<PAGE> 1
As filed with the Securities and Exchange Commission on September 29, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C> <C>
CALIFORNIA ABAXIS, INC. 77-0213001
(State or Other Jurisdiction (Exact Name of Registrant (I.R.S. Employer
of Incorporation or Organization) as Specified in its Charter) Identification Number)
</TABLE>
1320 Chesapeake Terrace
Sunnyvale, California 94089
(408) 734-0200
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
------------------
CLINTON SEVERSON
President and Chief Executive Officer,
ABAXIS, INC.
1320 Chesapeake Terrace
Sunnyvale, California 94089
(408) 734-0200
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
---------------------
Copy to:
Thomas W. Furlong, Esq.
William R. Schreiber, Esq.
GRAY CARY WARE & FREIDENRICH
400 Hamilton Avenue
Palo Alto, California 94301
(415) 328-6561
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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 a 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 a post-effective Act amendment filed pursuant to Rule
462(c) 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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================================
Amount Proposed Maximum Proposed Maximum
Title of Shares to be Aggregate Price Per Aggregate Offering Amount of
to be Registered Registered Unit Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 2,410,866 shares(1) $3.84375(2) $9,266,766(3) $2,809(3)
No par value
=====================================================================================================================
</TABLE>
(1) Shares of Common Stock which may be offered pursuant to this Registration
Statement consisting of (i) 2,316,042 shares issuable upon conversion of 3,000
shares of Series B Convertible Preferred Stock (the "Financing"), (ii) 60,000
shares issued in exchange for certain broker's services in connection with the
Financing (the "Broker's Shares") and (iii) 34,824 shares issued in exchange
for certain investment relations services. For purposes of estimating the
number of shares of Common Stock to be included in this Registration Statement
in connection with the Financing and the Broker's Shares, the Company
calculated 19.99% of the number of shares of Common Stock outstanding on July
18, 1997 (the "Closing Date"). The actual number of shares of Common Stock
issuable upon conversion of the Company's Series B Convertible Preferred Stock
on September 29, 1997 was 1,105,991 (based on a conversion price of $2.7125
which is 100% of the average of the closing bid prices of the Common Stock
reported on the Nasdaq National Market for the five consecutive trading days
ending on the Closing Date). In addition to the shares set forth in the table,
the amount to be registered includes an indeterminate number of shares issuable
upon conversion of or in respect of the Series B Convertible Preferred Stock,
as such number may be adjusted as a result of stock splits, stock dividends and
antidilution provisions (including floating rate conversion prices) in
accordance with Rule 416.
(2) Estimated solely for the purpose of computing the registration fee.
(3) Computed pursuant to Rule 457(c) based upon the average high and low sale
prices reported on the Nasdaq National Market for September 24, 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 which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
2,410,866 SHARES
ABAXIS, INC.
COMMON STOCK
The 2,410,866 shares (the "Shares") of Common Stock of Abaxis, Inc., a
California corporation ("Abaxis" or the "Company") offered by this Prospectus
consist of (i) up to 2,316,042 shares of Common Stock of Abaxis that will be
issued in connection with the conversion of shares of the Company's Series B
Convertible Preferred Stock (the "Series B Shares") issued pursuant to that
certain Securities Purchase Agreement dated as of July 18, 1997 by and among the
Company and certain of the Selling Shareholders (as defined below) (the
"Financing"); (ii) 60,000 shares of Common Stock of Abaxis that have been issued
in exchange for certain broker's services in connection with the Financing (the
"Broker's Shares"); and (iii) 34,824 shares of Common Stock of Abaxis that have
been issued in exchange for certain investment relations and other services (the
"IR Shares"). The Shares may be sold from time to time by or on behalf of
certain holders of Series B Shares, the Broker's Shares or the IR Shares
(collectively, the "Selling Shareholders") who are described in this Prospectus
under "Selling Shareholders." As part of the Financing, the Company has agreed
to register the Shares under the Securities Act of 1933, as amended (the
"Securities Act"). The Company has also agreed to use its best efforts to cause
the registration statement covering the Shares to remain effective until the
earlier of (i) the date on which the Selling Shareholders can sell all the
Shares pursuant to Rule 144 of the Securities Act (without limitation as to
volume), or (ii) when all the Shares have been resold pursuant to Rule 144 or an
effective registration statement. The Company will not receive any of the
proceeds from the sale of the Shares by the Selling Shareholders. See "Use of
Proceeds."
The Company has been advised by the Selling Shareholders that they or
their respective pledgees, donees, transferees or other successors in interest
intend to sell all or a portion of the Shares from time to time on The Nasdaq
National Market, in privately negotiated transactions through the writing of
options on the Shares, short sales or any combination thereof, and on terms and
at prices then obtainable. The Selling Shareholders and any broker-dealers,
agents or underwriters that participate with the Selling Shareholders in the
distribution of any of the Shares may be deemed to be "underwriters" within the
meaning of the Securities 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 Securities Act. The Company has
agreed to indemnify in certain circumstances the Selling Shareholders against
certain liabilities, including liabilities under the Securities Act. The Selling
Shareholders have agreed to indemnify in certain circumstances the Company
against certain liabilities, including liabilities under the Securities Act. See
"Plan of Distribution."
The Company will bear all out-of-pocket expenses incurred in connection
with the registration of the Shares, including, without limitation, all
registration and filing fees imposed by the Securities and Exchange Commission
(the "Commission"), the National Association of Securities Dealers ("NASD") and
blue sky laws, printing expenses, transfer agents' and registrars' fees, and the
reasonable fees and disbursements of the Company's outside counsel and
independent accountants and a single counsel for all of the Selling
Shareholders, but excluding underwriting discounts and commissions and transfer
or other taxes and other costs and expenses incident to the offering and sale of
the shares to the public which shall be borne by the Selling Shareholders.
THE SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES LAWS
OF ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS. BROKERS OR
DEALERS EFFECTING TRANSACTIONS IN THE SHARES SHOULD CONFIRM THE REGISTRATION OF
THE SHARES UNDER THE SECURITIES LAWS OF THE STATES IN WHICH SUCH TRANSACTIONS
OCCUR, OR THE EXISTENCE OF ANY EXEMPTIONS FROM SUCH REGISTRATION.
The Company's Common Stock is quoted on The Nasdaq National Market. On
September 26, 1997, the last sales price of the Company's Common Stock as
reported on The Nasdaq National Market was $3.875.
--------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR INFORMATION THAT SHOULD BE CONSIDERED
BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
--------------------------------------
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.
----------------------------------
The date of this Prospectus is October __, 1997
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<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational 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 filed by the Company can be inspected and
copied at the Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the Regional Offices of the Commission
located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60611 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the fees prescribed by the Commission. Abaxis' Common
Stock is traded on The Nasdaq National Market. Such reports and other
information may also be inspected without charge at a Web site maintained by the
Commission. The address of the site is http:\\www.sec.gov. Reports and other
information concerning Abaxis can also be inspected at the offices of the
National Association of Securities Dealers, Inc., Market Listing Section, 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has also filed with the Commission a Registration Statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, copies of which may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference:
1. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed on December 11,
1991;
2. Annual Report on Form 10-K for the fiscal year ended March 31, 1997;
and
3. Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents or reports. Any statement contained in a document incorporated
by reference 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 statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated by reference in this Prospectus (other than
any exhibits thereto). Requests for such documents should be directed to Abaxis,
Inc. at 1320 Chesapeake Terrace, Sunnyvale, California 94089 (telephone number
(408) 734-0200).
3
<PAGE> 4
THE COMPANY
This prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Exchange Act of 1933 that reflects the
Company's current view with respect to future events and financial performance.
The future events described in these statements involve risks and
uncertainties, among them risks and uncertainties related to the market
acceptance of its products and continuing development of its products,
including required FDA clearance and other government approvals, risks
associated with manufacturing and distributing its products on a commercial
scale, including complying with Federal and State food and drug regulations,
general market conditions and competition. When used in this report, the words
"anticipates", "believes", "expects", "intends", "plans", "future", and similar
expressions identify forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements as a result of
factors set forth throughout this document.
Abaxis, Inc. (the "Company") develops, manufactures and markets
portable blood analysis systems for use in any patient-care setting to provide
clinicians with rapid blood constituent measurements. The Company's products
consist of a compact 6.9 kilogram analyzer and a series of single-use plastic
disks called reagent disks that contain all the chemicals required to perform a
panel of up to 12 tests. The system can be operated with minimal training and
performs multiple routine tests on whole blood, serum or plasma using either
venous or fingerstick samples. The system provides test results in less than 15
minutes with the precision and accuracy equivalent to a clinical laboratory
analyzer. The Company currently markets this system for veterinary use under
the name VetScan(R) and in the human medical market under the name Piccolo(R).
The Company offers its point-of-care blood analyzer system with a total
of 18 test methods. The Company's repertoire of test methods includes albumin,
amylase, alkaline phosphates (ALP), alanine aminotransferase (ALT), asparatate
aminotransferase (AST), direct bilirubin, calcium, creatinine, creatine kinase
(CK), glucose, glutamyl transferase (GGT), potassium, total bilirubin, total
cholesterol, urea nitrogen (BUN), total protein, uric acid, and thyroxine (T4).
Thirteen of these tests are marketed for both human and veterinary markets,
while two tests, uric acid and direct bilirubin, are marketed only in the human
market, and three tests, CK, T4 and potassium, are marketed exclusively in the
veterinary market. The Company markets its reagent products by configuring
these 18 test methods in panels that are designed to meet a variety of clinical
diagnostic needs. The Company currently offers seven multi-test reagent disc
products in the human market and six reagent disks in the veterinary market.
During fiscal 1997 and the first quarter of fiscal 1998 the Company
continued to be expand its presence in the US veterinary market. Through June
30, 1997, the Company had installed a total of 827 VetScan systems in the US, a
136% increase from its installed base of 350 systems on March 31, 1996. The
addition of two national institutional customers, Veterinary Centers of America
("VCA") and VetSmart, contributed significantly to the Company's new system
placements. Both customers purchased the Company's VetScan systems to replace
systems from the Company's competitors. The Company began selling its VetScan
systems to VCA hospitals in September 1996 and through June 1997, a total of 89
systems were installed in a number of VCA's 155 free-standing animal hospitals.
In March 1997, the Company signed an agreement with VetSmart, to provide 105
VetScan analyzers and 80,000 reagent disks for use in VetSmart pet hospitals for
a twelve month period. Through June 1997, the Company has installed 93 VetScan
systems in VetSmart pet clinics located in PetSmart stores nationwide.
Internationally, in July 1997, the Company's VetScan system received regulatory
approval from the Japanese Ministry of Agriculture, Forestry and Fishery
(Noguisho) permitting sales and distribution to the veterinary market throughout
Japan. In addition to 59 VetScan units shipped to Japan during the first quarter
of fiscal 1998, the Company's Japanese distributor has ordered approximately 100
VetScan systems and 8,000 reagent discs for shipment during the second and third
quarters of fiscal 1998.
The Company has targeted branches of the US military as potential
customers for the Company's Piccolo Point-of-Care Blood Analyzer based on the
features of the Piccolo systems and the special requirements of the military
environment. The Company has been involved in rigorous studies with the US Navy
since 1995, evaluating the feasibility and clinical utility of the Piccolo
systems in the often rugged environment encountered by the Navy. In March 1997,
the Company announced that it had been awarded a contract with a potential
contract value of up to $7.5 million to provide the US Navy and the Marine
Corps its Piccolo Point-of-Care Blood Analyzer and reagent disc products. The
contract calls for a maximum order of approximately 345 Piccolo systems and
250,000 reagent discs. Through June 1997, the Company has shipped 85 Piccolo
analyzers under this contract and with another 30 analyzers on backlog. There
can be no assurance that the Company will receive orders for the maximum order
quantity under the conditions of the contract.
During August 1997, the Company received an order from Mexicano del
Sacuro Social for the purchase of 38 Piccolo systems to be used by Projecto
Solidaridad, a network of more than 6,000 rural health clinics throughout
Mexico. The Mexican diagnostic market is estimated at $285 million, with an
annual growth rate of about 4 percent. The majority of this market is funded
through government spending which supports healthcare delivery in hospitals and
rural clinics. This opportunity represents one of the key market segments that
the Piccolo system was designed to address. The systems are scheduled for
shipment during the second quarter of fiscal 1998.
