<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 23, 1998
ACCUMED INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 0-20652 36-4054899
--------------- ------------ -------------------
<S> <C> <C>
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
</TABLE>
900 N. FRANKLIN STREET, SUITE 401, CHICAGO, ILLINOIS 60610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 642-9200
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
EXCHANGE OF CERTAIN CONVERTIBLE NOTES AND INTEREST THEREON FOR
CONVERTIBLE PREFERRED STOCK AND EXCHANGE WARRANTS
On February 23, 1998, the Company consummated the exchange (the "Note
Exchange") of $5,275,000 in principal amount of the Company's 12% Convertible
Promissory Notes due 2000 (the "Convertible Notes") together with the right to
receive an aggregate of $329,030 in accrued and unpaid interest thereon for (i)
1,245,340 shares of Series A Convertible Preferred Stock, par value $0.01 of the
Company having an aggregate stated value equal to $5,604,030 (the "Series A
Stated Value") and convertible into 4,981,360 shares of Common Stock (at an
initial conversion price of $1.125 per share (the "Series A Conversion Price"),
and (ii) 1,245,340 five-year warrants (the "Exchange Warrants") each exercisable
to purchase one share of Common Stock at an exercise price of $1.125 per share.
As a result of the Note Exchange, the Company's net tangible assets increased by
$4,860,000 and the interest expense will be reduced by approximately $1,320,000
through March 2000. The balance of $3,225,000 of Convertible Notes remain
outstanding and unaffected by the Note Exchange.
AUTOMATIC CONVERSION. If, prior to February 23, 2004, (i) the Common
Stock trades at or above $4.50 per share for 20 consecutive trading days, and
(ii) the resale of the shares of Common Stock into which the Series A Preferred
is convertible are then covered by an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), each share of Series
A Preferred then outstanding shall, at the option of the Company, be converted,
automatically and without any action by the holders, into shares of Common Stock
at then effective Series A Conversion Price.
DIVIDEND PENALTY FOR FAILURE TO REGISTER SHARES. The Company has granted
registration rights with respect to the Common Stock issuable upon conversion of
the Series A Preferred and exercise of the Exchange Warrants (collectively the
"Note Exchange Registerable Securities"). The holders of Note Exchange
Registerable Securities are entitled to (i) one demand registration during the
five-year period beginning on May 23, 1998, and (ii) the right to participate,
on a so-called "piggyback" basis, in registrations by the Company under the
Securities Act, other than on Forms S-8, S-4, and similar forms until such time
as the Registerable Note Exchange Securities can be sold without restriction
pursuant to Rule 144 under the Securities Act. If, prior to June 23, 1998, a
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registration statement under the Securities Act has not been declared effective
with respect to the resale of a minimum of one-third of the aggregate number of
shares of Common Stock issuable upon conversion of the Series A Preferred, a
cash dividend of 16% per annum, payable quarterly in arrears, shall be paid on
the Series A Preferred until such time as such registration statement is
declared effective under the Securities Act.
RESTRICTIONS ON RESALE. Each holder of Note Exchange Registrable
Securities has agreed, not to sell, transfer, or otherwise dispose 64% of its
shares of Series A Preferred and shares of Common Stock issuable upon conversion
thereof prior to February 23, 1999.
VOTING RIGHTS. The Series A Preferred is entitled to the following
voting rights in addition to any voting rights which may be required under the
General Corporation Law of the State of Delaware ("Delaware Corporate Law") and
except as follows. The Company may not take any of the following actions without
the affirmative vote of a majority of the shares of Series A Preferred (i) issue
any series of preferred stock senior as to liquidation and/or dividend, (ii)
alter or change the rights of the Series A Preferred as to adversely affect the
Series A Preferred, and (iii) incur certain indebtedness.
On any matters on which the Series A Preferred may be entitled to vote
together with the Common Stock and other shares of convertible Preferred Stock,
the holders thereof shall be entitled to one vote per share of Common Stock into
which its shares of Series A Preferred are then convertible. As to matters upon
which the Series A Preferred is entitled to vote as a separate class, each share
of Series A Preferred shall be entitled to one vote per share.
LIQUIDATION PREFERENCE. Upon a liquidation of the Company, each holder
of Series A Preferred shall be entitled to receive, before and in preference to
any distribution or payment to holders of Common Stock or other security junior
to the Series A Preferred, an amount in cash equal to the Series A Stated Value
of such holder's shares of Series A Preferred then outstanding plus an amount
equal to the accrued and unpaid dividends on such Series A Preferred, if any.
If, upon such liquidation, the assets of the Company available for distribution
to holders of Series A Convertible Preferred and any other series of Preferred
Stock then outstanding ranking on parity with the Series A Convertible Preferred
upon liquidation shall be insufficient to permit payment in full to the holders
of the Series A Convertible Preferred and
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such parity stock, then the entire assets and funds of the Company legally
available for distribution to such holders and the holders of such parity stock
then outstanding shall be distributed ratably among such holders.
EXCHANGE WARRANTS. Each Exchange Warrant is exercisable to purchase one
share of Common Stock at an exercise price of $1.125 per share, subject to
adjustment upon the occurrence of certain events, including, certain dividends,
split-up, reclassification, issuances of stock and convertible securities for
less than the current fair market value, mergers and asset sales. The Company,
at its option, may redeem the Exchange Warrants for $0.25 per Exchange Warrant
upon a minimum of 30 days' notice if the Common Stock has traded at or above
$4.50 per share during 20 consecutive trading days prior to sending the
redemption notice. The Exchange Warrants expire March 31, 2001.
PLACEMENT AGENT COMPENSATION. Commonwealth Associates ("Commonwealth")
served as placement agent in the Note Exchange for which it has received or will
receive from the Company, (i) 50,000 shares of Common Stock in lieu of a cash
retainer, (ii) $175,000 in cash (due 60 days following February 23, 1998), (iii)
350,000 warrants each exercisable to purchase one share of Common Stock at an
exercise price of $1.125 per share during the seven-year exercise period, and
(iv) reimbursement of out-of-pocket expenses, including legal fees. In addition,
200,000 Common Stock purchase warrants issued to Commonwealth or its designees
as compensation for the original placement of the Convertible Notes with an
exercise price of $3.125 will be replaced with warrants having identical terms
except that the exercise price will be reduced to $1.125 per share.
PRIVATE PLACEMENT OF UNITS
On March 19, 1998, the Company sold an aggregate of 5,857,333 shares of
Common Stock and warrants to purchase 5,857,333 shares of Common Stock for
aggregate gross proceeds of $4,393,000 (the "Initial Closing"). Such securities
were issued and sold in units (the "Units"), each Unit consisting of 133,333
shares of Common Stock (determined by dividing (x) $100,000 by (y) $0.75 (the
average closing bid price per share of Common Stock on the three trading days
immediately preceding the closing date plus $0.03125), and seven-year warrants
(expiring on March 19, 2005) to purchase 133,333 shares of Common Stock (the
"Unit Warrants"), at an exercise price of $0.75 per share (the "Unit Warrant
Exercise Price"). The Units were sold in a private placement to accredited
investors (as defined in Rule 501(a) under the Securities Act) only
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(the "Private Placement").
POSSIBLE SALE OF ADDITIONAL UNITS
In accordance with the terms of the Private Placement, the Company may
accept subscriptions for approximately up to an additional $2,200,000 of Units
following the Initial Closing. In such case, a final closing would be held
pursuant to which such additional Units would be issued and sold on the same
terms on which the Units were issued and sold in the Initial Closing, including
payment of additional cash commissions and finders' fees and issuance of
additional agent's warrants and finders' warrants. However, there can be no
assurance that any additional Units will be sold.
REGISTRATION RIGHTS
The Company has agreed to register for resale under the Securities Act
the shares of Common Stock sold in the Units and the shares of Common Stock
underlying the Unit Warrants (collectively, the "Unit Registrable Shares"). The
holders of Units shall have (i) one demand registration during the five-year
period commencing June 19, 1998, and (ii) the right to participate, on a
"piggyback" basis, in registrations by the Company under the Securities Act,
other than on Forms S-8, S-4, etc. until such time as the Common Stock can be
sold (without restriction) pursuant to Rule 144 promulgated under the Securities
Act.
TERMS OF UNIT WARRANTS
Each Unit Warrant is exercisable to purchase one share of Common Stock
at the Unit Exercise Price, subject to adjustment upon the occurrence of certain
events, including, certain dividends, split-up, reclassification, issuances of
stock and convertible securities for less than the current fair market value,
mergers and asset sales. However, the Company currently has insufficient
authorized and unissued shares of Common Stock available to reserve for issuance
upon exercise of all of the Unit Warrants issued in the Initial Closing.
Therefore, certain of the Unit Warrants will become exercisable if and when the
Company has available a sufficient number of authorized and unissued shares of
Common Stock to reserve for issuance upon exercise thereof. If the Company does
not have such sufficient shares of Common Stock so reserved on or prior to July
15, 1998, each original holder of Unit Warrants will be entitled to receive, at
its option, in exchange
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for its Unit Warrants, shares of Series C Convertible Preferred Stock, par value
$0.01 per share of the Company (the "Series C Preferred") having a stated value
of $0.01 per share (the "Series C Stated Value"), convertible into the number of
shares of Common Stock issuable upon exercise other the Unit Warrants, upon
payment in cash of the amount of the Unit Warrant Exercise Price in effect at
the time of such exchange (the "Series C Conversion Price"), subject to
adjustment.
The Company, at its option, may redeem the Unit Warrants for $0.25 per
Unit Warrant upon a minimum of 20 days' notice if (i) the Common Stock has
traded at or above $4.50 per share during 20 consecutive trading days prior to
sending the redemption notice, and (ii) resale of shares of Common Stock
underlying the Unit Warrants is then covered by an effective registration
statement under the Securities Act.
TERMS OF SERIES C PREFERRED
Holders of Series C Preferred, if issued, will receive a cash dividend
of $0.16 per annum per share of Common Stock issuable upon conversion of its
shares of Series C Preferred, payable quarterly in arrears, until such time, if
any, as there is a sufficient number of authorized and unissued shares of Common
Stock reserved for issuance upon conversion in full of all shares of Series C
Preferred issued in exchange for the Unit Warrants.
DIVIDEND PENALTY FOR FAILURE TO REGISTER SHARES. If a registration
statement under the Securities Act has not been declared effective with respect
to the resale of all of the shares of Common Stock issuable upon conversion of
the Series C Preferred within 120 days following the date on which the Series C
Preferred is issued, if any, a cash dividend of $0.16 per annum per share
issuable upon conversion of the Series C Preferred, payable quarterly in
arrears, shall be paid on the Series C Preferred until such time as such
registration statement is declared effective under the Securities Act.
VOTING RIGHTS. The Series C Preferred, if issued, will be entitled to
the following voting rights in addition to any voting rights which may be
required under Delaware Corporate Law. The Company may not take any of the
following actions without the affirmative vote of a majority of the shares of
Series C Preferred (i) issue any series of preferred stock senior as to
liquidation and/or dividend, (ii) alter or change the rights of the Series C
Preferred as to adversely affect the Series A Preferred, and (iii) incur certain
indebtedness.
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On any matters on which the Series C Preferred may be entitled to vote
together with the Common Stock and other shares of convertible Preferred Stock,
the holders thereof shall be entitled to one vote per share of Common Stock into
which its shares of Series C Preferred are then convertible. As to matters upon
which the Series C Preferred is entitled to vote as a separate class, each share
of Series C Preferred shall be entitled to one vote per share.
LIQUIDATION PREFERENCE. Upon a liquidation of the Company, each holder
of Series C Preferred shall be entitled to receive, before and in preference to
any distribution or payment to holders of Common Stock or other security junior
to the Series C Preferred, an amount in cash equal to the Series C Stated Value
of such holder's shares of Series C Preferred then outstanding plus an amount
equal to the accrued and unpaid dividends on such Series C Preferred, if any.
If, upon such liquidation, the assets of the Company available for distribution
to holders of Series C Convertible Preferred and any other series of Preferred
Stock then outstanding ranking on parity with the Series C Convertible Preferred
upon liquidation shall be insufficient to permit payment in full to the holders
of the Series C Convertible preferred and such parity stock, then the entire
assets and funds of the Company legally available for distribution to such
holders and the holders of such parity stock then outstanding shall be
distributed ratably among such holders.
REDEMPTION. The Company, at its option, may redeem the Series C
Preferred for $0.01 per share upon a minimum of 30 days' notice if (i) the
Common Stock has traded at or above $4.50 per share during 20 consecutive
trading days prior to sending the redemption notice, and (ii) resale of shares
of Common Stock underlying the Series C Preferred is then covered by an
effective registration statement under the Securities Act.
POSSIBLE EXCHANGE OF UNITS FOR ALTERNATE UNITS
If the Common Stock is delisted from The Nasdaq Stock Market at any time
on or prior to December 31, 1998, original purchasers of Units will be entitled
to receive, at their option, in exchange for the Units, units (the "Alternate
Units"), each Alternate Unit consisting of (i) shares of Series B Convertible
Preferred Stock, par value $0.01 per share of the Company (the "Series B
Preferred") having an aggregate stated value of $100,000 (the "Series B Stated
Value"), convertible into shares of Common Stock at an initial conversion price
(the "Series B Conversion Price") of $0.75 per share, subject to reset as
described below, and (ii) warrants (the
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"Alternate Warrants") exercisable to purchase the number of shares of Common
Stock issuable upon exercise of the Unit Warrants at the same initial Unit
Warrant Exercise Price, subject to reset as described below.
TERMS OF SERIES B PREFERRED
The Series B Preferred, if issued, will be immediately convertible at
the option of the holder into shares of Common Stock at the Series B Conversion
Price. If, on or prior to December 31, 1998, the average closing bid price per
share of Common Stock for five consecutive trading days is less than $0.50 and
the then current Series B Conversion Price is higher than $0.50, then the Series
B Conversion Price will be reduced to $0.50. However, the Company may not have
sufficient authorized and unissued shares of Common Stock available to reserve
for issuance upon conversion of all of shares of Series B Preferred, if the
Series B Conversion Price is reset. In which case, holders of Series B Preferred
would only be able to convert such shares into its pro rata percentage of shares
available for issuance upon conversion of Series B Preferred. If the Company
does not have such sufficient shares of Common Stock reserved for issuance of
all shares of Common Stock into which the Series B Convertible Preferred are
then convertible on or prior to July 15, 1998, each holder of Series B Preferred
will be entitled to receive a cash dividend of 16% per annum on the Series B
Stated Value, payable quarterly in arrears, until such time, if any, as there
are sufficient authorized and unissued shares reserved for issuance upon
exercise in full of the Series B Preferred issued in the Alternate Units.
AUTOMATIC CONVERSION. If during the six-year period beginning on March
19, 1998, (i) the Common Stock has traded at or above $4.50 per share during 20
consecutive trading days, and (ii) resale of shares of Common Stock underlying
the Series B Preferred is then covered by an effective registration statement
under the Securities Act, the Series B Preferred, at the option of the Company
and without action of the holders, may be converted into Common Stock at the
then effective Series B Conversion Price.
