shall be referred to herein as the "Securities."
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SECURITIES.
2.1 SALE OF UNITS.
(a) At the Closing (as defined in Section 3), the Company will sell
to each Purchaser, and each Purchaser will purchase from the Company, at a
purchase price of seven dollars ($7.00) per "Unit," the number of Units set
forth next to such Purchaser's name on the Schedule of Purchasers attached
hereto as EXHIBIT A (the "Schedule of Purchasers"). As used herein, a Unit is
comprised of (i) two shares of Common Stock, and (ii) one warrant to purchase
one share of Common Stock.
2.2 SEPARATE AGREEMENT. Each Purchaser shall severally, and not jointly,
be liable for only the purchase of the Units that appear on EXHIBIT A hereto and
that relate to such
1.
<PAGE>
Purchaser. The Company's agreement with each of the Purchasers is a separate
agreement, and the sale of Units to each of the Purchasers is a separate sale.
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Units pursuant
to this Agreement (the "Closing") shall be held as soon as practicable after the
effectiveness of the Registration Statement, as set forth in Section 9.1(a)
hereof, to be filed with the Securities and Exchange Commission (the "SEC" or
"Commission"), and satisfaction or waiver of all other conditions to Closing, at
the offices of Cooley Godward LLP, 5 Palo Alto Square, 3000 El Camino Real, Palo
Alto, California, or on such other date and place as may be agreed to by the
Company and the Purchasers.
The Company shall give at least three (3) business days prior written
notice to the Purchasers, in a manner provided for in Section 11 hereof, of the
date, time and location of the Closing. At or prior to the Closing, each
Purchaser shall execute any related agreements or other documents required to be
executed hereunder, dated as of the date of the Closing (the "Closing Date").
3.2 DELIVERY OF THE UNITS AT THE CLOSING. At the Closing, the Company
shall deliver to each Purchaser stock certificates and Warrants registered in
the name of such Purchaser, or in such nominee name(s) as designated by such
Purchaser, representing the number of shares of Common Stock and Warrants to be
purchased by such Purchaser at the Closing as set forth in the Schedule of
Purchasers. The name(s) in which the stock certificates and Warrants are to be
issued to each Purchaser are set forth in the Stock Certificate and Warrant
Questionnaire in the form attached hereto as APPENDIX I, as completed by each
Purchaser. Also at the Closing, the Company shall deliver to the Placement
Agent the PGE Warrants.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached hereto as
EXHIBIT C, the Company hereby represents and warrants to, and covenants with,
the Purchasers and the Placement Agent as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as it is currently being conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement have been duly
authorized under Delaware law by all requisite corporate action by the Company,
and will not violate any law or the Company's Amended and Restated Certificate
of Incorporation or Bylaws of the Company or any provision of any material
indenture, mortgage, agreement, contract or other material instrument to which
the Company is a party or by which the Company or any of its properties or
assets is bound as of the date hereof, or result in a breach of or constitute
(upon notice or
2.
<PAGE>
lapse of time or both) a default under any such indenture, mortgage, agreement,
contract or other material instrument or result in the creation or imposition of
any lien, security interest, mortgage, pledge, charge or other encumbrance, of
any material nature whatsoever, upon any properties or assets of the Company.
Upon the execution and delivery, and assuming the valid execution and delivery
of this Agreement by each of the Purchasers, this Agreement will constitute a
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 10.4 hereof may be
legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES AND THE WARRANTS. When
issued and paid for in accordance with this Agreement or the applicable form of
Warrant, the Securities will be validly issued and outstanding, fully paid and
non-assessable, and will be issued in compliance with all applicable federal and
state securities laws and the applicable rules of the National Association of
Securities Dealers.
4.4 ADDITIONAL INFORMATION. The Company represents and warrants that the
information contained in the following documents, which the Company has
furnished to the Purchasers, or will furnish if requested by the Purchasers
prior to the Closing, is or will be true and correct in all material respects as
of their respective filing dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (without exhibits unless specifically requested);
(b) the Company's Quarterly Reports on Form 10-Q required to be filed
with the SEC for the three-month periods ended March 31, 1996 and June 30, 1996
(without exhibits unless specifically requested);
(c) the Company's Current Reports on Form 8-K filed with the SEC
since December 31, 1995, if any; and
(d) Notice of Annual Meeting and Proxy Statement for the Company's
1996 Annual Meeting of Stockholders.
4.5 NO MATERIAL CHANGE. As of the date hereof, there has been no material
adverse change in the financial condition or results of operations of the
Company since June 30, 1996, except that the Company continues to incur losses.
4.6 SEC REPORTS.
(a) The Company has filed with the Commission all reports ("SEC
Reports") required to be filed by it under the Securities Exchange Act of 1934,
as amended (the "Exchange
3.
<PAGE>
Act"). All of the SEC Reports filed by the Company comply in all material
respects with the requirements of the Exchange Act. None of the SEC Reports
contains, as of the respective dates thereof, any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. All financial statements contained in
the SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated
("GAAP"). Each balance sheet presents fairly in accordance with GAAP the
financial position of the Company as of the date of such balance sheet, and each
statement of operations, of stockholders' equity and of cash flows presents
fairly in accordance with GAAP the results of operations, the stockholders'
equity and the cash flows of the Company for the periods then ended.
(b) No event has occurred since June 30, 1996 requiring the filing of
an SEC Report that has not heretofore been filed and furnished to the
Purchasers.
(c) The SEC Reports and this Agreement taken together as a whole will
not, as of the Closing Date, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein, or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading (other than information relating to the Placement
Agent furnished by the Placement Agent expressly for use in the Agreement as to
which the Company makes no representation or warranty).
