Exhibit 10.1
WARRANT PURCHASE AGREEMENT
BETWEEN
TRIPATH IMAGING, INC.
AND
QUEST DIAGNOSTICS INCORPORATED
Dated as of May 1, 2004
WARRANT PURCHASE AGREEMENT
This WARRANT PURCHASE AGREEMENT dated as of May 1, 2004 (the
"Agreement"), is between TriPath Imaging, Inc., a Delaware corporation
("TriPath"), and Quest Diagnostics Incorporated, a Delaware corporation ("Quest
Diagnostics").
WITNESSETH:
WHEREAS, TriPath and Quest Diagnostics are parties to a Collaboration
Agreement effective as of March 1, 2003 (the "Original Collaboration
Agreement"), as amended by Amendment #1 to Collaboration Agreement of even date
herewith (the "Amendment" and, together with the Original Collaboration
Agreement, the "Collaboration Agreement"), pursuant to which TriPath and Quest
Diagnostics are entering into an Agreement for the Purchase of Products and
Lease of Equipment (the "Product Purchase Agreement") and into this Agreement
(terms used and not defined herein shall have the meaning ascribed to them in
the Collaboration Agreement).
WHEREAS, in addition to certain other consideration provided for in the
Collaboration Agreement, TriPath has agreed to issue to Quest Diagnostics
warrants to purchase shares of TriPath Common Stock, par value $0.01 per share
(the "TriPath Stock"), in the amounts and on the terms and conditions contained
herein and in such warrants as partial consideration for the commitments made by
Quest Diagnostics under the Collaboration Agreement and under the Product
Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
ISSUANCE OF WARRANTS; CLOSINGS
1.1 Issuance of Warrants; Exercisability. Upon the terms and
subject to the conditions contained in this Agreement, and in reliance on the
representations and warranties of Quest Diagnostics set forth herein, in
fulfillment of its obligations to issue such warrants under Section 8 of the
Amendment, TriPath hereby agrees to issue to Quest Diagnostics on the Closing
Date (as defined in Section 1.2) warrants (each a "Warrant" and collectively the
"Warrants") to purchase an aggregate of up to 4,000,000 shares of TriPath Stock.
Each Warrant shall be exercisable for the number of shares of TriPath Stock, at
the times and at the exercise price as follows:
1.1.1 The Warrant in the form attached hereto as Exhibit
A-1 shall be exercisable at any time from and after the Closing Date through the
third anniversary of the Closing Date as more specifically set forth in such
Warrant for an aggregate of up to 800,000 shares of TriPath Stock at an exercise
price of $9.25 per share (as each such figure may be adjusted pursuant to such
Warrant).
1.1.2 The Warrant in the form attached hereto as Exhibit
A-2 shall be exercisable at any time from and after the First Milestone Date (as
defined in Exhibit C attached to the Amendment) through the third anniversary of
the Closing Date, as more specifically set forth in such Warrant, for an
aggregate of up to 200,000 shares of TriPath Stock at an exercise price of
$10.18 per share (as each such figure may be adjusted pursuant to such Warrant).
1.1.3 The Warrant in the form attached hereto as Exhibit
A-3 shall be exercisable at any time from and after the Second Milestone Date
(as defined in Exhibit C attached to the Amendment) through the third
anniversary of the Closing Date, as more specifically set forth in such Warrant,
for an aggregate of up to 500,000 shares of TriPath Stock at an exercise price
of $10.64 per share (as each such figure may be adjusted pursuant to such
Warrant).
1.1.4 The Warrant in the form attached hereto as Exhibit
A-4 shall be exercisable at any time from and after the Third Milestone Date (as
defined in Exhibit C attached to the Amendment) through the fourth anniversary
of the Closing Date, as more specifically set forth in such Warrant, for an
aggregate of up to 1,000,000 shares of TriPath Stock at an exercise price of
$11.56 per share (as each such figure may be adjusted pursuant to such Warrant).
1.1.5 The Warrant in the form attached hereto as Exhibit
A-5 shall be exercisable at any time from and after the Fourth Milestone Date
(as defined in Exhibit C attached to the Amendment) through the fourth
anniversary of the Closing Date, as more specifically set forth in such Warrant,
for an aggregate of up to 1,500,000 shares of TriPath Stock at an exercise price
of $12.03 per share (as each such figure may be adjusted pursuant to such
Warrant).
It shall be a condition to TriPath's obligation to issue any Warrant Shares upon
exercise or conversion of any of the Warrants that any required filing of a
Notification and Report Form under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act, as amended (the "HSR Act"), shall have been made and the waiting period
(and any extension thereof) applicable to such exercise or conversion under the
HSR Act (if any) shall have been terminated or shall have expired. Quest
Diagnostics shall notify TriPath whether any such filing would be required as
the result of Quest Diagnostics' acquisition of any Warrant Shares upon exercise
or conversion; if so required, the parties shall: (a) cooperate in good faith to
each file with the United States Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the "DOJ") any
such Notification and Report Form under the HSR Act, (b) promptly supply the
other with any information that may be required to make such filing and (c)
supply any additional information that may be requested by the FTC or the DOJ
and which the parties reasonably deem appropriate. Each Warrant also shall be
subject to the other terms and conditions set forth in this Agreement and in the
respective form of each Warrant attached hereto as Exhibit X-0, X-0, X-0, X-0
and A-5.
1.2 The Closing. The closing of the issuance of the Warrants (the
"Closing") will be held at the offices of Xxxxxx & Dodge LLP, 000 Xxxxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, at 11:00 a.m. on the date on which the
execution of the Amendment and the Product Purchase Agreement occurs, or at such
other time or place, or both, as may be designated by the parties (the "Closing
Date").
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1.3 Deliveries at Closing. To effect the issuance of the Warrants
pursuant to this Agreement, TriPath will deliver to Quest Diagnostics an
executed counterpart of this Agreement together with the Warrants in the forms
attached hereto as Exhibits X-0, X-0, X-0, X-0 and A-5, respectively, signed by
an authorized officer of TriPath, and Quest Diagnostics will deliver to TriPath
an executed counterpart of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF TRIPATH
TriPath represents and warrants as of the date hereof to Quest
Diagnostics as follows:
2.1 Organization. TriPath is a corporation validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own, lease and operate its assets and to carry on its business
as now being and as heretofore conducted.