4
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The Company believes that its current menu of 15 reagent test methods
for it's Piccolo systems are suitable for certain niche human market segments,
such as the military, but not broad enough to fulfill the diagnostic needs of
physician's office practices. One of the key factors to the Company's future
success depends on the Company's ability to identify and develop new test
methods that will allow the Company to penetrate the human diagnostic market.
During fiscal 1997, the Company received 510(k) clearance from the Food and
Drug Administration ("FDA") for its GGT test. Completion of GGT allowed the
Company to release the Liver Panel Plus reagent disc product in October 1996,
which is currently being sold to the US Navy.
The Company continues to develop new products that will provide further
opportunities for market penetration. The Company currently is in development
of four electrolyte test methods: bicarbonate, chloride, potassium and sodium.
The Company intends to develop these tests into marketable products for both
the human and the veterinary markets. For the human market, the Company plans
on incorporating these tests into new panels consistent with the codes in the
1998 version of the Current Procedures Terminology manual published by the
American Medical Association. The fixed-test panels are: electrolytes,
comprehensive metabolic, hepatic function and basic metabolic. The Company has
all the tests for the hepatic function panel, and will have all required tests
for the additional three panels with the successful development of the four
electrolyte tests.
In June 1997, the Company introduced to the market a new reagent disc
product, especially designed for the veterinary market, the Equine Profile. The
test methods contained in the Equine Profile are useful for providing
indications of the health condition of horses, particularly in the areas of
hepatic dysfunction and muscle damage. This new product enables the Company to
offer the VetScan system to approximately 11,000 equine practitioners in the
United States where portability and ease-of-use are important features. The
Company completed development of a new test method, creatine kinase (CK) during
fiscal 1997 which allowed for completion of the Equine Profile product. This
method will be entered into clinical trials during fiscal 1998 for inclusion in
new reagent disc products for the human medical market.
While the Company believes that its technology will allow it to develop
reagent disc products in the future to provide a variety of additional blood
tests, there can be no assurances that such future products will be developed,
that such products will receive required regulatory clearance, or that the
Company will be able to manufacture or market such products successfully.
In addition to investing its own resources in expanding the test menu,
the Company signed a letter of intent with Teramecs Co., Ltd. and Daiichi Pure
Chemicals Co., Ltd. in April 1997 to jointly develop additional test methods
for use on the Piccolo analyzer. The product development collaboration will
focus on commercializing targeted methods for lipids, proteins, and enzymes.
The Company is currently negotiating terms of the definitive agreement. There
can be no assurances that the Company will be able to conclude this development
agreement with terms to its satisfaction, or that the conclusion of the
definitive agreement will allow the Company to develop these new test methods,
or if the test methods were developed, be able to successfully market these
methods.
The principal executive offices of Abaxis are located at 1320
Chesapeake Terrace, Sunnyvale, California 94089, and its telephone number at
that location is (408) 734-0200.
5
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RISK FACTORS
This prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 that reflect the Company's current
view with respect to future events and financial performance. The future events
described in these statements involve risks and uncertainties, among them risks
and uncertainties related to the market acceptance of its products and
continuing development of its products, including required FDA clearance and
other government approvals, risks associated with manufacturing and distributing
its products on a commercial scale, including complying with Federal and State
food and drug regulations, general market conditions and competition. When used
in this report, the words "anticipates", "believes", "expects", "intends",
"plans", "future", and similar expressions identify forward-looking statements.
Actual results could differ materially from those projected in the
forward-looking statements as a result of factors set forth throughout this
document.
An investment in the shares being offered by this Prospectus involves a
high degree of risk and should not be made by any investor who cannot afford the
loss of the entire investment. In addition to the other information in this
Prospectus, the following risk factors should be considered carefully in
evaluating an investment in the shares offered hereby:
FLUCTUATIONS IN OPERATING RESULTS; HISTORY OF LOSSES; UNCERTAINTY OF
FUTURE PROFITABILITY
As of June 30, 1997, Abaxis had incurred cumulative net losses of
approximately $50.4 million. The Company expects its operating losses may
continue for the foreseeable future. The Company's ability to achieve
profitability will depend in part on effectively and significantly increasing
its marketing and manufacturing activities to facilitate the increase in sales
volume of its Piccolo and VetScan products necessary to absorb the related
costs. There can be no assurance that any of the Company's products will be
manufactured or marketed successfully, or that sales volume sufficient to
achieve profitability will be realized.
Sales for any future periods are not predictable with a significant
degree of certainty. A significant portion of the Company's sales in any quarter
are typically derived from sales to a limited number of customers. Accordingly,
sales in any one quarter are not indicative of sales in any future period. In
addition, the Company generally operates with limited order backlog because its
products typically are shipped shortly after orders are received. As a result,
product sales in any quarter are generally dependent on orders booked and
shipped in that quarter. The Company's expense levels, which are to a large
extent fixed, are based in part on its expectations as to future revenues. The
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall. As a result, any such shortfall would have an
immediate materially adverse impact on the Company's operating results and
financial condition. In addition, until sales volume of the Company's products,
particularly its reagent discs, increase significantly so as to offset
associated fixed costs and to realize certain manufacturing economies of scale,
sales of the Company's products could result in further losses and adversely
affect the Company's results of operations and financial condition. The Company
believes that period to period comparisons of its results of operations are not
necessarily meaningful.
The Company's periodic operating results have in the past varied and in
the future may vary significantly depending on, but not limited to a number of
factors, including the level of competition; the size and timing of sales
orders; market acceptance of the current and new products; new product
announcements by the Company or its competitors; changes in pricing by the
Company or its competitors, the ability of the Company to develop, introduce and
market new products on a timely basis; component costs and supply constraints;
manufacturing capacities and the ability to scale up production; the mix of
product sales between the analyzers and the reagent disks; mix in sales
channels; levels of expenditures on research and development; changes in Company
strategy; personnel changes; regulatory changes; and general economic trends.
6
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FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company anticipates that its existing capital resources, equipment
financing loan and anticipated revenue from the sales of its products will be
adequate to satisfy its currently planned operating and financial requirements
through fiscal 1998. The Company's future capital requirements will largely
depend on the increased market acceptance of its Point-of-Care Blood Analyzer
products. In addition, the Company expects to incur substantial additional costs
to support its future operations, including further commercialization of its
products and development of new test methods to allow the Company to further
penetrate the human diagnostic market; acquisition of capital equipment for the
Company's manufacturing facilities, which includes the ongoing development and
implementation of an automated manufacturing line to provide capacity for
commercial volumes; costs related to continuing development of its current and
future products; and additional pre-clinical testing and clinical trials for its
current and future products. The Company is also currently contracting with a
vendor to build an automated disc assembly line to provide anticipated capacity
for future demand and to improve production efficiency. To the extent that
existing resources and anticipated revenue from the sale of the Piccolo and
VetScan systems are insufficient to fund the Company's activities, additional
funds will be required to be raised from the issuance of public or private
securities. There can be no assurance that additional funding will be available,
or, if available, that it will be available on acceptable terms. If additional
funds are raised by issuing equity securities, further dilution to then-existing
shareholders may result. If adequate funds are not available, the Company may be
required to curtail its operations significantly. The Company may also be
required to obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, products or marketing territories.
LIMITED MARKETING AND DISTRIBUTION EXPERIENCE AND RESOURCES
The Company has been marketing its VetScan Systems products for less
than three years and has only recently begun marketing its Piccolo System
products. Accordingly, the Company has very limited marketing and distribution
experience. Further, the Company has limited resources to devote to marketing
and distribution, including building a sales and marketing organization or
establishing an extensive distribution network. There can be no assurance that
the Company can build a successful sales and marketing organization, establish
effective distribution arrangements, that such arrangements will be successful
in marketing Abaxis products, or that the costs associated with marketing and
distribution will not be excessive. Although the Company has established some
international distributors, it has limited experience and resources in marketing
and distributing its products in international markets. There can be no
assurance that the Company will be successful in marketing the Piccolo System
and VetScan System products internationally.
PRODUCTS UNDER DEVELOPMENT
Abaxis has developed a blood analysis system which consists of a
portable blood analyzer and menu-specific single-use reagent discs. The Company
believes that it is necessary to develop a series of reagent discs with various
tests for use with the Piccolo and VetScan systems. There can be no assurance
that the Company will be able to develop any of these potential products on a
timely basis, that the Company will be able to obtain regulatory clearance for
discs containing additional tests, or that any products, if and when approved,
can be successfully manufactured or marketed. Failure to meet one or more of
these challenges will have a material adverse effect on the Company.
7
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RELIANCE ON DISTRIBUTION RELATIONSHIPS
Abaxis has entered into an agreement with Vedco that grants Vedco the
right to distribute the Company's VetScan products in the United States, subject
to certain terms and conditions. Abaxis may terminate this agreement if Vedco
fails to achieve minimum annual sales objectives. Either party may terminate the
agreement with 30 days prior notice. The Company is relying on Vedco to devote
financial and other resources to market and distribute the Company's products.
Although the Company believes that Vedco is economically motivated to market and
distribute the Company's products in an effective manner, there can be no
assurance that Vedco will continue to devote the necessary resources to be
successful in its efforts to commercialize the Company's products.
Abaxis has granted exclusive distribution rights for the Piccolo and
VetScan products in Japan to Teramecs Co., Ltd. ("Teramecs"). In addition, the
Company currently has exclusive distribution agreements in the following
countries: Argentina, Australia, Austria, France, Germany, Greece, Hong Kong,
Italy, Korea, Mexico, New Zealand, Norway, Portugal and the United Kingdom.
There can be no assurance that any of the Company's distributors will be
successful in obtaining proper approvals for Abaxis' products in their
respective countries or that these distributors will be successful in marketing
Abaxis' products. The Company plans to enter into additional distribution
agreements to enhance its international distribution base and solidify its
international presence. There can be no assurance that the Company will be
successful in entering into any additional distributor agreements.
There can be no assurance that any of its current or future
distribution agreements will not be terminated or that, if terminated, the
Company will be able to negotiate acceptable alternative distribution
relationships.
LIMITED MANUFACTURING CAPACITY; DEPENDENCE ON SOURCES OF SUPPLY
At present, the Company's manufacturing operations are relatively
limited in capacity. The Company will need to significantly expand these
operations to achieve profitable production levels. In addition, the Company
will need to continue to develop the infrastructure necessary to manage its
manufacturing operations. The manufacture of sufficient quantities of the
Company's products can be an expensive, time-consuming and complex process.
There can be no assurance that the Company will be successful in adding
technical and non-technical personnel as needed to meet the additional staffing
requirements. In addition, there can be no assurance that the Company will be
successful in its engineering efforts to effectively automate its processes on
a larger manufacturing scale. Further, all aspects of such scale-up must comply
with applicable governmental regulations. There can be no assurance that
significant problems or delays will not arise in such scale-up. If the Company
is unable to develop such manufacturing capabilities with appropriate quality,
at acceptable costs and on a timely basis, the business or financial condition
of the Company could be materially adversely affected.
Several components used in the Company's products are currently
available from limited or sole sources and the Company relies on a single
contract manufacturer to assemble its analyzers. The molded plastic disks which,
when loaded with reagents and welded together, form the Company's reagent
discs, are currently manufactured to the required very narrow tolerances by an
established injection molding manufacturer. The Company believes only a few
manufacturers are capable of manufacturing to such tolerances and, to date, only
one manufacturer has been qualified by the Company to manufacture the disks. The
Company is also currently dependent on single source vendors for some of the
chemicals which are used to produce the dry reagent chemistry beads. Further,
the Company's analyzer products use several technologically advanced components
that are available only from single source vendors. An interruption of the
Company's current supply or assembly arrangements would adversely impact the
Company's ability to produce commercial quantities of its products and
materially affect the business or financial condition of the Company.
