NEOPATH, INC.
Common Stock Purchase Agreement
Dated
as of
February 8, 1999
CONTENTS
1. Purchase and Sale of Stock 1
1.1 Purchase and Sale 1
1.2 Purchase Price 1
2. Closing 1
2.1 Closing Date 1
2.2 Delivery of Stock 1
3. Representations and Warranties of the Company 2
3.1 Organization and Qualification 2
3.2 Capitalization 2
3.3 Authorization, Due Execution and Validity 2
3.4 Valid Issuance of Stock 3
3.5 Governmental Consents 3
3.6 Litigation 3
3.7 Compliance With Other Instruments 3
3.8 SEC Reports; Financial Statements 4
3.9 Compliance With Laws 4
3.10 Private Offering 4
3.11 Changes 5
3.12 Certain Fees 5
3.13 Material Contracts 5
3.14 Title to Properties and Assets, Liens, etc. 6
3.15 Patents and Trademarks 6
3.16 Labor Matters 7
4. Representations and Warranties of the Investors 7
4.1 Authorization 7
4.2 Exemption from Registration 7
4.3 Purchase Entirely for Own Account 8
4.4 Investment Experience 8
4.5 Access to Information 8
4.6 Restricted Securities 8
4.7 Residency 9
4.8 Legends 9
5. Conditions of Investors' Obligations at the Closing Date 9
5.1 Representations and Warranties 9
5.2 Performance 9
5.3 Exemption 10
5.4 Compliance Certificate 10
5.5 Proceedings and Documents 10
5.6 Opinion of Company Counsel 10
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5.7 No Injunctions or Restraints 10
5.8 Tender of Consideration - Investor Rights
Agreement 10
6. Conditions of the Company's Obligations at the
Closing Date 10
6.1 Representations and Warranties 10
6.2 Performance 11
6.3 Exemption 11
6.4 No Injunctions or Restraints 11
7. Covenants 11
7.1 Publicity 11
7.2 Use of Proceeds 11
7.3 Nasdaq Listing 11
8. Miscellaneous 11
8.1 Expenses 11
8.2 Entire Agreement; Governing Law 12
8.3 Notice 12
8.4 Amendments and Waivers 12
8.5 Counterparts 12
8.6 Successors and Assigns 12
8.7 Severability 12
8.8 Survival of Representations and Warranties 13
Exhibit A - Schedule of Investors
Exhibit B - Schedule of Exceptions
Exhibit C - Form of Investor Rights Agreement
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COMMON STOCK PURCHASE AGREEMENT
COMMON STOCK PURCHASE AGREEMENT, dated as of February 8,
1999, by and among NEOPATH, INC., a Washington corporation
(the "Company"), and the investors listed on Exhibit A hereto
(the "Investors").
Recital
The Investors desire to purchase from the Company, and
the Company desires to sell to the Investors, shares of the
Company's common stock, par value $.01 per share (the "Common
Stock") upon the terms and subject to the conditions set forth
herein.
Agreement
NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein, the parties hereto agree as
follows:
1. Purchase and Sale of Stock
1.1 Purchase and Sale
Upon the terms and subject to the conditions of this
Agreement, the Company shall sell and issue to each Investor,
and each Investor shall purchase from the Company, severally
and not jointly, the number of shares of Common Stock set
forth opposite such Investor's name on Exhibit A hereto (the
"Shares").
1.2 Purchase Price
The purchase price for the Shares to be purchased by the
Investors shall be $5.00 per Share. Notwithstanding the
foregoing, if the Registration Statement that the Company is
required to file pursuant to the Investor Rights Agreement
attached hereto as Exhibit C has not been declared effective
by the Securities and Exchange Commission within 120 days
following the Closing Date, then the purchase price shall be
decreased by two (2) percent per share and such decrease shall
be paid by the Company to the Investors in cash within 10 days
following the expiration of such 120-day period.
2. Closing
2.1 Closing Date
The closing of the sale and purchase of the Shares shall
be held at 7:00 a.m., Seattle time, on February 9, 1999, or
such other time as may be agreed to by the parties hereto (the
"Closing Date").
2.2 Delivery of Stock
At the Closing, subject to the terms and conditions
hereof, the Company shall deliver to each Investor a
certificate representing the Shares to be purchased by such
Investor from the Company, which shall be dated the Closing
Date and duly registered in the name of such Investor, against
payment of the aggregate purchase price therefor by wire
transfer.