DIVIDEND PENALTY FOR FAILURE TO REGISTER SHARES. If a registration
statement under the Securities Act has not been declared effective with respect
to the resale of all of the shares of Common Stock issuable upon conversion of
the Series B Preferred on or prior to July 15, 1998, a cash dividend of 16% per
annum per on the Series B Stated Value, payable quarterly in arrears, shall be
paid on the Series B Preferred until such time as such registration statement is
declared effective under the Securities
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Act.
VOTING RIGHTS. The Series B Preferred, if issued, will be entitled to
the following voting rights in addition to any voting rights which may be
required under Delaware Corporate Law. The Company may not take any of the
following actions without the affirmative vote of a majority of the shares of
Series B Preferred (i) issue any series of preferred stock senior as to
liquidation and/or dividend, (ii) alter or change the rights of the Series B
Preferred as to adversely affect the Series B Preferred, and (iii) incur certain
indebtedness.
On any matters on which the Series B Preferred may be entitled to vote
together with the Common Stock and other shares of convertible Preferred Stock,
the holders thereof shall be entitled to one vote per share of Common Stock into
which its shares of Series B Preferred are then convertible. As to matters upon
which the Series B Preferred is entitled to vote as a separate class, each share
of Series B Preferred shall be entitled to one vote per share.
LIQUIDATION PREFERENCE. Upon a liquidation of the Company, each holder
of Series B Preferred shall be entitled to receive, before and in preference to
any distribution or payment to holders of Common Stock or other security junior
to the Series B Preferred, an amount in cash equal to the Series B Stated Value
of such holder's shares of Series B Preferred then outstanding plus an amount
equal to the accrued and unpaid dividends on such Series B Preferred, if any.
If, upon such liquidation, the assets of the Company available for distribution
to holders of Series B Preferred and any other series of Preferred Stock then
outstanding ranking on parity with the Series B Preferred (including the Series
A Preferred) upon liquidation shall be insufficient to permit payment in full to
the holders of the Series B Preferred and such parity stock, then the entire
assets and funds of the Company legally available for distribution to such
holders and the holders of such parity stock then outstanding shall be
distributed ratably among such holders.
PLACEMENT AGENT COMPENSATION; FINDERS' FEES
Commonwealth acted as placement agent in the Private Placement for which
it received from the Company, (i) 133,333 shares of Common Stock in lieu of a
cash retainer, (ii) $126,113 in cash, (iii) and seven-year warrants to purchase
336,302 shares of Common Stock at an exercise price of $0.75 per share, and (iv)
reimbursement of out-of-pocket expenses, including legal fees, up
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to a maximum of $100,000. In addition, the 350,000 Common Stock purchase
warrants issued to Commonwealth or its designees as compensation for its
services in connection with the Note Exchange at an exercise price of $1.125
will be replaced with warrants having identical terms except that the exercise
price will be reduced to $0.75 per share.
Harold S. Blue and Lincoln Enterprises served as finders in the Private
Placement for which each received approximately $107,000 in cash and seven-year
warrants to purchase an aggregate of approximately 284,000 shares of Common
Stock at an exercise price of $0.75 per share.
BELLINGHAM INVESTMENT; NEW DIRECTORS
Bellingham Capital Industries ("Bellingham") purchased $3,000,000 of
Units in the Private Placement pursuant to which Bellingham received 4,000,000
shares of Common Stock and 4,000,000 Unit Warrants. Upon consummation of the
Private Placement, Bellingham became the single largest holder of Common Stock
and owned approximately 14% of the shares of Common Stock issued and outstanding
as of March 19, 1998. The Company's Board of Directors has agreed to expand the
Board from seven to nine members and to appoint two individuals recommended by
Bellingham to fill the newly created directorships.
One of the individuals is Harold S. Blue, who was a director of the
Company from July 1996 through May 23, 1997. Since February 1993, Mr Blue has
served as Chairman of the Board and Chief Executive Officer of ProxyMed, Inc., a
healthcare information technology company. From July 1992 until February 1995,
Mr. Blue served as Chairman of the Board and Chief Executive Officer of
Health Services of Miami Lakes, Inc., Health Services of Pembroke Lakes, Inc.
and Health Services of North Miami, Inc., each a physician practice management
group. From June 1979 to February 1992, Mr. Blue was President and Chief
Executive Officer of Budget Drugs, Inc., a retail discount pharmacy chain. From
September 1984 to August 1988, Mr. Blue was Executive Vice President of Best
Generics Incorporated, a national generic distribution company, which he
co-founded.
CHANGES IN COMPOSITION OF AUDIT COMMITTEE
Effective March 3, 1998, the Company's Audit Committee is comprised of
the following non-employee directors, Jack H. Halperin, Chairman, J. Donald
Gaines and Joseph W. Plandowski.
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POSSIBLE REVERSE STOCK SPLIT; RECENT DEVELOPMENTS RELATING TO
POSSIBLE DELISTING OF COMMON STOCK FOR THE NASDAQ SMALLCAP MARKET
On March 17, 1998, Nasdaq granted the Company's request for an extension
of the deadline for achieving compliance with the minimum $1.00 bid price per
share of Common Stock for continued listing of the Common Stock on The Nasdaq
SmallCap Market. The Company must still meet the $7,000,000 minimum net tangible
assets requirement established by the Nasdaq Oral Hearing Panel (the "Panel") as
well as all criteria for continued listing of the Common Stock on The Nasdaq
SmallCap Market on or prior to March 20, 1998. However, the Panel has modified
the terms of the temporary exemption for inclusion of the Common Stock on The
Nasdaq SmallCap Market to allow the Company until May 29, 1998 to effect a
reverse stock spilt sufficient to rase the bid price per share of Common Stock
to over $1.00. The bid price must also remain over $1.00 per share during the
ten consecutive trading days following the effectiveness of such reverse stock
split. The Company's Board of Directors has approved such a reverse stock split
and will recommend that the stockholders vote in favor therefor at the Combined
Annual and Special Meeting of Stockholders currently scheduled to be held on May
19, 1998. However,there can be no assurance that the stockholders will approve
such proposal prior to such deadline or that such reverse stock split will have
the effect of so increasing the bid price.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information:
AccuMed International, Inc.:
1. Pro Forma Condensed Consolidated Balance Sheet as
of February 28, 1998.
2. Pro Forma Condensed Consolidated Statement of
Operations for the two months ended February 28, 1998.
3. Notes to Pro Forma Condensed Consolidated Financial
Statements.
(c) Exhibits:
4.1 Certificate of Designation, Rights and Preferences of Series A
Convertible Preferred Stock.
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4.2 Certificate of Correction to Certificate of Designation, Rights and
Preferences of Series A Convertible Preferred Stock.
4.3 Warrant Agreement dated as of February 23, 1998 between the Company
and Commonwealth Associates, including form of Warrant Certificate
attached as Exhibit A thereto, representing an aggregate of
1,245,340 Common Stock purchase Warrants.
4.4 Subscription Agreement and Registration Rights Agreement dated as
of February 23, 1998 between the Registrant and each of the
investors in the Note Exchange.
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ACCUMED INTERNATIONAL, INC.
PRO-FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
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ASSETS February 28, 1998 Adjustments Pro-Forma
----------------- ----------- ------------
Current Assets
<S> <C> <C> <C>
Cash and cash equivalents $ 317,668 $ 3,393,000 (1) $ 3,710,668
Accounts receivable, net 5,453,535 5,453,535
Prepaid expenses and deposits 274,989 274,989
Production inventory 3,389,346 3,389,346
------------ ----------- ------------
Total current assets 9,435,538 3,393,000 12,828,538
------------ ----------- ------------
Fixed assets, net 4,836,709 4,836,709
------------ ----------- ------------
Notes receivable 164,199 164,199
Deferred financing costs 244,024 244,024
Purchased technology 4,889,762 4,889,762
Other assets 760,143 760,143
------------ ----------- ------------
$ 20,330,375 $ 3,393,000 $ 23,723,375
============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,844,824 $ 439,300 (2) $ 4,284,124
Other current liabilities 1,266,101 1,266,101
Deferred revenue 142,423 142,423
Notes payable, current portion 3,867,795 (1,000,000) (1) 2,867,795
------------ ----------- ------------
Total current liabilities 9,121,143 (560,700) 8,560,443
------------ ----------- ------------
Warranty reserves 267,299 267,299
Long term debt 6,566,572 6,566,572
Minority interest 48,775 48,775
------------ ----------- ------------
6,882,646 - 6,882,646
------------ ----------- ------------
Stockholders' equity
Preferred stock, series A convertible 5,604,030 5,604,030
Common stock, $0.01 par value 229,040 59,906 (1,3) 288,946
Additional paid-in capital 52,171,867 3,893,794 (1,2,3) 56,065,661
Cumulative translation adjustment 22,589 22,589
Accumulated deficit (53,484,203) (53,484,203)
Less treasury stock (216,737) (216,737)
------------ ----------- ------------
Total stockholders' equity 4,326,586 3,953,700 8,280,286
------------ ----------- ------------
$ 20,330,375 $ 3,393,000 $ 23,723,375
============ =========== ============
</TABLE>
See notes to the Pro-Forma Consolidated Financial Statements.
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ACCUMED INTERNATIONAL, INC.
PRO-FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWO MONTHS ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
UNAUDITED
------------------------------------------------------------
Two Months Ended
February 28,1998 Adjustments Pro-Forma
---------------- ------------------- -----------
<S> <C> <C> <C>
Sales $ 3,845,914 $ 3,845,914
Less cost of sales (2,095,568) (2,095,568)
----------- ------------------- -----------
Gross profit (loss) 1,750,346 1,750,346
----------- ------------------- -----------
Operating expenses:
General and administrative 1,268,607 1,268,607
Research and development 675,078 675,078
Sales and marketing 558,419 558,419
----------- ------------------- -----------
Total operating expenses 2,502,104 2,502,104
----------- ------------------- -----------
Operating income (loss) (751,758) (751,758)
----------- ------------------- -----------
Other income (expense):
Interest income 1,545 1,545
Interest expense (357,702) (357,702)
Other income (expense) (43,080) (43,080)
Debt conversion (expense) (1,147,610) (1,147,610)
Minority interest 68,291 68,291
----------- ------------------- -----------
Total other income (expense) (1,478,556) - (1,478,556)
----------- ------------------- -----------
Loss before income taxes (2,230,314) - (2,230,314)
Income tax expense - -
----------- ------------------- -----------
Net loss $(2,230,314) $ - $(2,230,314)
=========== =================== ===========
Net loss per share $ (0.10) $ (0.10)
=========== ===========
Weighted average common shares outstanding 22,904,000 22,904,000
=========== ===========
</TABLE>
See Notes to the Pro-Forma Consolidated Financial Statements.
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ACCUMED INTERNATIONAL, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF THE OFFERING
The Company engaged an investment banking firm as placement agent in
a private placement (the "Offering") of units, each unit consisting of the
Company's Common Stock and detachable warrants to purchase Common Stock of the
Company. Terms of the agency agreement call for a "best efforts" method to sell
a minimum of $4,000,000 of units and a maximum of $6,000,000 of units, subject
to increase upon mutual agreement of the Company and the placement agent,
which is to be completed by April 15, 1998.
The accompanying condensed consolidated financial statements illustrate
the effect of the Offering ("Pro Forma") on the Company's financial position and
results of operations. The condensed consolidated balance sheet as of February
28, 1998 is based on the historical balance sheet of the Company as of that date
and assumes the Offering took place on that date. The condensed consolidated
statement of operations for the two months ended February 28, 1998 is based on
the historical statement of operations of the Company for that period. The pro
forma condensed consolidated statement of operations assumes the Offering took
place on February 28, 1998.
The pro forma condensed consolidated financial statements reflect the
Initial Closing of the Offering and may not be indicative of the results of the
Offering if additional units are sold.
The accompanying pro forma condensed consolidated financial statements
should be read in connection with the historical financial statements of the
Company.
NOTE B - PRO FORMA ADJUSTMENTS
The following adjustments are reflected in the Pro Forma Condensed
Consolidated Financial Statements under the columns headed "Adjustments".
(1) $4,393,000 of units consisting of Common Stock and detachable warrants
to purchase Common Stock of the Company are issued. The Company
exchanges a $1,000,000 note payable into $1,000,000 of units in lieu of
cash as part of the Offering.
(2) $439,300 of investment banking fees and estimated expenses are incurred
in connection with the issuance of the units described above.
(3) Shares of Common Stock having a market value of $100,000 are issued
for investment banking fees incurred in connection with the issuance
of the units described above.
- 15 -
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 20, 1998
ACCUMED INTERNATIONAL, INC.
By: /S/ LEONARD R. PRANGE
-----------------------------
Leonard R. Prange
Chief Financial Officer
and Chief Operating Officer
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<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE
PREFERRED STOCK
OF
ACCUMED INTERNATIONAL, INC.
ACCUMED INTERNATIONAL, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Company"), by
its President and Secretary, does hereby certify that, pursuant to authority
conferred upon the Board of Directors by Division I of Article Fourth of the
Certificate of Incorporation, as amended, of the Company, authorizing a class of
5,000,000 shares of preferred stock of the Company and pursuant to the
provisions of Section 151 of the Delaware General Corporation Law, as amended,
the Board of Directors of the Company, by Unanimous Written Consent effective as
of February 12, 1998, has duly adopted resolutions providing for the issuance
out of such class of a series of up to 1,221,715 shares of Series A Convertible
Preferred Stock at an issuance price of $4.50 per share (the "Stated Value") and
setting forth the voting powers, designation, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions thereof, which resolution is as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Certificate of
Incorporation, as amended, there be, and hereby is, created out of the class of
5,000,000 shares of preferred stock of the Company authorized in Division I of
Article Fourth of its Certificate of Incorporation, as amended, a series of
preferred stock of the Company with the following voting powers, designation,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions:
1. Designation and Number of Shares.
1,221,715 shares of preferred stock are hereby designated
as Series A Convertible Preferred Stock, par value $0.01 per share (the "Series
A Preferred Stock"). The Stated Value per share of the Series A Preferred Stock
is $4.50.
2. Dividends and Distributions.
(A) If on or prior to June 23, 1998 (the "Registration
Deadline"), the Company shall fail to have an effective registration statement
("Registration Statement") under the Securities Act of 1933, as amended
("Securities Act"), covering the registration of at least one-third of the
shares of Common Stock, $.01 par value per share, of the Company (the "Common
Stock") issuable upon conversion of the Series A Preferred Stock, commencing on
the Registration Deadline, the holders of the Series A Preferred Stock shall be
entitled to receive cumulative dividends on each share of Series A Preferred
Stock, payable in cash, at the rate of 16% per annum (computed on the basis of a
360-day year of twelve 30 day months) per share on the Stated Value of the
Series A Preferred Stock, payable
<PAGE> 2
quarterly in arrears, until and including such date as such shares of Common
Stock are covered by an effective registration statement under the Securities
Act. Thereafter, the Series A Preferred Stock shall not bear any dividend. Such
dividends shall accrue and accumulate whether or not they have been declared and
whether or not there are profits, surplus or other funds of the Company legally
available for the payment of dividends.