8
<PAGE> 9
COMPETITION
Abaxis' competition includes clinical laboratories, hospitals and
independent laboratories and manufacturers of bench top multi-test analyzers and
other near-patient test systems. Blood analysis is a well established field in
which there are a number of competitors which have substantially greater
financial resources and larger, more established marketing, sales and service
organizations than the Company. In addition, rapid technological developments
are expected to continue in the health care and diagnostic testing device
industry. No assurance can be given that the Company's products will be
competitive with existing or future products or services of such competitors or
that the Company will be able to keep pace with technological developments.
Historically, most human medical testing has been performed in the
hospital or commercial laboratory setting and most veterinary medical testing
has been performed in the commercial laboratory setting. Clinical laboratories
have traditionally been effective at processing large panels of tests using
skilled technicians and complex equipment. The Company's products compete with
the clinical laboratories with respect to range of tests offered, the immediacy
of results and cost effectiveness. While Abaxis cannot provide the same range of
tests, the Company believes that its products will provide a sufficient breadth
of test menus to compete successfully with clinical laboratories on the basis of
immediacy of results and cost effectiveness in certain limited markets. The
Company's products compete with products in the marketplace with respect to
ease-of-use, the ability to conduct tests without a skilled technician, the
ability to conduct multiple test panels, breadth of tests, built-in calibration
and quality control, cost effectiveness and quality of results.
The Company's primary competitors in the human medical testing market
include a limited number of instrument and reagent providers, including Johnson
& Johnson, and centralized laboratories. The Company's primary competitors in
the veterinary medical testing market are a limited number of instrument
providers, including Idexx Laboratories, Inc., and centralized laboratories.
Most of the Company's current and potential competitors have significantly
greater financial and other resources than Abaxis, and the Company expects the
competition will be intense. In particular, most of these competitors have large
sales forces and well-developed channels of distribution. To compete, the
Company must develop effective channels of distribution and a focused direct
sales force. There is no assurance that the Company will be able to compete
successfully.
POTENTIAL IMPACT OF MEDICARE REIMBURSEMENT REGULATIONS
Third party payors can indirectly affect the pricing or the relative
attractiveness of the Company's human testing products by regulating the maximum
amount of reimbursement they will provide for blood testing services. For
example, the reimbursement of fees for blood testing services for Medicare
beneficiaries is set by the Health Care Financing Administration ("HCFA"). If
the reimbursement amounts for blood testing services are decreased in the
future, it may decrease the amount which physicians and hospitals are able to
charge patients for such services and consequently the price the Company can
charge for its products. If adequate coverage and reimbursement levels are not
provided by government and third-party payors for use of the Company's products,
the market acceptance of those products would be adversely affected.
GOVERNMENT REGULATION: NEED FOR FDA MARKETING CLEARANCE; COMPLIANCE WITH GMP
GUIDELINES; APPLICATION OF CLIA REGULATIONS
Abaxis' Piccolo products are regulated under the 1976 Medical Device
Amendments to the Food, Drug and Cosmetic Act (the "Amendment"). The Company's
initial Piccolo products are Class II devices requiring the submission of a
510(k) FDA pre-market notification to substantiate label claims prior to
marketing. In its submission, the Company must, among other things, establish
that the product to be marketed is "substantially equivalent" to a product that
was on the market prior to the Amendment or to a product that has previously
been cleared under the 510(k) process. The typical process for clearance of a
510(k) notification can be three months to over a year and the FDA must issue a
written order finding substantial equivalence. To date, Abaxis has received
market clearance for its portable blood analyzer and 16 test methods from the
FDA. Abaxis is currently and plans to continue developing additional tests that
will be required to be cleared through the FDA. There can be no assurance that
Abaxis will receive marketing clearance for any of its future products.
9
<PAGE> 10
The Amendment also requires the Company to manufacture its Piccolo
products in accordance with GMP guidelines, using facilities registered to
manufacture the Company's products that are subject to periodic FDA audit. In
addition, the use of the Company's products may be regulated by various state
agencies. For example, the Company has obtained a license from the State of
California to manufacture its products. In September 1996, the FDA granted the
Company's manufacturing facility "in compliance" status, according to the
regulations for Good Manufacturing Practices ("GMP") for medical devices. The
Company is scheduled for inspection by the FDA and the State of California on a
routine basis, typically once every 24 months. There can be no assurance that
the Company can successfully pass a re-inspection by the FDA or the State of
California or any other future inspections. There can be no assurances that the
Company can comply with all current or future government manufacturing
requirements and regulations.
Abaxis' Piccolo products are affected by the Clinical Laboratory
Improvement Amendments of 1988 ("CLIA"), which is intended to insure the quality
and reliability of all medical testing in the United States regardless of where
tests are performed. Under the current CLIA regulations, laboratory tests are
divided into three categories: "simple," "moderately complex" and "highly
complex." Piccolo products are in the "moderately complex" category, which
requires that any location in which testing is performed be certified as a
laboratory. Initial certification would require the laboratory to obtain a
registration certificate from HCFA, which certificate would be issued if the
laboratory (1) agrees to notify HCFA within 30 days of any change in its
ownership, name or location, (2) agrees to treat proficiency testing samples in
the same manner as patient specimens and (3) remits the registration fee. Within
two years of registration certificate issuance, laboratories would be inspected
to determine compliance with the CLIA requirements. The CLIA regulations require
laboratories to meet specified standards in the areas of personnel
qualification, administration, participation in proficiency testing, patient
test management, quality control/assurance, laboratory information systems and
inspections. There can be no assurance that CLIA regulations will not have a
material adverse impact on the Company and its ability to market and sell its
products.
In July 1996, the Company filed an application to the Center for
Disease Control ("CDC") for its Piccolo systems to be waived from the CLIA
regulations. If granted, users of the product can then avoid many of the burdens
imposed on users of moderately complex tests. To have the Piccolo placed in the
waived category, the Company must conduct field studies at three non-laboratory
sites using at least 20 operators each who have no medical laboratory training
and can operate the Piccolo system with directions that require no more than
seventh grade reading skills. The Company met with the CDC in February 1997 to
review its application. CDC has requested more detailed performance data, which
the Company is in the process of collecting. To date, only a few companies have
received waived category status for their tests and approval time from CDC
appears to be over a year or two. Although the review process for a CLIA license
application could potentially be very lengthy and costly, the Company believes
that its Piccolo products fulfill all requirements for obtaining a waived
status. There can be no assurance that the Company will be able to obtain a
waived status for its Piccolo systems, or that if such waived status was
granted, it will enhance the Company's ability to place Piccolo systems.
Federal and state regulations regarding the manufacture and sale of
health care products and diagnostic devices are subject to future change. The
Company cannot predict what material impact, if any, such changes might have on
its business. In addition, the introduction of the Company's products in
international markets might require obtaining foreign regulatory clearances.
There can be no assurance that the Company will be able to obtain regulatory
clearances for its products in the United States or in foreign markets.
Although Abaxis believes that it will be able to comply with all
applicable regulations of the FDA and of the State of California, including GMP
guidelines, current regulations depend on administrative interpretations, and
there can be no assurance that future interpretations made by the FDA, HCFA, CDC
or other regulatory bodies, with possible retroactive effect, will not adversely
affect the Company.
10
<PAGE> 11
UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY TECHNOLOGY
As of September 29, 1997, the Company had filed 25 patent applications
in the United States and had been issued 17 patents. Additionally, the Company
has filed several international patent applications covering the subject matter
of its domestic applications. The patent position of any medical device
manufacturer, including Abaxis, is uncertain and may involve complex legal and
factual issues. Consequently, even though Abaxis is currently prosecuting its
patent applications in the United States and has filed international patent
applications, there can be no assurance that any of the Company's applications
will result in the issuance of any further patents, or that any patents issued
will provide significant proprietary protection or will not be circumvented or
invalidated. Since United States patent applications are maintained in secrecy
until patents are issued, and since publications of discoveries in the
scientific or patent literature tend to lag behind actual discoveries by several
months, Abaxis cannot be certain that it was the first creator of inventions
covered by its issued patents or pending patent applications or that it was the
first to file patent applications for such inventions. There can be no assurance
that if issued the patents will offer protection against competitors with
similar technology, nor can there be any assurance that others will not obtain
patents that the Company would need to license or circumvent. Moreover, the
Company may have to participate in interference proceedings declared by the U.S.
Patent and Trademark Office to determine the priority of inventions, which could
result in substantial cost to the Company.
The Company also relies upon copyright, trademarks and unpatented trade
secrets, and no assurance can be given 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.
NEED TO RETAIN AND ATTRACT KEY EMPLOYEES
The Company is highly dependent on the principal members of its
management and scientific staff, the loss of whose services might impede the
achievement of the Company's business objectives. The Company currently
maintains no key man life insurance. Furthermore, recruiting and retaining
additional qualified marketing, sales and manufacturing personnel will be
critical to the Company's success. Although the Company believes that it will be
successful both in retaining its management and scientific staff and attracting
and retaining skilled and experienced marketing, sales and manufacturing
personnel, there can be no assurance that such personnel may be employed on
acceptable terms, given the competition among numerous medical products and
other high technology companies for such experienced individuals.
RISK OF PRODUCT LIABILITY EXPOSURE; AVAILABILITY OF INSURANCE
Testing, manufacturing and marketing of the Company's products will
entail risk of product liability. The Company's business exposes it to potential
product liability risks which are inherent in the testing, manufacturing and
marketing of human medical products. The Company currently maintains product
liability insurance which it considers adequate for its needs, taking into
account the risks involved and cost of coverage. There can be no assurance,
however, that such coverage is in amounts sufficient to cover potential
liabilities, that the Company will continue to maintain such coverage or that
such coverage will be available on commercially reasonable terms, if at all. In
addition, a product liability claim or recall could have a material adverse
effect on the business or financial condition of Abaxis.
ENVIRONMENTAL MATTERS
Due to the nature of its current and proposed manufacturing processes,
the Company is subject to stringent federal, state and local laws, rules,
regulations and policies governing the use, generation, manufacture, storage,
air emission, effluent discharge, handling and disposal of certain materials and
wastes. In particular, the Company is subject to laws, rules and regulations
governing the handling and disposal of blood samples used in the development and
testing of its products. Although the Company believes that it has complied with
these laws and regulations in all material respects and has not been required to
take any action to correct any noncompliance, there can be no assurance that
Abaxis will not be required to incur significant costs to comply with
environmental regulations as manufacturing is increased to commercial levels,
nor that the operations, business or assets of the
11
<PAGE> 12
Company will not be materially and adversely affected by current or future
environmental laws, rules, regulations and policies.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock, like the securities of
many other medical products companies, has fluctuated over a wide range and the
market price of the shares of Common Stock is likely to be highly volatile in
the future. Factors such as fluctuation in the Company's operating results,
announcements of technological innovations or new commercial products by the
Company or its competitors, governmental regulation, prospects and proposals for
health care reform and controls on prices that may be paid for the Company's
potential products, developments or disputes concerning patent or other
proprietary rights, public concern as to the safety of devices developed by the
Company or its competitors, and general market conditions may have a significant
effect on the market price of the Common Stock.
ANTI-TAKEOVER EFFECT OF PREFERRED STOCK
The Board of Directors, without shareholder approval, can from time to
time cause the Company to issue Preferred Stock that could adversely affect the
rights of the holders of Common Stock and could delay or prevent a change of
control of the Company or make removal of management more difficult. In
September 1996 and July 1997, the Company issued shares of Series A Preferred
Stock and Series B Convertible Preferred Stock, respectively, without approval
of its shareholders.
ABSENCE OF DIVIDENDS
The Company has never paid any cash dividends and does not anticipate
paying cash dividends in the foreseeable future.
