<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 15, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
BIOCIRCUITS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE -------- 94-3060271
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) 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.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306-2155
(415) 843-5000
-----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this 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. / /
-----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock 1,588,677 $3.25 $5,163,200.25 $1,564.61
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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 January 10, 1997.
-----------------------
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 THAT 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
PURSUANT TO ITEM 501(b) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM S-3
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 Prospectus . . . . . . . . . . Inside Front and Outside Back
Cover
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges. . . The Company; Risk 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 Reference. . . . . . . . . . . . . . Inside Front Cover
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
1,588,677 SHARES
BIOCIRCUITS CORPORATION
___________________
COMMON STOCK
___________________
This Prospectus relates to a total of 1,588,677 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) 1,111,727 were issued by the Company in connection with the
conversion of a secured promissory note (the "Note") into Common Stock of the
Company on December 13, 1996 (the "Conversion"), (ii) 222,345 are issuable
pursuant to the exercise of a warrant which was issued in connection with the
Conversion (the "Beckman Warrant"), (iii) 250,000 are issuable pursuant to
the exercise of a warrant which was issued in connection with a manufacturing
arrangement (the "Kollsman Warrant") and (iv) 4,605 are issuable pursuant to
the exercise of a warrant issued in connection with a standby letter of
credit issued on August 6, 1996 (the "Credit Warrant"). The Beckman Warrant,
the Kollsman Warrant and the Credit Warrant 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 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 last
reported sales price on the Company's Common Stock on the Nasdaq National
Market on January 13, 1996 was $3.31 per share.
____________________
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 $21,565.00. 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 January 15, 1997.
<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;
(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; and
(5) The Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996, filed on November 14, 1996, including all matters
incorporated by reference therein.
3.
<PAGE>
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 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.
____________________
4.
<PAGE>
THE COMPANY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS 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 assessing thyroid function. In September
1996, the Company announced clearance from the United States Food and Drug
Administration (the "FDA") to market a qualitative serum pregnancy assay, a
test designed to allow physicians to perform this common pregnancy test in
their offices during the patient visit where they can provide more immediate
pre-natal care to patients. In December 1996, the Company announced FDA
clearance to market a quantitative hCG assay, a test to track the progress of
early pregnancies. Also in December 1996, the Company launched its Thyroid
Stimulating Hormone ("TSH") assay on a second generation cartridge. The TSH
assay is a test to assess thyroid function. The second generation cartridge
will be required for the market launch of all new assays. In addition,
existing assays will be converted to the new cartridge in the near future.
Biocircuits is currently developing three additional assays: a prostate
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
35 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.
Biocircuits has developed significant knowledge about lipid/polymer
biomaterials in the past seven years that the Company believes could be
useful in other diagnostic system applications. In August 1995, Biocircuits
entered into an agreement with Beckman Instruments, Inc. ("Beckman") and
received $3,500,000 in the form of the Note in exchange for granting Beckman
options for licensing and marketing rights to certain testing applications
using the Company's lipid-polymer technology. Pursuant to the terms of the
agreement, Biocircuits completed a feasibility study in August 1996. Because
Beckman subsequently elected not to exercise its development license option,
Biocircuits regained full rights to the lipid-polymer technology, including
all improvements made during the feasibility study. In connection with the
Conversion, Beckman elected to convert the Note into the Company's
Common Stock and the Beckman Warrant. Biocircuits will continue its internal
efforts to develop further the lipid-polymer technology and will also look
for licensing partners. The Company believes the lipid-polymer technology
could be used in a next generation IOS system.
5.
<PAGE>
THE OFFERING
Shares offered . . . . . . . . . . . Up to 1,588,677 Shares, all of which
are being offered by the Selling
Securityholders.(1)
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 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.
Nasdaq Symbol . . . . . . . . . . . BIOC.
(1) (i) 1,111,727 were issued by the Company in connection with the
Conversion, (ii) 222,345 are issuable pursuant to the exercise of the
Beckman Warrant, (iii) 250,000 are issuable pursuant to the exercise
of the Kollsman Warrant and (iv) 4,605 are issuable pursuant to the
Credit Warrant. Assumes the exercise of all of the Warrants.