(B) In addition to the foregoing, subject to the prior and
superior rights of the holders of any shares of any series or class of capital
stock ranking prior and superior to the shares of Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred Stock shall be
entitled to receive, as, when and if declared by the Board of Directors of the
Corporation, out of assets legally available for that purpose, dividends or
distributions in cash, stock or otherwise.
(C) The Corporation shall not declare any dividend or
distribution on any Junior Stock (as defined below), unless the Corporation
shall have paid all accrued cumulative dividends on the Series A Preferred Stock
pursuant to Subsection 2(A), if any, and shall, concurrently with the
declaration of such dividend or distribution on the Junior Stock, declare a like
dividend or distribution, as the case may be, on the Series A Preferred Stock in
an amount per share equal to (x) the amount of the dividend or distribution per
share of Junior Stock multiplied by (y) the effective Conversion Rate at the
time of such dividend or distribution.
(D) Any dividend or distribution (other than that
referenced in Subsection 2(A)) payable to the holders of the Series A Preferred
Stock pursuant to this Section 2 shall be paid to such holders at the same time
as the dividend or distribution on the Junior Stock or any other capital stock
of the Corporation by which it is measured is paid.
(E) All dividends or distributions declared upon the
Series A Preferred Stock shall be declared pro rata per share.
(F) Any reference to "distribution" contained in this
Section 2 shall not be deemed to include any distribution made in connection
with or in lieu of any Liquidation (as defined below).
(G) "Junior Stock" shall mean the Common Stock and any
shares of preferred stock or any series or class of the Corporation, whether
presently outstanding or hereafter issued, which are junior to the shares of
Series A Preferred Stock with respect to (i) the distribution of assets on any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, (ii) dividends or (iii) voting.
(H) In the event of a split or subdivision of the
outstanding shares of Series A Preferred Stock, or the combination or the
outstanding shares of Series A Preferred Stock, as the case may be, the
dividends provided for in this Section 2 shall automatically and without any
further action be decreased, in the case of a split or subdivision, or
increased, in the case of a combination, in proportion to the increase or
decrease in the number of shares of Series A Preferred Stock outstanding
immediately before such split, subdivision or combination.
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<PAGE> 3
3. Redemption. The Series A Preferred Stock is not redeemable.
4. Liquidation
Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary ("Liquidation"), the holders of record
of the shares of the Series A Preferred Stock shall be entitled to receive,
before and in preference to any distribution or payment of assets of the Company
or the proceeds thereof may be made or set apart for the holders of Common Stock
or any other security junior to the Series A Preferred Stock in respect of
distributions upon Liquidation out of the assets of the Company legally
available for distribution to its stockholders, an amount in cash equal to the
Stated Value per share (subject to adjustment if the Series A Preferred Stock
has been adjusted pursuant to Paragraph 2 hereof) plus an amount equal to
accrued and unpaid dividends, if any, on each share of Series A Preferred Stock
on the date fixed for the distribution of assets of the Company (the
"Liquidation Preference"). If, upon such Liquidation, the assets of the Company
available for distribution to the holders of Series A Preferred Stock and any
other series of preferred stock then outstanding ranking on parity with the
Series A Preferred Stock upon liquidation ("Parity Stock") shall be insufficient
to permit payment in full to the holders of the Series A Preferred Stock and
Parity Stock, then the entire assets and funds of the Company legally available
for distribution to such holders and the holders of the Parity Stock then
outstanding shall be distributed ratably among the holders of the Series A
Preferred Stock and Parity Stock based upon the proportion the total amount
distributable on each share upon liquidation bears to the aggregate amount
available for distribution on all shares of the Series A Preferred Stock and of
such Parity Stock, if any. A merger or consolidation shall be considered a
Liquidation except in the event that in such a transaction, the holders of the
Series A Preferred Stock receive securities of the surviving corporation having
substantially similar rights as the Series A Preferred Stock and the
stockholders of the Company immediately prior to such transaction are holders of
at least a majority of the voting securities of the surviving corporation
immediately thereafter. Notwithstanding Section 7 hereof, such provision may be
waived in writing by a majority of the holders of the then outstanding Series A
Preferred Stock.
5. Priority.
(A) So long as any shares of Series A Preferred Stock
shall be outstanding, no dividends, whether in cash or property, shall be paid
or declared, nor shall any other distribution be made, on the Common Stock of
the Company or any other security junior to the Series A Preferred Stock as to
dividend rights, unless all dividends on the Series A Preferred Stock for all
past quarterly dividend periods and the full dividends for the then current
quarterly period shall have been paid or declared and duly provided for. The
provisions of this Section 5 shall not, however, apply to a dividend payable in
Common Stock or any other security of the Company junior to the Series A
Preferred Stock. If any dividend previously due on the Series A Preferred Stock
has not been paid in full, then no dividends shall be paid or declared upon any
shares of any class or series of stock of the Company ranking on a parity with
the Series A Preferred Stock in the payment of dividends for any period unless a
like proportionate dividend for the current period, ratably in proportion to the
respective annual dividend rates fixed thereupon, if any, have been paid upon or
declared for the Series A Preferred Stock then issued and outstanding.
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<PAGE> 4
(B) The Company may issue, in the future, without the
consent of holders of the Series A Preferred Stock, other series of preferred
stock which rank on parity with or junior to the Series A Preferred Stock as to
dividend and/or liquidation rights. In accordance with Paragraph 7(C) hereof,
the consent of the holders of two-thirds of the outstanding shares of the Series
A Preferred Stock is required for the issuance of any series of preferred stock
which is senior as to dividend and/or liquidation rights to the Series A
Preferred Stock.
6. Conversion Rights.
Each holder of record of shares of the Series A Preferred
Stock shall have the right to convert all or any part of such holder's shares of
Series A Preferred Stock into Common Stock as follows:
(A) Voluntary Conversion. Each share of the Series A
Preferred Stock shall be convertible, at the option of the respective holders
thereof, at any time after the date of issuance, at the office of any transfer
agent for the Series A Preferred Stock, or if there is none, then at the office
of the transfer agent for the Common Stock, or if there is no such transfer
agent, at the principal executive office of the Company, into that number of
fully paid and non-assessable shares of Common Stock of the Company equal to the
Stated Value divided by the conversion price in effect at the time of conversion
(the "Conversion Price"), determined as hereinafter provided. The Conversion
Price shall initially be $1.125. The number of shares of Common Stock into which
each share of Series A Preferred Stock is convertible is hereinafter
collectively referred to as the "Conversion Rate." Dividends accrued and payable
at the time of conversion, if any, shall be paid in cash. For purposes of this
Paragraph 6(A), such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of
Series A Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of such date.
(B) Automatic Conversion. During the six year period
commencing on February 23, 1998 if (i) the current market price (as determined
in accordance with Paragraph 6(G)(ii)) of the Company's Common Stock equals or
exceeds $4.50 per share and (ii) a registration statement covering the shares of
Common Stock issuable upon conversion of the Series A Preferred Stock has been
declared effective under the Securities Act, each share of Series A Preferred
Stock then outstanding shall, at the option of the Company upon 20 days' prior
written notice to each holder of record, by virtue of such conditions and
without any action on the part of the holder thereof, be deemed automatically
converted into that number of shares of Common Stock into which the Series A
Preferred Stock would then be converted at the then effective Conversion Rate.
(C) Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Company or of any transfer agent for the
Series A Preferred Stock, and shall give written notice to the Company at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. The Company shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, or to
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<PAGE> 5
the nominee or nominees of such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of Series A
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date.
(D) All Common Stock which may be issued upon conversion
of the Series A Preferred Stock will, upon issuance, be duly issued, fully paid
and non-assessable and free from all taxes, liens, and charges with respect to
the issuance thereof. At all times that any shares of Series A Preferred Stock
are outstanding, the Company shall have authorized and shall have reserved for
the purpose of issuance upon such conversion into Common Stock of all Series A
Preferred Stock, a sufficient number of shares of Common Stock to provide for
the conversion of all outstanding shares of Series A Preferred Stock at the then
effective Conversion Rate. Without limiting the generality of the foregoing, if,
at any time, the Conversion Price is decreased, the number of shares of Common
Stock authorized and reserved for issuance upon the conversion of the Series A
Preferred Stock shall be proportionately increased.
(E) The Conversion Price shall be subject to adjustment
from time to time as follows:
(i) In case the Company shall (a) issue Common
Stock as a dividend or distribution on any class of the capital stock of the
Company, (b) split or otherwise subdivide its outstanding Common Stock, (c)
combine the outstanding Common Stock into a smaller number of shares, or (d)
issue by reclassification of its Common Stock (except in the case of a merger,
consolidation or sale of all or substantially all of the assets of the Company
as set forth in subparagraph 6(E)(ii) below) any shares of the capital stock of
the Company, the Conversion Price in effect on the record date for any stock
dividend or the effective date of any such other event shall be increased (or
decreased in the case of a reverse stock split) so that the holder of each share
of the Series A Preferred Stock shall thereafter be entitled to receive, upon
the conversion of such share, the number of shares of Common Stock or other
capital stock which it would own or be entitled to receive immediately after the
happening of any of the events mentioned above had such share of the Series A
Preferred Stock been converted immediately prior to the close of business on
such record date or effective date. The adjustments herein provided shall become
effective immediately following the record date for any such stock dividend or
the effective date of any such other events. There shall be no reduction in the
Conversion Price in the event that the Company pays a cash dividend.
(ii) In case of any reclassification or similar
change of outstanding shares of Common Stock of the Company, or in case of the
consolidation or merger of the Company with another corporation, or the
conveyance of all or substantially all of the assets of the Company in a
transaction in which holders of the Common Stock receive shares of stock or
other property including cash, each share of the Series A Preferred Stock shall,
after such event and subject to the other rights of the Series A Preferred Stock
as set forth elsewhere herein, be convertible only into the number of shares of
stock or other securities or property, including cash, to which a holder of the
number of shares of Common Stock of the Company deliverable upon conversion of
such shares of the Series A Preferred
-5-
<PAGE> 6
Stock would have been entitled upon such reclassification, change consolidation,
merger or conveyance had such share been converted immediately prior to the
effective date of such event.
(iii) No adjustment in the Conversion Price or the
number of shares of Common Stock into which a share of Series A Preferred Stock
may be converted shall be required unless such adjustment (plus any adjustments
not previously made by reason of this subparagraph (iii)) would require an
increase or decrease of at least 1 1/2% in the number of shares of Common Stock
into which each share of the Series A Preferred Stock is then convertible;
provided, however, that any adjustments which are not required to be made by
reason of this subparagraph (iii) shall be carried forward and taken into
account in any subsequent adjustment. All calculations and adjustments shall be
made to the nearest cent or to the nearest 1/100th of a share, as the case may
be.
(iv) After each adjustment of the Conversion Price
the Company shall promptly prepare a certificate signed by its Chairman or Chief
Financial Officer and a Secretary or Assistant Secretary setting forth the
Conversion Price, as so adjusted; the number of shares of Common Stock into
which the Series A Preferred Stock may be converted, and a statement of the
facts upon which such adjustment is based, and such certificate shall forthwith
be filed with the transfer agent, if any, for the Series A Preferred Stock, and
the Company shall cause such a copy of statement to be sent by ordinary first
class mail to each holder of record of Series A Preferred Stock.
(F) The Company shall at all times reserve and keep
available, out of its authorized but unissued shares of Common Stock or out of
shares of Common Stock held in its treasury, solely for the purpose of effecting
the conversion of the shares of the Series A Preferred Stock, the full number of
shares of Common Stock deliverable upon the conversion of all shares of the
Series A Preferred Stock from time to time outstanding. The Company shall from
time to time in accordance with Delaware law take all steps necessary to
increase the authorized amount of its Common Stock if at any time the authorized
number of shares of Common Stock remaining unissued shall not be sufficient to
permit the conversion of all of the shares of the Series A Preferred Stock.
(G)(i) No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon the conversion of the
Series A Preferred Stock. In lieu of any fractional shares to which a holder
would otherwise be entitled, the Company shall pay cash, equal to such fraction
multiplied by the current market price per share (determined as provided in
subparagraph (ii) of this Paragraph 6(G)) of the Common Stock on the day of
conversion.
(ii) For the purposes of any computation under this
Section 6, the current market price per share of Common Stock on any date shall
be deemed to be the average of the closing prices for the 20 consecutive trading
days commencing 45 business days before the day in question. The closing price
for each day shall be the last reported sales price regular way or in case no
sale takes place on such day, the average of the closing high bid and low asked
prices regular way, in either case (a) as officially quoted by the Nasdaq Small
Capitalization Market or the Nasdaq National Market, as the case may be, or (b)
if, in the reasonable judgment of the Board of Directors of the Company, the
Nasdaq Small Capitalization Market or the Nasdaq National Market is no longer
the principal United States market for the Common Stock, then as quoted on the
principal United States market for the Common Stock, as determined by the Board
of Directors of the Company, or (c) if, in the reasonable judgment
-6-
<PAGE> 7
of the Board of Directors of the Company, there exists no principal United
States market for the Common Stock, then as reasonably determined by the Board
of Directors of the Company.
(H) The Company will pay any taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of the Series A Preferred Stock. However, the Company shall not be
required to pay any tax which may be payable in respect to any transfer involved
in the issue and delivery of shares of Common Stock upon conversion in a name
other than that in which the shares of the Series A Preferred Stock so converted
were registered, and no such issue or delivery shall be made unless and until
the person requesting such issue or delivery has paid to the Company the amount
of any such tax, or has established, to the satisfaction of the Company, that
such tax has been paid.
(I) The Company will not, by amendment of its Certificate
of Incorporation, as amended, or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 6 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock against impairment.
7. Voting Rights. The holders of the Series A Preferred Stock
shall have no right to vote for any purpose, except as specifically required by
the General Corporation Law of the State of Delaware and except as follows:
(A) So long as any shares of the Series A Preferred Stock
remain outstanding, the affirmative vote of the holders of a majority of the
then outstanding shares of Series A Preferred Stock, voting as a single class,
together with any other series of preferred stock then entitled to vote on such
matter, regardless of series, either expressed in writing or at a meeting called
for that purpose, shall be necessary to permit, effect or validate the creation
and issuance of any series of preferred stock of the Company which is senior as
to liquidation and/or dividend rights to the Series A Preferred Stock.