3. Representations and Warranties of the Company
The Company hereby represents and warrants to each
Investor that, except as set forth on a Schedule of Exceptions
attached hereto as Exhibit C:
3.1 Organization and Qualification
The Company is a corporation organized and validly
existing under the laws of the state of Washington and has all
requisite corporate power and authority to own its properties
and carry on its business as currently conducted and as
proposed to be conducted. The Company is duly qualified to
transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to so
qualify would have a material adverse effect on its financial
condition, results of operations, business or properties (a
"Material Adverse Effect").
3.2 Capitalization
As of the date of this Agreement, the authorized capital
stock of the Company consists of (a) 10,000,000 shares of
preferred stock, par value $.01 per share, no shares of which
are outstanding and (b) 40,000,000 shares of Common Stock,
14,504,623 shares of which were issued and outstanding as of
December 31, 1998, 278,910 shares of which were subject to
warrants outstanding as of December 31, 1998, 2,928,186 shares
of which were reserved, as of December 31, 1998, for issuance
upon the exercise of stock options granted or to be granted
under the Company's 1989 Restated Stock Option Plan (the "1989
Plan") or the Company's Stock Option Plan for Nonemployee
Directors (the "XXX Plan") and 133,325 shares of which were
reserved, as of December 31, 1998, for issuance under the
Company's 1997 Employee Stock Purchase Plan. Except as set
forth in this Section 3.2 and as contemplated by this
Agreement, and except for options granted under the 1989 Plan
or the XXX Plan since December 31, 1998, there are no
outstanding options, warrants, conversion privileges,
preemptive rights, or other rights or agreements to purchase
or otherwise acquire or issue any equity securities of the
Company. The Company has no obligation to repurchase or
redeem any outstanding securities.
3.3 Authorization, Due Execution and Validity
The Company has all requisite power and authority to
execute, deliver and perform its obligations under this
Agreement and the Investor Rights Agreement. All corporate
action on the part of the Company, its officers, directors and
shareholders necessary for the
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authorization, execution and delivery of this Agreement and
the Investor Rights Agreement and the transactions
contemplated herein, the performance of all obligations of the
Company hereunder and the authorization, issuance and delivery
of the Shares being sold hereunder, have been taken or will be
taken prior to the Closing. Each of this Agreement and the
Investor Rights Agreement have been duly executed and
delivered by the Company and constitutes a valid and legally
binding obligation of the Company, enforceable in accordance
with its terms, except as (a) such enforceability may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (b) the availability of
equitable remedies may be limited by equitable principles of
general applicability.
3.4 Valid Issuance of Stock
The Shares, when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein,
will be duly and validly issued, fully paid and nonassessable
and free of any liens or encumbrances created by the Company,
and will be issued in compliance with all applicable state and
federal securities laws. The outstanding shares of Common
Stock are all duly and validly authorized and issued, fully
paid and nonassessable and were issued in compliance with all
applicable state and federal securities laws.
3.5 Governmental Consents
No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or
filing with, any federal or state governmental authority or
entity on the part of the Company is required in connection
with the consummation of the transactions contemplated by this
Agreement and the Investor Rights Agreement (including,
without limitation, the issuance of the Shares), except for
applicable notice filings as are necessary to secure an
exemption from qualification or registration of the offer and
sale of the Shares under all applicable United States federal
or state securities laws.
3.6 Litigation
There is no action, suit, claim, proceeding or
investigation pending or, to the Company's knowledge,
currently threatened against the Company that relates to or
challenges the legality, validity or enforceability of this
Agreement or the Investor Rights Agreement or the issuance of
the Shares that could either individually or in the aggregate
have a Material Adverse Effect. The Company is not a party to
or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or other governmental
authority or entity that could have, individually and in the
aggregate, a Material Adverse Effect.
3.7 Compliance With Other Instruments
The Company is not in violation of any provision of its
Restated Articles of Incorporation or its Amended and Restated
Bylaws or in violation or default of any provision of any
instrument, judgment, order, writ, decree or contract to which
it is a party or by which
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it is bound, which violation or default would adversely affect
the legality, validity, or enforceability of this Agreement
and the Investor Rights Agreement or have, individually and in
the aggregate, a Material Adverse Effect. The execution,
delivery and performance of this Agreement or the Investor
Rights Agreement and the consummation of the transactions
contemplated hereby will not require any consent under or be
in conflict with or constitute, with or without the passage of
time or the giving of notice or both, either a violation or
default under any such provision, instrument, judgment, order,
writ, decree or contract or an event which results in the
creation of any lien, charge or encumbrance upon any of the
Company's assets.