Biocircuits Corporation and IOS are registered trademarks of the Company.
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
September 1996, the Company received FDA clearance to market a qualitative
serum pregnancy assay. The Company received clearances from the FDA for a TSH
assay in November 1996 and a quantitative hCG assay in December 1996.
Biocircuits is currently developing three additional assays: a PSA test, a
Digoxin test, and a Free T4 test. In December 1996, the Company launched its
TSH assay on a second generation cartridge. The second generation cartridge
will be required for the market launch of all new assays. In addition,
existing assays will be converted to the new cartridge in the near future.
The Company does not expect to realize any significant revenue from related
instrument sales until at least the second quarter of 1997.
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 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 expand its existing sales force of 6 sales
representatives to between 12 and 20 sales representatives 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 believes that 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
expand its marketing and customer service programs and its 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. If such relationships are 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
Biocircuits has developed significant knowledge about lipid/polymer
biomaterials in the past seven years that the Company believes could be
useful in other diagnostic system applications. In August 1995, Biocircuits
entered into an agreement with Beckman Instruments, Inc. ("Beckman") and
received $3,500,000 in the form of the Note in exchange for granting Beckman
options for licensing and marketing rights to certain testing applications
using the Company's lipid-polymer technology. Pursuant to the terms of the
agreement, Biocircuits completed a feasibility study in August 1996. Because
Beckman subsequently elected not to exercise its development license option,
Biocircuits regained full rights to the lipid-polymer technology, including
all improvements made during the feasibility study. In connection with the
Conversion, Beckman also elected to convert the Note into the Company's
Common Stock and the Beckman Warrant to purchase the Company's Common Stock.
Biocircuits will continue its internal efforts to develop further the
lipid-polymer technology and will also look for licensing partners. The
Company believes the lipid-polymer technology could be used in a next
generation IOS system. There can be no assurance, however, that the Company
will be able to enter into any licensing
8.
<PAGE>
partnerships, that any such partnerships would be successful, or that the
lipid-polymer technology can be developed successfully for use in future
products.
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 completed 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
NalgeNunc 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.
In December 1992, the Company entered into an agreement with KMC
Systems, Inc. ("Kollsman") pursuant to which Kollsman was appointed the
exclusive North American supplier 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 at an exercise price of $7.00 per
share, subject to an increase of 50,000 shares under certain circumstances.
The warrant was to expire at year end 1997, subject to certain extension
rights. In November 1996, the Company and Kollsman amended the Letter
Agreement to extend the expiration date of the warrant to June 1998, subject
to certain extension rights. 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.
9.
<PAGE>
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 September 30, 1996, the Company's accumulated deficit was
approximately $48.0 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 by the Company in June 1995,
which expire on February 14, 1997, 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 warrants issued by the Company in an October 1996
private financing (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 through late in the third 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.
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 Company
believes that the Conversion of the Note will result in the Company
meeting Nasdaq listing requirements until the end of first quarter 1997. If
approximately one-third of the warrants which expire in February 1997 are
exercised for cash, the Company believes it will meet Nasdaq listing
requirements until the end of second quarter 1997. If the Financing Warrants
are exercised before June 30, 1997, the Company believes it will meet Nasdaq
listing requirements until the end of third quarter 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
10.
<PAGE>
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 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 licensor 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
11.
<PAGE>
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 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 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, the qualitative
serum pregnancy test, the TSH test and the quantitative hCG test in 1995 and
1996.
If a manufacturer or distributor cannot establish that a proposed
device is substantially equivalent to another legally marketed predicate
12.
<PAGE>
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 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 enacted 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.
13.
<PAGE>
Regulations implementing CLIA 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. However, 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 materially adverse impact on the Company and its
ability to market and sell its IOS system or any future products that the
Company may develop.
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 U.S. Department of
Health and Human Services, 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.
14.
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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 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
healthcare 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 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.
15.
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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.
16.
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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 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.
17.
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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
SELLING SECURITYHOLDER OWNED PRIOR TO OFFERING (1)(2) OFFERED(2) OWNED AFTER OFFERING(1)(3)
- ---------------------- ------------------------------ ------------ --------------------------
<S> <C> <C> <C>
Beckman Instruments, Inc. 1,334,072 1,334,072 0
KMC Systems, Inc. 250,000 250,000 0
Venture Lending, a division of
Cupertino National Bank & Trust
Company 12,233(4) 4,605 7,628
Total: 1,588,677
</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."