4.7 MAINTENANCE OF LISTING. For so long as the Company is obligated to
keep in effect the Registration Statements provided under Section 9 hereof, the
Company will use its reasonable best efforts to maintain its listing on The
National Market of The Nasdaq Stock Market or a national securities exchange, as
defined in the Exchange Act.
4.8 NO WAIVER OF CONDITION TO CLOSING WITHOUT CONSENT OF PLACEMENT AGENT.
The Company covenants to the Placement Agent that it will not waive the
condition to closing set forth herein at Section 7.2 as to any Purchaser without
the prior written consent of the Placement Agent.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.
Each Purchaser, severally and not jointly, represents and warrants to and
covenants with the Company that:
(a) Purchaser, taking into account the personnel and resources it can
practically bring to bear on the purchase of the Securities contemplated hereby,
either alone or together with the advice of such Purchaser's purchaser
representative, is knowledgeable, sophisticated and experienced in making, and
is qualified to make, decisions with respect to investments in shares presenting
an investment decision like that involved in the purchase of the Securities,
including investments in securities issued by the Company, and has requested,
received, reviewed and considered, either alone or with such Purchaser's
purchaser
4.
<PAGE>
representative, all information Purchaser deems relevant in making an informed
decision to purchase the Securities.
(b) Purchaser is acquiring the Securities being acquired by Purchaser
pursuant to this Agreement in the ordinary course of its business and for its
own account for investment only and with no present intention of distributing
any of such Securities or any arrangement or understanding with any other
persons regarding the distribution of such Securities, except in compliance with
Section 5(c).
(c) Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the securities purchased hereunder
except in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), applicable blue sky laws, and the rules and regulations
promulgated thereunder.
(d) Purchaser has completed or caused to be completed the Stock
Certificate and Warrant Questionnaire and the Registration Questionnaire,
attached hereto as APPENDIX I and APPENDIX II, respectively, for use in
preparation of the Registration Statements to be filed by the Company, and the
answers thereto are true and correct to the best knowledge of Purchaser as of
the date hereof and will be true and correct as of the effective date of the
applicable Registration Statement (provided that Purchaser shall be entitled to
update such information by providing notice thereof to the Company prior to the
effective date of such Registration Statement).
(e) Purchaser has, in connection with its decision to purchase the
Securities, relied with respect to the Company and its affairs solely upon the
information delivered to Purchaser as described in Sections 4.4 and 5(a) above
and the representations and warranties of the Company contained herein.
(f) Purchaser is an "accredited investor" within the meaning of Rule
501 of Regulation D promulgated under the Securities Act.
(g) Purchaser has full right, power, authority and capacity to enter
into this Agreement and to consummate the transactions contemplated hereby and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this
Agreement by Purchaser, this Agreement shall constitute a valid and binding
obligation of Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 9.3 hereof may be legally unenforceable.
5.
<PAGE>
For purposes of this Section 5, the term "Purchaser" shall also refer to the
Placement Agent with respect to the Placement Agent's acquisition of the PGE
Warrants and the underlying Warrant Shares.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
each Purchaser herein and in the certificates for the securities delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Purchasers of the securities being purchased and the payment therefor.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Securities and
deliver shares of Common Stock and Warrants to each Purchaser, individually, as
set forth in the Schedule of Purchasers shall be subject to the following
conditions to the extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Company shall have received payment, by check
or wire transfer of immediately available funds, in the full amount of the
purchase price for the number of Units being purchased by such Purchaser at the
Closing as set forth in the Schedule of Purchasers.
7.2 REGISTRATION STATEMENT EFFECTIVE. The Registration Statement filed by
the Company pursuant to Section 9 shall have become effective, and no stop order
suspending the effectiveness thereof shall have been issued and no proceedings
therefor shall be pending or threatened by the Commission.
7.3 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by such Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
7.4 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by such Purchaser on or prior to the Closing
Date shall have been performed or complied with in all material respects.
SECTION 8. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each
Purchaser's obligation to accept delivery of the Units and to pay for the
securities evidenced thereby shall be subject to the following conditions to the
extent not waived by such Purchaser:
8.1 REGISTRATION STATEMENT EFFECTIVE. The Registration Statement required
pursuant to Section 9 shall have become effective no later than the close of
business on November 25, 1996; and no stop order suspending the effectiveness
thereof shall have been issued and no proceedings therefor shall be pending or
threatened by the Commission.
6.
<PAGE>
8.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
8.3 COVENANTS PERFORMED. All covenants, agreements and conditions
contained herein to be performed by the Company shall have been performed or
complied with in all material respects.
8.4 LEGAL OPINION. Purchasers shall have received from Cooley Godward
LLP, counsel to the Company, an opinion letter addressed to the Purchasers,
dated as of the Closing Date, in form and substance reasonably satisfactory to
counsel for the Purchasers.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT.
9.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(a) As soon as practicable following the Effective Date, the Company
shall prepare and file with the Commission one or more registration statements
in order to register with the Commission the sale by the Purchasers, from time
to time, of the Shares through Nasdaq or the facilities of any national
securities exchange on which the Company's Common Stock is then traded, or in
privately-negotiated transactions (a "Registration Statement").