3.8 SEC Reports; Financial Statements
The Company has furnished the Investors with true and
complete copies of each report, schedule, registration
statement and definitive proxy statement filed by the Company
with the Securities and Exchange Commission (the "SEC") since
December 31, 1997 (the "SEC Documents"), which are all the
documents that the Company has been required to file with the
SEC during such period and each of which has been timely
filed. As of their respective dates, the SEC Documents
complied with the requirements of the Securities Act of 1933,
as amended (the "Securities Act"), or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as applicable,
and the rules and regulations of the SEC thereunder, and none
of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company
included in the SEC Documents were prepared in accordance with
generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of unaudited
financial statements, as permitted by Form 10-Q of the SEC)
and fairly present (subject, in the case of unaudited
financial statements, to normal recurring audit adjustments)
the financial position of the Company and its consolidated
subsidiaries at the dates thereof and the results of their
operations and changes in financial position for the periods
then ended.
3.9 Compliance With Laws
The Company has complied, and is in compliance with, all
federal, state, county, local and foreign laws, rules,
regulations, ordinances, decrees and orders applicable to the
operation of its business or to the real property or personal
property that it owns or leases (including, without
limitation, all such laws, rules, ordinances, decrees and
orders relating to federal food and drug administration,
antitrust, consumer protection, currency exchange,
environmental protection, equal opportunity, health,
occupational safety, pension, securities and
trading-with-the-enemy matters), the failure to comply with
which would, individually or in the aggregate, have a Material
Adverse Effect. The Company has not received any notification
of any asserted present or past unremedied failure by the
Company to comply with any of such laws, rules, regulations,
ordinances, decrees or orders.
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3.10 Private Offering
During the six months preceding the date of this
Agreement, neither the Company nor any person acting on its
behalf has, directly or through any agent, sold, offered for
sale, solicited offers to buy or otherwise negotiated in
respect of any security (as defined in the Securities Act)
that is or may be integrated with the sale of the Shares in a
manner that would require the registration of the Shares under
the Securities Act. Neither the Company nor any person acting
on its behalf has offered or sold or will offer or sell any
Shares by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the
Securities Act. Assuming the accuracy of the Investors'
representations in Section 4 hereof, the offering and sale of
the Shares will satisfy the requirements of Rule 506 under the
Securities Act.
3.11 Changes
Since September 30, 1998 (the date of the balance sheet
contained in the last quarterly report on Form 10-Q filed by
the Company as a part of the SEC documents), there has not
been:
(a) any damage, destruction or loss (whether or not
covered by insurance) which has had or is expected to have a
Material Adverse Effect;
(b) any material change in the accounting methods
or practices followed by the Company;
(c) any material debt obligation or liability
(whether absolute or contingent) incurred by the Company
(whether or not presently outstanding) except (i) current
liabilities incurred, and obligations under agreements entered
into, in the ordinary course of business and (ii) obligations
or liabilities entered into or incurred in connection with the
execution of this Agreement;
(d) any sale, lease, abandonment or other
disposition by the Company of any real property or, other than
in the ordinary course of business, of any equipment or other
operating properties or, other than in the ordinary course of
business, any sale, assignment, transfer, license or other
disposition by the Company of any intellectual property or
other intangible asset; or
(e) any other event or occurrence that has had or
is expected to have a Material Adverse Effect.
3.12 Certain Fees
No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection
with the sale of the Shares to the Investors; except that the
Company has agreed to issue to Invemed Associates, Inc.
warrants to purchase 100,000
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shares of Common Stock at an exercise price of equal to 15
percent above the closing price of NeoPath's Common Stock on
the Closing Date.
3.13 Material Contracts
The exhibit lists to the Company's SEC Reports contain a
true and complete list of all Material Contracts (as defined
below) to which the Company is a party or by which it or its
assets may be bound. The Company is, and, to the best of the
Company's knowledge, all other parties to such Material
Contracts (other than the Company) are, in compliance in all
material respects with their obligations thereunder.