2.2 Authorization and Issuance of Warrants. TriPath has taken all
necessary corporate action to authorize the issuance and delivery of the
Warrants under this Agreement and to reserve for issuance and delivery the
shares of TriPath Stock issuable upon exercise or conversion of the Warrants
(the "Warrant Shares"). Upon issuance in accordance with the terms of each
Warrant, including payment of the respective exercise price, the Warrant Shares
shall be duly and validly issued, fully paid and nonassessable, free and clear
of all pledges, liens and encumbrances.
2.3 Authorization and Binding Effect. TriPath has the corporate
power and authority to enter into, execute and deliver this Agreement and to
perform fully its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on behalf of TriPath. This
Agreement has been duly executed and delivered by TriPath and constitutes its
legal, valid and binding obligation, enforceable against TriPath in accordance
with its terms.
2.4 No Breach. Except for (a) filings with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (b) any required filing of a Notification and
Report Form under the HSR Act, the execution, delivery and performance of this
Agreement by TriPath and consummation by it of the transactions contemplated
hereby will not (i) violate any provision of the Certificate of Incorporation or
by-laws of TriPath, each as amended to date, (ii) violate, conflict with or
result in the breach of any of the terms or conditions of, result in
modification of, or otherwise give any other contracting party the right to
terminate or accelerate obligations under, or constitute (or with notice or
lapse of time or both constitute) a default under, any material instrument,
contract or other agreement to which TriPath is party or to which it or any of
its assets or properties is bound or subject, (iii) violate any law, ordinance
or regulation or any order, judgment, injunction, decree or requirement of any
court, arbitrator or governmental or regulatory body applicable to TriPath or by
which any of its assets or properties is bound or subject or (iv) require any
filing with, notice to, or permit, consent or approval of, any governmental or
regulatory body, except, with respect to the foregoing clauses (ii) through
(iv), any exception thereto that
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would not have a material adverse effect on TriPath's ability to consummate the
transactions contemplated hereby.
2.5 Brokers; Expenses. TriPath has not utilized the services of
any broker, finder, agent or similar intermediary in connection with the
transactions contemplated hereby and there are no brokerage commissions,
finders' fees or similar fees or commissions payable based on any agreement,
arrangement or understanding with TriPath or any action taken by it.
2.6 Authorized Capital. The authorized capital stock of TriPath
consists of (i) 98,000,000 shares of TriPath Stock and(ii) 1,000,000 shares of
preferred stock, par value $.01 per share ("TriPath Preferred Stock"). As of the
close of business on May 3, 2004, 37,985,616 shares TriPath Stock were issued
and outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable, (ii) 6,223,510 shares of TriPath Stock were reserved for
future issuance pursuant to outstanding options and warrants and (iii) no shares
of TriPath Preferred Stock were issued and outstanding.
2.7 Nasdaq Listing. TriPath has filed with Nasdaq a Notification
Form for Listing of Additional Shares covering the Warrant Shares.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF QUEST DIAGNOSTICS
Quest Diagnostics hereby represents and warrants as of the date hereof
to TriPath as follows:
3.1 Organization. Quest Diagnostics is a corporation validly
existing and in good standing under the laws of the State of Delaware. Quest
Diagnostics has the corporate power and authority to own and hold the Warrants
and the Warrant Shares.
3.2 Authorization and Binding Effect. Quest Diagnostics has the
corporate power and authority to enter into, execute and deliver this Agreement
and to perform fully its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on behalf of Quest
Diagnostics. This Agreement has been duly executed and delivered by Quest
Diagnostics and constitutes its legal, valid and binding obligation, enforceable
against Quest Diagnostics in accordance with its terms.
3.3 No Breach. Except for any required filing of a Notification
and Report Form under the HSR Act, the execution, delivery and performance of
this Agreement by Quest Diagnostics and consummation by its of the transactions
contemplated hereby will not (i) violate any provision of the charter or by-laws
of Quest Diagnostics, (ii) violate, conflict with or result in the breach of any
of the terms or conditions of, result in modification of, or otherwise give any
other contracting party the right to terminate or accelerate obligations under,
or constitute (or with notice or lapse of time or both constitute) a default
under, any material instrument, contract or other agreement to which Quest
Diagnostics is party or to which it or any of its assets or properties is bound
or subject, (iii) violate any law, ordinance or regulation or any order,
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judgment, injunction, decree or requirement of any court, arbitrator or
governmental or regulatory body applicable to Quest Diagnostics or by which any
of its assets or properties is bound or subject or (iv) require any filing with,
notice to, or permit, consent or approval of, any governmental or regulatory
body, except, with respect to the foregoing clauses (ii) through (iv), any
exception thereto that would not have a material adverse effect on Quest
Diagnostics' ability to consummate the transactions contemplated hereby.
3.4 Brokers; Expenses. Quest Diagnostics has not utilized the
services of any broker, finder, agent or similar intermediary in connection with
the transactions contemplated hereby and there are no brokerage commissions,
finders' fees or similar fees or commissions payable based on any agreement,
arrangement or understanding with Quest Diagnostics or any action taken by it.
3.5 Investment Representations.
3.5.1 Quest Diagnostics has received and reviewed and is
familiar with TriPath's Annual Report on Form 10-K filed with the SEC for
TriPath's fiscal year ending December 31, 2003 and all of TriPath's Quarterly
Reports on Form 10-Q and Current Reports on 8-K filed with the SEC since that
date.
3.5.2 Quest Diagnostics and Quest Diagnostics'
representatives have been given the opportunity to examine all documents and to
ask questions of, and to receive answers from, TriPath and its representatives
concerning the terms and conditions of the acquisition of the Warrants and the
Warrant Shares hereunder and the assets, business and prospects of TriPath and
to obtain any additional information that Quest Diagnostics or Quest
Diagnostics' representatives deem necessary to verify the accuracy of the
information that has been provided to Quest Diagnostics for Quest Diagnostics to
evaluate the merits and risk of its investment in the Warrants and the Warrant
Shares.