(b) The Company shall use reasonable best efforts to prepare and file
with the Commission (i) such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith, (ii) such SEC Reports
and (iii) such other filings required by the Commission, as may be necessary to
keep the Registration Statement continuously effective until the second
anniversary of the first date on which no Warrants remain unexercised or
unexpired; provided, however, that in the event of a Suspension Period (as
defined below), the Company shall extend the period of effectiveness of such
Registration Statement by the aggregate number of days of each such Suspension
Period. The Company may suspend use of the prospectus when it deems necessary,
in its reasonable judgment, until such time as the Company subsequently
authorizes use of the prospectus (each such period, a "Suspension Period").
Upon the declaration of a Suspension Period, the Company shall use reasonable
best efforts to end the Suspension Period as quickly as possible.
Notwithstanding the foregoing, the Company shall not allow a Suspension Period
to continue for more than 60 days unless the Company shall deliver to the
Purchasers a second notice, which shall have the effect of extending the
Suspension Period by up to an additional 30 days. In no event shall the Company
extend a Suspension Period beyond such 90 day period. The Company shall not
under any circumstances be entitled to exercise its rights under this
subparagraph to effect a Suspension Period more than two times in any 12 month
period. Each Purchaser agrees that such Purchaser will not sell any Shares
pursuant to the prospectus beginning at the time the Company gives such
Purchaser notice of the suspension of the prospectus and ending at the time
the Company gives
7.
<PAGE>
such Purchaser notice of the termination of the Suspension Period. Each
Purchaser further agrees to promptly notify the Company of the sale of all of
such Purchaser's Securities.
(c) In order to facilitate the public sale or other disposition of
all or any of the shares by each Purchaser, the Company shall furnish to each
Purchaser with respect to the Shares registered under the Registration Statement
such number of copies of prospectuses and preliminary prospectuses as such
Purchaser reasonably requests in conformity with the requirements of the
Securities Act.
(d) The Company shall file documents required of the Company for
normal blue sky clearance in states specified in writing by each Purchaser;
PROVIDED, HOWEVER, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented.
(e) Other than fees and expenses, if any, of counsel or other
advisers to the Purchasers, which fees and expenses shall be borne by the
Purchasers except as provided under Section 12.8 below, the Company shall bear
all expenses (exclusive of underwriting discounts and commissions) in connection
with the procedures in paragraphs (a) through (d) of this Section 9.1.
For purposes of this Section 9.1, the term "Purchaser" shall also refer to
the Placement Agent.
9.2 TRANSFER OF SECURITIES AFTER REGISTRATION. Each Purchaser agrees that
such Purchaser will not effect any disposition of the Shares or the Warrants
that would constitute a sale within the meaning of the Securities Act, except:
(i) pursuant to the Registration Statement, in which case such
Purchaser shall submit the certificates evidencing the Shares to the transfer
agent accompanied by a separate "Purchaser's Certificate" (A) in the form of
Appendix III attached hereto, (B) executed by such Purchaser or by an officer
of, or other authorized person designated by, such Purchaser, and (C) to the
effect that (1) the Shares have been sold in accordance with the Registration
Statement and (2) the requirement of delivering a current prospectus has been
satisfied; or
(ii) in a transaction exempt from registration under the
Securities Act, in which case such Purchaser shall, prior to effecting such
disposition, submit to the Company an opinion of counsel in form and substance
reasonably satisfactory to the Company to the effect that the proposed
transaction is in compliance with the Securities Act.
For purposes of this Section 9.2, the term "Purchaser" shall also refer to
the Placement Agent.
9.3 INDEMNIFICATION. As used in this Section 9.3 the following terms
shall have the following respective meanings:
8.
<PAGE>
(a) "Selling Stockholder" shall mean a Purchaser of Securities under
this Agreement, including the Placement Agent, and any transferee of such a
Purchaser who is entitled to resell Shares pursuant to the Registration
Statement;
(b) "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 9.1; and
(c) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Stockholder
and the Placement Agent from and against any losses, claims, damages or
liabilities to which such Selling Stockholder or the Placement Agent may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon, any Untrue Statement on or after the effective date of
the Registration Statement, or arise out of any failure by the Company to
fulfill any undertaking included in the Registration Statement and the Company
will reimburse such Selling Stockholder or the Placement Agent for any
reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; PROVIDED,
HOWEVER, that the Company shall not be liable to such Selling Stockholder or the
Placement Agent in any such case to the extent that such loss, claim, damage or
liability arises out of, or is based upon, an Untrue Statement made in such
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Selling Stockholder
or the Placement Agent, respectively, specifically for use in preparation of the
Registration Statement, or the failure of such Selling Stockholder or the
Placement Agent, respectively, to comply with the covenants and agreements
contained in Section 9.1 or 9.2 hereof respecting sale of the Shares or any
statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Selling Stockholder or the Placement Agent,
respectively, prior to the pertinent sale or sales by the Selling Stockholder or
the Placement Agent, respectively.
Each Purchaser, severally and not jointly, agrees to indemnify and hold
harmless the Company (and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, each officer of the Company who
signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or any
such officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any failure to comply with the covenants and agreements contained in
Section 9.1 or 9.2 hereof respecting sale of the Shares, or any Untrue Statement
contained in the Registration Statement on or after the effective date thereof
if such Untrue Statement was made in reliance upon and in conformity with
written information furnished by or on behalf of such Purchaser specifically for
use in preparation of
9.
<PAGE>
the Registration Statement, and such Purchaser will reimburse the Company (or
such officer, director or controlling person), as the case may be, for any legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim; PROVIDED that in no event shall
any indemnity by a Purchaser under this Section 9.3 exceed the gross proceeds
received by such Purchaser from the sale of Shares covered by such Registration
Statement.