"Material Contracts" means the agreements, obligations and
undertakings which are material to the business or operations
of the Company. Without limiting the generality of the
foregoing, any agreement, obligation or undertaking will be
deemed to be a Material Contract if a breach thereof or
default thereunder would have a Material Adverse Effect.
3.14 Title to Properties and Assets, Liens, etc.
Other than as disclosed in the SEC Documents, the Company
has good and marketable title to its properties and assets,
and good title to its leasehold estates, in each case subject
to no mortgage, pledge, lien, lease, encumbrance, or charge,
other than (i) those resulting from taxes which have not yet
become delinquent, (ii) minor liens and encumbrances which do
not materially detract from the value of the property subject
thereto or have a Material Adverse Effect on the Company, and
(iii) those that have otherwise arisen in the ordinary course
of business.
3.15 Patents and Trademarks
To the best of the Company's knowledge, the Company has
sufficient title and ownership of or rights to use such trade
names, copyrights, trade secrets, information, patents,
trademarks, service marks, rights and processes (including all
applications therefor) as are necessary for its business as
now conducted and as proposed to be conducted, without any
conflict with or infringement of the rights of others. Except
as set forth in the exhibit lists to the Company's SEC
documents, there are no material options, licenses, or
agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any material options, licenses
or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade
secrets, licenses, proprietary rights and processes of any
other person or entity. The Company has not received any
communications alleging that the Company has violated or, by
conducting its business as now conducted or proposed, would
violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights
of any other person or entity. The Company is not aware that
any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or
order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote
the interests of the Company or that would conflict with the
Company's
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business as now conducted or proposed to be conducted. To the
best of the Company's knowledge, no person or entity is
infringing or threatening to infringe the patents, trademarks,
service marks, trade names, copyrights or trade secrets or
other proprietary rights of the Company. All employees,
officers and directors, other than those employees who are not
privy to any of the Company's confidential information, are
bound by confidentiality and assignment of intellectual
property and technology agreements and such agreements and
obligations do not confer on any such person any rights of the
intellectual property of the Company.
3.16 Labor Matters
The Company has no collective bargaining agreement with
any of its employees and there is no labor union organizing
activity pending or threatened with respect to the Company.
There are no disputes pending or, to the knowledge of the
Company, threatened between the Company, on the one hand, and
any of its employees, on the other hand, other than employee
grievances arising in the ordinary course of business which
would not, individually or in the aggregate, have a Material
Adverse Effect.
4. Representations and Warranties of the Investors
Each Investor hereby represents and warrants to the
Company, severally and not jointly, that:
4.1 Authorization
All acts and conditions necessary for the authorization,
execution, delivery and consummation by the Investor of this
Agreement and the transactions contemplated hereby have been,
or will prior to the Closing be, taken, performed and
obtained. This Agreement constitutes a valid and legally
binding obligation of the Investor, enforceable in accordance
with its terms, except as (a) such enforceability may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (b) the availability of
equitable remedies may be limited by equitable principles of
general applicability. The Investor has full power and
authority to execute, deliver and perform its obligations
under this Agreement and to own the Shares. The execution,
delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
conflict with or constitute a violation or default under any
provision of the charter or bylaws of the Investor, or of any
material agreement, indenture or other instrument to which the
Investor is a party, or by which it or its properties or
assets are bound, or of any order, judgment or decree against
or binding upon such Investor.
4.2 Exemption from Registration
Except as provided in the Investor Rights Agreement, the
Investor has been advised that none of the Shares to be
purchased by the Investor hereunder are being registered under
the Securities Act, or applicable state or foreign securities
laws, but are being offered and
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sold pursuant to exemptions from such laws. The Investor
acknowledges that the Company is relying in part upon the
Investor's representations and warranties contained herein for
the purpose of qualifying the offer and sale of the Shares
proposed to be offered and sold hereunder for applicable
exemptions from registration or qualification pursuant to
federal or state securities laws, rules and regulations.
4.3 Purchase Entirely for Own Account
The Shares to be received by the Investor will be
acquired for investment for the Investor's own account, not as
a nominee or agent, and not with a view to the distribution of
any part thereof in a manner contrary to the Securities Act or
any applicable federal or state securities law, and the
Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same in a
manner contrary to the Securities Act or any applicable
federal or state securities law. The Investor does not have
any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such
person or to any third person with respect to any of the
Shares.