POTENTIAL FOR DILUTION
As of September 29, 1997, 3,000 shares of the Company's Series B
Convertible Preferred Stock (the "Series B Preferred Stock") were issued and
outstanding. Each share of the Series B Preferred Stock is convertible into such
number of shares of Common Stock as is determined by dividing the stated value
($1,000) of each share of Series B Preferred Stock (as such value is increased
by a premium based on the number of days the Series B Preferred Stock is held)
by the then current Conversion Price (which is determined by reference to the
then current market price). If converted on September 29, 1997, the Series B
Preferred Stock would have been convertible into approximately 1,105,991 shares
of Common Stock. Depending on market conditions at the time of conversion, the
number of shares issuable could prove to be significantly greater in the event
of a decrease in the trading price of the Common Stock. Purchasers of Common
Stock could therefore experience substantial dilution upon conversion of the
Series B Preferred Stock. The shares of Series B Preferred Stock are not
registered and may be sold only if registered under the Securities Act or sold
in accordance with an applicable exemption from registration, such as Rule 144.
The shares of Common Stock into which the Series B Preferred Stock may be
converted are being registered pursuant to this Registration Statement.
12
<PAGE> 13
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
by the Selling Shareholders.
SELLING SHAREHOLDERS
The table below lists the Selling Shareholders, the number of shares of
Abaxis Common Stock which each owned as of September 29, 1997, the number of
Shares subject to sale pursuant to this Registration Statement, and the number
of the shares of Abaxis Common Stock which each would own assuming that such
number of Shares were offered and assuming the sale of all such Shares.
<TABLE>
<CAPTION>
Shares To Shares Owned
Shares Owned Be After Offering
Selling Stockholder(1) Before Offering Offered Such Shares
- ---------------------- --------------- --------- --------------
<S> <C> <C> <C>
RGC International Investors, LDC 1,544,028(2) 1,544,028(3) -
Advantage Fund Ltd. 772,014(2) 772,014(3) -
Per Erik Danielsen 32,000 32,000 -
PVH Fund Managers Ltd. 30,000 30,000 -
Wharton Capital Partners, Ltd. 30,000 30,000 -
Coffin Communications Group 2,824 2,824 -
</TABLE>
- ---------------
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Abaxis Common Stock shown as beneficially owned by
them, subject to community property laws, where applicable.
(2) Assumes the sale of all shares offered hereby.
(3) The number of shares set forth in the table represents an estimate of the
number of shares of Common Stock to be offered by the Selling Stockholder.
The actual number of shares of Common Stock issuable upon conversion of
Series B Preferred Stock is indeterminate, is subject to adjustment and
could be materially less or more than such estimated number depending on
factors which cannot be predicted by the Company at this time, including
among other factors, the future market price of the Common Stock. The
actual number of shares of Common Stock offered hereby, and included in the
Registration Statement of which this Prospectus is a part, includes such
additional number of shares of Common Stock as may be issued or issuable
upon conversion of the Series B Preferred Stock by reason of the floating
rate conversion price mechanism or other adjustment mechanisms described
therein, or by reason of any stock split, stock dividend or similar
transaction involving the Common Stock, in order to prevent dilution, in
accordance with Rule 416 under the Securities Act. Pursuant to the terms of
the Series B Preferred Stock, if the Series B Preferred Stock had been
actually converted on September 29, 1997 the conversion price would have
been $2.7125 (100% of the average of the closing bid prices of the Common
Stock for the five consecutive trading days immediately preceding such July
18, 1997) at which price the Series B Preferred Stock would have been
converted into approximately 1,105,991 shares of Common Stock. Pursuant to
the terms of the Series B Preferred Stock, the shares of Series B Preferred
Stock are convertible by any holder only to the extent that the number of
shares of Common Stock thereby issuable, together with the number of shares
of Common Stock owned by such holder and its affiliates (but not including
shares of Common Stock underlying unconverted shares of Series B Preferred
Stock) would not exceed 4.9% of the then outstanding Common Stock as
determined in accordance with Section 13(a) of the Exchange Act.
Accordingly, the number of shares of Common Stock set forth in the table
for this Selling Stockholder exceeds the number of shares of Common Stock
that this Selling Stockholder could own beneficially at any given time
through their ownership of the Series B Preferred Stock. In that regard,
beneficial ownership of this Selling Stockholder set forth in the table is
not determined in accordance with rule 13d-3 under the Exchange Act.
15
<PAGE> 14
PLAN OF DISTRIBUTION
The Shares being offered by the Selling Stockholders or their
respective pledgees, donees, transferees or other successors in interest, will
be sold in one or more transactions (which may involve block transactions) on
the Nasdaq National Market or on such other market on which the Common Stock
may from time to time be trading, in privately-negotiated transactions, through
the writing of options on the Shares, short sales or any combination thereof.
The sale price to the public may be the market price prevailing at the time of
sale, a price related to such prevailing market price or such other price as
the Selling Stockholders determine from time to time. The Shares may also be
sold pursuant to Rule 144.
The Selling Stockholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the Shares directly
to market makers acting as principals and/or broker-dealers acting as agents
for themselves or their customers. Brokers acting as agents for the Selling
Stockholders will receive usual and customary commissions for brokerage
transactions, and market makers and block purchasers purchasing the Shares will
do so for their own account and at their own risk. It is possible that a
Selling Stockholder will attempt to sell shares of Common Stock in block
transactions to market makers or other purchasers at a price per share which
may be below the then market price. There can be no assurance that all or any
of the Shares offered hereby will be issued to, or sold by, the Selling
Stockholders. The Selling Stockholders and any brokers, dealers or agents, upon
effecting the sale of any of the Shares offered hereby, may be deemed
"underwriters" as that term is defined under the Securities Act or the Exchange
Act, or the rules and regulations thereunder.
The Selling Stockholders and any other persons participating in the
sale or distribution of the Shares will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Stockholders or any other such person. The foregoing may affect the
marketability of the Shares.
The Company has agreed to indemnify in certain circumstances the
Selling Shareholders, or their transferees or assignees, and the broker-dealers
who may be deemed to be the underwriters (if any) of the securities covered by
this Registration Statement against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments, the Selling Shareholders
or their respective pledgees, donees, transferees or other successors in
interest, may be required to make in respect thereof. The Selling Shareholders
have agreed to indemnify in certain circumstances the Company against certain
liabilities, including liabilities under the Securities Act.
The Company has agreed to use its best efforts to keep the Registration
Statement, of which this Prospectus constitutes a part, effective until the
earlier of (i) the date on which the Selling Shareholders can sell all the
Shares pursuant to Rule 144 of the Security Act (without regard to volume
limitations), or (ii) when all of the Shares have been resold pursuant to Rule
144 or an effective registration statement.
16
<PAGE> 15
LEGAL MATTERS
The legality of the Shares is being passed upon by Gray Cary Ware &
Freidenrich, A Professional Corporation, Palo Alto, California.
EXPERTS
The Company's financial statements as of March 31, 1997 and 1996 and
for the years then ended incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K for the year ended March 31, 1997 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The financial statements of Abaxis, Inc. for the year ended March 31,
1995 included in the Abaxis, Inc. Annual Report (Form 10-K) for the year ended
March 31, 1997, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report included therein and incorporated by reference
herein. Such financial statements are incorporated by reference herein in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
17
<PAGE> 16
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR BY ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES, OR AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE
COMMON STOCK HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..........................3
Incorporation of Certain
Documents by Reference.......................3
The Company....................................4
Risk Factors...................................6
Use of Proceeds...............................15
Selling Shareholders..........................15
Plan of Distribution..........................16
Legal Matters.................................17
Experts.......................................17
</TABLE>
================================================================================
================================================================================
2,410,866 SHARES
ABAXIS, INC.
COMMON STOCK
------------------
PROSPECTUS
------------------
October __, 1997
================================================================================
18
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration and listing and
filing fees.
<TABLE>
<CAPTION>
To be Paid
By The
Registrant
----------
<S> <C>
Securities and Exchange Commission registration fee............ $ 2,809
Nasdaq National Market Additional Listing Fee.................. $17,500
Accounting fees and expenses................................... $15,000
Legal fees and expenses........................................ $15,000
Miscellaneous expenses......................................... 2,691
-------
Total.......................................................... $53,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation (Exhibit 3.1) and Bylaws
(Exhibit 3.2) provide that the Company shall indemnify its directors, officers,
employees, and agents to the full extent permitted by California Law, including
in circumstances in which indemnification is otherwise discretionary under
California law. in addition, the Company has entered into separate
indemnification agreements (Exhibit 10.1) with its directors and officers which
would require the Company, among other things, to indemnify them against certain
liabilities which may arise by reason of their status or service (other than
liabilities arising from willful misconduct of a culpable nature) to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and to maintain directors' and officers' liability in
reasonable amounts. The Company currently has directors' and officers' liability
insurance in the amount of $4 million per occurrence or per year.
The Registration Rights Agreement (Exhibit 10.23) and the Stock
Purchase Agreements pursuant to which the Brokers Shares are IR Shares were
issued (Exhibits 99.1, 99.2 and 99.3) each provide for indemnification by
certain of the Selling Shareholders of the Registrant and its officers and
directors for certain liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act").
These indemnification provisions may be sufficiently broad to permit
indemnification of the Registrant's officers and directors for liabilities
(including reimbursement of expenses incurred) arising under the Securities Act.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ----------- -----------------------
<S> <C>
3.1 Restated Articles of Incorporation, as amended(5)(10)
3.2 By-laws of the Company(1)
3.3 Certificate of Determination(12)
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A Professional Corporation
10.5 1989 Stock Option Plan as amended and forms of agreement(3)
10.6 1992 Outside Directors Stock Option Plan and forms of agreement(4)
10.7 401(k) Plan(1)
</TABLE>
II-1
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ----------- -----------------------
<S> <C>
10.8 Lease Agreement between the Company and South Bay/Caribbean dated March 11, 1992(3)
10.13 Exclusive Distribution Agreement dated September 20, 1991 between the Company and Teramecs(1)(2)
10.14 Sponsored Research Agreement dated as of September 20, 1991 between the Company and
Teramecs(1)(2)
10.15 Development Agreement between the Company and Becton Dickinson and Company (through its Becton
Dickinson Immunocytometry Systems Division) dated April 9, 1993(5)(6)
10.16 Distribution agreement between the Company and VedCo, Inc. dated June 20, 1994(6)
10.17 Supply Agreement between the Company and Becton Dickinson and Company (through its Becton
Dickinson Immunocytometry Systems Division) dated September 16, 1994(6)(7)
10.18 Licensing agreement between the Company and Pharmacia biotech, Inc. dated October 1, 1994(6)(7)
10.19 Employment Agreement with Mr. Gary H. Stroy dated March 11, 1995(8)
10.20 Employment Agreement with Mr. Clinton H. Severson dated March 31, 1997(11)
10.21 Amendment to the Lease Agreement between the Company and South Bay/Caribbean dated March 11,
1997(11)
10.22 Equipment Loan Agreement between the Company and Transamerica Business Credit dated March 4,
1997(11)
10.23 Registration Rights Agreement dated July 18, 1997 between the Company and certain shareholders(12)
10.24 Securities Purchase Agreement dated July 18, 1997 between the Company and certain shareholders(12)
16.1 Letter from Ernst & Young LLP dated January 30, 1996(9)
22.1 Subsidiaries of Registrant(11)
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation. Reference is made to
Exhibit 5.1
24.1 Power of Attorney (see signature page)
99.1 Stock Purchase Agreement dated as of April 1, 1997 between the Company and Coffin Communications Group
99.2 Stock Purchase Agreement dated as of ____________, 1997 between the Company and Per Erik Danielsen
99.3 Form of Stock Purchase Agreement between the Company and Wharton Capital Partners, Ltd.
</TABLE>
- ---------------------
(1) Incorporated by reference from Registration Statement No. 33-44326 filed
December 11, 1991.
(2) Confidential treatment of certain portions of these agreements has been
granted.
(3) Incorporated by reference to the exhibit filed with the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1992.
(4) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1992.
(5) Incorporated by reference to the exhibit filed with the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993.
(6) Confidential treatment of certain portions of these agreements has been
granted.
II-2
<PAGE> 19
(7) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994.
(8) Incorporated by reference to the exhibit filed with the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995.
(9) Incorporated by reference to the Company's Report on Form 8-K filed
February 1, 1996.
(10) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996.
(12) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997.
All Schedules have been omitted because the information required to be set forth
therein is not applicable or is shown in the Financial Statements or notes
thereto.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Securities Act"), each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) 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 the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) 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.