The Placement Agent agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof
respecting sale of the Shares, or any Untrue Statement contained in the
Registration Statement on or after the effective date thereof if such Untrue
Statement was made in reliance upon and in conformity with written information
furnished by or on behalf of the Placement Agent specifically for use in
preparation of the Registration Statement, and the Placement Agent will
reimburse the Company (or such officer, director or controlling person), as the
case may be, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; PROVIDED that in no event shall any indemnity by the Placement Agent
under this Section 9.3 exceed the gross proceeds received by the Placement Agent
from the sale of Shares covered by such Registration Statement.
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; PROVIDED, HOWEVER, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; PROVIDED, HOWEVER, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for all indemnified parties.
9.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 4, Section 5 or this Section 9 upon the transferability of
the Shares shall cease and
10.
<PAGE>
terminate as to any particular number of the Shares when such Shares shall have
been sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such Shares or at
such time as an opinion of counsel satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
9.5 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchasers or the Placement
Agent, the Company will furnish to the Purchasers and the Placement Agent:
(a) as soon as practicable after available (but in the case of the
Company's Annual Report to Stockholders, within 120 days after the end of each
fiscal year of the Company), one copy of (i) its Annual Report to Stockholders
(which Annual Report shall contain financial statements audited in accordance
with generally accepted auditing standards certified by a national firm of
certified public accountants); (ii) its Annual Report on Form 10-K; (iii) its
quarterly reports on Form 10-Q (the foregoing, in each case, excluding
exhibits); and (iv) its current reports on Form 8-K, if any;
(b) upon the request of any Purchaser or the Placement Agent, all
exhibits excluded by the parenthetical to subparagraph (a)(iii) of this
Section 9.5, in the form generally available to the public; and
(c) upon the reasonable request of any Purchaser or the Placement
Agent, an adequate number of copies of the prospectuses to supply to any other
party requiring such prospectuses.
9.6 MARKET STAND-OFF. If requested by the underwriters in any proposed
underwritten public offering by the Company of Common Stock, Purchasers and the
Placement Agent, or any assignees thereof or transferees who are affiliates
thereof, will not sell any of the Securities for up to 90 days following the
effective date of the registration statement relating to such public offering.
9.7 CHANGES IN PURCHASER INFORMATION. Each Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding Purchaser or such Purchaser's plan of
distribution set forth in such Registration Statement. The Placement Agent
agrees to promptly notify the Company of any changes in the information set
forth in the Registration Statement regarding the Placement Agent or its plan of
distribution set forth in such Registration Statement.
SECTION 10. BROKER'S FEE. The Company and each Purchaser (severally and
not jointly) hereby represent that, except for amounts to be paid to the
Placement Agent by the Company as described in Section 12.8 hereof, there are no
brokers or finders entitled to compensation in connection with the sale of the
Units, and shall indemnify each other for any such fees for which they are
responsible.
11.
<PAGE>
SECTION 11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent in the case of facsimile transmission, or when so
received in the case of mail or courier, and addressed as follows:
(a) if to the Company, to:
Biocircuits Corporation
1324 Chesapeake Terrace
Sunnyvale, California 94089
Attention: Chief Executive Officer
Facsimile: (408) 752-8792
with a copy so mailed to:
Cooley Godward LLP
Five Palo Alto Square, 4th Floor
Palo Alto, California 94306
Attention: Deborah A. Marshall, Esq.
Facsimile: (415) 857-0663
or to such other person at such other place as the Company shall
designate to the Purchasers and the Placement Agent in writing; and
(b) if to the Purchasers or the Placement Agent, at the address as
set forth at the end of this Agreement, or at such other address or addresses as
may have been furnished to the Company in writing.
SECTION 12. MISCELLANEOUS.
12.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and holders of at least a
majority of the Shares.
12.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
12.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and
12.
<PAGE>
performed entirely in California by California residents, without regard to
conflicts of law principles.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
12.6 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.
12.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
12.8 PAYMENT OF FEES AND EXPENSES. Each of the Company and the Purchasers
shall bear its own expenses and legal fees incurred on its behalf with respect
to this Agreement and the transactions contemplated hereby (the "Offering");
PROVIDED, that the Company shall reimburse the Placement Agent for all
reasonable out-of-pocket expenses incurred by the Placement Agent in connection
with the Offering and the reasonable fees and expenses of Howard, Rice,
Nemerovski, Canady, Falk & Rabkin in connection with its acting as counsel to
the Placement Agent. The fees and expenses of the Placement Agent for which the
Company shall be liable hereunder shall in no event exceed $50,000 in the
aggregate. Purchasers acknowledge that the Placement Agent will receive a
commission equal to $0.35 per Unit sold in the Offering and will be entitled to
receive a warrant to purchase the number of shares of the Company's Common Stock
equal to sixteen percent (16%) of the number of Units sold in the Offering upon
substantially the same terms and conditions as the Warrants; PROVIDED, HOWEVER,
that the PGE Warrants will contain a cashless exercise provision. If any action
at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
13.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
COMPANY: PLACEMENT AGENT:
BIOCIRCUITS CORPORATION PACIFIC GROWTH EQUITIES, INC.
By:
---------------------------
By:
---------------------------
Donald B. Hawthorne Name:
Chief Financial Officer -------------------------
Title:
Address: 1324 Chesapeake Terrace ------------------------
Sunnyvale, CA 94089
Address: 353 Sacramento Street
Facsimile: (408) 752-8792 16th Floor
San Francisco, CA 94111
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
<PAGE>
EXHIBIT A
SCHEDULE OF PURCHASERS
<PAGE>
EXHIBIT B
FORM OF WARRANT
16.