3.5.3 Quest Diagnostics is not relying on any
representations, warranties, or statements, express or implied, of TriPath or
any of its respective "affiliates" (as defined in Section 4.3.2 below),
directors, officers, employees, agents or representatives, except those
expressly set forth in Article 2 of this Agreement. Quest Diagnostics has such
knowledge and experience in financial and business matters that it is capable of
evaluating the relative risks of the Warrants and the Warrant Shares. Quest
Diagnostics and Quest Diagnostics' representatives, including Quest Diagnostics'
financial, tax, legal and other advisers, have carefully reviewed all documents
furnished to them in connection with Quest Diagnostics' investment in the
Warrants and the Warrant Shares, and Quest Diagnostics understands the risks
related to such investment.
3.5.4 Quest Diagnostics understands that (a) the issuance
of the Warrants and of the Warrant Shares upon exercise or conversion of the
Warrants, have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon an exemption for private offerings, (b)
TriPath is under no obligation to register the issuance of Warrants or, except
as set forth in Section 4.1 below, the Warrant Shares, and (b) Quest Diagnostics
is acquiring the Warrants and the Warrant Shares without being furnished any
offering literature or prospectus.
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3.5.5 The Warrants and the Warrant Shares are being or will
be acquired solely for Quest Diagnostics' own account, for investment and not
with a view to or for the resale, distribution, subdivision, or
fractionalization thereof in violation of the Securities Act. Quest Diagnostics
has no current plans to enter into any contract, undertaking, agreement, or
arrangement relating with respect to the Warrants or the Warrant Shares.
3.5.6 Quest Diagnostics acknowledges and is aware that (a)
the Warrants and the Warrant Shares are characterized as "restricted securities"
for purposes of the Securities Act and, as such, cannot be sold, pledged,
transferred or otherwise disposed of unless such transaction is registered under
the Securities Act and any applicable securities law of any state or other
jurisdiction, or an exemption from registration is available, (b) any
certificate evidencing the Warrants or the Warrant Shares will bear an
appropriate legend to the foregoing effect (as well as to the effect of the
additional restrictions set forth in Section 4.2 below) and (c) unless any
resale of the Warrants or the Warrant Shares is so registered or an exemption
from registration is available there will be no public market for the Warrants
or the Warrant Shares.
ARTICLE 4
COVENANTS
4.1 Registration of Warrant Shares.
4.1.1 Demand Registration. At any time following the second
anniversary of the Closing Date, if Quest Diagnostics shall notify TriPath in
writing that it intends to offer or cause to be offered any Warrant Shares for
public sales in accordance with Section 4.2 hereof, TriPath shall, promptly
following such notice, use its commercially reasonable efforts to effect the
registration of such Warrant Shares on a Registration Statement (as defined in
Section 4.1.10 below) on Form S-1 or, if TriPath then meets the eligibility
requirements for the use of Form S-3 for the registration of securities in a
transaction involving secondary offerings, Form S-3 (or any successor form of
Registration Statement promulgated by the SEC that would cover the resale of the
Warrant Shares), covering the resale of the Warrant Shares proposed to be
offered by Quest Diagnostics; provided, however, that, the reasonably
anticipated aggregate price to the public for all Warrant Shares proposed to be
sold in such public offering would exceed $1,000,000; and provided further,
however, that TriPath shall not be required to effect more than one registration
pursuant to this Section 4.1.1 in any twelve (12) month period. If at the time
of any request to register Warrant Shares pursuant to this Section 4.1.1,
TriPath is engaged or has fixed plans to engage within thirty (30) days of the
time of the request in a registered public offering as to which Quest
Diagnostics may include Warrant Shares pursuant to Section 4.1.2 or is engaged
in any other activity which, in the good faith determination of TriPath's Board
of Directors, would be adversely affected by the requested registration to the
material detriment of TriPath, then TriPath may at its option direct that such
request be delayed for a period not in excess of six (6) months from the
effective date of such offering or the date of commencement of such other
material activity, as the case may be, such right to delay a request to be
exercised by TriPath not more than once in any one (1) year period. Any
notification by Quest Diagnostics under this Section 4.1.1 is hereinafter
referred to as a "Demand Request."
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4.1.2 Incidental Registration.
(i) At any time following the second
anniversary of the Closing Date, if TriPath proposes to file a Registration
Statement with the SEC for a public offering and sale of the securities of
TriPath either for its own account or the account of a security holder or
holders pursuant to demand registration rights (a "Requesting Security Holder"),
it will, prior to such filing, give written notice to Quest Diagnostics of its
intention to do so and, upon the written request of Quest Diagnostics given
within ten (10) trading days after TriPath provides such notice (which request
shall state the intended method of disposition of the Warrant Shares and include
only such number of Warrant Shares that TriPath may then sell in accordance with
Section 4.2 hereof), TriPath shall use its commercially reasonable efforts to
cause all Warrant Shares that TriPath has been requested by Quest Diagnostics to
register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of Quest Diagnostics; provided,
however, that notwithstanding the specified method of distribution, in no
circumstance will TriPath be required to effect or participate in any
distribution by means of an underwriting and shall do so only in its sole
discretion; and provided further, however, that TriPath shall have the right to
postpone or withdraw any registration effected pursuant to this Section 4.1.2 at
any time before it becomes effective or withdraw, postpone or terminate the
offering after it becomes effective without regard to whether Quest Diagnostics
has requested TriPath to include Warrant Shares in such registration and without
any further obligation to Quest Diagnostics.