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:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
II-3
<PAGE> 20
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) of the Securities Act of 1933,
if, in the aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) 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;
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Exchange Act of 1934, that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(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.
II-4
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on September 28,
1997.
ABAXIS, INC.
(Registrant)
By: /s/ Clinton S. Severson
---------------------------------------
Clinton S. Severson,
President and Chief Executive Officer
POWER OF ATTORNEY
Each of the officers and directors of Abaxis, Inc. whose signature
appears below hereby constitutes and appoints Clinton S. Severson and Ting W.
Lu, and each of them, his true and lawful attorneys and agents, each with full
power of substitution, and each with power to act alone, to sign on behalf of
the undersigned any amendment or amendments to this Registration Statement on
Form S-3 (including post-effective amendments) and any and all new registration
statements filed pursuant to Rule 462 under the Securities Act of 1933, as
amended, in connection with or related to the offering contemplated by this
Registration Statement, as amended, and to perform any acts necessary in order
to file such amendments or registration statements, with exhibits thereto and
other documents in connection therewith, and each of the undersigned does hereby
ratify and confirm his signature as it may be signed by his said attorney and
agent to any and all such documents and all that said attorneys and agents, or
their or his substitutes, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Clinton S. Severson President, Chief Executive Officer September 28, 1997
- ----------------------------------- and Director (Principal Executive
(Clinton S. Severson) Officer)
/s/ Ting W. Lu
- ----------------------------------- Vice President, Finance & September 28, 1997
(Ting W. Lu) Administration, and Chief Financial
Officer (Principal Financial and
Accounting Officer)
/s/ Gary H. Stroy
- ----------------------------------- Chairman of the Board of Directors September 28, 1997
(Gary H. Stroy)
/s/ Richard Bastiani
- ----------------------------------- Director September 28, 1997
(Richard Bastiani, Ph.D.)
/s/ Brenton G.A. Hanlon
- ----------------------------------- Director September 28, 1997
(Brenton G.A. Hanlon)
- ----------------------------------- Director September __, 1997
(Prithipal Singh, Ph.D.)
/s/ Ernest S. Tucker
- ----------------------------------- Director September 28, 1997
(Ernest S. Tucker)
</TABLE>
II-5
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ----------- -----------------------
<S> <C>
3.1 Restated Articles of Incorporation, as amended(5)(10)
3.2 By-laws of the Company(1)
3.3 Certificate of Determination(12)
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A Professional Corporation
10.5 1989 Stock Option Plan as amended and forms of agreement(3)
10.6 1992 Outside Directors Stock Option Plan and forms of agreement(4)
10.7 401(k) Plan(1)
10.8 Lease Agreement between the Company and South Bay/Caribbean dated March 11, 1992(3)
10.13 Exclusive Distribution Agreement dated September 20, 1991 between the Company and Teramecs(1)(2)
10.14 Sponsored Research Agreement dated as of September 20, 1991 between the Company and
Teramecs(1)(2)
10.15 Development Agreement between the Company and Becton Dickinson and Company (through its Becton
Dickinson Immunocytometry Systems Division) dated April 9, 1993(5)(6)
10.16 Distribution agreement between the Company and VedCo, Inc. dated June 20, 1994(6)
10.17 Supply Agreement between the Company and Becton Dickinson and Company (through its Becton
Dickinson Immunocytometry Systems Division) dated September 16, 1994(6)(7)
10.18 Licensing agreement between the Company and Pharmacia biotech, Inc. dated October 1, 1994(6)(7)
10.19 Employment Agreement with Mr. Gary H. Stroy dated March 11, 1995(8)
10.20 Employment Agreement with Mr. Clinton H. Severson dated March 31, 1997(11)
10.21 Amendment to the Lease Agreement between the Company and South Bay/Caribbean dated March 11,
1997(11)
10.22 Equipment Loan Agreement between the Company and Transamerica Business Credit dated March 4,
1997(11)
10.23 Registration Rights Agreement dated July 18, 1997 between the Company and certain shareholders(12)
10.24 Securities Purchase Agreement dated July 18, 1997 between the Company and certain shareholders(12)
16.1 Letter from Ernst & Young LLP dated January 30, 1996(9)
22.1 Subsidiaries of Registrant(11)
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation. Reference is made to
Exhibit 5.1
24.1 Power of Attorney (see signature page)
99.1 Stock Purchase Agreement dated as of April 1, 1997 between the Company and Coffin Communications Group
99.2 Stock Purchase Agreement dated as of ____________, 1997 between the Company and Per Erik Danielsen
99.3 Form of Stock Purchase Agreement between the Company and Wharton Capital Partners, Ltd.
</TABLE>
- ---------------------
(1) Incorporated by reference from Registration Statement No. 33-44326 filed
December 11, 1991.
(2) Confidential treatment of certain portions of these agreements has been
granted.
(3) Incorporated by reference to the exhibit filed with the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1992.
(4) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1992.
(5) Incorporated by reference to the exhibit filed with the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993.
(6) Confidential treatment of certain portions of these agreements has been
granted.
II-6
<PAGE> 23
(7) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994.
(8) Incorporated by reference to the exhibit filed with the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995.
(9) Incorporated by reference to the Company's Report on Form 8-K filed
February 1, 1996.
(10) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1996.
(12) Incorporated by reference to the exhibit filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997.
II-7
<PAGE> 1
EXHIBIT 5.1
September 29, 1997
Securities and Exchange Commission
450 Fifth Street, N.w.
Washington, D.C. 20549
Re: ABAXIS, INC.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
As legal counsel for Abaxis, Inc., a California corporation (the
"Company"), we are rendering this opinion in connection with the preparation
and filing of a registration statement on Form S-3 (the "Registration
Statement") relating to the registration under the Securities Act of 1933, as
amended, of 2,410,866 shares of Common Stock, no par value (the "Common
Stock"), consisting of (i) 94,824 shares of Common Stock issued by the Company
to certain selling shareholders in exchange for certain broker, investment
relations and other services (the "Common Shares") and (ii) 2,316,042 shares of
Common Stock issuable by the Company upon the conversion of shares of the
Company's Series B Convertible Preferred Stock issued to certain selling
shareholders (the "Conversion Shares").
We have examined such instruments, documents and records as we deemed
relevant and necessary for the basis of our opinion hereinafter expressed. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
to the originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion that the 2,410,866 shares
of Common Stock of the Company being registered pursuant to the Registration
Statement and to be sold by the selling shareholders are duly authorized shares
of Common Stock and the Common Shares and the Conversion Shares (if and when
issued upon conversion of the shares of the Company's Series B Convertible
Preferred Stock in accordance with the Company's Certificate of Determination)
will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the use of our name wherever it
appears in said Registration Statement.
This opinion is to be used only in connection with the issuance of the
Common Stock while the Registration Statement is in effect.
Respectfully submitted,
/s/ GRAY CARY WARE & FREIDENRICH
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Abaxis, Inc. on Form S-3 of our report dated April 22, 1997 (April 30, 1997 as
to Note 10), appearing in the Annual Report on Form 10-K of Abaxis, Inc. for
the year ended March 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
San Jose, California
September 25, 1997
<PAGE> 1
EXHIBIT 23.2
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 Abaxis, Inc. for the
registration of 2,410,866 shares of its common stock and to the incorporation by
reference therein of our report dated April 21, 1995 with respect to the
financial statements of Abaxis, Inc. included in its Annual Report (Form 10-K)
for the fiscal year ended March 31, 1997, filed with the Securities and Exchange
Commission.
San Jose, California
September 29, 1997
<PAGE> 1
EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this April 1, 1997, (the "Effective Date")
by and between Abaxis, Inc., a California corporation (the "Corporation"), and
Coffin Communications Group, a _________ corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the Corporation desires to issue and the Purchaser desires to
acquire stock of the Corporation as herein described, on the terms and
conditions hereinafter set forth.
WHEREAS, the Purchaser and the Corporation each desire to satisfy any
and all obligations of the Corporation to issue its securities to the Purchaser
pursuant to that certain Letter of Engagement between the Corporation and the
Purchaser dated April 4, 1997 (the "Letter") by issuing shares of the
Corporation's Common Stock to the Purchaser.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Number of Shares and Price Per Share. The Purchaser hereby agrees to
purchase from the Corporation and the Corporation agrees to issue to the
Purchaser Five Thousand Six Hundred Forty Seven (5,647) shares of the
Corporation's Common Stock (the "Stock") in exchange for entering into, and
services provided to date under, the Letter. Purchaser acknowledges that, upon
issuance of the Stock by the Corporation and delivery of such Stock to the
Purchaser, any and all non-cash compensation due to the Purchaser by the
Corporation under the Letter shall be satisfied in full.
2. Unvested Share Repurchase Option. In the event the engagement
described in the Letter is terminated for any reason or no reason, with or
without cause, or if the Purchaser or the Purchaser's legal representative
attempts to sell, exchange, transfer, pledge or otherwise dispose of any shares
purchased pursuant to this Agreement which have not vested in the Founder
pursuant to Section 2(a) below (the "Unvested Shares"), the Corporation shall
have the right to reacquire the Unvested Shares under the terms and subject to
the conditions set forth in this Section 2 (the "Unvested Share Repurchase
Option").
(a) Vesting of Shares. The term "Initial Vesting Date" shall mean
April 1, 1997. As of the Initial Vesting Date, no shares of Stock will be vested
in the Purchaser. The Stock will vest in the Purchaser and become "Vested
Shares" on and after the Initial Vesting Date in accordance with the following
schedule:
1
<PAGE> 2
<TABLE>
<CAPTION>
Date Portion Vested
---- --------------
<S> <C>
On the Initial Vesting Date zero (0) shares of Stock
(April 1, 1997)
For each full month from the Initial 8.3334% of the Stock
Vesting Date the engagement described in for each such full mo. of
the Letter is in effect and notice of its engagement
termination has not been delivered by
either party
</TABLE>
Provided that the aggregate percentage of Stock constituting Vested Shares may
not exceed one hundred percent (100.0%), and that such numbers shall be adjusted
appropriately to reflect any stock splits, stock dividends, recombinations,
recapitalizations or the like by the Corporation.
(b) Exercise of Unvested Share Repurchase Option. If the
engagement described in the Letter is terminated for any reason or for no
reason, or if the Purchaser or the Purchaser's legal representative attempts to
dispose of any Unvested Shares other than as allowed in this Agreement, with or
without cause, the Corporation may exercise the Unvested Share Repurchase Option
by written notice to the Purchaser or the Purchaser's legal representative
within sixty (60) days after such termination or after the Corporation has
received notice of the attempted disposition.
(c) Payment for Shares and Return of Shares. Payment for the
repurchased shares by the Corporation to the Purchaser or the Purchaser's legal
representative shall be made in cash within thirty (30) days after the date of
the mailing of the written notice of exercise of the Unvested Share Repurchase
Option. The purchase price per share for the shares being repurchased by the
Corporation shall be an amount equal to $0.001 per share. Within three (3)
business days after payment by the Corporation, the Purchaser shall deliver the
shares which the Corporation has repurchased to the Corporation and shall
deliver the payment received from the Corporation to the Purchaser.
(d) Assignment of Unvested Share Repurchase Option. In the event
the Corporation is unable to exercise the Unvested Share Repurchase Option
pursuant to the provisions of Section 500 et seq. of the California Corporations
Code, or the corresponding provisions of other applicable law, the Corporation
shall have the right to assign the Unvested Share Repurchase Option to one or
more persons as may be selected by the Corporation.
3. Additional Salability Restriction. The Purchaser understands that, in
its capacity as an investment relations firm for the Company, it may have
non-public material information regarding the Company. Consequently, the
Purchaser agrees that, during "blackout periods" according to the Company's
insider trading policies then in effect, Purchaser shall not pledge, sell, offer
to sell, contract to sell, grant any option to purchase, make any short sale or
otherwise dispose of any shares of Common Stock of the Company, or any options
or warrants
2
<PAGE> 3
to purchase any shares of Common Stock of the Company, or any securities
convertible into or exchangeable for shares of Common Stock of the Company,
whether now owned or hereinafter acquired, owned directly by the undersigned or
with respect to which the undersigned has beneficial ownership within the rules
and regulations of the SEC, without the prior written consent of the Company.