(4) Includes 7,628 shares of Common Stock issuable upon the exercise of
Warrants issued in previous financings.
18.
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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.
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 $21,565.00.
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.
19.
<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 (which contains an explanatory
paragraph with respect to the Company's ability to continue as a going
concern) 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.
20.
<PAGE>
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- ------------------------------------------------------------------------------
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.....................................................3
Incorporation of Certain Documents by Reference...........................3
Summary Information.......................................................5
The Offering..............................................................6
Risk Factors..............................................................7
The Company...............................................................17
Use of Proceeds...........................................................17
Dividend Policy...........................................................17
Selling Securityholders...................................................18
Plan of Distribution......................................................19
Legal Matters.............................................................20
Experts...................................................................20
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- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1,588,677 SHARES
BIOCIRCUITS CORPORATION
COMMON STOCK
----------
PROSPECTUS
----------
JANUARY 15, 1997
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<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................... $ 1,565.00
Printing and Engraving Expenses........ 2,500.00
Legal Fees and Expenses................ 10,000.00
Accounting Fees and Expenses........... 7,500.00
---------
Total.................................. $ 21,565.00
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
3.1 Amended and Restated Certificate of Incorporation.(1)
3.2 Amended and Restated Bylaws.(2)
4.1 Convertible Note Purchase Agreement, dated August 15, 1995 between the
Company and Beckman Instruments, Inc. ("Beckman").(3)
4.2 Convertible Secured Promissory Note (the "Note"), dated August 15,
1995, in the amount of $3,500,000 made by the Company in favor
of Beckman.(3)
4.3 Investor Rights Agreement (the "Rights Agreement"), dated August 15,
1995, between the Company and Beckman.(3)
4.4 Specimen Stock Certificate.
4.5 Form of Warrant issued to Beckman.
4.6 Form of Warrant issued to Kollsman.
4.7 Form of Warrant issued to Venture Lending.
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-4).
- -----------------
(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.
(3) Filed as an exhibit to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995.
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
II-2
<PAGE>
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-3
<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, as of January 15,
1997.
BIOCIRCUITS CORPORATION
By /s/
________________________
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 DATE INDICATED.
SIGNATURE TITLE DATE
/s/
- ---------------------- President, Chief Executive January 15, 1997
John Kaiser Officer and Director
/s/
- ---------------------- Vice President, Chief Financial January 15, 1997
Donald B. Hawthorne Officer and Secretary
II-4
<PAGE>
SIGNATURE TITLE DATE
/s/
- ---------------------- Director January 15, 1997
Robert Curry, Ph.D.
/s/
- ---------------------- Director January 15, 1997
Patrick Latterell
/s/
- ---------------------- Director January 15, 1997
Hans O. Ribi, Ph.D.
/s/
- ---------------------- Director January 15, 1997
David Rubinfien
<PAGE>
EXHIBIT 4.4
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 4.5
[Form of Warrant Issued to Beckman Instruments, Inc.]
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
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. 1996-B1 222,345 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 Beckman Instruments, Inc. ("Holder"),
or its assigns, in consideration for payment of $100.00, is entitled, subject
to the provisions of this Warrant and pursuant to the terms of that certain
Convertible Secured Promissory Note dated August 15, 1995, as amended, (the
"Note") to purchase from the Company, at any time before 5:00 p.m. (Pacific
Standard Time) August 15, 2000 (the "Expiration Date"), such 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 of $3.4469311 (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."
SECTION 1. EXERCISE OF WARRANT. This Warrant may be exercised in whole
or in part on any business day on or 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
1.
<PAGE>
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.
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.
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 Exercise Price of the fractional
share. The Exercise Price of a fraction of a share is determined as follows:
multiply the Exercise Price of a full share by the fraction of a share and
round the result to the nearest cent.
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) The Company shall issue a new Warrant in place of any
previously issued Warrant alleged to have been lost, stolen or destroyed,
upon such terms and conditions as the Company's Board of Directors may
prescribe, including the presentation of reasonable evidence of such loss,
theft or destruction (provided that an affidavit of Holder will be
satisfactory for
2.