(B) So long as any shares of the Series A Preferred Stock
remain outstanding, the affirmative vote of the holders of a majority of the
then outstanding shares of Series A Preferred Stock, voting as one class
together with any other series of the Company's preferred stock then entitled to
vote on such matter, regardless of series, either expressed in writing or at a
meeting called for that purpose, shall be necessary to repeal, amend or
otherwise change this Certificate of Designation, Preferences and Rights or the
Certificate of Incorporation of the Company in a manner which would alter or
change the powers, preferences or rights of the Series A Preferred Stock so as
to adversely affect the Series A Preferred Stock. However, in case the Series A
Preferred Stock would be affected by any action referred to in this Paragraph
7(B) in a different manner than any other series of preferred stock then
outstanding, the holders of the shares of the Series A Preferred Stock shall be
entitled to vote as a single and separate class, and the Company shall not take
such action without the affirmative vote, as above provided, of at least a
majority of the total number of shares of the Series A Preferred Stock then
outstanding, in addition to or as a specific part of the consent or affirmative
vote hereinabove otherwise required.
-7-
<PAGE> 8
(C) So long as any shares of the Series A Preferred Stock
remain outstanding, the affirmative vote of the holders of a majority of the
then outstanding shares of Series A Preferred Stock, voting as one class
together with any other series of the Company's preferred stock then entitled to
vote on such matter, regardless of series, either expressed in writing or at a
meeting called for that purpose, shall be necessary to permit the Company to
incur any indebtedness whatsoever which indebtedness does not expressly provide
that no payments will be made on such indebtedness (except for regularly
scheduled interest payments) while the Series A Preferred Stock is outstanding,
except for the incurrence of $5,000,000 principal amount of bank debt and
$500,000 principal amount of intercompany indebtedness and except for the
incurrence of any indebtedness (including without limitation, the incurrence of
any guarantee or contingent payment obligation with respect thereto) secured by
a lien, mortgage or guarantee on the property (whether real or personal) or
equipment of the Company and any refinancings or replacements thereto or trade
debt incurred in the ordinary course of business.
(D) Each share of the Series A Preferred Stock shall
entitle the holder thereof to one vote on all matters to be voted on by the
holders of the Series A Preferred Stock, as set forth above. However, if the
Series A Preferred Stock is entitled to vote, together with the holders of
Common Stock as one class, then each share of Series A Preferred Stock shall
entitle the holder thereof to the number of votes per share that equals the
number of whole shares of Common Stock into which each such share of Series A
Preferred Stock is then convertible, calculated to the nearest one share.
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<PAGE> 9
8. Miscellaneous.
(A) All shares of the Series A Preferred Stock purchased
or otherwise acquired by the Company or surrendered to it for conversion into
Common Stock as provided above shall be cancelled and shall be restored to the
status of authorized but unissued preferred stock of the Company.
(B) There is no sinking fund with respect to the Series A
Preferred Stock.
(C) The shares of the Series A Preferred Stock shall not
have any preferences, voting powers or relative, participating, optional,
preemptive or other special rights except as set forth above in this Certificate
of Designation, Preferences and Rights and in the Certificate of Incorporation
of the Company, as amended.
(D) The holders of record of the Series A Preferred Stock
shall be entitled to receive all communications sent by the Company to the
holders of the Common Stock, sent by regular U.S. mail to such holder's address
as set forth in the records of the registrar for the Series A Preferred Stock.
IN WITNESS WHEREOF, AccuMed International, Inc. has caused this
Certificate to be signed by Paul F. Lavallee, its Chairman, Chief Executive
Officer and President, on this 23rd day of February, 1998, and such person
hereby affirms under penalty of perjury that this Certificate is the act and
deed of AccuMed International, Inc. and that the facts stated herein are true
and correct.
ACCUMED INTERNATIONAL, INC.
By: /s/ PAUL F. LAVALLEE
---------------------------------
Paul F. Lavallee, Chairman, Chief
Executive Officer and President
Attest:
/s/ JOYCE WALLACH
- -----------------------------------
Joyce L. Wallach, Secretary
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<PAGE> 1
EXHIBIT 4.2
CERTIFICATE OF CORRECTION FILED TO CORRECT A CERTAIN ERROR IN
THE CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A CONVERTIBLE PREFERRED STOCK OF
ACCUMED INTERNATIONAL, INC.
FILED WITH THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE
ON FEBRUARY 23, 1998
AccuMed International, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Company"),
DOES HEREBY CERTIFY:
1. The name of the Company is AccuMed International, Inc.
2. That a Certificate of Designation, Preferences and Rights of Series A
Convertible Preferred Stock was filed by the Secretary of State of Delaware on
February 23, 1998 and that said Certificate requires correction as permitted by
Section 103 of the General Corporation Law of the State of Delaware.
3. The inaccuracy or defect of said Certificate to be corrected is as
follows: the number of shares of Series A Convertible Preferred Stock designated
is 1,245,340 rather than 1,221,715.
4. The first paragraph of the Certificate of Designation, Preferences
and Rights is corrected to read as follows:
ACCUMED INTERNATIONAL, INC., a corporation
organized and existing under the General Corporation Law of the
State of Delaware (the "Company"), by its President and
Secretary, does hereby certify that, pursuant to authority
conferred upon the Board of Directors by Division I of Article
Fourth of the Certificate of Incorporation, as amended, of the
Company, authorizing a class of 5,000,000 shares of preferred
stock of the Company and pursuant to the provisions of Section
151 of the Delaware General Corporation Law, as amended, the
Board of Directors of the Company, by Unanimous Written Consent
effective as of February 12, 1998, has duly adopted resolutions
providing for the issuance out of such class of a series of up to
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<PAGE> 2
1,245,340 shares of Series A Convertible Preferred Stock at an
issuance price of $4.50 per share (the "Stated Value") and
setting forth the voting powers, designation, preferences and
relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions thereof, which
resolution is as follows:
5. Article 1 of the Certificate of Designation, Preferences and Rights
is corrected to read as follows:
1. Designation and Number of Shares.
1,245,340 shares of preferred stock are hereby designated
as Series A Convertible Preferred Stock, par value $0.01 per
share (the "Series A Preferred Stock"). The Stated Value per
share of the Series A Preferred Stock is $4.50.
IN WITNESS WHEREOF, AccuMed International, Inc. has caused this
Certificate to be signed by Paul F. Lavallee, its Chairman, Chief Executive
Officer and President, on this 25th day of February 1998, and such person hereby
affirms under penalty of perjury that this Certificate is the act and deed of
AccuMed International, Inc. and that the facts stated herein are true and
correct.
ACCUMED INTERNATIONAL, INC.
By: /S/ PAUL F. LAVALLEE
---------------------------------
Paul F. Lavallee, Chairman,
Chief Executive Officer and
President
Attest:
/S/ JOYCE L. WALLACH
- ------------------------------
Joyce L. Wallach, Secretary
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<PAGE> 1
EXHIBIT 4.3
WARRANT AGREEMENT
AGREEMENT, dated as of this 23rd day of February, 1998, between
ACCUMED INTERNATIONAL, INC., a Delaware corporation (the "Company"), and
COMMONWEALTH ASSOCIATES, a New York limited partnership ("Commonwealth").
W I T N E S S E T H
WHEREAS, in connection with the exchange by the Company (the
"Exchange Offer") of up to $6,000,000 principal amount of 12% Convertible
Promissory Notes due March 13, 2000 ("Notes") for the Company's Series A
Convertible Preferred Stock, $.01 par value per share (the "Convertible
Preferred Stock"), and common stock purchase warrants ("Warrants"), each Warrant
exercisable to purchase one share of the Company's common stock, $.01 par value
per share (the "Common Stock"), the Company will issue up to 1,245,340 warrants;
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, and the holders
of certificates representing the Warrants, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in the
distributions of earnings and assets of the Company without limit as to amount
or percentage, which at the date hereof consists of 50,000,000 authorized shares
of Common Stock, par value $.01 per share.
(b) "Corporate Office" shall mean the office of the Company at
which at any particular time its principal business shall be administered, which
office is located at the date hereof at 900 North Franklin Street, Suite 401,
Chicago, Illinois 60610.
(c) "Exercise Date" shall mean, as to any Warrant, the date on
which the Company shall have received both (a) the Warrant Certificate
representing such Warrant, with the exercise form thereon properly completed and
duly executed by the Registered Holder thereof or its attorney duly authorized
in writing, and (b) payment in cash, or by official bank or certified check made
payable to the Company, of an amount in lawful money of the United States of
America equal to the applicable Purchase Price.
(d) "Initial Warrant Exercise Date" shall mean February 23, 1998.
(e) "Market Price" shall mean (i) the average closing bid price
of the Common Stock, for twenty (20) consecutive trading days ending on the
Calculation Date as reported by Nasdaq, if the Common Stock is traded on the
SmallCap Market, or (ii) the average last reported sales price of the Common
Stock, for twenty (20) consecutive trading days ending on the Calculation Date,
as reported by the primary exchange on which the Common Stock is traded, if the
<PAGE> 2
Common Stock is traded on a national securities exchange, or by Nasdaq, if
the Common Stock is traded on the Nasdaq National Market.
(f) "Purchase Price" shall mean the purchase price to be paid
upon exercise of each Warrant in accordance with the terms hereof, which price
shall be $1.125 per share subject to adjustment from time to time pursuant to
the provisions of Section 8 hereof and subject to the Company's right to reduce
the Purchase Price upon notice to all warrantholders.
(g) "Redemption Price" shall mean the price at which the Company
may, at its option in accordance with the terms hereof, redeem the Warrants
which price shall be $0.25 per Warrant.
(h) "Registered Holder" shall mean the person in whose name any
certificate representing applicable Warrants shall be registered on the books
maintained by the Company.
(i) "Transfer Agent" shall mean First Chicago Trust Company of
New York, as the Company's transfer agent for the Common Stock, or its
authorized successor, as such.
(j) "Warrant Expiration Date" shall mean 5:00 P.M. (New York
time) on March 31, 2001, or such earlier date as the Warrants shall be redeemed;
provided that if either of such date shall in the State of New York be a holiday
or a day on which banks are authorized to close, then 5:00 P.M. (New York time)
on the next following day which in the State of New York is not a holiday or a
day on which banks are authorized to close. Upon notice to all Warrantholders
the Company shall have the right to extend the Warrant Expiration Date.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) A Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase one share of
Common Stock upon the exercise thereof, in accordance with the terms hereof,
subject to modification and adjustment as provided in Section 8.
(b) From time to time, up to the Warrant Expiration Date, the
Company shall execute and deliver stock certificates in required whole number
denominations representing up to an aggregate of 1,245,340 shares of Common
Stock, subject to adjustment as described herein, upon the exercise of Warrants
in accordance with this Agreement.
(c) From time to time, up to the Warrant Expiration Date, the
Company shall execute and deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with any transfer or
exchange permitted under this Agreement; provided that no Warrant Certificates
shall be issued except (i) those initially issued hereunder, (ii) those issued
on or after the Initial Warrant Exercise Date, upon the exercise of fewer than
all Warrants represented by any Warrant Certificate, to evidence any unexercised
Warrants held by the exercising Registered Holder, (iii) those issued upon any
transfer or exchange pursuant to Section 6; (iv) those issued in replacement of
lost, stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7;
and (v) at the option of the Company, in such form as may be approved by the its
Board of Directors, to reflect (a) any adjustment or change in the Purchase
Price or Target Price (as defined in Section 9) or the number of shares of
Common Stock purchasable upon exercise of the
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<PAGE> 3
Warrants, made pursuant to Section 8 hereof and (b) other modifications approved
by Warrantholders in accordance with Section 17 hereof.
SECTION 3. Form and Execution of Warrant Certificates. (a) The
Warrant Certificates shall be substantially in the form annexed hereto as
Exhibit A (the provisions of which are hereby incorporated herein) and may have
such letters, numbers or other marks of identification or designation and such
legends, summaries or endorsements printed, lithographed, engraved or typed
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Warrants may be listed, or to conform to
usage. The Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen, or destroyed Warrant Certificates) and issued in registered form.
Warrants shall be numbered serially with the letter W.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer or Chief Financial
Officer and by its Secretary or an Assistant Secretary, by manual signatures or
by facsimile signatures printed thereon, and shall have imprinted thereon a
facsimile of the Company's seal. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be such officer of
the Company before the date of issuance of the Warrant Certificates and issue
and delivery thereof, such Warrant Certificates may nevertheless be issued and
delivered with the same force and effect as though the person who signed such
Warrant Certificates had not ceased to be such officer of the Company. After
execution by the Company, Warrant Certificates shall be delivered to the
Registered Holder.
SECTION 4. Exercise.
(a) Each Warrant may be exercised by the Registered Holder
thereof at any time on or after the Initial Exercise Date, but not after the
Warrant Expiration Date, upon the terms and subject to the conditions set forth
herein and in the applicable Warrant Certificate. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the Exercise
Date and the person entitled to receive the securities deliverable upon such
exercise shall be treated for all purposes as the holder upon exercise thereof
as of the close of business on the Exercise Date. As soon as practicable on or
after the Exercise Date the Company shall deposit the proceeds received from the
exercise of a Warrant, and promptly after clearance of checks received in
payment of the Purchase Price pursuant to such Warrants, cause to be issued and
delivered by the Transfer Agent, to the person or persons entitled to receive
the same, a certificate or certificates for the securities deliverable upon such
exercise, (plus a certificate for any remaining unexercised Warrants of the
Registered Holder). Notwithstanding the foregoing, in the case of payment made
in the form of a check drawn on an account of Commonwealth or such other
investment banks and brokerage houses as the Company shall approve, certificates
shall promptly be issued without any delay.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve and keep available
out of its authorized Common Stock, solely for the purpose of issue upon
exercise of Warrants, such number of shares of Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants
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<PAGE> 4
and payment of the Purchase Price pursuant to the terms hereof shall, at the
time of delivery, be duly and validly issued, fully paid, nonassessable and free
from all taxes, liens and charges with respect to the issue thereof (other than
those which the Company shall promptly pay or discharge).
(b) The Company will use reasonable efforts to obtain appropriate
approvals or registrations (in such states as requested in writing by or on
behalf of any Warrantholders) under state "blue sky" securities laws or
compliance with exemption requirements (if such exemptions are not self
executing) with respect to the exercise of the Warrants; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or qualify as a foreign corporation in any jurisdiction. With respect to
any such securities laws, however, Warrants may not be exercised by, or shares
of Common Stock issued to, any Registered Holder in any state in which such
exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of Warrants, or the issuance, or delivery of any shares upon exercise of the
Warrants; provided, however, that if the shares of Common Stock are to be
delivered in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless (i) the person requesting the same has paid to the Company
the amount of transfer taxes or charges incident thereto, if any and (ii) the
Registered Holder has provided documentation satisfactory to the Company's
counsel that such issuance is not in violation of applicable Federal and state
securities laws.
SECTION 6. Exchange and Registration of Transfer.
Subject to the restrictions on transfer contained in the Warrant
Certificates and the Subscription Agreements and Registration Rights Agreements
(the "Subscription Agreements") between the Company and the initial
Warrantholders:
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Company at its Corporate Office, and upon
satisfaction of the terms and provisions hereof, the Company shall execute,
issue and deliver in exchange therefor the Warrant Certificate or Certificates
which the Registered Holder making the exchange shall be entitled to receive.