<PAGE>
EXHIBIT C
SCHEDULE OF EXCEPTIONS
THE INCLUSION OF ANY MATTER AS PART OF THIS SCHEDULE SHOULD NOT BE
INTERPRETED AS INDICATING THAT THE COMPANY HAS DETERMINED THAT SUCH MATTER IS
NECESSARILY MATERIAL TO THE PURCHASER.
SECTIONS 4.4; 4.5; AND 4.6
ADDITIONAL INFORMATION; NO MATERIAL CHANGE; SEC REPORTS
The Company recently determined that certain of its year-to-date product
sales were contingent sales. In light of the contingent nature of such sales,
the Company will increase its reserves up to $68,000 for the quarter ending
September 30, 1996 as necessary to account for any contingent amounts still
outstanding.
The Company is currently negotiating with Beckman Instruments, Inc.
("Beckman") to eliminate Beckman's right to convert its convertible promissory
note into equity under the terms of this financing, and to provide Beckman with
certain registration rights.
<PAGE>
APPENDIX I
BIOCIRCUITS CORPORATION
STOCK CERTIFICATE AND WARRANT QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares and Warrants are to be registered in (this
is the name that will appear on your stock certificate(s) and warrant(s)).
You may use a nominee name if appropriate:
-------------------------------
2. The relationship between the Purchaser of the Securities and the Registered
Holder listed in response to item 1 above:
-------------------------------
3. The mailing address of the Registered Holder listed in response to item 1
above:
-------------------------------
-------------------------------
-------------------------------
4. The Social Security Number or Tax Identification Number of the Registered
Holder listed in the response to item 1 above:
-------------------------------
Signature:
---------------------
Print Name:
---------------------
Title:
---------------------
<PAGE>
APPENDIX II
BIOCIRCUITS CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Please state your or your organization's name exactly as it should
appear in the Registration Statement:
2. Please provide the following information, as of September 24, 1996:
(1) (2)
Number of shares, if any, which
will be owned after completion
Number of Shares of sale of Shares
which are being included included in the
in the Registration Statement Registration Statement
- ----------------------------- --------------------------------
3. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Proxy Statement in connection with the
Company's 1996 Annual Meeting of Stockholders?
Yes No
--- ---
If yes, please indicate the nature of any such relationships:
--------------
- --------------------------------------------------------------------------------
Signature:
---------------------------------
Print Name:
---------------------------------
Title:
---------------------------------
<PAGE>
APPENDIX III
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized
by hereby
---------------------------------------------------------------
[fill in official name of individual or institution]
certifies that he/she is the Purchaser of the Shares evidenced by the attached
stock certificate(s) and as such, sold such Shares on in
----------------------
[date]
accordance with registration statement number ______________________________
[fill in the number of or otherwise identify registration statement]
and the requirement of delivering a current prospectus and current annual,
quarterly and reports (Forms 10-K, 10-Q, and 8-K) by the Company has been
complied with in connection with such sale.
PRINT OR TYPE:
Name of Purchaser (Individual or Institution):
----------------------------------
Name of Individual representing Purchaser
(if an Institution):
----------------------------------
Title of Individual representing Purchaser
(if an Institution):
----------------------------------
SIGNATURE BY:
Individual Purchaser or Individual
representing Purchaser:
----------------------------------
<PAGE>
BIOCIRCUITS CORPORATION
COMMON STOCK AND WARRANT
PURCHASE AGREEMENT
<PAGE>
NOTICE TO PURCHASERS IN ALL STATES:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
NOTICE TO FLORIDA PURCHASERS:
THE SECURITIES REFERRED TO HEREIN MAY BE SOLD TO, AND ACQUIRED BY, THE HOLDER IN
A TRANSACTION EXEMPT UNDER Section 517.061 OF THE FLORIDA SECURITIES ACT. THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN
ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE
WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH
PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN
THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH
PURCHASER, WHICHEVER OCCURS LATER.
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. AUTHORIZATION OF SALE OF THE SECURITIES....................... 1
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SECURITIES................. 1
2.1 Sale of Units................................................. 1
2.2 Separate Agreement............................................ 1
SECTION 3. CLOSING AND DELIVERY.......................................... 2
3.1 Closing....................................................... 2
3.2 Delivery of the Units at the Closing.......................... 2
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY...... 2
4.1 Organization and Qualification................................ 2
4.2 Due Execution, Delivery and Performance of the Agreements..... 2
4.3 Issuance, Sale and Delivery of the Shares and the Warrants.... 3
4.4 Additional Information........................................ 3
4.5 No Material Change............................................ 3
4.6 SEC Reports................................................... 3
4.7 Maintenance of Listing........................................ 4
4.8 No Waiver of Condition To Closing Without Consent of
Placement Agent............................................... 4
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS... 4
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS........ 6
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING............ 6
7.1 Receipt of Payment............................................ 6
7.2 Registration Statement Effective.............................. 6
7.3 Representations and Warranties Correct........................ 6
7.4 Covenants Performed........................................... 6
SECTION 8. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING.......... 6
8.1 Registration Statement Effective.............................. 6
8.2 Representations and Warranties Correct........................ 7
8.3 Covenants Performed........................................... 7
8.4 Legal Opinion................................................. 7
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT. 7
9.1 Registration Procedures and Expenses.......................... 7
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
9.2 Transfer of Securities After Registration..................... 8
9.3 Indemnification............................................... 8
9.4 Termination of Conditions and Obligations..................... 10
9.5 Information Available......................................... 11
9.6 Market Stand-Off.............................................. 11
9.7 Changes in Purchaser Information.............................. 11
SECTION 10. BROKER'S FEE.................................................. 11
SECTION 11. NOTICES....................................................... 12
SECTION 12. MISCELLANEOUS................................................. 12
12.1 Waivers and Amendments........................................ 12
12.2 Headings...................................................... 12
12.3 Severability.................................................. 12
12.4 Governing Law................................................. 12
12.5 Counterparts.................................................. 13
12.6 Successors and Assigns........................................ 13
12.7 Entire Agreement.............................................. 13
12.8 Payment of Fees and Expenses.................................. 13
ATTACHMENTS:
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Warrant
Exhibit C - Schedule of Exceptions
Appendix I - Stock Certificate and Warrant Questionnaire
Appendix II - Registration Statement Questionnaire
Appendix III - Purchaser's Certificate of Subsequent Sale
ii.
