EXHIBIT 10.51
AGREEMENT REGARDING CANCELLATION OF INDEBTEDNESS
This Agreement Regarding Cancellation of Indebtedness ("Agreement") is
made as of this 1st day of July, 1999 by and between That X. Xxx, Ph.D.
("Holder") and AMDL, Inc., a Delaware corporation (the "Company").
R E C I T A L S
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A. Holder served as an officer of the Company until February 1999.
The Company and Holder acknowledge that as of the date of this Agreement, the
Company is indebted to Holder in the amount of $218,351.30 (the "Indebtedness")
for accrued wages due Holder by the Company.
B. The Company and Holder are also both parties to that certain
Agreement Relating to Salary Deferral dated July 1, 1998 ("Salary Deferral
Agreement") pursuant to which Holder agreed to defer payment of a portion of his
salary pending the receipt by the Company of additional financing.
C. The Company and Holder now wish to cancel the Indebtedness and to
terminate the the Salary Deferral Agreement in exchange for the consideration
set forth herein.
A G R E E M E N T
- - - - - - - - -
THEREFORE, the Company and Holder agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are herein
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incorporated by this reference.
2. Cancellation of Indebtedness. Holder hereby agrees to cancel and
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extinguish the Indebtedness in exchange for the consideration set forth in
Section 4 of this Agreement (the "Consideration"). Holder further acknowledges
and agrees that the payment of the Consideration shall constitute full
satisfaction of $218,351.30 of the Indebtedness represented thereby and that the
Corporation shall have no further obligation to repay same.
3. Termination of Agreements. The Company and Holder hereby mutually
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agree to the termination of, and hereby mutually terminate, any and all
agreements existing between them and any of them, the Salary Deferral Agreement,
including the termination and nonsurvival of all representations, warranties and
covenants thereunder; provided, however, that this Agreement shall not cover the
Company's agreement to pay consulting fees accrued by Holder totalling $14,775
as of June 30, 1999.
4. Consideration In exchange for the cancellation of the
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Indebtedness pursuant to Section 2 of the Agreement and the termination of the
Salary Deferral Agreement pursuant to
Section 3 of the Agreement, the Company shall deliver to the Holder the
following consideration:
(a) Cash Consideration. The Company shall pay the Holder $21,835 in
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cash (the "Cash Consideration"). The Cash Consideration shall be payable in six
installments of $3,639.17 each with the first payment to be made on the earlier
of (i) the first business day following the date on which the Company receives
Offering Proceeds of at least $250,000, or (ii) August 31, 1999. The remaining
payments shall be made on or before the last day of each of the next five
calendar months following August 31, 1999. For purposes of this Section 4(a),
the term Offering Proceeds refers to the cash consideration received by the
Company from the sale of 776,837 shares ("Shares") of Common Stock in the
Company's private placement pursuant to Rule 504 under the Securities Act of
1933, as amended. The Shares were contracted for by the purchasers and were
delivered into escrow on June 30, 1999.
(b) Warrant. Upon the execution of this Agreement, the Company shall
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issue to Holder a stock purchase warrant ("Warrant") to purchase up to 131,011
shares of Common Stock at an exercise price of $.68 per share, pursuant to the
form of Warrant attached hereto as Exhibit A.
5. General Release. The Company and Holder agree to execute and deliver
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the General Release in the form attached hereto as Exhibit B.
6. Arbitration and Fees. Any controversy or claim arising out of or
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relating to this Agreement, or breach thereof, may be resolved by mutual
agreement; or if not, shall be settled in accordance with the arbitration rules
of the American Arbitration Association in Orange County, California. Any
decision issued therefrom shall be binding upon the parties and shall be
enforceable as a judgment in any court of competent jurisdiction. The
prevailing party in such arbitration or other proceeding shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
attorneys' fees in such arbitration or other proceeding which may be determined
by the arbitrator or other officer in such proceeding. If collection is
required for any payment not made when due, the creditor shall collect statutory
interest and the cost of collection, including attorney's fees whether or not
court action is required for enforcement.
7. Miscellaneous. This Agreement contains the entire agreement between
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Holder and the Company and may not be modified, altered or changed in any manner
whatsoever, except by a written agreement signed by all of the parties hereto.