(b) The Company shall keep at its office books in which, subject
to such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof in accordance with its regular practice.
Upon due presentment for registration of transfer of any Warrant Certificate at
its Corporate Office, the Company shall execute, issue and deliver to the
transferee or transferees a new Warrant Certificate or Certificates representing
an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription form on
the reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company, duly executed by the Registered Holder or its attorney-in-fact duly
authorized in writing provided to the Company.
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<PAGE> 5
(d) The Company may require payment by such Registered Holder of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly cancelled
by the Company and thereafter retained by the Company until termination of this
Agreement or, with the prior written consent of Commonwealth, disposed of or
destroyed.
(f) Prior to due presentment for registration of transfer
thereof, the Company may deem and treat the Registered Holder of any Warrant
Certificate as the absolute owner thereof and of each Warrant represented
thereby (notwithstanding any notations of ownership or writing thereon made by
anyone other than a duly authorized officer of the Company for all purposes and
shall not be affected by any notice to the contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company of
evidence satisfactory to it of the ownership of and loss, theft, destruction or
mutilation of any Warrant Certificate and (in case of loss, theft or
destruction) of indemnity satisfactory to the Company, and (in the case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and (in the absence of notice to the Company that the Warrant Certificate has
been acquired by a bonafide purchaser) and deliver to the Registered Holder in
lieu thereof a new Warrant Certificate of like tenor representing an equal
aggregate number of Warrants. Applicants for a substitute Warrant Certificate
shall comply with such other reasonable regulations and pay such other
reasonable charges as the Company may prescribe.
SECTION 8. Adjustment of Exercise Price and Number of Shares
of Common Stock or Warrants.
(a) Subject to the exceptions referred to in Section 8(g) below,
in the event the Company shall, at any time or from time to time after the date
hereof, sell any shares of Common Stock for a consideration per share less than
the current fair market value per share of the Common Stock on the date of the
sale or issue any shares of Common Stock as a stock dividend to the holders of
Common Stock, or subdivide or combine the outstanding shares of Common Stock
into a greater or lesser number of shares (any such sale, issuance, subdivision
or combination being herein called a "Change of Shares"), then, and thereafter
upon each further Change of Shares, the Purchase Price in effect immediately
prior to such Change of Shares shall be changed to a price (including any
applicable fraction of a cent) determined by multiplying the Purchase Price in
effect immediately prior thereto by a fraction, the numerator of which shall be
the sum of the number of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares and the number of shares of Common Stock
which the aggregate consideration received (determined as provided in subsection
8(f)(F) below), if any, for the issuance of such additional shares would
purchase at such current market price per share of Common Stock, and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately after the issuance of such additional shares. Such
adjustment shall be made successively whenever such an issuance is made.
Upon each adjustment of the Purchase Price pursuant to
this Section 8, the total number of shares of Common Stock purchasable upon the
exercise of each Warrant shall
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<PAGE> 6
(subject to the provisions contained in Section 8(b) hereof) be such number of
shares (calculated to the nearest tenth) purchasable at the Purchase Price
immediately prior to such adjustment multiplied by a fraction, the numerator of
which shall be the Purchase Price in effect immediately prior to such adjustment
and the denominator of which shall be the Purchase Price in effect immediately
after such adjustment.
(b) The Company may elect, upon any adjustment of the Purchase
Price hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the exercise
of each Warrant as hereinabove provided, so that each Warrant outstanding after
such adjustment shall represent the right to purchase one share of Common Stock.
Each Warrant held of record prior to such adjustment of the number of Warrants
shall become that number of Warrants (calculated to the nearest tenth)
determined by multiplying the number one by a fraction, the numerator of which
shall be the Purchase Price in effect immediately prior to such adjustment and
the denominator of which shall be the Purchase Price in effect immediately after
such adjustment. Upon each adjustment of the number of Warrants pursuant to this
Section 8, the Company shall, as promptly as practicable, cause to be
distributed to each Registered Holder of Warrant Certificates on the date of
such adjustment Warrant Certificates evidencing, subject to Section 10 hereof,
the number of additional Warrants to which such Registered Holder shall be
entitled as a result of such adjustment or, at the option of the Company, cause
to be distributed to such Registered Holder in substitution and replacement for
the Warrant Certificates held by it prior to the date of adjustment (and upon
surrender thereof, if required by the Company) new Warrant Certificates
evidencing the number of Warrants to which such Registered Holder shall be
entitled after such adjustment.
(c) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock), or in
case of any sale or conveyance to another corporation of the property of the
Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then outstanding shall
have the right thereafter, by exercising such Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock that might have been purchased upon exercise of such Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation, merger, sale or conveyance. Any such provision shall
include provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 8. The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations and other changes of outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 2(c) hereof, continue to express the Purchase Price per
share and the number of shares purchasable thereunder as the Purchase Price per
share, and
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<PAGE> 7
the number of shares purchasable were expressed in the Warrant Certificates when
the same were originally issued.
(e) After each adjustment of the Purchase Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the
Chairman, Chief Executive Officer or Chief Financial Officer, and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary,
of the Company setting forth: (i) the Purchase Price as so adjusted, (ii) the
number of shares of Common Stock purchasable upon exercise of each Warrant after
such adjustment, and, if the Company shall have elected to adjust the number of
Warrants, the number of Warrants to which the registered holder of each Warrant
shall then be entitled, and (iii) a brief statement of the facts accounting for
such adjustment. The Company will promptly cause a brief summary thereof to be
sent by ordinary first class mail to Commonwealth and to each registered holder
of Warrants at its last address as it shall appear on the registry books of the
Company. No failure to mail such notice nor any defect therein or in the mailing
thereof shall affect the validity thereof except as to the holder to whom the
Company failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of the Secretary or an Assistant Secretary of the
Company that such notice has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
(f) For purposes of Section 8(a) and 8(b) hereof, the following
provisions (A) to (F) shall also be applicable:
(A) The number of shares of Common Stock outstanding at
any given time shall include shares of Common Stock owned or held
by or for the account of the Company and the sale or issuance of
such treasury shares or the distribution of any such treasury
shares shall not be considered a Change of Shares for purposes of
said sections.
(B) No adjustment of the Purchase Price shall be made
unless such adjustment would require an increase or decrease of
at least $.10 in such price; provided that any adjustments which
by reason of this clause (B) are not required to be made shall be
carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with any
adjustment(s) so carried forward, shall require an increase or
decrease of at least $.10 in the Purchase Price then in effect
hereunder.
(C) In case of (1) the sale by the Company for cash of any
rights or warrants to subscribe for or purchase, or any options
for the purchase of, Common Stock or any securities convertible
into or exchangeable for Common Stock without the payment of any
further consideration other than cash, if any (such convertible
or exchangeable securities being herein called "Convertible
Securities"), or (2) the issuance by the Company, without the
receipt by the Company of any consideration therefor, of any
rights or warrants to subscribe for or purchase, or any options
for the purchase of, Common Stock or Convertible Securities, in
each case, if (and only if) the consideration payable to the
Company upon the exercise of such rights, warrants or options
shall consist of cash, whether or not such rights, warrants or
options, or the right to convert or exchange such Convertible
Securities, are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such
rights, warrants or options or upon the conversion or exchange of
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<PAGE> 8
such Convertible Securities (determined by dividing (x) the
minimum aggregate consideration payable to the Company upon the
exercise of such rights, warrants or options, plus the
consideration received by the Company for the issuance or sale of
such rights, warrants or options, plus, in the case of such
Convertible Securities, the minimum aggregate amount of
additional consideration, if any, other than such Convertible
Securities, payable upon the conversion or exchange thereof, by
(y) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities issuable
upon the exercise of such rights, warrants or options) is less
than the Market Price of the Common Stock on the date of the
issuance or sale of such rights, warrants or options, then the
total maximum number of shares of Common Stock issuable upon the
exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities (as of the
date of the issuance or sale of such rights, warrants or options)
shall be deemed to be outstanding shares of Common Stock for
purposes of Sections 8(a) and 8(b) hereof and shall be deemed to
have been sold for cash in an amount equal to such price per
share.
(D) In case of the sale by the Company for cash of any
Convertible Securities, whether or not the right of conversion or
exchange thereunder is immediately exercisable, and the price per
share for which Common Stock is issuable upon the conversion or
exchange of such Convertible Securities (determined by dividing
(x) the total amount of consideration received by the Company for
the sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, other than
such Convertible Securities, payable upon the conversion or
exchange thereof, by (y) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of such
convertible Securities) is less than the Market Price of the
Common Stock on the date of the sale of such Convertible
Securities, then the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of such
Convertible Securities (as of the date of the sale of such
Convertible Securities) shall be deemed to be outstanding shares
of Common Stock for purposes of Sections 8(a) and 8(b) hereof and
shall be deemed to have been sold for cash in an amount equal to
such price per share.
(E) If the exercise or purchase price provided for in any
right, warrant or option referred to in (C) above, or the rate at
which any Convertible Securities referred to in (C) or (D) above
are convertible into or exchangeable for Common Stock, shall
change at any time (other than under or by reason of provisions
designed to protect against dilution), the Purchase Price then in
effect hereunder shall forthwith be readjusted to such Purchase
Price as would have obtained (1) had the adjustments made upon
the issuance or sale of such rights, warrants, options or
Convertible Securities been made upon the basis of the issuance
of only the number of shares of Common Stock theretofore actually
delivered (and the total consideration received therefor) upon
the exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities, (2) had
adjustments been made on the basis of the Purchase Price as
adjusted under clause (1) for all transactions (which would have
affected such adjusted Purchase Price) made after the issuance or
sale of such rights, warrants, options or Convertible
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<PAGE> 9
Securities, and (3) had any such rights, warrants, options or
Convertible Securities then still outstanding been originally
issued or sold at the time of such change. On the expiration of
any such right, warrant or option or the termination of any such
right to convert or exchange any such Convertible Securities, the
Purchase Price then in effect hereunder shall forthwith be
readjusted to such Purchase Price as would have obtained (a) had
the adjustments made upon the issuance or sale of such rights,
warrants, options or Convertible Securities been made upon the
basis of the issuance of only the number of shares of Common
Stock theretofore actually delivered (and the total consideration
received therefor) upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible
Securities and (b) had adjustments been made on the basis of the
Purchase Price as adjusted under clause (a) for all transactions
(which would have affected such adjusted Purchase Price) made
after the issuance or sale of such rights, warrants, options or
Convertible Securities.
(F) In case of the sale for cash of any shares of Common
Stock, any Convertible Securities, any rights or warrants to
subscribe for or purchase, or any options for the purchase of,
Common Stock or Convertible Securities, the consideration
received by the Company therefore shall be deemed to be the gross
sales price therefor without deducting therefrom any expense paid
or incurred by the Company or any underwriting discounts or
commissions or concessions paid or allowed by the Company in
connection therewith.
(g) No adjustment to the Purchase Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of each Warrant
will be made, however,
(i) upon the exercise of any of the options presently
outstanding under the Company's Stock Option Plans (the "Plans")
for officers, directors and certain other key personnel of, and
consultants to, the Company; or
(ii) upon the grant or exercise of any other options which
may hereafter be granted or exercised under the Plans or under
any other employee benefit plan of the Company; or
(iii) upon the sale or exercise of the Warrants or any other
Warrants issued by the Company, including the warrants to be
issued and repriced to Commonwealth in connection with the
Exchange Offer; or
(iv) upon the issuance or sale of Common Stock or Convertible
Securities upon the exercise of any rights or warrants to
subscribe for or purchase, or any options for the purchase of,
Common Stock or Convertible Securities, whether or not such
rights, warrants or options were outstanding on the date of the
original sale of the Warrants or were thereafter issued or sold;
or
(v) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, whether or
not any adjustment in the Purchase Price was made or required to
be made upon the issuance or sale of such Convertible Securities
and whether or not such Convertible Securities were
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<PAGE> 10
outstanding on the date of the original sale of the Warrants or
were thereafter issued or sold; or
(vi) upon any amendment to or change in the terms of any
rights or warrants to subscribe for or purchase, or options for
the purchase of, Common Stock or Convertible Securities or in the
terms of any Convertible Securities, including, but not limited
to, any extension of any expiration date of any such right,
warrant or option, any change in any exercise or purchase price
provided for in any such right, warrant or option, any extension
of any date through which any Convertible Securities are
convertible into or exchangeable for Common Stock or any change
in the rate at which any Convertible Securities are convertible
into or exchangeable for Common Stock (other than rights,
warrants, options or Convertible Securities issued or sold after
the close of business on the date of the original issuance of the
Warrants (i) for which an adjustment in the Purchase Price then
in effect was theretofore made or required to be made, upon the
issuance or sale thereof, or (ii) for which such an adjustment
would have been required had the exercise or purchase price of
such rights, warrants or options at the time of the issuance or
sale thereof or the rate of conversion or exchange of such
Convertible Securities, at the time of the sale of such
Convertible Securities, or the issuance or sale of rights or
warrants to subscribe for or purchase, or options for the
purchase of, such Convertible Securities, been the price or rate
as changed, in which case the provisions of Section 8(f)(E)
hereof shall be applicable if, but only if, the exercise or
purchase price thereof, as changed, or the rate of conversion or
exchange thereof, as changed, consists of cash or requires the
payment of additional consideration, if any, consisting of cash
and the Company did not receive any consideration other than
cash, if any, in connection with such change).
(h) As used in this Section 8, the term "Common Stock" shall mean
and include the Company's Common Stock authorized on the date of the original
issue of the Warrants and shall also include any capital stock of any class of
the Company thereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the shares
issuable upon exercise of the Warrants shall include only shares of such class
designated in the Company's Certificate of Incorporation, as amended as Common
Stock on the date of the original issue of the Warrants or (i), in the case of
any reclassification, change, consolidation, merger, sale or conveyance of the
character referred to in Section 8(c) hereof, the stock, securities or property
provided for in such section or (ii), in the case of any reclassification or
change in the outstanding shares of Common Stock issuable upon exercise of the
Warrants as a result of a subdivision or combination or consisting of a change
in par value, or from par value to no par value, or from no par value to par
value, such shares of Common Stock as so reclassified or changed.
(i) Any determination as to whether an adjustment in the Purchase
Price in effect hereunder is required pursuant to Section 8, or as to the amount
of any such adjustment, if required, shall be binding upon the holders of the
Warrants and the Company if made in good faith by the Board of Directors of the
Company.
(j) If and whenever the Company shall declare any dividends or
distributions or grant to the holders of Common Stock, as such, rights or
warrants to subscribe for or to purchase, or
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<PAGE> 11
any options for the purchase of, Common Stock or securities
convertible into or exchangeable for or carrying a right, warrant
or option to purchase Common Stock, the Company shall notify each
of the then Registered Holders of the Warrants of such event
prior to its occurrence to enable such Registered Holders to
exercise their Warrants and participate as holders of Common
Stock in such event.