<PAGE>
such purpose) and the giving of such indemnity as the Company's Board of
Directors may request for the protection of the Company or transfer agent or
registrar (provided that the Holder's own indemnification agreement in form
reasonably satisfactory to the Company shall under all circumstances be
satisfactory, and no bond shall be required). Upon surrender of any
previously issued Warrant that has been mutilated, the Company shall issue a
new Warrant in place thereof.
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
December 13, 1996, the Company:
(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 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.
3.
<PAGE>
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) 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 ($.05) 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.
(c) 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.
(d) WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made for a
change in the par value or no 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.
(e) 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
4.
<PAGE>
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 (other than
actions of the character described in subsection (a) of this Section 6) 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 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.
(f) NO ADJUSTMENT UPON EXERCISE OF WARRANT. No adjustments shall
be made under any Section herein in connection with the issuance of Warrant
Shares after exercise of this Warrant.
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
5.
<PAGE>
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.
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
6.
<PAGE>
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. 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 and addressed as follows:
(i) if to the Company, to:
Biocircuits Corporation
1324 Chesapeake Terrace
Sunnyvale, California 94089
Attention: Donald B. Hawthorne
Chief Financial Officer
Facsimile No.: (408) 752-8790
with a copy so mailed to:
Cooley Godward LLP
Five Palo Alto Square
Palo Alto, California 94306-2155
Attention: Deborah A. Marshall, Esq.
Facsimile No.: (415) 857-0663
or to such other person at such other place as the Company shall
designate to Purchaser in writing; and
(ii) if to Purchaser, to:
Beckman Instruments, Inc.
2500 Harbor Boulevard
Fullerton, California 92834-3100
Attention: Treasurer
Facsimile No.: (714) 773-8111
with a copy so mailed to the General Counsel of Beckman Instruments,
Inc. at the above address or at such other address or addresses as may
have been furnished to the Company in writing.
7.
<PAGE>
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 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 December 13, 1996.
BIOCIRCUITS CORPORATION
By:
---------------------------------------
John Kaiser
Chief Executive Officer
8.
<PAGE>
PURCHASE FORM
Dated December 13, 1996
The undersigned hereby irrevocably elects to exercise the within
Warrant, No. 1996-B1, to purchase ________ shares of Common Stock and hereby
makes payment of $______ in payment of the exercise price thereof.
BECKMAN INSTRUMENTS, INC.
By:
-------------------------------------
Louis T. Rosso
Chief Executive Officer
<PAGE>
ASSIGNMENT FORM
Dated _________, 19____
FOR VALUE RECEIVED, Beckman Instruments, Inc. 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-B1, 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.
BECKMAN INSTRUMENTS, INC.
By:
------------------------------------
Louis T. Rosso
Chief Executive Officer
<PAGE>
EXHIBIT 4.6
[Form of Warrant Issued to KMC Systems, Inc.]
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
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. 1996-K1 250,000 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 KMC Systems, Inc. ("Kollsman" or
alternatively, "Holder"), or its assigns, in consideration for Kollsman's
commitment to manufacture all of the Company's United States' requirements of
IOS instruments ordered before 5:00 p.m (Pacific Standard Time) December 31,
1997 is entitled, subject to the provisions of this Warrant, to purchase from
the Company, at any time before 5:00 p.m. (Pacific Standard Time) June 30, 1998
(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. 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 shares of Common Stock deliverable upon such exercise, as
adjusted from time to time, are hereinafter referred to as "Warrant Shares."
SECTION 1. EXERCISE OF WARRANT. Holder may purchase said number of
Warrant Shares at a purchase price per share of seven dollars ($7.00) per share
(the "Exercise Price"). 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
1.
<PAGE>
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.