(ii) In connection with any offering
under this Section 4.1.2 involving an underwriting, TriPath shall not be
required to include any Warrant Shares in such underwriting unless Quest
Diagnostics accepts the terms of the underwriting as agreed upon between TriPath
and the underwriters selected by it. If in the opinion of the managing
underwriter of an underwritten offering the inclusion in such underwritten
distribution of all, or part of, the Warrant Shares would materially and
adversely affect such public offering, then TriPath will include in such
registration, to the extent of the number that TriPath is so advised can be sold
in such offering, (A) first, securities TriPath proposes to sell for its own
account, (B) second, securities a Requesting Security Holder proposes to sell
(whether through the exercise of demand or incidental registration rights), (C)
third, up to the full number of Warrant Shares that TriPath has been requested
to register, and (D) fourth, any other securities of TriPath included in such
registration by the holders thereof.
4.1.3 Registration Procedures. If and whenever TriPath is
required by the provisions of this Section 4.1 to use its commercially
reasonable efforts to effect the registration of any of the Warrant Shares under
the Securities Act, TriPath shall:
(i) prepare and file with the SEC a
Registration Statement with respect to such Warrant Shares and use its
commercially reasonable efforts to cause that Registration Statement to become
and remain effective;
(ii) prepare and file with the SEC any
amendments and supplements to the Registration Statement and the Prospectus (as
defined in Section 4.1.10 below) as may be necessary to keep the Registration
Statement effective for a period of not less
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than ninety (90) days from the effective date (excluding for purposes of
calculating the ninety (90) day period any period during which Quest Diagnostics
is required to discontinue disposition of the Warrant Shares under Section
4.1.4); cause the Prospectus used in connection therewith to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during the period referred to above in accordance with
the intended method or methods of distribution by Quest Diagnostics set forth in
such Registration Statement as amended or supplement to the Prospectus used in
connection therewith;
(iii) furnish to Quest Diagnostics and
each managing underwriter, if any, without charge, at least one signed copy of
the Registration Statement and every post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference, and all exhibits (including those incorporated by reference); and
furnish such number of copies of the Prospectus (including each preliminary
Prospectus) and any amendments or supplements thereto as Quest Diagnostics may
reasonably request in order to facilitate the public sale or other disposition
of the Warrant Shares being sold by Quest Diagnostics;
(iv) register or qualify the Warrant
Shares covered by the Registration Statement under such securities or "blue sky"
laws, if any, as may be applicable of such states of the United States in which
TriPath proposes to sell the securities of TriPath; provided, however, that
TriPath shall not be required in connection with this paragraph (iv) to qualify
as a foreign corporation in any jurisdiction;
(v) give notice to Quest Diagnostics
(i) when the Prospectus or any Prospectus supplement or post-effective amendment
has been filed and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any state securities authority with jurisdiction
for amendments and supplements to the Registration Statement and Prospectus or
for additional information after the Registration Statement has become
effective, (iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, (iv) of the issuance by any
state securities commission or other regulatory authority with jurisdiction of
any order suspending the qualification or exemption from qualification of any of
the Warrant Shares under any applicable state securities or "blue sky" laws and
(v) of the happening of any event that makes any statement made in the
Registration Statement or related Prospectus untrue or that requires the making
of any changes in the Registration Statement or Prospectus so that they will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(vi) upon the occurrence of any event
contemplated by Section 4.1.3(v), prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Warrant Shares, the
Prospectus will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
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(vii) use its best efforts to obtain the
withdrawal at the earliest possible time of any order suspending or preventing
the use of any Prospectus or suspending the effectiveness of the Registration
Statement or any amendment or supplement thereto or suspending the qualification
of any Shares included in such Registration Statement for sale in any
jurisdiction;
(viii) cooperate with Quest Diagnostics
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Warrant Shares to be sold and not bearing
any restrictive legends; enable such Warrant Shares to be in such denominations
and registered in such names as Quest Diagnostics or the managing underwriters
may request at least two (2) trading days prior to any sale of Warrant Shares to
the underwriters; and
(ix) in connection with any offering
under this Section 4.1 involving an underwriting, enter into an underwriting
agreement in customary form.
4.1.4 Suspension Period. Upon receipt of a notice under
clauses (ii) through (v) of Section 4.1.3(v), Quest Diagnostics will forthwith
discontinue disposition of the Warrant Shares pursuant to the Registration
Statement until Quest Diagnostics' receipt of copies of the supplemented or
amended Prospectus, if any, or until Quest Diagnostics is advised in writing by
TriPath that the use of the Prospectus may be resumed and has received copies of
any additional or supplemental filings that are incorporated by reference in the
Prospectus, and, if so directed by TriPath, Quest Diagnostics will deliver to
TriPath all copies, other than permanent file copies then in Quest Diagnostics'
possession, of the Prospectus covering the Warrant Shares current at the time of
receipt of such notice.
4.1.5 Registration Expenses. TriPath will bear all expenses
incurred in connection with the registration of the Warrant Shares pursuant to
this Section 4.1, including without limitation all printing, legal and
accounting expenses incurred by TriPath and all registration and filing fees
imposed by the SEC, any state securities commission or the Nasdaq Stock Market
or, if the common stock of TriPath is not then listed on such market, the
principal national securities exchange or national market system on which
TriPath Stock is then traded or quoted. Quest Diagnostics will be responsible
for any brokerage commissions, underwriter's discounts or commissions and taxes
of any kind (including, without limitation, transfer taxes) with respect to any
disposition, sale or transfer of the Warrant Shares and for any legal,
accounting and other expenses incurred by Quest Diagnostics.
4.1.6 Indemnification.
(i) Indemnification by TriPath. TriPath
agrees to indemnify and hold harmless, to the full extent permitted by law,
Quest Diagnostics and each person who controls Quest Diagnostics within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (collectively, the "Controlling Persons"), from and against all losses,
claims, damages, liabilities and expenses (collectively, the "Damages"),
incurred by Quest Diagnostics and any such Controlling Person arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
a Registration Statement (or any amendment thereto), or any omission or alleged
omission to state therein a material fact
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necessary to make the statements therein in light of the circumstances under
which they were made not misleading, or any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (as amended or
supplemented if TriPath shall have furnished any amendments or supplements
thereto), or any omission or alleged omission to state therein a material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading, except insofar as such Damages arise out of
or are based upon any such untrue statement or omission based upon information
relating to Quest Diagnostics furnished in writing to TriPath by Quest
Diagnostics for use therein; provided, however, that TriPath shall not be liable
to Quest Diagnostics under this Section 4.1.6(i) to the extent that any such
Damages were caused by the fact that Quest Diagnostics sold the Warrant Shares
to a person as to whom it shall be established that there was not sent or given,
at or prior to the written confirmation of such sale, a copy of the Prospectus
as then amended or supplemented if, and only if (A) TriPath has previously
furnished copies of such amended or supplemented Prospectus to Quest Diagnostics
and (B) such Damages were caused by any untrue statement or omission or alleged
untrue statement or omission contained in the Prospectus so delivered that was
corrected in such amended or supplemented Prospectus.