SECTION 9. Redemption.
(a) On not less than thirty (30) days' notice given at any time
after the date hereof (the "Redemption Notice"), to Registered Holders of the
Warrants being redeemed, the Warrants may be redeemed, at the option of the
Company, at a redemption price of $0.25 per Warrant, provided the Market Price
of the Common Stock shall equal or exceed $4.50 per share (the "Target Price"),
subject to adjustment as set forth in Section 9(f), below. All Warrants must be
redeemed if any are redeemed. For purposes of this Section 9, the Calculation
Date shall mean a date within 15 days of the mailing of the Redemption Notice.
The date fixed for redemption of the Warrants is referred to herein as the
"Redemption Date".
(b) If the conditions set forth in Section 9(a) are met, and the
Company desires to exercise its right to redeem the Warrants, it shall mail a
Redemption Notice to each of the Registered Holders of the Warrants to be
redeemed, first class, postage prepaid, not later than the thirtieth day before
the date fixed for redemption, at their last address as shall appear on the
records maintained pursuant to Section 6(b). Any notice mailed in the manner
provided herein shall be conclusively presumed to have been duly given whether
or not the Registered Holder receives such notice.
(c) The Redemption Notice shall specify (i) the redemption price,
(ii) the Redemption Date, (iii) the place where the Warrant Certificates shall
be delivered and the redemption price paid, (iv) that the right to exercise the
Warrant shall terminate at 5:00 P.M. (New York time) on the business day
immediately preceding the Redemption Date. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the validity of the
proceedings for such redemption except as to a Registered Holder (a) to whom
notice was not mailed or (b) whose notice was defective. An affidavit of the
Company that notice of redemption has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 P.M.
(New York time) on the business day immediately preceding the Redemption Date.
On and after the Redemption Date, Registered Holders of the Warrants shall have
no further rights except to receive, upon surrender of the Warrant, payment of
the Redemption Price.
(e) From and after the Redemption Date, the Company shall, at the
place specified in the Redemption Notice, upon presentation and surrender to the
Company by or on behalf of the Registered Holder thereof of one or more Warrant
Certificates evidencing Warrants to be redeemed, deliver or cause to be
delivered to or upon the written order of such Registered Holder a sum in cash
equal to the Redemption Price of each such Warrant. From and after the
Redemption Date and upon the deposit or setting aside by the Company of a sum
sufficient to redeem all the Warrants called for redemption, such Warrants shall
expire and become void and all rights
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<PAGE> 12
hereunder and under the Warrant Certificates, except the right to receive
payment of the Redemption Price, shall cease.
(f) If the shares of Common Stock are subdivided or combined into
a greater or smaller number of shares of Common Stock, the Target Price shall be
proportionally adjusted by the ratio which the total number of shares of Common
Stock outstanding immediately prior to such event bears to the total number of
shares of Common Stock to be outstanding immediately after such event.
SECTION 10. Registration Under The Securities Act of 1933.
The Company agrees to register for resale the shares of Common
Stock issued or issuable upon exercise of Warrants under the Securities Act of
1933, as amended (the "Act"), as more fully set forth in Section IV of the
Subscription Agreement between the Company and each initial Registered Holder of
the Warrants.
SECTION 11. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Common Stock purchasable upon the
exercise of each Warrant is adjusted pursuant to Section 8 hereof, the Company
shall nevertheless not be required to issue fractions of shares of Common Stock,
upon exercise of the Warrants or otherwise, or to distribute certificates that
evidence fractional shares. With respect to any fraction of a share of Common
Stock called for upon any exercise of a Warrant, the Company shall pay to the
Registered Holder an amount in cash equal to such fraction multiplied by the
current market value of such fractional share, determined as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq National Market or
Nasdaq SmallCap Market, the current market value shall be the
last reported sale price of the Common Stock on such exchange on
the last trading day prior to the date of exercise of the
applicable Warrant or if no such sale is made on such day or no
last reported sale price is quoted, the average of the closing
bid and asked prices for such day on such exchange or system; or
(2) If the Common Stock is listed in the over-the-counter
market (other than on Nasdaq) or admitted to unlisted trading
privileges, the current market value shall be the mean of the
last reported bid and asked prices reported by the National
Quotation Bureau, Inc. on the last business day prior to the date
of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current market value shall be an amount determined
in such reasonable manner as may be prescribed by the Board of
Directors of the Company.
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<PAGE> 13
SECTION 12. Warrant Holders Not Deemed Stockholders. No Holder of
Warrants shall, as such, be entitled to vote or to receive dividends or be
deemed the Holder of Common Stock that may at any time be issuable upon exercise
of such Warrants for any purpose whatsoever, nor shall anything contained herein
be construed to confer upon the holder of Warrants, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such an applicable
Warrant and been issued shares of Common Stock with respect thereto in
accordance with the provisions hereof.
SECTION 13. Rights of Action. All rights of action with respect
to this Agreement are vested in the respective Registered Holders of the
Warrants, and any Registered Holder of a Warrant, without consent of the Company
or of the holder of any other Warrant, may, on its own behalf and for its
benefit, enforce against the Company his right to exercise its Warrant for the
purchase of shares of Common Stock in the manner provided in the Warrant
Certificate and this Agreement.
SECTION 14. Agreement of Warrant Holders. Every holder of a
Warrant, by its acceptance thereof, consents and agrees with the Company, and
every other holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of
the Company by the Registered Holder thereof in person or by its attorney duly
authorized in writing and only if the Warrant Certificates representing such
Warrants are surrendered at the Corporate Office of the Company, duly endorsed
or accompanied by a proper instrument of transfer satisfactory to the Company,
in its sole discretion, together with payment of any applicable transfer taxes;
and
(b) The Company may deem and treat the person in whose name the
Warrant Certificate is registered as the holder and as the absolute, true and
lawful owner of the Warrants represented thereby for all purposes, and the
Company shall not be affected by any notice or knowledge to the contrary, except
as otherwise expressly provided in Section 7 hereof.
SECTION 15. Cancellation of Warrant Certificates. If the Company
shall purchase or acquire any Warrant or Warrants, the Warrant Certificate or
Warrant Certificates evidencing the same shall thereupon be cancelled by the
Company and retired; the Company shall also cancel Common Stock following
exercise of any or all of the Warrants represented thereby or delivered to it
for transfer, splitup, combination or exchange.
SECTION 16. Modification of Agreement. Subject to the provisions
of Section 4(b), the parties hereto may by supplemental agreement make any
changes or corrections in
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<PAGE> 14
this Agreement (i) that it shall deem appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or manifest mistake or error
herein contained; (ii) to reflect an increase in the number of Warrants which
are to be governed by this Agreement pursuant to the adjustment provisions of
Section 8 hereof or resulting from an increase in the size of the Exchange Offer
or a subsequent exchange offer which includes warrants having the same terms and
conditions as the Warrants; or (iii) that it may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not otherwise be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders of Warrant Certificates representing not less
than 50% of the Warrants then outstanding; and provided, further, that no change
in the number or nature of the securities purchasable upon the exercise of any
Warrant, or the Purchase Price therefor, or the acceleration of the Warrant
Expiration Date, shall be made without the consent in writing of the Registered
Holder of the Warrant Certificate representing such Warrant, other than as
otherwise provided herein.
SECTION 17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company, at 900 North Franklin Street, Suite 401, Chicago, IL
60610, Attention: Paul F. Lavallee, Chairman and Chief Executive Officer; if to
the Warrant Agent, at its Corporate Office and if to Commonwealth at
Commonwealth Associates, 830 Third Avenue, New York, New York 10022, Attention:
Keith Rosenbloom.
SECTION 18. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
SECTION 19. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Company (and its successors and assigns) and the
Registered Holders from time to time of Warrant Certificates. Nothing in this
Agreement is intended or shall be construed to confer upon any other person any
right, remedy or claim, in equity or at law, or to impose upon any other person
any duty, liability or obligation.
SECTION 20. Termination. This Agreement shall terminate on the
earlier to occur of (i) the close of business on the Expiration Date of all the
Warrants; or (ii) the date upon which all Warrants have been exercised.
SECTION 21. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original and all of
which together shall constitute a single document.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
ACCUMED INTERNATIONAL, INC.
By: /s/ PAUL F. LAVALLEE
------------------------------
Paul F. Lavallee, Chairman and
Chief Executive Officer
COMMONWEALTH ASSOCIATES
By:
------------------------------
-15-
<PAGE> 16
EXHIBIT A
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT
BY THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER TO
THE EFFECT THAT REGISTRATION UNDER THE SECURITIES ACT IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES LAWS.
No. W___ _________Warrants
VOID AFTER MARCH 31, 2001
WARRANT CERTIFICATE FOR PURCHASE
OF COMMON STOCK
ACCUMED INTERNATIONAL, INC.
This certifies that FOR VALUE RECEIVED ________________________
or registered assigns (the "Registered Holder") is the owner of the number of
Warrants ("Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined), one fully
paid and nonassessable share of Common Stock, $0.01 par value per share ("Common
Stock") of AccuMed International, Inc., a Delaware corporation (the "Company"),
at any time commencing on February 23, 1998 and prior to the Expiration Date (as
hereinafter defined), upon the presentation and surrender of this Warrant
Certificate with the Exercise Form on the reverse hereof properly completed and
duly executed, at the corporate office of the Company, accompanied by payment of
an amount equal to $1.125 for each Warrant (the "Purchase Price") in lawful
money of the United States of America in cash or by official bank or certified
check made payable to AccuMed International, Inc. The Company may, at its
election, reduce the Purchase Price.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Warrant Agreement (the "Warrant Agreement"), dated February 23,
1998 between the Company and Commonwealth Associates in connection with the
exchange offer of the Company's 12% Convertible Promissory Notes (the "Exchange
Offer").
-16-
<PAGE> 17
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of
the Registered Holder, but no fractional shares of Common Stock will be issued
in respect thereto. In the case of the exercise of less than all the Warrants
represented hereby, the Company shall cancel this Warrant Certificate upon the
surrender hereof and shall execute and deliver to the Registered Holder a new
Warrant Certificate or Warrant Certificates of like tenor for the balance of
such Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New York time)
on March 31, 2001 or such earlier date as the Warrants shall be redeemed. If
such date shall in the State of New York be a holiday or a day on which the
banks are authorized to close, then the Expiration Date shall mean 5:00 P.M.
(New York time) the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close. The Company may, at its
sole election, extend the Expiration Date.
This Warrant Certificate is exchangeable, upon the surrender
hereof by the Registered Holder at the corporate office of the Company, for a
new Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment with any tax or other
governmental charge imposed in connection therewith, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any of the rights of a stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
The Warrants represented hereby may be redeemed at the option of
the Company, at a redemption price of $.25 per Warrant at any time after the
date hereof, provided the Market Price (as defined in the Warrant Agreement) for
the Common Stock shall equal or exceed $4.50 per share. Notice of redemption
shall be given not later than the thirtieth day before the date fixed for
redemption, all as provided in the Warrant Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect to
the Warrants represented hereby except to receive the $.25 in cash per Warrant
upon surrender of this Warrant Certificate.
Prior to due presentment for registration of transfer hereof, the
Company may deem and treat the Registered Holder as the absolute owner hereof
and of each Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly authorized officer
of the Company) for all purposes and shall not be affected by any notice to the
contrary.
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<PAGE> 18
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without regard to the conflict
of law provisions thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile by two of its officers
thereunto duly authorized and a facsimile of its corporate seal to be imprinted
hereon.
ACCUMED INTERNATIONAL, INC.
Dated: February 23, 1998
By:_________________________________
Leonard R. Prange, Chief Financial
Officer and Chief perating Officer
[seal]
Attest:
_____________________________
Joyce L. Wallach
Secretary and General Counsel
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<PAGE> 19
NOTICE OF EXERCISE
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
______________________________
______________________________
______________________________
______________________________
[please print or type name and address]
and be delivered to
______________________________
______________________________
______________________________
______________________________
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
The undersigned represents that the exercise of the within
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc. If not solicited by an NASD member, please write "unsolicited" in
the space below.
____________________________________
(Name of NASD Member)
Dated: ______________________
X_____________________________
______________________
______________________
Address
______________________
Taxpayer Identification Number
______________________________
Signature Guaranteed
______________________________
-19-
<PAGE> 20
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_________________________________
_________________________________
_________________________________
_________________________________
[please print or type name and address]
_________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
____________________________________ _______________________________ Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated: ____________________
X___________________________
Signature Guaranteed
_________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE EXERCISE NOTICE MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
-20-
<PAGE> 1
EXHIBIT 4.4
ACCUMED INTERNATIONAL, INC.
SUBSCRIPTION AGREEMENT AND REGISTRATION RIGHTS AGREEMENT made as
of this 23rd day of February, 1998 (this "Agreement") between ACCUMED
INTERNATIONAL, INC., a Delaware corporation with its principal offices at 900 N.
Franklin, Suite 401, Chicago, Illinois 60610 (the "Company") and the undersigned
(the "Subscriber").
WHEREAS, in an exchange offer (the "Exchange Offer"), the Company
desires to exchange up to $6,000,000 principal amount of 12% Convertible
Promissory Notes of the Company (the "Notes"), for shares (the "Shares") of
Series A Convertible Preferred Stock, $0.01 par value per share (the
"Convertible Preferred Stock"), as described in the Certificate of Designation
Preferences and Rights attached hereto as Exhibit A and common stock purchase
warrants (the "Warrants"), in the form included in the warrant agreement (the
"Warrant Agreement") attached hereto as Exhibit B on the terms and conditions
hereinafter set forth and set forth in the Confidential Exchange Offer
Memorandum dated February 13, 1998 (the "Memorandum") and accompanying Letter of
Transmittal ("Letter of Transmittal") with which this Agreement is enclosed;
WHEREAS, for each $1,000 principal amount of Notes exchanged (and
accrued interest thereon through the Expiration Date (defined herein)), the
Subscriber shall receive such number of shares of Convertible Preferred Stock
having a stated value of $1,000 plus an amount equal to the interest accrued and
unpaid thereon and Warrants exercisable to purchase twenty-five (25%) percent of
the number of shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock issued to the Subscriber;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
I. EXCHANGE OF NOTES AND REPRESENTATIONS BY AND
COVENANTS OF SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set
forth, the Subscriber hereby agrees to exchange such principal amount of Notes
set forth on the signature page hereof and in the Transmittal Letter for the
Convertible Preferred Stock and Warrants, upon the terms set forth herein and in
the Memorandum and the Letter of Transmittal. For each $1,000 increment of
principal amount of Notes exchanged (and accrued interest thereon), tendering
holders will receive such number of Shares and Warrants calculated as set forth
in the Memorandum. The Shares and Warrants (collectively, the "Securities") will
be delivered to Subscribers as provided for in the Memorandum.