In addition to and without limiting the rights of Holder under any other
terms set forth herein, Holder shall have the right, upon written request by
Holder delivered or transmitted to the Company together with this Warrant, to
exchange this Warrant, in whole or in part at any time on or before the
Expiration Date, for the number of shares of Common Stock of the Company having
an aggregate current market price on the date of such exchange (determined as
provided in Section 6(b)) equal to the difference between (a) the aggregate
current market value on the date of such exchange (determined as aforesaid) of a
number of Warrant Shares designated by Holder, and (b) the aggregate Exercise
Price Holder would have paid to the Company to purchase such designated number
of Warrant Shares upon exercise of this Warrant. Upon such exchange, the number
of Warrant Shares purchasable upon exercise of this Warrant shall be reduced by
such designated number of Warrant Shares and, if a balance of purchasable
Warrant Shares remains after such exchange, the Company shall execute and
deliver to Holder a new warrant evidencing the right to purchase such balance of
Warrant Shares; PROVIDED, that no fractional shares shall be issuable upon such
exchange, and if the number of shares of Common Stock determined in accordance
with the foregoing formula is other than a whole number, the Company shall pay
Holder an amount by check, determined in accordance with the provisions of
Section 3.
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.
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
2.
<PAGE>
share and round the result to the nearest cent. The current market price of
a share of Common Stock for purposes of this Section 3 is the Quoted Price
(as defined in Section 6(b)) of the Common Stock on the last trading day
prior to the exercise date.
SECTION 4. ASSIGNMENT OR LOSS OF WARRANT.
(a) Subject to the provisions of Section 8, 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 8, 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 also 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 NUMBER OF SHARES AND EXPIRATION DATE: The number
and kind of securities purchasable upon the exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If at any time after
___________ ___, 1996, the Company:
(i) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a
greater number of shares;
3.
<PAGE>
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
(iv) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any shares of
its capital stock;
then 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) ADJUSTMENTS DEPENDENT UPON THE MARKET PRICE OF THE COMMON STOCK.
The market price per share of Common Stock is the average of the Quoted Prices
of the Common Stock for the 10 consecutive trading days commencing before June
30, 1998. 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.
(i) If the market price per share of Common Stock is less
than $14.00 per share but greater than $10.00 per share for the 10
consecutive trading day period prior to June 13, 1998, the Expiration Date of
this Warrant shall be extended to June 30, 1999.
(ii) If the market price per share of Common Stock is less
than $10.00 per share for the 10 consecutive trading day period prior to June
13, 1998, the Expiration Date of this Warrant shall be extended to June 30,
1999. In addition, Biocircuits shall issue on July 1, 1998 a warrant for
50,000 shares of Common Stock with an exercise price equal to the then market
price and an expiration date of June 30, 1999. For the purpose of the
additional 50,000 shares, the "then market price" is the average closing
price of the 10 trading days prior to July 1, 1998.
(c) ADJUSTMENT DEPENDENT UPON REGULATORY APPROVAL AND PRODUCT
LAUNCH. In April 1, 1996, the Company filed a 510(k) pre-market notification
with the United States Food and Drug Administration ("FDA") for a Thyroid
Stimulating Hormone ("TSH") assay. If the TSH assay is not cleared by the
FDA and launched by the Company on or before
4.
<PAGE>
January 31, 1997, then the expiration date of this warrant shall be extended
by six months 180 days and all the dates in 6(b)(i) and (ii) shall be
extended by 180 days.
(d) WHEN NO ADJUSTMENT REQUIRED. If the market price of the Common
Stock is $14.00 per share or greater for the 15 day period prior to December 15,
1997, no adjustment with respect to Subsection 6(b) need be made.
(e) NOTICE OF CERTAIN ACTIONS. In the event that:
(i) 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
(ii) the Company shall authorize the distribution to all holders
of its Common Stock of evidences of its indebtedness or assets (other than 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
(iii) 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
(iv) the Company is the subject of a voluntary or involuntary
dissolution, liquidation or winding-up procedure; or
(v) the Company proposes to take any action that would require
an adjustment of the Exercise Price;
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 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.
5.
<PAGE>
(f) NO ADJUSTMENT UPON EXERCISE OF WARRANT. No adjustments shall be
made under any Section herein in connection with the issuance of Warrant Shares
upon exercise of this Warrant.
SECTION 7. 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 7 shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
SECTION 8. 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 subsequent 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 and
subsequent Warrants, 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
6.
<PAGE>
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 8
shall be binding upon all subsequent holders of certificates for Warrant Shares
bearing the above legend and all subsequent Holders of this Warrant and new
warrants (as provided in Section 1), if any.