4. Transfers in Violation of Agreement. The Corporation shall not be
required (i) to transfer on its books any shares of Stock of the Corporation
which shall have been sold or transferred in violation of any of the provisions
set forth in this Agreement or (ii) to treat as owner of such shares or to
accord the right to vote as such owner or to pay dividends to any transferee to
whom such shares shall have been so transferred.
5. Warranties and Representations. In connection with the proposed
purchase of the Stock, the Purchaser hereby agrees, represents and warrants as
follows:
(a) The Purchaser is purchasing the Stock solely for his own
account for investment and not with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Act"). The Purchaser further represents that he does not have any
present intention of selling, offering to sell or otherwise disposing of or
distributing the Stock or any portion thereof; and that the entire legal and
beneficial interest of the Stock he or is purchasing is being purchased for, and
will be held for the account of, the Purchaser only and neither in whole nor in
part for any other person.
(b) The Purchaser is aware of the Corporation's business affairs
and financial condition and has acquired sufficient information about the
Corporation to reach an informed and knowledgeable decision to acquire the
Stock. The Purchaser further represents and warrants that he has discussed the
Corporation and its plans, operations and financial condition with its officers,
has received all such information as he deems necessary and appropriate to
enable him to evaluate the financial risk inherent in making an investment in
the Stock and has received satisfactory and complete information concerning the
business and financial condition of the Corporation in response to all inquiries
in respect thereof.
(c) Such Purchaser (i) has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of such Purchaser's prospective investment in the Company, (ii) has the
ability to bear the economic risks of such Purchaser's prospective investment in
the Company, (iii) has been furnished with and has had access to such
information as such Purchaser has considered necessary to make a determination
as to the purchase of the Securities together with such additional information
as is necessary to verify the accuracy of the information supplied, (iv) has had
all questions which have been asked by such Purchaser satisfactorily answered by
the Company, (v) has not been offered the Securities by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any such media and
(vi) has a pre-existing personal or business with the Company or with any of the
Company's officers or directors.
3
<PAGE> 4
(d) The Purchaser realizes that his purchase of the Stock will be
a highly speculative investment, and he is able, without impairing his financial
condition, to hold the Stock for an indefinite period of time and to suffer a
complete loss on his investment.
(e) The Corporation has disclosed to the Purchaser that:
(i) The sale of the Stock has not been registered under
the Act, and the Stock must be held indefinitely unless a transfer of it is
subsequently registered under the Act or an exemption from such registration is
available, and that the Corporation is under no obligation to register the
Stock; and
(ii) The Corporation will make a notation in its records
of the aforementioned restrictions on transfer and legends.
(f) The Purchaser is aware of the provisions of Rule 144,
promulgated under the Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or an affiliate of such issuer), in a non-public offering subject to
the satisfaction of certain conditions, including among other things: the resale
occurring not less than one year from the date the Purchaser has purchased and
paid for the Stock; the availability of certain public information concerning
the Corporation; the sale being through a broker in an unsolicited "broker's
transaction" or in a transaction directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934); and that any sale of the
Stock may be made by him only in limited amounts during any three-month period
not exceeding specified limitations. The Purchaser further represents that he
understands that at the time he wishes to sell the Stock there may be no public
market upon which to make such a sale, and that, even if such a public market
then exists, the Corporation may not be satisfying the current public
information requirements of Rule 144, and that, in such event, he would be
precluded from selling the Stock under Rule 144 even if the two-year minimum
holding period had been satisfied. The Purchaser represents that he understands
that in the event all of the requirements of Rule 144 are not satisfied,
registration under the Act or compliance with an exemption from registration
will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the staff of the SEC has expressed its opinion that persons proposing
to sell private placement securities other than in a registered offering and
otherwise than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
(g) Without in any way limiting the Purchaser's representations
and warranties set forth above, the Purchaser further agrees that he shall in no
event make any disposition of all or any portion of the Stock which he is
purchasing unless and until:
(i) There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with said
4
<PAGE> 5
Registration Statement; or
(ii) The Purchaser shall have (A) notified the
Corporation of the proposed disposition and furnished the Corporation with a
detailed statement of the circumstances surrounding the proposed disposition,
and (B) furnished the Corporation with an opinion of his own counsel to the
effect that such disposition will not require registration of such shares under
the Act, and such opinion of his counsel shall have been concurred in by counsel
for the Corporation and the Corporation shall have advised the Purchaser of such
concurrence.
6. Legends. All certificates representing any shares of Stock subject to
the provisions of this Agreement shall have endorsed thereon the following
legends:
(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE CORPORATION RECEIVES AN OPINION
OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT";
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF REPURCHASE IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN
AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR ITS PREDECESSOR
IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS
CORPORATION"; and
(c) Any legend required to be placed thereon by the California
Commissioner of Corporations.
7. Registration Rights.
(a) Definitions. As used in this Section 7, the following terms
shall have the following respective meanings:
(1) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance
5
<PAGE> 6
with the Act, and the declaration or ordering of the effectiveness of such
registration statement.
(2) The term "Registrable Securities" means (A) the
Stock, (B) common stock issued in lieu of the Stock in any reorganization which
has not been sold to the public or (C) common stock issued in respect of the
Stock as a result of a stock split, stock dividend, recapitalization or the
like, which (i) have not been sold to the public and (ii) which are not subject
to the Unvested Share Repurchase Option described in Section 2 hereof on the
date the Company registers its securities.
(3) The term "Holder" means the person to whom
Registrable Securities were originally issued or qualifying transferees under
subsection 7(g) hereof who hold Registrable Securities.
(4) The term "SEC" means the Securities and Exchange
Commission.
(b) Corporation Registration.
(1) Participation in Corporation Registration. If at any
time or from time to time, the Corporation shall determine to register any of
its securities, for its own account or the account of any of its shareholders
(other than a registration relating solely to employee stock option or purchase
plans, or a registration on SEC Form S-4 relating solely to an SEC Rule 145
transaction, or a registration on any form other than SEC Forms S-1, S-2 or S-3,
or their successor forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities), the Corporation will: (A) promptly
give to the Holder written notice thereof and (B) include in such registration
(and any related qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within ten (10) days after receipt of such
written notice from the Corporation, by the Holder, except as set forth in
subsection 6(b)(2) below.
(2) Underwriting. If the registration of which the
Corporation gives notice is for a registered public offering involving an
underwriting, the Corporation shall so advise the Holders as a part of the
written notice given pursuant to subsection 7(b)(1). In such event the right of
the Holder to registration pursuant to subsection 7(b) shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. A Holder proposing to distribute their securities through such
underwriting shall (together with the Corporation and any other shareholders
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 Corporation. Notwithstanding any other
provision of this subsection 6(b), the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting, or
may exclude Registrable Securities entirely from such registration and
underwriting. The Corporation shall so advise the Holder of Registrable
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<PAGE> 7
Securities which would otherwise be registered and underwritten pursuant hereto,
the number of shares of Registrable Securities that may be included in the
registration and underwriting. If any Holder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to the
Corporation and the underwriter. Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(c) Expenses of Registration. All expenses incurred in connection
with any registration, qualification or compliance pursuant to this Section 7,
including without limitation, all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for the Corporation and
expenses of any special audits incidental to or required by such registration,
shall be borne by the Corporation except as follows:
(i) The Corporation shall not be required to pay fees or
disbursements of legal counsel of the Holder.
(ii) The Corporation shall not be required to pay
underwriters' fees, discounts or commissions relating to Registrable Securities.
(d) Registration Procedures. In the case of each registration,
qualification or compliance effected by the Corporation pursuant to this
Agreement, the Corporation will keep the Holder participating therein advised in
writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof. At its expense the Corporation will:
(i) Keep such registration, qualification or compliance
pursuant to this Section 6 effective for a period of one hundred eighty (180)
days or until the Holder or Holders have completed the distribution described in
the registration statement relating thereto, whichever first occurs; and
(ii) Furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may reasonably request.
(e) Indemnification.
(1) The Corporation will indemnify the Holder of
Registrable Securities, each of its officers, directors and partners, and each
person controlling such Holder, with respect to which such registration,
qualification or compliance has been effected pursuant to this Section 7, and
each underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other 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
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<PAGE> 8
therein or necessary to make the statements therein not misleading, or
any violation by the Corporation of any rule or regulation promulgated under the
Act or any state securities law applicable to the Corporation and relating to
action or inaction required of the Corporation in connection with any such
registration, qualification or compliance, and will reimburse each such Holder,
each of its officers, directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
for any reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, provided that the Corporation will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Corporation by an instrument duly executed by such Holder or underwriter
specifically for use therein.
(2) The Holder will, if Registrable Securities held by
or issuable to such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Corporation, each of its directors and officers, each underwriter, if any, of
the Corporation's securities covered by such a registration statement, each
person who controls the Corporation within the meaning of the Act, and each
other such Holder, each of its officers, directors and partners and each person
controlling such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) 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
document, 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, and will reimburse the Corporation, such Holder, such directors,
officers, partners, persons or underwriters for any reasonable legal or any
other expenses incurred in connection with investigating, defending or settling
any such claim, loss, damage, liability or action, 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 Corporation by an
instrument duly executed by such Holder specifically for use therein; provided,
however, the total amount for which the Holder shall be liable under this
subsection 7(e)(2) shall not in any event exceed the aggregate proceeds received
by such Holder from the sale of Registrable Securities held by such Holder in
such registration.
(3) Each party entitled to indemnification under this
subsection 7(e) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge 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
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not
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<PAGE> 9
relieve the Indemnifying Party of its obligations hereunder, unless such failure
resulted in actual detriment to the Indemnifying Party. 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.
(f) Information by Holder. The Holder of Registrable Securities
included in any registration shall promptly furnish to the Corporation such
information regarding such Holder and the distribution proposed by such Holder
as the Corporation may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to herein.
(g) Transfer of Registration Rights. A Holder's rights to cause
the Corporation to register their securities and keep information available,
granted to them by the Corporation under this Section 7, may be assigned to a
transferee or assignee who also receives all shares of Registrable Securities
then held by the Holder; provided that the Corporation is given written notice
by such Holder at the time of or within a reasonable time after said transfer,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being assigned,
and such transferee has agreed to comply with the obligations of this Section 7.
(h) Termination of Registration Rights. The registration rights
contained in this Section 7 shall terminate as to a Holder, when all Registrable
Securities held by such Holder may be sold pursuant to SEC Rule 144 within a
three month period.
8. General.
(a) Notice. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon receipt if delivered
personally or by facsimile at the number hereinafter shown below his signature,
or upon deposit in the United States Post Office, by registered or certified
mail with postage and fees prepaid, addressed to the other party hereto at the
address hereinafter shown below his signature. Either party may designate
another address or facsimile number by ten (10) days' advance written notice to
the other party hereto.
(b) Successors and Assigns. This Agreement shall inure to the
benefit of the successors and assigns of the Corporation and, subject to the
restrictions on transfer herein set forth, be binding upon the Purchaser, his
heirs, executors, administrators, successors and assigns. This Agreement shall
be fully assignable by the Corporation.
(c) Entire Agreement; Amendments. This Agreement shall be
construed under the laws of the State of California (as it applies to agreements
between California residents, entered into and to be performed entirely within
California), and constitutes the entire agreement of the parties with respect to
the subject matter hereof superseding all prior
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<PAGE> 10
written or oral agreements, and no amendment or addition hereto shall be deemed
effective unless agreed to in writing by the parties hereto.
(d) Separability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way and shall be construed in
accordance with the purposes and tenor and effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PURCHASER" "CORPORATION"
COFFIN COMMUNICATIONS ABAXIS, INC.
GROUP
By___________________________________ By:___________________________________
Title:_______________________________ Title:________________________________
Address:_____________________________ Address: 1320 Chesapeake Terrace
_____________________________ Sunnyvale, CA 94089
_____________________________
Facsimile:___________________________ Facsimile: (408) 734-3120
10
<PAGE> 1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this ______________, 1997, (the "Effective
Date") by and between Abaxis, Inc., a California corporation (the
"Corporation"), and Per Erik Danielsen (the "Purchaser").