1.2 The Subscriber recognizes that the exchange of the
Notes for the Shares and Warrants involves a high degree of risk in that (i) an
investment in the Company is highly speculative and only investors who can
afford the loss of their entire investment should consider investing in the
Company; (ii) he may not be able to liquidate his investment;
<PAGE> 2
(iii) transferability of the securities is extremely limited; and (iv) in the
event of a disposition, an investor could sustain the loss of his entire
investment, as well as other risk factors as more fully set forth herein and in
the Memorandum, including the attachments thereto.
1.3 The Subscriber represents that he is an "accredited
investor" as such term in defined in Rule 501 of Regulation D promulgated under
the United States Securities Act of 1933, as amended (the "Act"), as indicated
by his responses to the Investor Questionnaire, and that he is able to bear the
economic risk of exchanging the Notes for the Securities.
1.4 The Subscriber acknowledges that he has prior
investment experience, including investment in non-listed and non-registered
securities, or he has employed the services of an investment advisor, attorney
or accountant to read all of the documents furnished or made available by the
Company both to him and to all other prospective investors in the Exchange Offer
and to evaluate the merits and risks of such an investment on his behalf, and
that he recognizes the highly speculative nature of this investment.
1.5 The Subscriber acknowledges receipt and careful review
of the Memorandum and the attachments thereto (the "Offering Documents") and
hereby represents that he has been furnished by the Company during the course of
this transaction with all information regarding the Company which he had
requested or desired to know; that all documents which could be reasonably
provided have been made available for his inspection and review; and that such
information and documents have, in his opinion, afforded the Subscriber with all
of the same information that would be provided him in a registration statement
filed under the Act; that he has been afforded the opportunity to ask questions
of and receive answers from duly authorized officers or other representatives of
the Company concerning the terms and conditions of the Exchange Offer, and any
additional information which he had requested.
1.6 The Subscriber acknowledges that the Exchange Offer
may involve tax consequences, including but not limited to the possible need to
recognize interest income relating to the Warrants and that the contents of the
Offering Documents do not contain tax advice or information. The Subscriber
acknowledges that he must retain his own professional advisors to evaluate the
tax and other consequences of an investment in the Securities.
1.7 The Subscriber acknowledges that the Exchange Offer
has not been reviewed by the United States Securities and Exchange Commission
("SEC") because of the Company's representations that this is intended to be a
nonpublic offering pursuant to Sections 4(2) or 3(b) of the Act. The Subscriber
represents that the Shares and Warrants are being purchased for his own account,
for investment and not for distribution or resale to others. The Subscriber
agrees that he will not sell or otherwise transfer such Securities unless they
are registered under the Act or unless an exemption from such registration is
available.
1.8 The Subscriber understands that the Shares and
Warrants have not been registered under Act by reason of a claimed exemption
under the provisions of the Act which depends, in part, upon his investment
intention. In this connection, the Subscriber understands that it is the
position of the SEC that the statutory basis for such exemption would not be
present if his representation merely meant that his present intention was to
hold such securities for a short period, such as the capital gains period of tax
statutes, for a deferred sale, for a market rise, assuming that a market
develops, or for any other fixed period. The Subscriber realizes that, in the
view of the SEC, a purchase now with an intent to resell would represent a
2
<PAGE> 3
purchase with an intent inconsistent with his representation to the Company, and
the SEC might regard such a sale or disposition as a deferred sale to which such
exemptions are not available.
1.9 The Subscriber understands that there is no public
market for the Shares or Warrants. Rule 144 (the "Rule") promulgated under the
Act requires, among other conditions, a one year holding period prior to the
resale (in limited amounts) of securities acquired in a non-public offering
without having to satisfy the registration requirements under the Act. The
Subscriber understands that the Company makes no representation or warranty
regarding its fulfillment in the future of any reporting requirements under the
Securities Exchange Act of 1934, as amended, or its dissemination to the public
of any current financial or other information concerning the Company, as is
required by the Rule as one of the conditions of its availability. The
Subscriber understands and hereby acknowledges that the Company is under no
obligation to register the Securities or the shares of Common Stock underlying
the Shares and Warrants under the Act, with the exception of certain
registration rights set forth in Article IV herein. The Subscriber consents that
the Company may, if it desires, permit the transfer of the Securities or shares
of Common Stock issuable upon exercise and/or conversion thereof out of his name
only when his request for transfer is accompanied by an opinion of counsel
reasonably satisfactory to the Company that neither the sale nor the proposed
transfer results in a violation of the Act or any applicable state "blue sky"
laws (collectively "Securities Laws"). The Subscriber agrees to hold the Company
and its directors, officers and controlling persons and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of any
misrepresentation made by him contained herein or any sale or distribution by
the undersigned Subscriber in violation of any Securities Laws.
1. 10 The Subscriber agrees not to sell, transfer, assign,
hypothecate or otherwise dispose of 64% of the Shares and the shares of Common
Stock underlying such Shares for a period of up to one year after the Expiration
Date (as defined in the Memorandum).
1. 11 The Subscriber consents to the placement of a legend
on any certificate or other document evidencing the Shares and Warrants and the
shares of Common Stock issuable upon exercise and/or conversion of such Warrants
and Shares stating that they have not been registered under the Act and setting
forth or referring to the restrictions on transferability and sale thereof.
1.12 The Subscriber understands that the Company will
review this Subscription Agreement and is hereby given authority by the
undersigned to call his bank or place of employment or otherwise review the
financial standing of the Subscriber; and it is further agreed that the Company
reserves the unrestricted right to reject or limit any exchange and to terminate
the Exchange Offer at any time.
1.13 The Subscriber hereby represents that the address of
Subscriber furnished by him at the end of this Subscription Agreement is the
undersigned's principal residence if he is an individual or its principal
business address if it is a corporation or other entity.
1.14 The Subscriber acknowledges that if he is a
Registered Representative of an NASD member firm, he must give such firm the
notice required by the
3
<PAGE> 4
NASD's Rules of Fair Practice, receipt of which must be acknowledged by such
firm on the signature page hereof.
1.15 The Subscriber hereby represents that, except as set
forth in the Offering Documents, no representations or warranties have been made
to the Subscriber by the Company or any agent, employee or affiliate of the
Company and in entering into this transaction, the Subscriber is not relying on
any information, other than that contained in the Offering Documents and the
results of independent investigation by the Subscriber.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber that
on the date hereof and on the Expiration Date (as defined herein):
(a) Each of the Company and its subsidiaries is a
corporation duly organized, existing and in good standing under the laws of the
State of its incorporation and has the corporate power to conduct the business
which it conducts and proposes to conduct.
(b) The execution, delivery and performance of this
Agreement by the Company will have been duly approved by the Board of Directors
of the Company and all other actions required to authorize and effect the
exchange of the Notes for the Shares and Warrants will have been duly taken and
approved.
(c) The Shares and Warrants have been duly and validly
authorized and when issued and paid for in accordance with the terms hereof,
will be valid and binding obligations of the Company enforceable in accordance
with their respective terms.
(d) The Company will at all times during the term of the
Shares and Warrants have authorized and reserved a sufficient number of shares
of Common Stock to provide for exercise and/or conversion of the Warrants and
Shares.
(e) The Company and its subsidiaries have obtained, or are
in the process of obtaining, all licenses, permits and other governmental
authorizations necessary to the conduct of their respective business; such
licenses, permits and other governmental authorizations obtained are in full
force and effect; and the Company and its subsidiaries are in all material
respects complying therewith, except where the failure to comply will not
materially adversely affect the business, property, financial condition or
operations of the Company and its subsidiaries, taken as a whole.
(f) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company or its subsidiaries is a party
which could materially adversely affect the business, property, financial
condition or operations of the Company and its subsidiaries, taken as a whole.
(g) The Company is not in violation of or default under,
nor will the execution and delivery of this Agreement, the issuance of the
Shares or the Warrants in exchange for the Notes, and the incurrence of the
obligations herein and therein set forth and the consummation of the
transactions herein or therein contemplated, result in a violation of, or
constitute a default under, the certificate of incorporation or by-laws, in the
performance or
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<PAGE> 5
observance of any material obligations, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of indebtedness or in
any material contract, indenture, mortgage, loan agreement, lease, joint venture
or other agreement or instrument to which the Company is a party or by which it
or any of its properties may be bound or in violation of any material order,
rule, regulation, writ, injunction, or decree of any government, governmental
instrumentality or court, domestic or foreign.
(h) The selected financial information contained in the
Memorandum previously furnished by the Company to the Subscriber presents fairly
the financial condition of the Company as of the date and for the periods
indicated.
III. TERMS OF SUBSCRIPTION
3.1 The Exchange Offer will begin as of February 13, 1998
and will terminate at 5:00 PM New York time on February 19, 1998 unless extended
by the mutual consent of the Company and the Placement Agent (the "Expiration
Date").
3.2 The Exchange Offer will be made through Commonwealth
Associates (the "Placement Agent"), which will receive (i) a fee in the amount
of 5% of the principal amount of the Notes exchanged; (ii) reimbursement of
accountable expenses; (iii) warrants to purchase up to 5% of the shares of
Common Stock of the Company underlying the Shares and Warrants issued in the
Exchange Offer; (iv) reduction in the exercise price of warrants previously
issued to Commonwealth in connection with the private placement of the Notes;
and (v) other compensation as summarized in the Memorandum.
3.3 The Subscriber hereby authorizes and directs the
Company to deliver the securities to be issued to such Subscriber pursuant to
the Exchange Offer as provided for in the Letter of Transmittal.
3.4 The Subscriber acknowledges that at such time, if
ever, as any of the securities are registered, sales of such securities will be
subject to state securities laws, including those of states which may require
any securities sold therein to be sold through a registered broker-dealer or in
reliance upon an exemption from registration.
3.5 If the Subscriber is not a United States person, such
Subscriber hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the Securities,
(ii) any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Securities. Such Subscriber's
subscription and payment for, and his or her continued beneficial ownership of
the Securities, will not violate any applicable securities or other laws of the
Subscriber's jurisdiction.
IV. REGISTRATION RIGHTS
4.1 Demand Registration. If at any time after three (3)
months following the Expiration Date, but not more than five (5) years from the
Expiration Date, the
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<PAGE> 6
Company shall receive a written request therefor (the "Demand Notice") from
holders (the "Requesting Holders") of Shares convertible into at least thirty
percent (30%) of the shares of Common Stock issuable or issued upon conversion
of the Shares or the exercise of the Warrants ("Registrable Securities"), the
Company shall prepare and file with the SEC a registration statement under the
Act covering the "Registrable Securities" which are the subject of such request
and shall use its best efforts to cause such registration statement to become
effective. In addition, upon the receipt of such request, the Company shall
promptly give written notice to all other record holders of Registrable
Securities that such registration is to be effected. The Company shall include
in such registration statement such Registrable Securities for which it has
received written requests to register by such other record holders within thirty
(30) days after the delivery of the Company's written notice to such other
record holders.
In the event that at the time of the Demand Notice the
Company is in the process of preparing a registration statement under the Act
relating to an underwritten public offering, then no holder of securities of the
Company, including Requesting Holders, may include securities in such
registration if in the good faith judgment of the managing underwriter of such
public offering the inclusion of such securities would interfere with the
successful marketing of the securities being underwritten. Shares to be excluded
from an underwritten public offering shall be selected in a manner provided in
Section 4.2 below. To the extent only a portion of the Registrable Securities
held by a Requesting Holder is included in the underwritten public offering, a
registration statement covering those Registrable Securities which are excluded
from the underwritten public offering will be filed within 180 days of the
consummation of the underwritten public offering.
The obligation of the Company under this Section 4.1 shall
be limited to one registration statement. The Company shall pay the expenses
described in Section 4.4 for the registration statement filed pursuant to this
Section 4.1, except for underwriting discounts and commissions and legal fees of
the Requesting Holders, which shall be borne by the Requesting Holders.
4.2 "Piggyback" Registration Rights. From and after the
Expiration Date, and until such time as the Registrable Securities are freely
salable (without restriction) under Rule 144 promulgated under the Act, if the
Company shall determine to proceed with the actual preparation and filing of a
registration statement under the Act in connection with the proposed offer and
sale of any of its securities by it or any of its security holders (other than a
registration statement on Form S-4, S-8 or other limited purpose form), the
Company will give written notice of its determination to all record holders of
the Registrable Securities. Upon the written request from the Requesting
Holders, (as defined in Section 4.1) within twenty (20) days after receipt of
any such notice from the Company, the Company will, except as herein provided,
cause all such Registrable Securities to be included in such registration
statement, all to the extent requisite to permit the sale or other disposition
by the prospective seller or sellers of the Registrable Securities to be so
registered; provided, further, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any registration. If any registration
pursuant to this Section 4.2 shall be underwritten in whole or in part, the
Company may require that the Registrable Securities requested for inclusion
pursuant to this Section 4.2 be included in the underwriting on the same terms
and conditions as the securities otherwise being sold through the underwriters.
In the event that the Registrable Securities requested for inclusion pursuant to
this Section 4.2 together with any other shares which have similar piggyback
registration rights (such shares and the Registrable Securities being
collectively referred to as the "Requested Stock") would, in the good faith
judgment of the managing underwriter of such public offering, reduce
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<PAGE> 7
the number of shares to be offered by the Company or interfere with the
successful marketing of the shares of stock offered by the Company, the number
of shares of Requested Stock otherwise to be included in the underwritten public
offering may be reduced pro rata (by number of shares) among the holders thereof
requesting such registration or excluded in their entirety if so required by the
underwriter. To the extent only a portion of the Requested Stock is included in
the underwritten public offering, those shares of Requested Stock which are thus
excluded from the underwritten public offering shall be withheld from the market
by the holders thereof for a period, not to exceed 180 days, which the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering. A registration statement covering those shares of
Requested Stock excluded from the underwritten offering will be filed within 180
days of the consummation of the underwritten public offering.
The obligation of the Company under this Section 4.2 shall
be unlimited to the number of registration statements.
4.3 Registration Procedures. If and whenever the Company
is required by the provisions of Section 4.1 or 4.2 to effect the registration
of Registrable Securities under the Act, the Company will:
(a) prepare and file with the SEC a registration
statement with respect to such securities, and use its best efforts to cause
such registration statement to become and remain effective until the Registrable
Securities are freely salable without the volume limitations of Rule 144;
(b) prepare and file with the SEC such amendments
to such registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement effective until
the Registrable Securities are freely salable without the volume limitations of
Rule 144;
(c) furnish to the security holders participating
in such registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(d) use its best efforts to register or qualify the
securities covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as such participating holders may reasonably
request in writing within twenty (20) days following the original filing of such
registration statement, except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the security holders participating in
such registration, promptly after it shall receive notice thereof, of the time
when such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify such holders promptly of any request by
the SEC for the amending or supplementing of such registration statement or
prospectus or for additional information;
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<PAGE> 8
(g) prepare and file with the SEC, promptly upon
the request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
holders (and concurred in by counsel for the Company), is required under the Act
or the rules and regulations thereunder in connection with the distribution of
Common Stock by such holder;
(h) prepare and promptly file with the SEC and
promptly notify such holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading; and
(i) advise such holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
4.4 Expenses.
(a) With respect to each registration requested
pursuant to Section 4.1 hereof, and with respect to each inclusion of
Registrable Securities in a registration statement pursuant to Section 4.2
hereof, all fees, costs and expenses of and incidental to such registration,
inclusion and public offering (as specified in paragraph (b) below) in
connection therewith shall be borne by the Company, provided, however, that any
security holders participating in such registration shall bear their pro rata
share of the underwriting discount and commissions and transfer taxes.