(ii) Indemnification by Quest
Diagnostics. Quest Diagnostics agrees to indemnify and hold harmless, to the
full extent permitted by law, TriPath, its directors and officers and each
person, if any, who controls TriPath within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from TriPath to Quest Diagnostics, but only with reference
to information relating to Quest Diagnostics furnished in writing to TriPath by
Quest Diagnostics for use in the Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto); and Quest
Diagnostics shall reimburse TriPath for reasonable legal or other expenses
incurred by TriPath in connection with investigating or defending any loss,
claim, damage, liability or action giving rise to the Damages incurred by
TriPath.
(iii) Procedure. Each party entitled to
indemnification under this Section 4.1 (the "Indemnified Party") shall give
prompt notice of any claim as to which indemnification may be sought to the
party required to provide indemnification (the "Indemnifying Party"), provided
that failure to give such notice shall not relieve the Indemnifying Party of its
obligations hereunder except to the extent of actual prejudice. The Indemnifying
Party shall be entitled to assume the defense of any such claim with counsel
reasonably satisfactory to the Indemnified Party. The Indemnified Party may
participate in such defense at its own expense, provided that the Indemnifying
Party will pay such expense if representation of the Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party
shall, except with the consent of the Indemnified Party, agree to any settlement
that does not include a release of the Indemnified Party from all liability in
respect of such claim, and the Indemnified Party shall not settle such claim
without the prior written consent of the Indemnifying Party.
4.1.7 "Stand-Off" Agreement. Quest Diagnostics, if
requested by TriPath and an underwriter of common stock or other securities of
TriPath, shall agree not to, directly or indirectly, (i) sell, offer, contract
to sell, make any short sale, pledge, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
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purchase or otherwise transfer or dispose of any of the Warrants, the Warrant
Shares or any other securities of TriPath held by Quest Diagnostics or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences or ownership of any of the Warrants, the Warrant
Shares or any other securities of TriPath held by Quest Diagnostics, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of TriPath Stock or other securities, in cash or otherwise
(collectively, "Transfer"), during the period commencing ten (10) days prior to
and expiring one hundred twenty (120) days following the effective date of a
registration statement not covering the Warrant Shares. Such agreement shall be
in writing in a form containing reasonable and customary provisions satisfactory
to TriPath and such underwriter and reasonably satisfactory to Quest
Diagnostics. TriPath may impose stop transfer instructions with respect to the
Warrant Shares or other securities subject to the foregoing restriction until
the end of the stand-off period. Quest Diagnostics' obligations under this
Section 4.1.7 shall terminate at such time as all Warrant Shares (a) have been
disposed of or sold either in accordance with a Registration Statement covering
Warrant Shares, pursuant to Rule 144 under the Securities Act, and/or in any
manner to a person or entity that is not entitled to the rights under this
Section 4.1 and/or (b) all Warrant Shares not disposed of or sold in accordance
with the preceding clause (a) may be sold (1) in any three (3) month period
pursuant to Rule 144 under the Securities Act or (2) pursuant to Rule 144(k)
under the Securities Act and, in either case under this clause (b) Quest
Diagnostics shall have acknowledged in writing that TriPath's obligations under
this Section 4.1 shall have terminated.
4.1.8 Information by Quest Diagnostics. Quest Diagnostics
shall furnish to TriPath such information regarding Quest Diagnostics and the
distribution proposed by Quest Diagnostics as TriPath may request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to in this Section 4.1.
4.1.9 Termination. TriPath's obligations under this Section
4.1 shall terminate with respect to any Warrant Shares, at such time as such
Warrant Shares (a) have been disposed of in accordance with a Registration
Statement covering such Warrant Shares, (b) have been sold pursuant to Rule 144
under the Securities Act or (c) have been sold in any manner to a person or
entity that is not entitled to the rights under this Section 4.1. TriPath's
obligations under this Section 4.1 shall be suspended during any period during
which the Warrant Shares (a) may be sold in any three (3) month period pursuant
to Rule 144 under the Securities Act or (b) may be sold pursuant to Rule 144(k)
under the Securities Act.
4.1.10 Certain Definitions. As used in this Section 4.1, the
following terms have the following meanings:
(i) "Prospectus" means the prospectus
included in any Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A under
the Securities Act), as amended or supplemented by any prospectus supplement,
and by all other amendments and supplements to the prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
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(ii) "Registration Statement" means any
registration statement of TriPath (other than a registration statement on Form
S-8 or Form S-4, or their successors, or any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another corporation) that covers the Warrant Shares pursuant to the provisions
of this Section 4.1 and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
4.2 Lock-Up of Warrants and Warrant Shares. Quest Diagnostics
hereby agrees that it will not directly or indirectly, (i) sell, offer, contract
to sell, make any short sale, pledge, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any of the Warrants or the Warrant
Shares or (ii) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences or ownership of any of the Warrants
or the Warrant Shares, whether any such transaction described in clause (i) or
(ii) above is to be settled by delivery of TriPath Stock or other securities, in
cash or otherwise (collectively, "Transfer"); provided, however, that Quest
Diagnostics may Transfer up to fifty percent (50%) of the Warrant Shares then
issuable upon exercise or conversion of exercisable or convertible Warrants
after the second anniversary of the Closing Date; and provided further, however,
that Quest Diagnostics may, in any event, Transfer any then outstanding Warrant
Shares after the third anniversary of the Closing Date. Quest Diagnostics
acknowledges and agrees that any certificate evidencing the Warrants or the
Warrant Shares shall bear an appropriate legend identifying the foregoing
restrictions (as well as the Securities Act legend contemplated by Section 3.5.6
above).