4.4 Investment Experience
The Investor qualifies as an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated by the SEC
that meets the requirements of Rule 501(a)(1), (2), (3), or
(7) of said Regulation D, and acknowledges that an investment
in the Securities involves a high degree of risk. The
Investor is able to fend for itself in the transactions
contemplated by this Agreement, can bear the economic risk of
its investment (including possible complete loss of such
investment) for an indefinite period of time and has such
knowledge and experience in financial or business matters that
it is capable of evaluating the merits and risks of the
investment in the Shares. The Investor has not been organized
for the purpose of acquiring the Shares.
4.5 Access to Information
The Investor has been furnished such information as it
deems necessary to evaluate an investment in the Shares. The
Investor has been given access to sufficient information
regarding the Company, including information regarding the
current financial condition, results of operations, business,
properties and management of the Company and the risks
associated therewith and has utilized such access to its
satisfaction for the purpose of obtaining information or
verifying information. The Investor has either attended or
been given reasonable opportunity to attend a meeting with
representatives of the Company for the purpose of asking
questions of, and receiving answers from, such representatives
concerning the terms and conditions of the offering of the
Shares and to obtain any additional information, to the extent
reasonably available. The foregoing representations in this
Section 4.5 shall not be deemed to limit the Company's
representations contained in Section 3 of this Agreement.
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4.6 Restricted Securities
The Investor realizes that none of the Shares to be
purchased by the Investor hereunder have been registered under
the Securities Act and that all of such Securities are
characterized under the Securities Act as "restricted
securities" and therefore cannot be sold or transferred unless
subsequently registered under the Securities Act or an
exemption from such registration is available. In this
connection, the Investor represents that it is familiar with
Rule 144 under the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the
Securities Act.
4.7 Residency
The Investor represents that it is a bona fide resident
of or is domiciled in the jurisdiction indicated on Exhibit A
hereto.
4.8 Legends
It is understood that the certificates evidencing the
Shares may bear legends in substantially the following form:
The securities evidenced by this certificate
have not been registered under the Securities
Act of 1933, as amended (the "Act"), or
applicable state securities laws, and no
interest therein may be sold, distributed,
assigned, offered, pledged or otherwise
transferred unless (i) there is an effective
registration statement under the Act and
applicable state securities laws covering any
such transaction involving said securities,
(ii) this corporation receives an opinion of
legal counsel for the holder of these
securities reasonably satisfactory to this
corporation stating that such transaction is
exempt from registration or (iii) this
corporation otherwise satisfies itself that
such transaction is exempt from registration.
5. Conditions of Investors' Obligations at the Closing Date
The obligations of each Investor under Section 1 hereof
are subject to the fulfillment on or before the Closing Date
of each of the following conditions, unless waived in writing
by the Investor:
5.1 Representations and Warranties
The representations and warranties of the Company
contained in Section 3 hereof shall be true in all material
respects on and as of the Closing Date.
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5.2 Performance
The Company shall have performed and complied with all
agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with
by it on or before the Closing Date.
5.3 Exemption
The offer and sale of the Shares to the Investors
pursuant to this Agreement shall be exempt from registration
under the Securities Act.
5.4 Compliance Certificate
The Chief Executive Officer or the Chief Financial
Officer of the Company shall have delivered to the Investors a
certificate stating that the conditions specified in
Sections 5.1 and 5.2 hereof have been fulfilled.
5.5 Proceedings and Documents
All corporate and other proceedings in connection with
the transactions contemplated at the Closing Date and all
documents incident thereto shall be reasonably satisfactory to
the Investors and the Investors' legal counsel.
5.6 Opinion of Company Counsel
Each Investor shall have received from Xxxxxxx Coie,
legal counsel for the Company, an opinion, dated as of the
Closing Date, in form and substance reasonably satisfactory to
such Investor.
5.7 No Injunctions or Restraints
There shall be no temporary restraining order,
preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint
or prohibition preventing consummation of the offer, sale and
purchase of the Shares contemplated hereby.
5.8 Tender of Consideration - Investor Rights Agreement
Each Investor shall have tendered full consideration for
all of the Shares being purchased by it hereunder. The
Company and the Investors shall have entered into an Investor
Rights Agreement in the form attached hereto as Exhibit C.