(b) The fees, costs and expenses of registration to
be borne by the Company as provided in paragraph (a) above shall include,
without limitation, all registration, filing, and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, and all legal
fees and disbursements and other expenses of complying with state securities or
blue sky laws of any jurisdictions in which the securities to be offered are to
be registered and qualified (except as provided in 4.4(a) above). Fees and
disbursements of counsel and accountants for the selling security holders and
any other expenses incurred by the selling security holders not expressly
included above shall be borne by the selling security holders.
4.5 Indemnification.
(a) The Company will indemnify and hold harmless
each holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of Sections 4.1 or 4.2 hereof, its
directors and officers, and any underwriter (as defined in the Act) for such
holder and each person, if any, who controls such holder or such underwriter
within the meaning of the Act, from and against, and will reimburse such holder
and each such underwriter and controlling person with respect to, any and all
loss, damage, liability, cost and expense to which such holder or any such
underwriter or controlling person may become
8
<PAGE> 9
subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expenses
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information furnished
by such holder, such underwriter or such controlling person in writing
specifically for use in the preparation thereof.
(b) Each holder of Registrable Securities included
in a registration pursuant to the provisions of Sections 4.1 or 4.2 hereof will
indemnify and hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will reimburse the
Company, its directors and officers, any controlling person and any underwriter
with respect to, any and all loss, damage, liability, cost or expense to which
the Company or any controlling person and/or any underwriter may become subject
under the Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance upon
and in strict conformity with written information furnished by or on behalf of
such holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 4.5 of notice
of the commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party,
provided, however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or in addition to those available
to the indemnified party, or if there is a conflict of interest which would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties have the right to select
separate counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said paragraph (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the indemnified
party shall have employed
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<PAGE> 10
counsel in accordance with the provisions of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
V. Covenants of Company.
The Company covenants and agrees that, so long as the
Convertible Preferred Stock is outstanding, it will:
(a) Promptly pay and discharge all lawful taxes,
assessments, and governmental charges or levies imposed upon the Company or upon
its income and profits, or upon any of its property, before the same shall
become in default, as well as all lawful claims for labor, materials and
supplies which, if unpaid, might become a lien or charge upon such properties or
any part thereof; provided, however, that the Company, if so required under
generally accepted accounting principles, shall not be required to pay and
discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings and
the Company shall set aside on its books adequate reserves with respect to any
such tax, assessment, charge, levy or claim so contested;
(b) Do or cause to be done all things reasonably
necessary to preserve and keep in full force and effect its corporate existence,
rights and franchises and comply with all laws applicable to the Company, except
where the failure to comply would not have a material adverse effect on the
Company;
(c) At all times reasonably maintain, preserve,
protect and keep its property used in and material to the conduct of its
business in good repair, working order and condition (ordinary wear and tear
excluded), and from time to time make such repairs, renewals, replacements,
betterments and improvements thereto as shall be reasonably required in the
conduct of its business;
(d) To the extent reasonably necessary for the
operation of its business, keep adequately insured by all financially sound
reputable insurers, all property of a character usually insured by similar
corporations and carry such other insurance as is usually carried by similar
corporations;
(e) At all times keep true and correct books,
records and accounts; and
VI. MISCELLANEOUS
6.1 Any notice or other communication given hereunder
shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, addressed to the Company, at its registered
office, 900 North Franklin, Suite 401, Chicago, Illinois 60610 , Attention: Paul
F. Lavallee and Joyce Wallach and to the Subscriber at his address indicated on
the last page of this Subscription Agreement. Notices shall be deemed to have
been given on the date of mailing, except notices of change of address, which
shall be deemed to have been given when received.
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<PAGE> 11
6.2 This Subscription Agreement shall not be changed,
modified or amended except by a writing signed by the parties to be charged, and
this Subscription Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
6.3 This Subscription Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
6.4 Notwithstanding the place where this Subscription
Agreement may be executed by any of the parties hereto, the parties expressly
agree that all the terms and provisions hereof shall be construed in accordance
with and governed by the laws of the State of New York. The parties hereby agree
that any dispute which may arise between them arising out of or in connection
with this Subscription Agreement shall be adjudicated before a court located in
New York City and they hereby submit to the exclusive jurisdiction of the courts
of the State of New York located in New York, New York and of the federal courts
in the Southern District of New York with respect to any action or legal
proceeding commenced by any party, and irrevocably waive any objection they now
or hereafter may have respecting the venue of any such action or proceeding
brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Subscription Agreement or
any acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, in care of the
address set forth below or such other address as the undersigned shall furnish
in writing to the other.
6.5 This Subscription Agreement may be executed in
counterparts. Upon the execution and delivery of this Subscription Agreement by
the Subscriber, this Subscription Agreement shall become a binding obligation of
the Subscriber with respect to the exchange of the Notes for the Shares and
Warrants as herein provided; subject, however, to the right hereby reserved to
the Company to enter into the same agreements with other subscribers and to add
and/or to delete other persons as subscribers and to not accept the subscription
hereunder.
6.6 The holding of any provision of this Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Subscription Agreement, which shall remain in full
force and effect.
6.7 It is agreed that a waiver by either party of a breach
of any provision of this Agreement shall not operate, or be construed, as a
waiver of any subsequent breach by that same party.
6.8 The parties agree to execute and deliver all such
further documents, agreements and instruments and take such other and further
action as may be necessary or appropriate to carry out the purposes and intent
of this Agreement.
6.9 The Company agrees not to disclose the names,
addresses or any other information about the Subscribers, except as required by
law, provided, that the Company
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may use information relating to the Subscriber in any registration statement
under the Act with respect to the Registrable Securities.
VII. CONFIDENTIAL INVESTOR QUESTIONNAIRE
7.1 The Subscriber represents and warrants that he, she or it
comes within one category marked below, and that for any category marked, he or
she has truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish
any additional information which the Company deems necessary in order to verify
the answers set forth below.
Category A ____ The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint net
worth with his or her spouse, presently exceeds $1,000,000.
EXPLANATION. In calculating net worth you may
include equity in personal property and real
estate, including your principal residence, cash,
short-term investments, stock and securities.
Equity in personal property and real estate should
be based on the fair market value of such property
less debt secured by such property.
Category B ____ The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of $200,000
in each of the two most recent years, or joint income with
his or her spouse in excess of $300,000 in each of those
years (in each case including foreign income, tax exempt
income and full amount of capital gains and loses but
excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the current
year.
Category C ____ The undersigned is a director or executive officer of the
Company which is offering to exchange the Notes for the
Securities.
Category D ____ The undersigned is a bank; a savings and loan association;
insurance company; registered investment company; registered
business development company; licensed small business
investment company ("SBIC"); or employee benefit plan within
the meaning of Title 1 of ERISA and (a) the investment
decision is made by a plan fiduciary which is either a bank,
savings and loan association, insurance company or
registered investment advisor, or (b) the plan has total
assets in excess of $5,000,000 or is a self
directed plan with investment decisions made solely by persons that are
accredited investors.
_______________________________________________
_______________________________________________
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(describe entity)
Category E ____ The undersigned is a private business development company
as defined in section 202(a)(22) of the Investment Advisors
Act of 1940.
_______________________________________________
_______________________________________________
(describe entity)
Category F ____ The undersigned is either a corporation, partnership,
Massachusetts business trust, or non-profit organization
within the meaning of Section 501(c)(3) of the Internal
Revenue Code, in each case not formed for the specific
purpose of acquiring the Securities and with total assets in
excess of $5,000,000.
_______________________________________________
_______________________________________________
(describe entity)
Category G ____ The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of
exchanging the Notes for the Securities, where the purchase
is directed by a "sophisticated person" as defined in
Regulation 506(b)(2)(ii).
Category H ____ The undersigned is an entity (other than a trust) all the
equity owners of which are "accredited investors" within one
or more of the above categories. If relying upon this
Category alone, each equity owner must complete a separate
copy of this Agreement.
_______________________________________________
_______________________________________________
(describe entity)
Category I ____ The undersigned is not within any of the categories above
and is therefor not an accredited investor.
The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Exchange Date in the event that the representations and
warranties in this Agreement shall cease to be true, accurate and complete.
7.2 SUITABILITY (please answer each question)
(a) For an individual Subscriber, please describe your current employment,
including the Company by which you are employed and its principal
business:
______________________________________________________________________
______________________________________________________________________
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______________________________________________________________________
______________________________________________________________________
(b) For an individual Subscriber, please describe any college or graduate
degrees held by you:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(c) For an individual Subscriber, do you expect your current level of income
to significantly decrease in the foreseeable future:
YES ____ NO ____
(d) For all Subscribers, please check types of prior investments:
U.S. Government Securities ______ Private Placements _____
Publicly Traded Corporate Mutual Funds _____
Securities _____ Other (describe) ___________________
Real Estate Investments _____ ___________________
(e) For all Subscribers, please state whether you have participated in other
private placements before:
YES ____ NO ____
(f) For all Subscribers, please indicate frequency of such prior
participation in private placements:
<TABLE>
<CAPTION>
Public Private
Companies Companies
<S> <C> <C>
Frequently __________ __________
Occasionally __________ __________
Never __________ __________
</TABLE>
(g) For all Subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need
sudden cash requirements in excess of cash readily available to you:
YES ____ NO ____
(h) For all Subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek
to subscribe?
YES ____ NO ____
(i) For all Subscribers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing
your entire investment?
YES ____ NO ____
7.3 Manner In Which Title to be Held. (circle one)
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<PAGE> 15
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of
Survivorship (both parties
must sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(g) Trust*
(h) Other
(j) For trust, corporate, partnership and other institutional Subscribers,
do you expect your total assets to significantly decrease in the
foreseeable future:
YES ____ NO ____
*IF THE NOTES ARE BEING EXCHANGED FOR THE SECURITIES BY AN ENTITY, THE
ATTACHED CERTIFICATE OF SIGNATORY MUST ALSO BE COMPLETED.
7.4 NASD Affiliation:
Are you associated(1) with an NASD member firm(2) (please check one):
YES ____ NO ____
If Yes, please describe:
______________________________________________________
______________________________________________________
______________________________________________________
(1) The NASD defines a "person associated with a member" or "associated
person of a member" as being every sole proprietor, general or limited
partner, officer, director or branch manager of any member, or any
natural person occupying a similar status or performing similar
functions, or any natural person engaged in the investment banking or
securities business who is directly or indirectly controlling or
controlled by such member (for example, any employee), whether or not
any such person is registered or exempt from registration with the NASD.
Thus, "person associated with a member" or "associated person of a
member" includes a sole proprietor, general or limited partner, officer,
director or branch manager of an organization of any kind (whether a
corporation, partnership or other business entity) which itself is
either a "member" or a "Person associated with a member" or "associated
person of a member." In addition, an organization of any kind is a
"person associated with a member" or "associated person of a member" if
its sole proprietor or any one of its general or limited partners,
officers, directors or branch managers is a "member," "person associated
with a member" or "associated person of a member."
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<PAGE> 16
(2) The NASD defines a "member" as being any individual, partnership,
corporation or other legal entity that is a broker or dealer admitted to
membership in the NASD.
*IF SUBSCRIBER IS A REGISTERED REPRESENTATIVE WITH AN NASD MEMBER FIRM,
HAVE THE FOLLOWING ACKNOWLEDGMENT SIGNED BY THE APPROPRIATE PARTY:
The undersigned NASD member firm acknowledges receipt of the notice
required by Article 3, Sections 28(a) and (b) of the Rules of Fair Practice or
any successor rules or regulations.
- -------------------------
Name of NASD Member Firm
By: ____________________
Authorized Officer
Date: ___________________
7.5 The undersigned is informed of the significance to the
Company of the foregoing representations and answers contained in the
Confidential Investor Questionnaire contained in this Section 7 and such answers
have been provided under the assumption that the Company will rely on them.
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<PAGE> 17
INDIVIDUAL INVESTOR SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first written above.
PRINCIPAL AMOUNT OF NOTES EXCHANGED: $_________________
____________________________________ ____________________________________
Signature Signature (if purchasing jointly)
____________________________________ ____________________________________
Name Typed or Printed Name Typed or Printed
____________________________________ ____________________________________
Address Address
____________________________________ ____________________________________
City, State and Zip Code City, State and Zip Code
____________________________________ ____________________________________
Telephone - Business Telephone - Business
____________________________________ ____________________________________
Telephone - Residence Telephone - Residence
____________________________________ ____________________________________
Facsimile - Business Facsimile - Business
____________________________________ ____________________________________
Facsimile - Residence Facsimile - Residence
____________________________________ ____________________________________
Tax ID# or Social Security # Tax ID# or Social Security #
Name in which securities should be issued:
___________________________________________
Dated: _____________ ____, 1998
This Subscription Agreement is agreed to and accepted as of February
___, 1998.
ACCUMED INTERNATIONAL, INC.
____________________________________
Name:
Title:
17
<PAGE> 18
INSTITUTIONAL INVESTOR SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first written above.
PRINCIPAL AMOUNT OF NOTES EXCHANGED: $______________
____________________________________ ______________________________________
Name of Institution Number of Partners (If Applicable)
____________________________________ ______________________________________
Address Number of Shareholders (If Applicable)
____________________________________ ______________________________________
City, State and Zip Code State of Formation
____________________________________ ______________________________________
Telephone Date of Formation
____________________________________ ______________________________________
Facsimile Tax ID# or Social Security # of
Institution
____________________________________
Signature
_____________________________________
Name (Typed or Printed) of Individual
Signing on Behalf of Institution
____________________________________
Position or Title
Name in which securities should be issued:
___________________________________________
Dated: __________________, 1998
This Subscription Agreement is agreed to and accepted as of February __,
1998.
ACCUMED INTERNATIONAL, INC.
____________________________________
Name:
Title:
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<PAGE> 19
CERTIFICATE OF SIGNATORY
(To be completed if Notes are being
exchanged for Securities by an entity)
I, ____________________________, am the _________________________
of ______________________________________ (the "Entity").
I certify that I am empowered and duly authorized by the Entity
to execute and carry out the terms of the Agreement and to exchange the Notes
for the Shares and Warrants and certify further that the Agreement has been duly
and validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this _____ day of
________________, 1998.
_________________________________
(Signature)
19