4.3 Standstill.
4.3.1 Quest Diagnostics agrees that, for a period of four
(4) years from the Closing Date, unless specifically invited in writing to do so
by the Board of Directors of TriPath, neither Quest Diagnostics nor any its
affiliates will, directly or indirectly:
(i) acquire, offer, seek, propose or
agree to acquire by purchase or otherwise, individually or by joining a
partnership, limited partnership, syndicate or other "group" (as such term is
used in Section 13(d)(3) of the Exchange Act) (any such act, to "acquire"), any
(i) assets or businesses of TriPath or (ii) securities of TriPath entitled to
vote, or securities convertible into or exercisable or exchangeable or
redeemable for such securities (collectively, "Voting Securities");
(ii) form, join, participate in or
encourage the formation of a partnership, limited partnership, syndicate or
other group for the purpose of acquiring, holding or disposing of assets or
businesses of TriPath or Voting Securities;
(iii) make, or in any way participate in,
directly or indirectly, any "solicitation" of "proxies" (as such terms are
defined or used in Regulation 14A under the Exchange Act) or become a
"participant" in any "election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) with respect to TriPath, or initiate,
propose or otherwise solicit stockholders of TriPath for the approval of one or
more stockholder proposals
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with respect to TriPath or induce or attempt to induce any other person to
initiate any stockholder proposal;
(iv) act, directly or indirectly, alone
or in concert with others, to seek to control the management, Board of
Directors, policies or affairs of TriPath, or solicit, propose, seek to effect
or negotiate with any other person with respect to any form of business
combination transaction involving, directly or indirectly, TriPath or any of its
subsidiaries, or any restructuring, recapitalization or similar transaction with
respect to TriPath, or announce or disclose an intent, purpose, plan or proposal
with respect to TriPath or any Voting Securities inconsistent with the
provisions of this Section 4.3;
(v) encourage any person, or directly
or indirectly participate, aid and abet or otherwise induce any person or engage
in any of the actions prohibited by this Section 4.3 or to engage in any actions
consistent with such prohibitions;
(vi) enter into any discussions,
negotiations, arrangements or understandings with any third party with respect
to any of the foregoing;
(vii) other than pursuant to the
Collaboration Agreement or the Product Purchase Agreement or Section 4.1 of this
Agreement, take any actions reasonably likely to require TriPath to make public
disclosure regarding such matters;
(viii) make any request to amend or waive
any provision of this Section 4.3; or
(ix) disclose any intention, plan or
arrangement inconsistent with the foregoing.
4.3.2 For purposes of this Section 4.3, the invitation of
TriPath's Board of Directors shall be with the approval of a majority of those
individuals who are either: (a) members of TriPath's Board of Directors as of
the date hereof (the "Current Directors"); or (b) new members elected after the
date hereof by a majority of the Current Directors and any new members
previously elected pursuant to this clause (b). The term "affiliate" as used in
this Agreement shall have the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act, but shall not include directors or officers of Quest
Diagnostics acting in their individual capacities.
ARTICLE 5
MISCELLANEOUS
5.1 Assignment. This Agreement may not be assigned or otherwise
transferred by either TriPath or Quest Diagnostics without the prior written
consent of the other party; provided, however, that each of the parties may,
without such consent, assign this Agreement (together with the Warrants) and its
rights and obligations hereunder (and under the Warrants) to an affiliate or in
connection with the transfer or sale of all or substantially all of its
business, or in the event of its merger or consolidation or change in control or
similar transaction. Any
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purported assignment in violation of the preceding sentences shall be void. Any
permitted assignee shall assume in writing all obligations of its assignor under
this Agreement in writing.
5.2 Severability. Should one or more provisions of this Agreement
be or become invalid, the parties hereto shall substitute, by mutual consent,
valid provisions for such invalid provisions, which such valid provisions in
their economic effect are sufficiently similar to the invalid provisions so that
it can be reasonably assumed the parties would have entered into this Agreement
with such valid provisions. In case such valid provisions cannot be agreed upon,
the invalidity of one or several provisions of this Agreement shall not affect
the validity of this Agreement as a whole, unless the invalid provisions are of
such essential importance to this Agreement that it is to be reasonably assumed
that the parties would not have entered into this Agreement without the invalid
provisions.
5.3 Notices. Any notice or other communication required or
permitted to be given or made under this Agreement by one of the parties hereto
to the other shall be in writing, delivered personally or by facsimile (and
promptly confirmed by personal delivery or courier) or by next business day
delivery service of a nationally recognized overnight courier service (signature
required), addressed to such other party at its address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor in accordance with this Section 5.3 and shall be effective upon
receipt by the addressee.
If to Quest Diagnostics: Quest Diagnostics Incorporated
Xxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telephone (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Quest Diagnostics Incorporated
0000 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President Anatomic Pathology
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to TriPath: TriPath Imaging, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to: Xxxxxx & Dodge LLP
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
5.4 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to any choice of law principle that would dictate the application of the laws of
another jurisdiction.
5.5 Entire Agreement; Amendments. This Agreement and Exhibits X-0,
X-0, X-0, X-0, and A-5 hereto, together with the Collaboration Agreement and the
Exhibits thereto, contains the entire understanding of the parties with respect
to the subject matter hereof and supersedes and terminates all prior and
contemporaneous agreements and understandings between the parties, whether oral
or in writing. All express or implied agreements and understandings, either oral
or written, heretofore made are expressly merged in and made a part of this
Agreement. This Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by the parties hereto.
5.6 Rules of Construction The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or ruling of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
5.7 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
5.8 Waiver. The waiver by either party hereto of any right
hereunder or of the failure to perform or of a breach by the other party shall
not be deemed a waiver of any other right hereunder or of any other breach or
failure by said other party whether of a similar nature or otherwise.