Any agreement or representation concerning the subject matter of this Agreement
not set forth in this Agreement or a subsequent written agreement signed by all
of the parties hereto is null and void. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. The rights and obligation of either party to this Agreement may not be
assigned by such party without the prior written consent of the other party.
This Agreement may be executed in two or more counterparts, each signed by one
of the parties and all of said counterparts together shall constitute one and
the same instrument. The parties agree that facsimile signatures may be relied
upon by each of the parties hereto as original signatures.
IN WITNESS WHEREOF, the parties have executed this Agreement, the date
first above written.
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"The Company"
AMDL, INC.,
a Delaware corporation
By:__________________________________
Xxxx X. Xxxxxx, President
"Holder"
By:__________________________________
That X. Xxx, Ph.D.
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EXHIBIT A
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC OFFERINGS.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE SECURITIES EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY
NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., PACIFIC TIME ON JULY 1, 2004.
STOCK PURCHASE WARRANT
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For the Purchase of 131,011
Shares of Common Stock, $.001 Par Value
of
AMDL, INC.
A Delaware Corporation
THIS CERTIFIES THAT, for value received, That X. Xxx, Ph.D. (the "Holder"),
as registered owner of this Stock Purchase Warrant ("Warrant"), is entitled to
at any time or from time to time after July 1, 1999 and before 5:00 P.M.,
Pacific Time, July 1, 2004, but not thereafter, to subscribe for, purchase and
receive 131,011 fully paid and nonassessable shares of the common stock, $.001
par value (the "Common Stock"), of AMDL, INC., a Delaware corporation (the
"Company"), at a price equal to $.68 per share of the Common Stock (the
"Exercise Price"), upon presentation and surrender of this Warrant and upon
payment by cashier's check or wire transfer of the Exercise Price for such
shares of the Common Stock to the Company at the principal office of the
Company; provided, however, that upon the occurrence of any of the events
specified in the Statement of Rights of Warrant Holder, a copy of which is
attached as Annex I hereto and by this reference made a part hereof, the rights
granted by this Warrant shall be adjusted as therein specified. Upon exercise
of this Warrant, the form of election hereinafter provided for must be duly
executed and the instructions for registration of the Common Stock acquired by
such exercise must be completed. If the subscription rights represented hereby
shall not be exercised at or before 5:00 P.M., Pacific Time, on July 1, 2004,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
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This Warrant may be exercised in accordance with its terms in whole or in
part. In the event of the exercise or assignment hereof in part only, the
Company shall cause to be delivered to the Holder a new Warrant of like tenor to
this Warrant in the name of the Holder evidencing the right of the Holder to
purchase the number of shares of the Common Stock purchasable hereunder as to
which this Warrant has not been exercised or assigned.
In no event shall this Warrant (or the shares of the Common Stock issuable
upon full or partial exercise hereof) be offered or sold except in conformity
with the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 1st day of July, 1999.
AMDL, INC.
By:______________________________
Xxxx X. Xxxxxx, President
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Form to be used to exercise Warrant:
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TO: AMDL, INC. DATE: __________________
The Undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase shares of the Common Stock of the Company called for
thereby, and hereby makes payment by cashier's check of $___________ (at the
rate of $______ per share of the Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the shares of the Common Stock as to which this
Warrant is exercised in the name of:
(Name)
(Address)
(Taxpayer Number)
and if said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, issue a new Warrant Certificate for the balance
remaining of such Warrants to the undersigned at the address stated below.
Name of Holder:________________________________
(Please Print)
Signature:_____________________________________
___________________________________
(Address)
Signature Guaranteed: _________________________
NOTICE: The signature to the form to exercise must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
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Form to be used to transfer Warrant:
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TO: AMDL, INC. DATE: _________________
For value received, ____________ hereby sells, assigns and transfers
unto _______________________ said Warrant Certificate together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
the Secretary of AMDL, Inc. attorney, to transfer said Warrant Certificate on
the books of the corporation, with full power of substitution in the premises.
Name of Holder:___________________________________
(Please Print)
Signature:________________________________________
______________________________________
(Address)
Signature Guaranteed: ___________________________
NOTICE: The signature to the form to transfer must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
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ANNEX I TO AMDL, INC.