WITNESSETH:
WHEREAS, the Corporation desires to issue and the Purchaser desires to
acquire stock of the Corporation as herein described, on the terms and
conditions hereinafter set forth.
WHEREAS, the Purchaser was a consultant of the Corporation pursuant to
that certain Consulting Agreement dated January 1, 1996 between the Corporation
and the Purchaser (the "Consulting Agreement").
WHEREAS, the Purchaser and the Corporation each desire to satisfy any
and all amounts due to the Purchaser, including those due under the Consulting
Agreement pursuant to Section 3 thereof, by issuing shares of the Corporation's
Common Stock to the Purchaser.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Number of Shares and Price Per Share. The Purchaser hereby agrees to
purchase from the Corporation and the Corporation agrees to issue to the
Purchaser Thirty Two Thousand (32,000) shares of the Corporation's Common Stock
(the "Stock") in exchange for cancellation of any and all existing indebtedness
by the Corporation to the Purchaser. Purchaser acknowledges that, upon issuance
of the Stock by the Corporation and delivery of such Stock to the Purchaser, any
and all amounts due to the Purchaser by the Corporation, including those due
under the Consulting Agreement pursuant to Section 3 thereof, shall be satisfied
in full.
2. Warranties and Representations. In connection with the proposed
purchase of the Stock, the Purchaser hereby agrees, represents and warrants as
follows:
(a) The Purchaser is purchasing the Stock solely for his own
account for investment and not with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Act"). The Purchaser further represents that he does not have any
present intention of selling, offering to sell or otherwise disposing of or
distributing the Stock or any portion thereof; and that the entire legal and
beneficial interest of the Stock he or is purchasing is being purchased for, and
will be held for the account of, the Purchaser only and neither in whole nor in
part for any other person.
(b) The Purchaser is aware of the Corporation's business affairs
and financial condition and has acquired sufficient information about the
Corporation to reach an informed and knowledgeable decision to acquire the
Stock. The Purchaser further represents
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<PAGE> 2
and warrants that he has discussed the Corporation and its plans, operations and
financial condition with its officers, has received all such information as he
deems necessary and appropriate to enable him to evaluate the financial risk
inherent in making an investment in the Stock and has received satisfactory and
complete information concerning the business and financial condition of the
Corporation in response to all inquiries in respect thereof.
(c) The Purchaser realizes that his purchase of the Stock will be
a highly speculative investment, and he is able, without impairing his financial
condition, to hold the Stock for an indefinite period of time and to suffer a
complete loss on his investment.
(d) The Corporation has disclosed to the Purchaser that:
(i) The sale of the Stock has not been registered under
the Act, and the Stock must be held indefinitely unless a transfer of it is
subsequently registered under the Act or an exemption from such registration is
available, and that the Corporation is under no obligation to register the
Stock; and
(ii) The Corporation will make a notation in its records
of the aforementioned restrictions on transfer and legends.
(e) The Purchaser is aware of the provisions of Rule 144,
promulgated under the Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or an affiliate of such issuer), in a non-public offering subject to
the satisfaction of certain conditions, including among other things: the resale
occurring not less than two years from the date the Purchaser has purchased and
paid for the Stock; the availability of certain public information concerning
the Corporation; the sale being through a broker in an unsolicited "broker's
transaction" or in a transaction directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934); and that any sale of the
Stock may be made by him only in limited amounts during any three-month period
not exceeding specified limitations. The Purchaser further represents that he
understands that at the time he wishes to sell the Stock there may be no public
market upon which to make such a sale, and that, even if such a public market
then exists, the Corporation may not be satisfying the current public
information requirements of Rule 144, and that, in such event, he would be
precluded from selling the Stock under Rule 144 even if the two-year minimum
holding period had been satisfied. The Purchaser represents that he understands
that in the event all of the requirements of Rule 144 are not satisfied,
registration under the Act or compliance with an exemption from registration
will be required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the staff of the SEC has expressed its opinion that persons proposing
to sell private placement securities other than in a registered offering and
otherwise than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
(f) Without in any way limiting the Purchaser's representations
and
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<PAGE> 3
warranties set forth above, the Purchaser further agrees that he shall in no
event make any disposition of all or any portion of the Stock which he is
purchasing unless and until:
(i) There is then in effect a Registration Statement under
the Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) The Purchaser shall have (A) notified the Corporation
of the proposed disposition and furnished the Corporation with a detailed
statement of the circumstances surrounding the proposed disposition, and (B)
furnished the Corporation with an opinion of his own counsel to the effect that
such disposition will not require registration of such shares under the Act, and
such opinion of his counsel shall have been concurred in by counsel for the
Corporation and the Corporation shall have advised the Purchaser of such
concurrence.
3. Legends. All certificates representing any shares of Stock subject to
the provisions of this Agreement shall have endorsed thereon the following
legends:
(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
(b) Any legend required to be placed thereon by the California
Commissioner of Corporations.
4. Transfers in Violation of Agreement. The Corporation shall not be
required (i) to transfer on its books any shares of Stock of the Corporation
which shall have been sold or transferred in violation of any of the provisions
set forth in this Agreement or (ii) to treat as owner of such shares or to
accord the right to vote as such owner or to pay dividends to any transferee to
whom such shares shall have been so transferred.
5. Registration Rights.
(a) Definitions. As used in this Section 5, the following terms
shall have the following respective meanings:
(1) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the
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<PAGE> 4
Act, and the declaration or ordering of the effectiveness of such registration
statement.
(2) The term "Registrable Securities" means (A) the Stock,
(B) common stock issued in lieu of the Stock in any reorganization which has not
been sold to the public or (C) common stock issued in respect of the Stock as a
result of a stock split, stock dividend, recapitalization or the like, which
have not been sold to the public.
(3) The term "Holder" means the person to whom Registrable
Securities were originally issued or qualifying transferees under subsection
5(g) hereof who hold Registrable Securities.
(4) The term "SEC" means the Securities and Exchange
Commission.
(b) Company Registration.
(1) Participation in Company Registration. If at any time
or from time to time, the Company shall determine to register any of its
securities, for its own account or the account of any of its shareholders (other
than a registration relating solely to employee stock option or purchase plans,
or a registration on SEC Form S-4 relating solely to an SEC Rule 145
transaction, or a registration on any form other than SEC Forms S-1, S-2 or S-3,
or their successor forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities), the Company will: (A) promptly
give to the Holder written notice thereof and (B) include in such registration
(and any related qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within ten (10) days after receipt of such
written notice from the Company, by the Holder, except as set forth in
subsection 5(b)(2) below.
(2) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to subsection 5(b)(1). In such event the right of the Holder to
registration pursuant to subsection 5(b) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. A
Holder proposing to distribute their securities through such underwriting shall
(together with the Company and any other shareholders 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
subsection 5(b), the underwriter may limit the number of Registrable Securities
to be included in the registration and underwriting, or may exclude Registrable
Securities entirely from such registration and underwriting. The Company shall
so advise the Holder of Registrable Securities which would otherwise be
registered and underwritten pursuant hereto, the number of shares of Registrable
Securities that may be included in the registration and underwriting. If any
Holder disapproves of the terms of any such underwriting, he may elect to
withdraw
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<PAGE> 5
therefrom by written notice to the Company and the underwriter. Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
(c) Expenses of Registration. All expenses incurred in connection
with any registration, qualification or compliance pursuant to this Section 5,
including without limitation, all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for the Company and
expenses of any special audits incidental to or required by such registration,
shall be borne by the Company except as follows:
(i) The Company shall not be required to pay fees or
disbursements of legal counsel of the Holder.
(ii) The Company shall not be required to pay
underwriters' fees, discounts or commissions relating to Registrable Securities.
(d) Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep the Holder participating therein advised in writing as to
the initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
(i) Keep such registration, qualification or compliance
pursuant to this Section 5 effective for a period of one hundred eighty (180)
days or until the Holder or Holders have completed the distribution described in
the registration statement relating thereto, whichever first occurs; and
(ii) Furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may reasonably request.
(e) Indemnification.
(1) The Company will indemnify the Holder of Registrable
Securities, each of its officers, directors and partners, and each person
controlling such Holder, with respect to which such registration, qualification
or compliance has been effected pursuant to this Section 5, and each
underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other 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, or
any violation by the Company of any rule or regulation promulgated under the Act
or any state securities law applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each
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<PAGE> 6
such Holder, each of its officers, directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any reasonable legal and any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage or liability arises
out of or is based on any untrue statement or omission based upon written
information furnished to the Company by an instrument duly executed by such
Holder or underwriter specifically for use therein.
(2) The Holder will, if Registrable Securities held by or
issuable to such 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 underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company within the meaning of the Act, and each other such Holder,
each of its officers, directors and partners and each person controlling such
Holder, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereof) 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 document, 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, and will reimburse
the Company, such Holder, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, 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 such Holder
specifically for use therein; provided, however, the total amount for which the
Holder shall be liable under this subsection 5(e)(2) shall not in any event
exceed the aggregate proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in such registration.
(3) Each party entitled to indemnification under this
subsection 5(e) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge 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
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
actual detriment to the Indemnifying Party. 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
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<PAGE> 7
liability in respect to such claim or litigation.
(f) Information by Holder. The Holder of Registrable Securities
included in any registration shall promptly furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to herein.
(g) Transfer of Registration Rights. A Holder's rights to cause
the Company to register their securities and keep information available, granted
to them by the Company under this Section 5, may be assigned to a transferee or
assignee who also receives all shares of Registrable Securities then held by the
Holder; provided that the Company is given written notice by such Holder at the
time of or within a reasonable time after said transfer, stating the name and
address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being assigned, and such
transferee has agreed to comply with the obligations of this Section 5.
(h) Termination of Registration Rights. The registration rights
contained in this Section 5 shall terminate as to a Holder, when all Registrable
Securities held by such Holder may be sold pursuant to SEC Rule 144 within a
three month period.
6. General.
(a) Notice. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon receipt if delivered
personally or by facsimile at the number hereinafter shown below his signature,
or upon deposit in the United States Post Office, by registered or certified
mail with postage and fees prepaid, addressed to the other party hereto at the
address hereinafter shown below his signature. Either party may designate
another address or facsimile number by ten (10) days' advance written notice to
the other party hereto.
(b) Successors and Assigns. This Agreement shall inure to the
benefit of the successors and assigns of the Corporation and, subject to the
restrictions on transfer herein set forth, be binding upon the Purchaser, his
heirs, executors, administrators, successors and assigns. This Agreement shall
be fully assignable by the Corporation.
(c) Entire Agreement; Amendments. This Agreement shall be
construed under the laws of the State of California (as it applies to agreements
between California residents, entered into and to be performed entirely within
California), and constitutes the entire agreement of the parties with respect to
the subject matter hereof superseding all prior written or oral agreements, and
no amendment or addition hereto shall be deemed effective unless agreed to in
writing by the parties hereto.
(d) Separability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall
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nevertheless continue in full force and effect without being impaired or
invalidated in any way and shall be construed in accordance with the purposes
and tenor and effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PURCHASER" "CORPORATION"
ABAXIS, INC.
________________________________________ By:
Per Erik Danielsen
Title:
Address: ___________________________ Address:1320 Chesapeake Terrace
___________________________ Sunnyvale, CA 94089
___________________________
Facsimile: ___________________________ Facsimile: (408) 734-2874
8
<PAGE> 1
EXHIBIT 99.3
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this ______________, 1997 (the "Effective
Date") by and between Abaxis, Inc., a California corporation (the "Corporation")
and Wharton Capital Partners, Ltd., a New York corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the Corporation desires to issue and the Purchaser desires to
acquire stock of the Corporation as herein described, on the terms and
conditions hereinafter set forth.
WHEREAS, the Purchaser acted as a placement agent of the Corporation in
connection with its Series B Convertible Preferred Stock financing.