SECTION 9. REGISTRATION RIGHTS.
(a) If at any time after the date hereof and prior to the Expiration
Date, the Company shall determine to register any of its Common Stock, for its
own account or for the account of others on a registration statement on Form S-1
or Form S-3, the Company shall:
(i) promptly give Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable blue sky or other state
securities); and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all shares of Common Stock of the Company obtained upon exercise of
this Warrant (the "Registrable Securities") specified in a written request or
requests by Holder, received by the Company within twenty (20) days after such
written notice is given, requesting inclusions in such registration.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise Holder as a part of the written notice given pursuant to
Paragraph 9(a)(i). In such event, the right of Holder to registration pursuant
to this Section 9 shall be conditioned upon Holder's participation in such
underwriting and the inclusion of Holder's Registrable Securities in the
underwriting to the extent provided herein.
Holder shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 9, if the underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten, the
underwriter may exclude some or all of the Registrable Securities from such
registration and underwriting.
7.
<PAGE>
If Holder disapproves of the terms of any such underwriting, Holder
may select to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities so withdrawn from such underwriting
shall also be withdrawn from such registration.
(c) The Company shall bear registration expenses (exclusive of
underwriting discounts and commissions) for the Form S-1 or Form S-3
registration.
(d) If requested by the underwriters, Holder, or any assignee of
Holder, shall not sell or otherwise transfer or dispose of any securities of the
Company held by Holder for a period of up to 180 days following a public
offering by the Company of its capital stock.
(e) (i) The Company will indemnify Holder, each of Holder's
officers, directors, partners and agents, and each person controlling Holder,
with respect to such registration, qualification or compliance that has been
effected pursuant to this Section 9, and each underwriter, if any, and each
person who controls any underwriter against all claims, losses, damages and
liabilities (or actions in respect thereof) including any of the foregoing
incurred in settlement of any litigation commenced or threatened arising out of
or based on (x) any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other similar document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, or (y) any violation (or
alleged violation) by the Company of any federal, state or common law rule or
regulation applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse Holder, each of its officers,
directors, partners and agents, and each person controlling Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, as incurred,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement (or alleged untrue statement) or omission (or alleged
omission) based upon written information furnished to the Company by an
instrument duly executed by Holder or such underwriter and stated to be
specifically for use therein.
(ii) Holder shall, if Registrable Securities held by Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each legal counsel and independent accountant of the Company, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act, and each other such holder, each of its
directors, officers, and partners and agents and each person controlling such
other holder, against all claims, losses, damages and liabilities (or actions in
respect thereof) including any of the foregoing incurred in settlement of any
litigation commenced or threatened arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other similar document
(including any related
8.
<PAGE>
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and shall reimburse the Company,
its directors, officers, legal counsel, accountants, underwriters, control
persons and such other holders and each such holder's directors, officers,
partners, agents and control persons for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, as incurred, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon
and in conformity with written information furnished to the Company by an
instrument duly executed by Holder and stated to be specifically for use
therein; provided, however, that the obligations of Holder hereunder shall be
limited to an amount equal to the proceeds to Holder for Registrable
Securities sold as contemplated herein.
(iii) Each party entitled to indemnification under this
Subsection 9(e) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has received written notice of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld). The Indemnified Party may participate in such
defense at the Indemnified Party's expense; provided, however, that the
Indemnifying Party shall bear the expense of such defense of the Indemnified
Party if representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest. The failure of
any Indemnified Party to give notice as provided herein shall relieve the
Indemnifying Party of its obligations under this Subsection 9(e) only to the
extent that such failure to give notice shall materially adversely prejudice the
Indemnifying Party in the defense of any such claim or any such litigation. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
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, Subsections and Paragraphs of this Warrant are
inserted for convenience
9.
<PAGE>
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in 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.
____________, 1996.
BIOCIRCUITS CORPORATION
By:
----------------------------------
Donald B. Hawthorne
Chief Financial Officer
10.
<PAGE>
PURCHASE FORM
Dated ___________, 19____
The undersigned hereby irrevocably elects to exercise the within Warrant
No. 1996-K1 to purchase ________ shares of Common Stock of Biocircuits
Corporation and hereby makes payment of $_____________ in payment of the
exercise price thereof.