STOCK PURCHASE WARRANT DATED JULY 1, 1999
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exercise of Warrant. This Warrant may be exercised in whole or in
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part at any time or from time to time after July 1, 1999 and before 5:00 p.m.,
Pacific Time, on July 1, 2004, by presentation and surrender hereof to the
Company, with the Exercise Form annexed hereto duly executed and accompanied by
payment by cashier's check or wire transfer of the Exercise Price for the number
of shares specified in such form, together with all federal and state taxes
applicable upon such exercise. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant and the Exercise Price at the office or agency of the Company, in
proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder.
2. Rights of the Holder. The Holder shall not, by virtue hereof, be
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entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
3. Adjustment in Number of Shares.
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(A) Adjustment for Reclassifications. In case at any time or from
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time to time after July 1, 1999 ("the Issue Date") the holders of the Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then and in each such case the Holder of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property which such Holder
would hold on the date of such exercise if on the Issue Date he had been the
holder of record of the number of shares of Common Stock of the Company called
for on the face of this Warrant and had thereafter, during the period from the
Issue Date, to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period.
(B) Adjustment for Reorganization, Consolidation, Merger. In case of
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any reorganization of the Company (or any other corporation the stock or other
securities of which are
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at the time receivable on the exercise of this Warrant) after the Issue Date, or
in case, after such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in each such
case the Holder of this Warrant, upon the exercise hereof as provided in Section
1 at any time after the consummation of such reorganization, consolidation,
merger or conveyance, shall be entitled to receive, in lieu of the stock or
other securities and property receivable upon the exercise of this Warrant prior
to such consummation, the stock or other securities or property to which such
Holder would be entitled had the Holder exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided herein; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
4. Notices to Warrant Holders. So long as this Warrant shall be
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outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of stock
of any class or any other rights or (iii) if any capital reorganization of the
Company, reclassification of the capital stock of the Company, consolidation or
merger of the Company with or into another corporation, sale, lease or transfer
of all or substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any, is
to be fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
5. Officer's Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions hereof, the Company shall forthwith file
in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
6. Restrictions on Transfer. The Holder of this Warrant, by acceptance
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thereof, agrees that, absent an effective notification under Regulation A or
registration statement, in either case under the Securities Act of 1933 (the
"Act"), covering the disposition of this Warrant or the Common Stock issued or
issuable upon exercise hereof, such Holder will not sell or transfer any or all
of this Warrant or such Common Stock without first providing the Company with an
opinion of counsel reasonably satisfactory to the Company to the effect that
such sale or transfer will be
A-6
exempt from the registration and prospectus delivery requirements of the Act.
Such Holder agrees that the Company may issue instructions to its transfer agent
to place, or may itself place, a "stop order" on transfers with respect to the
Warrant and Common Stock and that the certificates evidencing the Warrant and
Common Stock which will be delivered to such Holder by the Company shall bear
substantially the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REQUIREMENTS FOR SUCH REGISTRATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN
MAY NOT BE ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THAT ACT OR AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
Each Holder of this Warrant, at the time all or a portion of such
Warrant is exercised, agrees to make such written representations to the Company
as counsel for the Company may reasonably request, in order that the Company may
be reasonably satisfied that such exercise of the Warrant and consequent
issuance of Common Shares will not violate the registration and prospectus
delivery requirements of the Act, or other applicable state securities laws.
7. Registration.
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(a) Form S-8. As soon as practicable after the Company becomes a
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reporting company under the Securities Exchange Act of 1934, as amended, the
Company shall use its best efforts to cause the shares of Common Stock
underlying the Warrants to be registered under the Securities Act of 1933, as
amended (the "Act"), by filing a Form S-8 Registration Statement covering the
Warrants and the shares of Common Stock underlying the Warrants; provided,
however, that Form S-8 is available for purposes of registering the Warrants and
the underlying shares under the Act.