<PAGE>
EXHIBIT 4.5
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
BIOCIRCUITS CORPORATION
FORM OF
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. 1996-C_ _______ Shares
FOR VALUE RECEIVED, BIOCIRCUITS CORPORATION, a Delaware corporation (the
"Company"), with its principal office at 1324 Chesapeake Terrace, Sunnyvale,
California 94089, hereby certifies that __________________ ("Holder"), or its
assigns, is entitled, subject to the provisions of this Warrant, to purchase
from the Company, at any time before 5:00 p.m. (Pacific Time) on the expiration
date of _____________, 1997; provided, however, that the expiration date shall
be extended by one day for each day since the issuance of this Warrant on which
there has been effective a Suspension Period, as that term is defined in the
Common Stock and Warrant Purchase Agreement dated ______________, 1996, pursuant
to which this Warrant was issued (the "Expiration Date"), the number of fully
paid and nonassessable shares of Common Stock of the Company set forth above,
subject to adjustment as hereinafter provided.
Holder may purchase such number of shares of Common Stock at a purchase
price per share (as appropriately adjusted pursuant to Section 6 hereof) of Four
Dollars ($4.00) (the "Exercise Price"). The term "Common Stock" shall mean the
aforementioned Common Stock of the Company, together with any other equity
securities that may be issued by the Company in addition thereto or in
substitution therefor as provided herein.
The number of shares of Common Stock to be received upon the exercise of
this Warrant and the price to be paid for a share of Common Stock are subject to
adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares."
1.
<PAGE>
SECTION 1. EXERCISE OF WARRANT.
(a) Subject to the automatic exercise provisions of Section 1(b)
below, this Warrant may be exercised in whole or in part on any business day
prior to the Expiration Date by presentation and surrender hereof to the Company
at its principal office at the address set forth in the initial paragraph hereof
(or at such other address as the Company may hereafter notify Holder in writing)
with the Purchase Form annexed hereto duly executed and accompanied by proper
payment of the Exercise Price in lawful money of the United States of America in
the form of a check, subject to collection, for the number of Warrant Shares
specified in the Purchase Form. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant, execute and deliver a
new Warrant evidencing the rights of Holder thereof to purchase the balance of
the Warrant Shares purchasable hereunder. Upon receipt by the Company of this
Warrant and such Purchase Form, together with proper payment of the Exercise
Price, at such office, Holder shall be deemed to be the holder of record of the
Warrant Shares, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such Warrant Shares shall
not then be actually delivered to Holder. The Company shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of the Warrant Shares.
(b) AUTOMATIC EXERCISE. At any time beginning six months prior to
the Expiration Date and prior to the Expiration Date, upon notice to the Holders
by the Company of the occurrence of an Automatic Exercise Event (as hereinafter
defined), this Warrant shall automatically be exercised without further action
by the Holders. For purposes of the preceding sentence, an "Automatic Exercise
Event" shall occur when the average closing price per share of the Company's
Common Stock as quoted on the Nasdaq National Market System or on the primary
national securities exchange on which the Common Stock is then listed, whichever
is applicable, as published in the Western Edition of the Wall Street Journal
(or, if not so reported, as otherwise reported by the Nasdaq National Market
System) over the course of ten (10) consecutive trading days equals or exceeds
Six Dollars ($6.00).
(c) Payment for Warrant Shares automatically purchased pursuant to
Section 1(b) shall be due and payable to the Company in accordance with the
provisions of Section 1(b) within five (5) business days following notice to the
Holder by the Company.
SECTION 2. RESERVATION OF SHARES. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company from time to time issuable upon exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise in
accordance with the terms of this Warrant, shall be validly issued, fully paid
and nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale (other than as provided in the
Company's certificate of incorporation and any restrictions on sale set forth
herein or pursuant to applicable federal and state securities laws) and free and
clear of all preemptive rights.
2.
<PAGE>
SECTION 3. FRACTIONAL INTEREST. The Company will not issue a fractional
share of Common Stock upon exercise of a Warrant. Instead, the Company will
deliver its check for the current market value of the fractional share. The
current market value of a fraction of a share is determined as follows: multiply
the current market price of a full share by the fraction of a share and round
the result to the nearest cent.
The current market price of a share of Common Stock for purposes of this
Section only is the Quoted Price (as defined in Section 6(b) below) of the
Common Stock on the last trading day prior to the exercise date.
SECTION 4. ASSIGNMENT OR LOSS OF WARRANT.
(a) Except as provided in Section 9, Holder shall be entitled,
without obtaining the consent of the Company, to assign its interest in this
Warrant in whole or in part to any person or persons. Subject to the provisions
of Section 9, upon surrender of this Warrant to the Company or at the office of
its stock transfer agent or warrant agent, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees named in such instrument of assignment (any such
assignee will then be a "Holder" for purposes of this Warrant) and, if Holder's
entire interest is not being assigned, in the name of Holder, and this Warrant
shall promptly be canceled.