KMC SYSTEMS, INC.
By:
----------------------------------
Print Name:
--------------------------
Title:
--------------------------------
<PAGE>
ASSIGNMENT FORM
Dated _________, 19____
FOR VALUE RECEIVED, KMC Systems, Inc. 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 of Biocircuits Corporation represented by Biocircuits
Corporation Warrant No. 1996-K-1 and does hereby irrevocably constitute and
appoint ____________________________ attorney, to transfer the same on the
books of Biocircuits Corporation, with full power of substitution in the
premises.
KMC SYSTEMS, INC.
By:
----------------------------------
Print Name:
--------------------------
Title:
--------------------------------
<PAGE>
EXHIBIT 4.7
[Form of Warrant Issued to Venture Lending]
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
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
No. 1996-___ 4,605 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 Venture Lending, a division of
Cupertino National Bank & Trust Company ("Holder"), or its assigns, in
consideration for a loan and other financial accommodations, is entitled,
subject to the provisions of this Warrant, to purchase from the Company, at
any time before 5:00 p.m. (Pacific Standard Time) November 1, 2006 (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
seventy percent (70%) of the 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) on the day immediately prior to the date of exercise
(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. 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.
In addition to and without limiting the rights of Holder under any other
terms set forth herein, Holder shall have the right, upon written request by
Holder delivered or transmitted to the Company together with this Warrant, to
exchange this Warrant, in whole or in part at any time after the Exercise
Date and on or before the Expiration Date, for the number of shares of Common
Stock of the Company having an aggregate current market price on the date of
such exchange (determined as provided in Section 6(b) below) equal to the
difference between (a) the aggregate current market value on the date of such
exchange (determined as aforesaid) of a number of Warrant Shares designated
by Holder, and (b) the aggregate Exercise Price Holder would have paid to the
Company to purchase such designated number of Warrant Shares upon exercise of
this Warrant. Upon such exchange, the number of Warrant Shares purchasable
upon exercise of this Warrant shall be reduced by such designated number of
Warrant Shares and, if a balance of purchasable Warrant Shares remains after
such exchange, the Company shall execute and deliver to Holder a new Warrant
evidencing the right to purchase such balance of Warrant Shares; PROVIDED,
that no fractional shares shall be issuable upon such exchange, and if the
number of shares of Common Stock determined in accordance with the foregoing
formula is other than a whole number, the Company shall pay Holder an amount
by check, determined in accordance with the provisions of Section 3.
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 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
April 4, 1996, 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 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.
(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
4.
<PAGE>
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 or no 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 (other than
actions of the character described in subsection (a) of this Section 6) 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 date as of which the holders of
Common Stock of record to be entitled to receive any such
5.
<PAGE>
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.
(g) NO ADJUSTMENT UPON EXERCISE OF WARRANT. No adjustments shall
be made under any Section herein in connection with the issuance of Warrant
Shares upon exercise of this Warrant.
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
6.
<PAGE>
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.
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. REGISTRATION RIGHTS.
(a) If at any time prior to the Expiration Date, the Company shall
determine to register any of its Common Stock, for its own account or for the
account of others on a Registration Statement on Form S-1 or Form S-3, the
Company will:
(A) promptly give Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable blue sky or other state
securities); and
7.
<PAGE>
(B) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all shares of Common Stock of the Company
obtained upon exercise of this Warrant (the "Registrable Securities")
specified in a written request or requests by Holder, received by the Company
within twenty (20) days after such written notice is given, requesting
inclusions in such registration.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise Holder as a part of the written notice given pursuant
to Section 10(a)(A). In such event, the right of Holder to registration
pursuant to this Section 10 shall be conditioned upon Holder's participation
in such underwriting and the inclusion of Holder's Registrable Securities in
the underwriting to the extent provided herein.
Holder shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 10, if the underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten, the
underwriter may exclude some or all the Registrable Securities from such
registration and underwriting.
If Holder disapproves of the terms of any such underwriting, Holder
may select to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities so withdrawn from such underwriting
shall also be withdrawn from such registration.