(b) Piggyback Registration Rights. If, at any time after July 1,
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1999 and expiring July 1, 2004, the Company proposes to register any of its
securities under the Act (except for registrations on Forms S-8 or S-4 or their
equivalent), it will give written notice by registered mail, at least thirty
(30) days prior to the filing of each such registration statement, to Holder of
its intention to do so. If Holder notifies the Company within twenty (20) days
after receipt of any such notice of its desire to include any such shares of
Common Stock issuable upon exercise of this
A-8
Warrant in such proposed registration statement, the Company shall afford Holder
the opportunity to have any such shares of Common Stock registered under such
registration statement at the Company's sole cost and expense. These rights may
be exercised at any time on an unlimited number of occasions prior to July 1,
2004, subject to the absolute discretion of any underwriter of the Company's
securities requesting that the shares of Common Stock held by the Holder not be
sold for a period not to exceed 180 days from the effective date of the
Company's initial underwritten public offering. If the underwriter believes that
the total amount of securities sought to be registered by the Holder and any
other holder of similar rights exceeds the amount of securities that the
underwriter deems advisable to include in the offering, only the pro rata number
of shares of Common Stock requested by the Holder with all other holders of
shares of Common Stock requesting registration pursuant to piggyback
registration rights, if any, shall be so registerable.
8. Loss or Mutilation. Upon receipt by the Company of evidence
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satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
9. Reservation of Common Stock. The Company shall at all times reserve
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and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
10. Notices. All notices and other communications from the Company to
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the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
to the Company in writing.
11. Change; Waiver. Neither this Warrant nor any term hereof may be
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changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. Law Governing. This Warrant shall be construed and enforced in
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accordance with and governed by the laws of Delaware.
DATED: July 1, 1999
AMDL, INC.
A Delaware Corporation
By:______________________________
Xxxx X. Xxxxxx, President
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EXHIBIT B
GENERAL RELEASE
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WHEREAS, THAT X. XXX, Ph.D. ("Releasor") and AMDL, INC., a Delaware
corporation ("Releasee") have entered into that certain Agreement Regarding
Cancellation of Indebtedness dated as of July 1, 1999 (the "Agreement");
WHEREAS, pursuant to the Agreement, Releasee has agreed to General Release.
1. Release.
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(a) For valuable consideration, receipt of which is hereby acknowledged,
Releasor does hereby release, acquit and forever discharge Releasee and its
shareholders, partners, principals, employees, agents, relatives, and successors
and assigns (all of whom shall be included as a Releasee), from any and all
claims, demands, actions, causes of action, damages, costs, or other claims
whatsoever in law or equity, which Releasor may have against the Releasee. In
so doing, Releasor releases, relinquishes, remises, waives forever, discharges,
absolves, and quits the Releasee from each, every and all things, including by
way of example, but not limitation each and every claim, action, cause of action
whatsoever and all liabilities, debts, sums of money, controversies,
indebtedness, breaches of contract, breaches of duty or any relationships, acts,
omissions, promises, agreements, representations, damages and any demand of any
type, nature, kind or description, whether in law or in equity, or otherwise,
whether known or unknown, suspected or unsuspected, heretofore or now existing
which could, might or may be claimed to exist from the beginning of time unto
the date of these presents.
(b) Releasor does hereby acknowledge and agree that it is Releasor's
intention that this release shall be effective as a full and final accord and
satisfaction and settlement of and as a bar to each and every claim, demand,
debt, account, reckoning, liability, obligation, cost, expense, lien, action and
cause of action, heretofore referred to and released, which Releasor has against
Releasee. In connection with such waiver and relinquishment, Releasor
acknowledges that Releasor is aware that Releasor or Releasor's attorney may
hereafter discover facts different from or in addition to the facts which they
or their attorney now know or believe to be true with respect to the subject
matter of this release, but that it is Releasor's intention to fully, finally,
absolutely and forever settle any and all claims, disputes and differences which
to now exist or heretofore have existed between Releasor and Releasee, and that
in furtherance of such intention the releases herein given shall be and remain
in effect as a full and complete general release notwithstanding the discovery
of any such different or additional facts. Therefore, Releasor acknowledges
that Releasor is familiar with Section 1542 of the Civil Code of the State of
California which provides as follows:
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"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor."
(c) Releasor does hereby abandon, release, waive and relinquish all rights
and benefits which Releasor may acquire under Section 1542 of the Civil Code of
the State of California pertaining to the subject matter of this release.
2. Consideration.
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Concurrent with the execution hereof, Releasee shall pay to Releasor the
other consideration set forth in the Agreement.
DATED: July 1, 1999
"Releasor"
______________________________________
That X. Xxx, Ph.D.
"Releasee"
AMDL, INC.,
a Delaware corporation
By:___________________________________
Xxxx X. Xxxxxx, President
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