(b) Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of indemnification satisfactory to the Company, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
SECTION 5. RIGHTS OF HOLDER. Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of Holder are limited to those expressed in this Warrant.
Nothing contained in this Warrant shall be construed as conferring upon Holder
hereof the right to vote or to consent or to receive notice as a stockholder of
the Company on any matters or with respect to any rights whatsoever as a
stockholder of the Company. No dividends or interest shall be payable or
accrued in respect of this Warrant or the interest represented hereby or the
Warrant Shares purchasable hereunder until, and only to the extent that, this
Warrant shall have been exercised in accordance with its terms.
SECTION 6. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number
and kind of securities purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time upon the
beginning of certain events, as follows:
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If at any time after the
date hereof the Company:
3.
<PAGE>
(A) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(B) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(C) combines its outstanding shares of Common Stock into a
smaller number of shares;
(D) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(E) issues by reclassification of its Common Stock any shares of
its capital stock;
then the number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price in effect immediately prior to such action shall
be adjusted so that Holder may receive upon exercise of this Warrant and payment
of the same aggregate consideration the number of shares of capital stock of the
Company which Holder would have owned immediately following such action if
Holder had exercised this Warrant immediately prior to such action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
(b) CURRENT MARKET PRICE. The "current market price" per share of
Common Stock on any date is the average of the Quoted Prices of the Common Stock
for the 30 consecutive trading days commencing 45 trading days before the date
in question. The "Quoted Price" of the Common Stock is the last reported sales
price of the Common Stock as reported by the Nasdaq National Market, or the
primary national securities exchange on which the Common Stock is then quoted;
provided, however, that if the Common Stock is neither traded on the Nasdaq
National Market nor on a national securities exchange, the price referred to
above shall be the price reflected on the Nasdaq National Market, or if the
Common Stock is not then traded on the Nasdaq National Market, the price
reflected in the over-the counter market as reported by the National Quotation
Bureau, Inc. or any organization performing a similar function.
(c) MINIMUM ADJUSTMENT. No adjustment in the Exercise Price of this
Section 6 shall be required unless such adjustment would require an increase or
decrease of at least twenty-five cents ($.25) in such Exercise Price; PROVIDED,
HOWEVER, that any adjustments which by reason of this subsection are not
required to be made, shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 6 shall be made to
the nearest cent or to the nearest share, as the case may be.
4.
<PAGE>
(d) DEFERRAL OF ISSUANCE OR PAYMENT. In any case in which an event
covered by this Section 6 shall require that an adjustment in the Exercise Price
be made effective as of a record date, the Company may elect to defer until the
occurrence of such event (i) issuing to Holder, if this Warrant is exercised
after such record date, the shares of Common Stock and other capital stock of
the Company, if any, issuable upon such exercise over and above the shares of
Common Stock or other capital stock of the Company, if any, issuable upon such
exercise on the basis of the Exercise Price in effect prior to such adjustment,
and (ii) paying to Holder by check any amount in lieu of the issuance of
fractional shares pursuant to Section 3.
(e) WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made for a
change in the par value of the Common Stock. To the extent this Warrant becomes
exercisable into cash, no adjustment need be made thereafter as to the cash, and
interest will not accrue on the cash.
(f) NOTICE OF CERTAIN ACTIONS. In the event that:
(A) the Company shall authorize the issuance to all holders of
its Common Stock of rights, warrants, options or convertible securities to
subscribe for or purchase shares of its Common Stock or of any other
subscription rights, warrants, options or convertible securities; or
(B) the Company shall authorize the distribution to all holders
of its Common Stock of evidences of its indebtedness or assets (other than
dividends paid in or distributions of the Company's capital stock for which the
Exercise Price shall have been adjusted pursuant to subsection (a) of this
Section 6 or cash dividends or cash distributions payable out of consolidated
current or retained earnings as shown on the books of the Company and paid in
the ordinary course of business); or
(C) the Company shall authorize any capital reorganization or
reclassification of the Common Stock (other than a subdivision or combination of
the outstanding Common Stock and other than a change in par value of the Common
Stock) or of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of the Common Stock
outstanding), or of the conveyance or transfer of the properties and assets of
the Company as an entirety or substantially as an entirety; or
(D) the Company is the subject of a voluntary or involuntary
dissolution, liquidation or winding-up procedure; or
(E) the Company proposes to take any action that would require
an adjustment of the Exercise Price pursuant to this Section 6;
then the Company shall cause to be mailed by first-class mail to Holder, at
least twenty (20) days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the
5.
<PAGE>
date as of which the holders of Common Stock of record to be entitled to receive
any such rights, warrants or distributions are to be determined, or (y) the date
on which any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding-up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up.
SECTION 7. OFFICERS' CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of Section 6, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal
office an officers' certificate showing the adjusted Exercise Price determined
as herein provided, setting forth in reasonable detail the facts requiring such
adjustment and the manner of computing such adjustment. Each such officers'
certificate shall be signed by the chairperson, president or chief financial
officer of the Company and by the secretary or any assistant secretary of the
Company. Each such officers' certificate shall be made available at all
reasonable times for inspection by Holder.