5.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts may be
exchanged by facsimile if mutually agreed by the parties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Quest Diagnostics and TriPath have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, as of the day and year first above written.
TRIPATH IMAGING, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxx, M.D.
Title: Chairman, President & CEO
QUEST DIAGNOSTICS INCORPORATED.
By: /s/ Xxx X. Xxxxxxxxxx
-----------------------------------------
Name: Xxx X. Xxxxxxxxxx, Xx.
Title: Vice President
TABLE OF CONTENTS
PAGE
ARTICLE 1 ISSUANCE OF WARRANTS; CLOSINGS............................................................ 1
1.1 Issuance of Warrants; Exercisability.......................................................... 1
1.2 The Closing................................................................................... 2
1.3 Deliveries at Closing......................................................................... 3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF TRIPATH................................................. 3
2.1 Organization.................................................................................. 3
2.2 Authorization and Issuance of Warrants........................................................ 3
2.3 Authorization and Binding Effect.............................................................. 3
2.4 No Breach..................................................................................... 3
2.5 Brokers; Expenses............................................................................. 4
2.6 Authorized Capital............................................................................ 4
2.7 Nasdaq Listing................................................................................ 4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF QUEST DIAGNOSTICS....................................... 4
3.1 Organization.................................................................................. 4
3.2 Authorization and Binding Effect.............................................................. 4
3.3 No Breach..................................................................................... 4
3.4 Brokers; Expenses............................................................................. 5
3.5 Investment Representations.................................................................... 5
ARTICLE 4 COVENANTS................................................................................. 6
4.1 Registration of Warrant Shares................................................................ 6
4.2 Lock-Up of Warrants and Warrant Shares........................................................ 12
4.3 Standstill.................................................................................... 12
ARTICLE 5 MISCELLANEOUS............................................................................. 13
5.1 Assignment.................................................................................... 13
5.2 Severability.................................................................................. 14
5.3 Notices....................................................................................... 14
5.4 Applicable Law................................................................................ 15
5.5 Entire Agreement; Amendments.................................................................. 15
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
5.6 Rules of Construction......................................................................... 15
5.7 Headings...................................................................................... 15
5.8 Waiver........................................................................................ 15
5.9 Counterparts.................................................................................. 15
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EXHIBIT A-1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).
TRIPATH IMAGING, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, Quest Diagnostics
Incorporated, a Delaware corporation (the "Holder"), is entitled to subscribe
for and purchase 800,000 shares (subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof) of Common Stock of TriPath
Imaging, Inc., a Delaware corporation (the "Company"), at the initial exercise
price of $9.25 per share, subject to adjustment from time to time pursuant to
the provisions of Section 3 hereof (the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.
The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."
1. Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the date hereof and ending at 5:00 p.m. Burlington, North
Carolina time on the third anniversary of the date hereof.
A-1-1
2. Exercise or Conversion of Warrant.
2.1. Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.
2.2. Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:
X = Y (A - B)
--------
A
where X = the number of shares of Common Stock to be issued to
the holder;
Y = the number of shares of Common Stock subject to this
Warrant being surrendered for conversion;
A = the fair market value of one share of Common Stock; and
B = the Warrant Price
As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares of Common Stock sold by the Company, as determined in
good faith by the Board of Directors of the Company, unless the Company shall
become subject to a merger acquisition or other consolidation pursuant to which
the Company will not be the surviving party, in which case the current fair
market value of a share of Common Stock shall be deemed to be the value received
by the holders of the Company's Common Stock for each share of Common Stock
pursuant to such transaction.
2.3. Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue
A-1-2
and deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise or conversion, registered in the name of the Holder
or its designee. The Holder will be deemed for all purposes to be the Holder of
the shares of Warrant Shares so purchased as of the first trading day following
the date of such exercise. If this Warrant should be exercised or converted in
part only, the Company shall, upon surrender of the certificate evidencing this
Warrant for cancellation, execute and deliver a new Warrant certificate
evidencing the right of the Holder to purchase the balance of the Warrant Shares
(or portions thereof) subject to purchase hereunder.
2.4. Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
2.5. Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.
3. Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:
3.1. Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this Warrant immediately before such time and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification.
3.2. Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.
A-1-3
3.3. Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.
3.4. Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
4. Reorganizations; Reclassifications.
4.1. Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise or conversion of this
Warrant. Any such adjustment shall be made by and set forth in a supplemental
agreement between the Company, or any successor thereto, and the Holder and
shall for all purposes hereof conclusively be deemed to be an appropriate
adjustment. The Company will not effect any Reorganization involving another
person unless, upon or prior to the consummation thereof, the successor person
or the other person involved in the Reorganization will assume by written
instrument the obligation to deliver to the Holder such shares of stock,
securities, cash or property as in accordance with the foregoing provisions the
Holder will be entitled to receive.
A-1-4
4.2. Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.
5. Restriction on Transfer of Warrant; Warrant Agent; Legends.
5.1. Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).
5.2. Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.
5.3. Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST
FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"
A-1-5
6. Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, 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 of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.
7. Miscellaneous.
7.1. Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.
7.2. No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.
7.3. Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.
7.4. Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.
7.5. Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:
(a) the date on which a record is to be taken for the
purpose of any dividend, distribution or grant of
rights, or, if a record is not to be taken, the date
as of which the shareholders of Common Stock of
record to be entitled to such dividend, distribution
or grant of rights are to be determined;
A-1-6
(b) the date on which a record is to be taken for the
purpose of determining shareholders of Common Stock
entitled to vote on any reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up or
purchase, retirement or redemption; and
(c) the date, if any, as of which holders of record of
the Common Stock will be entitled to exchange their
Common Stock for securities or other property
deliverable upon such reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up,
purchase, retirement or redemption.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.
TRIPATH IMAGING, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
A-1-7
FORM OF SUBSCRIPTION
(To be signed only on exercise or conversion of Warrant)
TO: TRIPATH IMAGING, INC.
1. Check Box that Applies:
[] The undersigned hereby elects to purchase ______ shares of
Common Stock pursuant to the terms of the attached Warrant,
and tenders herewith cash payment of the purchase price of
such shares in full.