6. Conditions of the Company's Obligations at the Closing Date
The obligations of the Company under Section 1 hereof are
subject to the fulfillment on or before the Closing Date of
each of the following conditions, unless waived in writing by
the Company:
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6.1 Representations and Warranties
The representations and warranties of each Investor
contained in Section 4 hereof shall be true in all material
respects on and as of the Closing Date.
6.2 Performance
Each Investor shall have performed and complied with all
agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with
by it on or before the Closing Date.
6.3 Exemption
The offer and sale of the Shares to the Investors
pursuant to this Agreement shall be exempt from registration
under the Securities Act.
6.4 No Injunctions or Restraints
There shall be no temporary restraining order,
preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint
or prohibition preventing consummation of the offer, sale and
purchase of the Shares contemplated hereby.
7. Covenants
7.1 Publicity
The Company shall not use or make reference to the name
of any Investor or any affiliate of any Investor in any press
release or other public document without such Investor's prior
consent unless the use or reference to the Investor or
affiliate is required by law, in which event the Company will
consult with the Investor prior to such publication.
7.2 Use of Proceeds
The Company shall use the proceeds from the offering and
sale of the Shares for working capital and other general
corporate purposes.
7.3 Nasdaq Listing
The Company shall use its best efforts to cause the
Shares to be listed on the Nasdaq National Market.
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8. Miscellaneous
8.1 Expenses
The Company and each Investor shall each bear its own
expenses with respect to the transactions contemplated by this
Agreement, except that the Company shall reimburse each
Investor for all reasonable out-of-pocket legal fees and
disbursements incurred with respect thereto, up to a maximum
amount of $15,000. Such reimbursement shall be paid on the
Closing Date or on such other date as is requested by an
Investor in the event the Closing does not occur.
8.2 Entire Agreement; Governing Law
This Agreement and the other documents delivered at the
Closing constitute the full and entire understanding and
agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements with respect
to the subject matter hereof. This Agreement shall be
governed by and construed under the laws of the state of
Washington as applied to agreements among Washington residents
entered into and to be performed entirely within the state of
Washington.
8.3 Notice
Unless otherwise provided, any notice desired or required
to be given hereunder shall be in writing given by personal
delivery or certified or registered mail, or confirmed
facsimile transmission, in any such case addressed or sent:
(a) if to the Company, to NeoPath, Inc. with a copy to Xxxxxxx
Coie, 0000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000, Attn:
Xxxxxxx X. Xxxxxxxxx, Facsimile: (000) 000-0000; (b) if to an
Investor, to the address or facsimile number listed on
Exhibit A hereto; or (c) to such other address or facsimile
number as any party shall have previously designated by such a
notice. The effective date of any notice or request shall be
three days from the date it is sent by the addresser with
charges prepaid so long as it is in fact received within five
days, or when successful transmission is confirmed if sent by
facsimile, or when personally delivered.
8.4 Amendments and Waivers
Any term of this Agreement may be amended and the
observance of any term may be waived (either generally or in a
particular instance and either retroactively or prospectively)
only with the written consent of the Company and each
Investor.
8.5 Counterparts
This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, and by
the different parties hereto in separate counterparts, each of
which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one
and the same agreement.
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8.6 Successors and Assigns
Except as otherwise provided herein, the provisions
hereof shall inure to the benefit, and be binding upon, the
successors and assigns of the parties hereto.
8.7 Severability
If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provisions shall
be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provisions were so
excluded and shall be enforceable in accordance with its
terms.
8.8 Survival of Representations and Warranties
The representations and warranties contained in Section 3
shall survive the execution and delivery of this Agreement and
the Closing for a period expiring on April 30, 2000. No
Investors shall be entitled to bring any claims based on such
representations and warranties unless such claims are brought
on or before April 30, 2000.
[remainder of page intentionally left blank]
13
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
NEOPATH, INC.
By /s/ XXXX X. XXXXXX
__________________
Xxxx X. Xxxxxx
Chairman, President and
Chief Executive Officer
INVESTORS:
THE XXXXXXXX FUND, INC.
By /s/ XXXXXX XXXXX III
____________________
Its Health Care Analyst
CAPITAL RESEARCH AND MANAGEMENT
COMPANY ON BEHALF OF SMALLCAP WORLD
FUND, INC.