WHEREAS, the Purchaser and the Corporation the desire to satisfy any and
all amounts due to the Purchaser, except for a cash payment of $120,000, by
issuing shares of the Corporation's Common Stock to the Purchaser.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Number of Shares and Price Per Share. The Purchaser hereby agrees to
purchase from the Corporation and the Corporation agrees to issue to the
Purchaser Sixty Thousand (60,000) shares of the Corporation's Common Stock (the
"Stock") in exchange for cancellation of any and all existing indebtedness by
the Corporation to the Purchaser (including but not limited to indebtedness for
past services performed in connection with the Corporation's Series B
Convertible Preferred Stock financing, receipt of which is hereby acknowledged).
The Purchaser acknowledges that, upon issuance of the Stock by the Corporation
and delivery of such Stock to the Purchaser, any and all amounts due to the
Purchaser by the Corporation for fees of any kind for services rendered to the
Corporation by the Purchaser in the Financing, except for a cash payment of
$120,000, shall be satisfied in full.
2. Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants to the Purchaser as follows:
(a) The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of California.
(b) All corporate action on the part of the Corporation, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Corporation hereunder and the authorization, issuance and delivery of the Stock
being sold hereunder has been taken, and this Agreement constitutes a valid and
legally binding obligation of the Corporation, enforceable in accordance with
its terms, except as may be limited by bankruptcy, insolvency, moratorium and
other laws of
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general application affection the enforcement of creditors' rights.
(c) The Stock, when issued in compliance with the provisions of
this Agreement, will be validly issued, fully paid and nonassessable and will be
free of any liens or encumbrances; provided, however, that the Stock may be
subject to restrictions on transfer under state and/or federal securities laws
as set forth herein, and as may be required by future changes in such laws.
3. Warranties and Representations. In connection with the proposed
purchase of the Stock, the Purchaser hereby agrees, represents and warrants as
follows:
(a) The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
(b) All corporate action on the part of the Purchaser, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Purchaser hereunder and the authorization, issuance and delivery of the Stock
being sold hereunder has been taken, and this Agreement constitutes a valid and
legally binding obligation of the Purchaser, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, moratorium and other
laws of general application affection the enforcement of creditors' rights.
(c) The Purchaser is purchasing the Stock solely for his own
account for investment and not with a view to, or for resale in connection with,
any distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Act").
(d) The Purchaser is aware of the Corporation's business affairs
and financial condition and has acquired sufficient information about the
Corporation to reach an informed and knowledgeable decision to acquire the
Stock. The Purchaser further represents and warrants that he has discussed the
Corporation and its operations and financial condition with its officers, has
received all such information as he deems necessary and appropriate to enable
him to evaluate the financial risk inherent in making an investment in the Stock
and has received satisfactory and complete information concerning the business
and financial condition of the Corporation in response to all inquiries in
respect thereof.
(e) The Purchaser realizes that his purchase of the Stock will be
a highly speculative investment, and he is able, without impairing his financial
condition, to hold the Stock for an indefinite period of time and to suffer a
complete loss on his investment. In addition, the Purchaser has read and is
fully understands the provisions of Rule 144, promulgated under the Act, which,
in substance, permits limited public resale of "restricted securities" acquired,
directly or indirectly, from the issuer thereof (or an affiliate of such
issuer), in a non-public offering subject to the satisfaction of certain
conditions.
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(f) The Corporation has disclosed to the Purchaser that:
(i) The sale of the Stock has not been registered under
the Act, and the Stock must be held indefinitely unless a transfer of it is
subsequently registered under the Act or an exemption from such registration is
available; and
(ii) The Corporation will make a notation in its records
of the aforementioned restrictions on transfer and legends.
(g) Without in any way limiting the Purchaser's representations
and warranties set forth above, the Purchaser further agrees that he shall in no
event make any disposition of all or any portion of the Stock which he is
purchasing unless and until:
(i) There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) The Purchaser shall have (A) notified the
Corporation of the proposed disposition and furnished the Corporation with a
general summary of the proposed disposition, and (B) furnished the Corporation
with an opinion of its own counsel reasonably acceptable in form and substance
to the Corporation and its counsel to the effect that such disposition will not
require registration of such shares under the Act.
3. Legends. All certificates representing any shares of Stock subject to
the provisions of this Agreement shall have endorsed thereon the following
legends:
(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE CORPORATION RECEIVES AN OPINION
OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
(b) Any legend required to be placed thereon by the California
Commissioner of Corporations.
4. Transfers in Violation of Agreement. The Corporation shall not be
required (i) to transfer on its books any shares of Stock of the Corporation
which shall have been sold or transferred in violation of any of the provisions
set forth in this Agreement or (ii) to treat as owner of such shares or to
accord the right to vote as such owner or to pay dividends to any transferee to
whom such shares shall have been so transferred.
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5. Registration Rights.
(a) Definitions. As used in this Section 5, the following terms
shall have the following respective meanings:
(1) The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act, and the declaration or ordering of the
effectiveness of such registration statement.
(2) The term "Registrable Securities" means (A) the
Stock, (B) common stock issued in lieu of the Stock in any reorganization which
has not been sold to the public or (C) common stock issued in respect of the
Stock as a result of a stock split, stock dividend, recapitalization or the
like, which have not been sold to the public.
(3) The term "Holder" means the person to whom
Registrable Securities were originally issued or qualifying transferees under
subsection 5(g) hereof who hold Registrable Securities.
(4) The term "SEC" means the Securities and Exchange
Commission.
(b) Corporation Registration.
(1) Participation in Corporation Registration. If at any
time or from time to time, the Corporation shall determine to register any of
its securities, for its own account or the account of any of its shareholders
(other than a registration relating solely to employee stock option or purchase
plans, or a registration on SEC Form S-4 relating solely to an SEC Rule 145
transaction, or a registration on any form other than SEC Forms S-1, S-2 or S-3,
or their successor forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities), the Corporation will: (A) promptly
give to the Holder written notice thereof and (B) include in such registration
(and any related qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within ten (10) days after receipt of such
written notice from the Corporation, by the Holder, except as set forth in
subsection 5(b)(2) below.
(2) Underwriting. If the registration of which the
Corporation gives notice is for a registered public offering involving an
underwriting, the Corporation shall so advise the Holders as a part of the
written notice given pursuant to subsection 5(b)(1). In such event the right of
the Holder to registration pursuant to subsection 5(b) shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. A Holder proposing to distribute their securities through such
underwriting shall (together with the Corporation and any other shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for
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such underwriting by the Corporation. Notwithstanding any other provision of
this subsection 5(b), the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting, or may exclude
Registrable Securities entirely from such registration and underwriting. The
Corporation shall so advise the Holder of Registrable Securities which would
otherwise be registered and underwritten pursuant hereto, the number of shares
of Registrable Securities that may be included in the registration and
underwriting. If any Holder disapproves of the terms of any such underwriting,
he may elect to withdraw therefrom by written notice to the Corporation and the
underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration. The Corporation shall
use reasonable commercial efforts to register the Stock in the first
Registration Statement that it intends to file in connection with that certain
Registration Rights Agreement dated as of July 18, 1997 among the Corporation
and the Initial Investors (as defined therein).
(c) Expenses of Registration. All expenses incurred in connection
with any registration, qualification or compliance pursuant to this Section 5,
including without limitation, all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for the Corporation and
expenses of any special audits incidental to or required by such registration,
shall be borne by the Corporation except as follows:
(i) The Corporation shall not be required to pay fees or
disbursements of legal counsel of the Holder.
(ii) The Corporation shall not be required to pay
underwriters' fees, discounts or commissions relating to Registrable Securities.
(d) Registration Procedures. In the case of the registration,
qualification or compliance effected by the Corporation pursuant to this
Agreement, the Corporation will keep the Holder participating therein advised in
writing as to the initiation of the registration, qualification and compliance
and as to the completion thereof. At its expense the Corporation will:
(i) Keep such registration, qualification or compliance
pursuant to this Section 5 effective for a period of one hundred eighty (180)
days or until the Holder or Holders have completed the distribution described in
the registration statement relating thereto, whichever first occurs; and
(ii) Furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may reasonably request.
(e) Indemnification.
(1) The Corporation will indemnify the Holder of
Registrable Securities, the of its officers, directors and partners, and the
person controlling such Holder, with respect to which such registration,
qualification or compliance has been effected pursuant
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to this Section 5, and the underwriter, if any, and the person who controls any
underwriter of the Registrable Securities held by or issuable to such Holder,
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereto) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other 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, or any violation by the Corporation of any rule or
regulation promulgated under the Act or any state securities law applicable to
the Corporation and relating to action or inaction required of the Corporation
in connection with any such registration, qualification or compliance, and will
reimburse the such Holder, the of its officers, directors and partners, and the
person controlling such Holder, the such underwriter and the person who controls
any such underwriter, for any reasonable legal and any other expenses as
incurred in connection with investigating, defending or settling any such claim,
loss, damage, liability or action, provided that the Corporation will not be
liable in any such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement or omission based
upon and in conformity with written information furnished to the Corporation by
an instrument duly executed by such Holder or underwriter specifically for use
therein.
(2) The Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Corporation, the of its directors and officers, the underwriter, if any, of the
Corporation's securities covered by such a registration statement, the person
who controls the Corporation within the meaning of the Act, and the other such
Holder, the of its officers, directors and partners and the person controlling
such Holder, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereof) 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 document, 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, and will reimburse
the Corporation, such Holder, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in the 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 Corporation by an instrument duly executed by such Holder
specifically for use therein; provided, however, the total amount for which the
Holder shall be liable under this sub- section 5(e)(2) shall not in any event
exceed the aggregate proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in such registration.
(3) The party entitled to indemnification under this
subsection 5(e) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any
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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 be unreasonably withheld), and the Indemnified
Party may participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations hereunder,
unless such failure resulted in actual detriment to the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of the 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.
(f) Information by Holder. The Holder of Registrable Securities
included in any registration shall promptly furnish to the Corporation such
information regarding such Holder and the distribution proposed by such Holder
as the Corporation may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to herein.
(g) Transfer of Registration Rights. A Holder's rights to cause
the Corporation to register their securities and keep information available,
granted to them by the Corporation under this Section 5, may be assigned to a
transferee or assignee who also receives all shares of Registrable Securities
then held by the Holder; provided that the Corporation is given written notice
by such Holder at the time of or within a reasonable time after said transfer,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being assigned,
and such transferee has agreed to comply with the obligations of this Section 5.
(h) Termination of Registration Rights. The registration rights
contained in this Section 5 shall terminate as to a Holder, when all Registrable
Securities held by such Holder may be sold pursuant to SEC Rule 144 within a
three month period.
6. General.
(a) Notice. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon receipt if delivered
personally or by facsimile at the number hereinafter shown below his signature,
or upon deposit in the United States Post Office, by registered or certified
mail with postage and fees prepaid, addressed to the other party hereto at the
address hereinafter shown below his signature. Either party may designate
another address or facsimile number by ten (10) days' advance written notice to
the other party hereto.
(b) Successors and Assigns. This Agreement shall inure to the
benefit of the successors and assigns of the Corporation and, subject to the
restrictions on transfer herein set forth, be binding upon the Purchaser, its
heirs, executors, administrators, successors and
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assigns. This Agreement shall be fully assignable by the Corporation.
(c) Entire Agreement; Amendments. This Agreement shall be
construed under the laws of the State of California (as it applies to agreements
between California residents, entered into and to be performed entirely within
California), and constitutes the entire agreement of the parties with respect to
the acquisition of the securities contemplated hereby superseding all prior
written or oral agreements, and no amendment or addition hereto shall be deemed
effective unless agreed to in writing by the parties hereto. This Agreement is
not intended to supersede the Corporation's obligations under that certain
Engagement Letter among certain of the parties hereto, except for any and all
fees payable for the Corporation's Series B financing.
(d) Separability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way and shall be construed in
accordance with the purposes and tenor and effect of this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"CORPORATION"
ABAXIS, INC.
By: __________________________________
Title: __________________________________
Address: 1320 Chesapeake Terrace
Sunnyvale, CA 94089
Facsimile: (408) 734-2874
"PURCHASER"
WHARTON CAPITAL PARTNERS, LTD.
By: __________________________________
Title: __________________________________
Address:__________________________________ __________________________________
Facsimile:________________________________
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