(c) The Company shall bear registration expenses (exclusive of
underwriting discounts and commissions) for the Form S-1 or Form S-3
registration.
(d) If requested by the underwriters, Holder, or any assignee of
Holder, will not sell or otherwise transfer or dispose of any securities of
the Company held by Holder for a period of up to 180 days following a public
offering by the Company of its capital stock.
(e) (A) The Company will indemnify Holder, each of Holder's
officers, directors, partners and agents, and each person controlling Holder,
with respect to which registration, qualification or compliance has been
effected pursuant to this Section 10, and each underwriter, if any, and each
person who controls any underwriter against all claims, losses, damages and
liabilities (or actions in respect thereof) including any of the foregoing
incurred in settlement of any litigation commenced or threatened arising out of
or based on (i) any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other similar document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, or (ii) any violation (or
alleged violation) by the Company of any federal, state or common law rule or
regulation applicable to the Company in connection with any such
8.
<PAGE>
registration, qualification or compliance, and will reimburse Holder, each
of its officers, directors, partners and agents, and each person controlling
Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as incurred, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omission) based upon
written information furnished to the Company by an instrument duly executed
by Holder or such underwriter and stated to be specifically for use therein.
(B) Holder will, if Registrable Securities held by Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors
and officers, each legal counsel and independent accountant of the Company,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act, and each other such
holder, each of its directors, officers, and partners and agents and each
person controlling such other holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) including any of the foregoing
incurred in settlement of any litigation commenced or threatened arising out
of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus,
offering circular or other similar document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and will reimburse the Company, its
directors, officers, legal counsel, accountants, underwriters, control
persons and such other holders and each such holder's directors, officers,
partners, agents and control persons for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, as incurred, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon
and in conformity with written information furnished to the Company by an
instrument duly executed by Holder and stated to be specifically for use
therein; provided, however, that the obligations of Holder hereunder shall be
limited to an amount equal to the proceeds to Holder for Registrable
Securities sold as contemplated herein.
(C) Each party entitled to indemnification under this Section
10(e) (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has received written notice of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld). The Indemnified Party may
participate in such defense at the Indemnified Party's expense; provided,
however, that the Indemnifying Party shall bear the expense of such defense
of the Indemnified Party if
9.
<PAGE>
representation of both parties by the same counsel would be inappropriate due
to actual or potential conflicts of interest. The failure of any Indemnified
Party to give notice as provided herein shall relieve the Indemnifying Party
of its obligations under this Section 10(e) only to the extent that such
failure to give notice shall materially adversely prejudice the Indemnifying
Party in the defense of any such claim or any such litigation. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
SECTION 11. 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 12. 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 13. 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 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.
SECTION 14. WARRANT VALUE. Holder and the Company hereby agree that
the value of this warrant is $1,000.
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
10.
<PAGE>
PURCHASE FORM
Dated ___________, 19____
The undersigned hereby irrevocably elects to exercise the within Warrant
No. 1996-___to purchase ______ shares of Common Stock and hereby makes
payment of $_____________ in payment of the exercise price thereof.
VENTURE LENDING
By:
----------------------------
Print Name:
Title:
-----------------------------
<PAGE>
ASSIGNMENT FORM
Dated _________, 19____
FOR VALUE RECEIVED, Venture Lending 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-___ 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.
VENTURE LENDING
By:
---------------------------------
Print Name:
-------------------------
Title:
------------------------------
<PAGE>
EXHIBIT 5.1
[COOLEY GODWARD Letterhead]
January 15, 1997
DEBORAH A. MARSHALL
415 843-5137
[email protected]
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 1,588,677 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. Of such Shares (i) 1,111,727 were issued by the
Company pursuant to the Conversion of the Note (the "Conversion Shares") and
(ii) 476,950 are issuable pursuant to the exercise of the Warrants (the
"Warrant Shares"). 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 (i) the Conversion Shares are validly issued, fully paid, and
nonassesable and (ii) the Warrant Shares, when 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.
Very truly yours,
Cooley Godward LLP
/s/ Deborah A. Marshall
Deborah A. Marshall
21233587
<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 1,588,677 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
year ended December 31, 1995, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Palo Alto, California
January 13, 1997