By /s/ XXXXXXX XXXXXX
__________________
Xxxxxxx X. Xxxxxx
Its Secretary
XXXXXXX CAPITAL GROUP, LLC, as
attorney-in-fact for each of the
Investors indicated on Exhibit A
hereto
By /s/ XXXXXX X. XXXXXXX
_____________________
Its Principal
14
Exhibit A
Schedule of Investors
Name, Address and Facsimile Number Shares
__________________________________ ______
The Xxxxxxxx Fund, Inc. 1,821,000
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
FAX (000) 000-0000
Capital Research and Management 500,000
Company on behalf of SmallCap
World Fund, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
FAX (000) 000-0000
Investors represented by
Xxxxxxx Capital Group, LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
FAX (000) 000-0000
The Xxxxxxx Xxxxxx Foundation 7,000
Alza Corporation Retirement Plan 6,000
Xxxx Xxxxxx Foundation 6,000
The Xxxxxx Xxxxxxxx Family Trust 5,000
Xxxx X. & Xxxxxxxxx X. Xxxxxx 4,000
Xxxxxx X. Xxxxxx Employee
Investment Plan 60,000
The Xxxxx/Xxxxxxxx LLC 18,000
The Xxxxxx Investment
Partnership I, L.P. 4,000
Xxxxxxxx X. Legacy 6,000
NFIB Employee Pension Trust 12,000
NFIB Corporate Account 15,000
Norwalk Employees' Pension Plan 12,000
Public Employee Retirement
System of Idaho 120,000
Roanoke College 6,000
The A & JS Family LLC 11,000
City of Stamford Firemen's
Pension Fund 18,000
State of Oregon PERS/ZCG 240,000
Van Loben Sels Foundation 5,000
The A & SW Family LLC 12,000
Xxxxx Family LLC 6,000
Xxxxxxx Investment Partners LP 6,000
2
Exhibit B
Schedule of Exceptions
This Schedule of Exceptions, dated February 8, 1999, is
made and given, pursuant to the Common Stock Purchase
Agreement, dated as of February 8, 1999 (the "Agreement") by
and among NeoPath, Inc. (the "Company") and the purchasers of
the Company's Common Stock, to the Investors named on
Exhibit A to the Agreement. Any matter set forth herein as an
exception to one section or paragraph of the Agreement shall
be deemed to constitute an exception to all other applicable
sections and paragraphs of the Agreement. Capitalized terms
used but not otherwise defined herein have the respective
meanings assigned to such terms in the Agreement.
Section 3.11(d) The Company plans to write-off
approximately $3.1 million in intangible assets related to the
Pathfinder System product line. This non-cash expense is
expected to be reflected in the Company's results of
operations for the three months ended December 31, 1998.
Section 3.15 [Excerpt from the Company's Form 10-Q for
the quarterly period ended September 30, 1998]:
On July 15, 1996, Neuromedical Systems, Inc.
("Neuromedical") filed a lawsuit against NeoPath,
Inc. in the United States District Court for the
Southern District of New York. The complaint alleged
patent infringement, unfair competition, false
advertising, and related claims. On September 5,
1996, the Company filed its answer and counter
claims. In May 1998, a judge in the United States
District Court for the Southern District of New York
denied Neuromedical's motion for a preliminary
injunction against NeoPath. The parties have agreed
to dismiss their claims and counterclaims on all but
the patent issues, and Neuromedical accordingly
served an amended complaint on July 27, 1998
asserting only patent infringement claims. This
lawsuit is still in the discovery stage and a trial
date has not been set. The Company continues to
believe it has a strong position in this action and
will defend itself vigorously.
On March 31, 1997, the Company filed a patent
infringement lawsuit against Neuromedical in the
United States District Court for the Western District
of Washington. The complaint alleges patent
infringement and seeks permanent injunctions against
Neuromedical. In March and April 1998 this lawsuit
was amended, and NeoPath filed an additional related
patent lawsuit against Neuromedical. Neuromedical
filed a motion for summary judgment, which was denied
by the court in April 1998. In October 1998,
Neuromedical filed another motion for summary
judgment for which the judge has not yet rendered a
decision. The first lawsuit is currently scheduled
for trial in 1999, and the second lawsuit is
currently in the discovery stage.
Update: Neuromedical's motion for summary judgment was
denied, and the first Washington trial is currently scheduled
to begin in April 1999.
2