SECTION 8. RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR MERGER. In
the event of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or in the event of any consolidation or merger of the
Company with or into another corporation (other than a merger in which the
Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in the
event of any sale, lease, transfer or conveyance to another corporation of the
property and assets of the Company as an entirety or substantially as an
entirety, the Company shall, as a condition precedent to such transaction, cause
effective provisions to be made so that Holder shall have the right thereafter,
by exercising this Warrant, to purchase the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
that might have been received upon exercise of this Warrant immediately prior to
such reclassification, capital reorganization, change, consolidation, merger,
sale or conveyance. Any such provision shall include provisions for adjustments
in respect of such shares of stock and other securities and property that shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Warrant. The foregoing provisions of this Section 8 shall similarly apply
to successive reclassifications, capital reorganizations and changes of shares
of Common Stock and to successive consolidations, mergers, sales or conveyances.
In the event that in connection with any such capital reorganization, or
reclassification, consolidation, merger, sale or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for, or of, a security of the Company other than
Common Stock, any such issue shall be treated as an issue of Common Stock
covered by the provisions of subsection (a) of Section 6.
6.
<PAGE>
SECTION 9. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. This
Warrant may not be exercised and neither this Warrant nor any of the Warrant
Shares, nor any interest in either, may be offered, sold, assigned, pledged,
hypothecated, encumbered or in any other manner transferred or disposed of, in
whole or in part, except in compliance with applicable United States federal and
state securities or Blue Sky laws and the terms and conditions hereof. Each
Warrant shall bear a legend in substantially the same form as the legend set
forth on the first page of this Warrant. Each certificate for Warrant Shares
issued upon exercise of this Warrant, unless at the time of exercise such
Warrant Shares are acquired pursuant to a registration statement that has been
declared effective under the Act, and applicable blue sky laws shall bear a
legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
Any certificate for any Warrant Shares issued at any time in exchange or
substitution for any certificate for any Warrant Shares bearing such legend
(except a new certificate for any Warrant Shares issued after the acquisition of
such Warrant Shares pursuant to a registration statement that has been declared
effective under the Act) shall also bear such legend unless, in the opinion of
counsel for the Company, the Warrant Shares represented thereby need no longer
be subject to the restriction contained herein. The provision of this Section 9
shall be binding upon all subsequent holders of certificates for Warrant Shares
bearing the above legend and all subsequent holders of this Warrant, if any.
SECTION 10. MODIFICATION AND WAIVER. Neither this Warrant nor any term
hereof may be changed, waived, discharged or terminated other than by an
instrument in writing signed by the Company and by Holder.
SECTION 11. NOTICES. Any notice, request or other document required or
permitted to be given or delivered to Holder or the Company shall be delivered
or shall be sent by certified mail, postage prepaid, to Holder at its address as
shown on the books of the Company or to the Company at the address indicated
therefor in the first paragraph of this Warrant.
SECTION 12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description
headings of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in
7.
<PAGE>
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California, without regard to its conflicts of laws principles.
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed
by its duly authorized officer and to be dated as of _______________, 1996.
BIOCIRCUITS CORPORATION
By:
--------------------------------
Donald B. Hawthorne
Chief Financial Officer
8.
<PAGE>
PURCHASE FORM
Dated ___________, 19____
The undersigned hereby irrevocably elects to exercise the within Warrant
No. 1996-C_ to purchase _________ shares of Common Stock and hereby makes
payment of $_____________ in payment of the exercise price thereof.
HOLDER
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
<PAGE>
ASSIGNMENT FORM
Dated _________, 19____
FOR VALUE RECEIVED, ________________ hereby sells, assigns and transfers
unto __________________________________________________ (the "Assignee"),
(please type or print in block letters)
- --------------------------------------------------------------------------------
(insert address)
its right to purchase up to _______ shares of Common Stock represented by this
Warrant No. 1996-C_ and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
HOLDER
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
<PAGE>
EXHIBIT 5.1
[Letterhead]
October 8, 1996
Biocircuits Corporation
1324 Chesapeake Terrace
Sunnyvale, CA 94089
RE: BIOCIRCUITS CORPORATION
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Biocircuits Corporation (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of 2,903,321 shares of the
Company's Common Stock (the "Shares"), with a par value of $0.001 (the
"Common Stock") to be sold by certain stockholders as described in the
Registration Statement, (i) 1,930,462 of which are being issued by the
Company in a private financing pursuant to a Common Stock and Warrant
Purchase Agreement dated as of September 30, 1996, (the "Financing"), (ii)
965,231 of which are issuable pursuant to the exercise of warrants which are
being issued in the Financing, (iii) 2,500 of which are issuable pursuant to
the exercise of warrants issued in connection with a line of credit agreement
dated April 4, 1996 and (iv) 5,128 of which are issuable pursuant to the
exercise of warrants issued in connection with a standby letter of credit
issued on August 6, 1996. Defined terms used herein shall have the meanings
attributed to such terms in the Registration Statement unless otherwise
stated herein.
In connection with this opinion, we have examined the Registration Statement,
the Company's Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws, and such other documents, records, certificates, memoranda and
other instruments as we deem necessary as a basis for this opinion. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement, will be validly issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the Prospectus included in the Registration Statement.
<PAGE>
Biocircuits Corporation
October 8, 1996
Page 2
Very truly yours,
Cooley Godward LLP
Deborah A. Marshall
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Biocircuits
Corporation for the registration of 2,903,321 shares of its common stock and to
the incorporation by reference therein of our report dated January 12, 1996,
except for 'Nature of Business and Financing' in Note 1 as to which the date is
March 28, 1996, with respect to the financial statements of Biocircuits
Corporation included in its Annual Report (Form 10-K) for the fiscal year ended
December 31, 1995, filed with the Securities and Exchange Commission.
Palo Alto, California
October 7, 1996
1