[] The undersigned hereby elects to convert ______ shares subject
to the attached Warrant into shares of shares of Common Stock
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.
Dated: __________
________________________________________________
(Signature must conform to the name of holder as
specified on the face of
the Warrant)
________________________________________________
________________________________________________
(Address)
EXHIBIT A-2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).
TRIPATH IMAGING, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, Quest Diagnostics
Incorporated, a Delaware corporation (the "Holder"), is entitled to subscribe
for and purchase 200,000 shares (subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof) of Common Stock of TriPath
Imaging, Inc., a Delaware corporation (the "Company"), at the initial exercise
price of $10.18 per share, subject to adjustment from time to time pursuant to
the provisions of Section 3 hereof (the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.
The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."
1. Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the delivery of the calculation of the First Milestone Date
(as defined in the Warrant Purchase Agreement) and ending at 5:00 p.m.
Burlington, North Carolina time on the third anniversary of the date hereof;
provided, however, if the calculation as to the First Milestone Date shall be
delivered on or after such third anniversary, then the purchase or conversion
right represented by this Warrant shall
A-2 - 1
remain exercisable until 5:00 p.m. Burlington, North Carolina time on the tenth
day after delivery of such calculation as to the First Milestone Date; and
provided further, however, that, in the event the Holder contests such
calculation within five (5) business days after receipt of such calculation by
notice accompanied by reasonable detail concerning such contest, the Holder
shall retain the right, exercisable until such tenth day, to deliver this
Warrant (with the election at the end hereof duly executed) for exercise, which
exercise would be considered effective for all purposes of this Warrant only
upon the resolution of the dispute as to such calculation confirming that the
applicable milestone has been met.
2. Exercise or Conversion of Warrant.
2.1. Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.
2.2. Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:
X = Y (A - B)
-----
A
where X = the number of shares of Common Stock
to be issued to the holder;
Y = the number of shares of Common Stock
subject to this Warrant
being surrendered for conversion;
A = the fair market value of one share of
Common Stock; and
B = the Warrant Price
As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares
A-2-2
of Common Stock sold by the Company, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a merger
acquisition or other consolidation pursuant to which the Company will not be the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock pursuant to such
transaction.
2.3. Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise or conversion,
registered in the name of the Holder or its designee. The Holder will be deemed
for all purposes to be the Holder of the shares of Warrant Shares so purchased
as of the first trading day following the date of such exercise. If this Warrant
should be exercised or converted in part only, the Company shall, upon surrender
of the certificate evidencing this Warrant for cancellation, execute and deliver
a new Warrant certificate evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.
2.4. Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
2.5. Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.
3. Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:
3.1. Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this
A-2-3
Warrant immediately before such time and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.
3.2. Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.
3.3. Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.
3.4. Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
4. Reorganizations; Reclassifications.
4.1. Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property
A-2-4
thereafter deliverable upon exercise or conversion of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company will
not effect any Reorganization involving another person unless, upon or prior to
the consummation thereof, the successor person or the other person involved in
the Reorganization will assume by written instrument the obligation to deliver
to the Holder such shares of stock, securities, cash or property as in
accordance with the foregoing provisions the Holder will be entitled to receive.
4.2. Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.
5. Restriction on Transfer of Warrant; Warrant Agent; Legends.
5.1. Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).
5.2. Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.
5.3. Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST
A-2-5
FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"
6. Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, 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 of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.
7. Miscellaneous.
7.1. Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.
7.2. No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.
7.3. Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.
7.4. Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.
A-2-6
7.5. Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:
(a) the date on which a record is to be taken for the
purpose of any dividend, distribution or grant of
rights, or, if a record is not to be taken, the date
as of which the shareholders of Common Stock of
record to be entitled to such dividend, distribution
or grant of rights are to be determined;
(b) the date on which a record is to be taken for the
purpose of determining shareholders of Common Stock
entitled to vote on any reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up or
purchase, retirement or redemption; and
(c) the date, if any, as of which holders of record of
the Common Stock will be entitled to exchange their
Common Stock for securities or other property
deliverable upon such reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up,
purchase, retirement or redemption.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.
TRIPATH IMAGING, INC.
By: _____________________________________
Name: ___________________________________
Title:___________________________________
A-2-7
FORM OF SUBSCRIPTION
(To be signed only on exercise or conversion of Warrant)
TO: TRIPATH IMAGING, INC.
1. Check Box that Applies:
[] The undersigned hereby elects to purchase ______ shares of
Common Stock pursuant to the terms of the attached Warrant,
and tenders herewith cash payment of the purchase price of
such shares in full.
[] The undersigned hereby elects to convert ______ shares subject
to the attached Warrant into shares of shares of Common Stock
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.
Dated: __________
_____________________________________
(Signature must conform to the name of holder as specified
on the face of the Warrant)
_____________________________________
_____________________________________
(Address)
EXHIBIT A-3
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).
TRIPATH IMAGING, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, Quest Diagnostics
Incorporated, a Delaware corporation (the "Holder"), is entitled to subscribe
for and purchase 500,000 shares (subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof) of Common Stock of TriPath
Imaging, Inc., a Delaware corporation (the "Company"), at the initial exercise
price of $10.64 per share, subject to adjustment from time to time pursuant to
the provisions of Section 3 hereof (the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.
The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."
1. Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the delivery of the calculation of the Second Milestone Date
(as defined in the Warrant Purchase Agreement) and ending at 5:00 p.m.
Burlington, North Carolina time on the third anniversary of the date hereof;
provided, however, if the calculation as to the Second Milestone Date shall be
delivered on or after such third anniversary, then the purchase or conversion
right represented by this Warrant
A-3 - 1
shall remain exercisable until 5:00 p.m. Burlington, North Carolina time on the
tenth day after delivery of such calculation as to the Second Milestone Date;
and provided further, however, that, in the event the Holder contests such
calculation within five (5) business days after receipt of such calculation by
notice accompanied by reasonable detail concerning such contest, the Holder
shall retain the right, exercisable until such tenth day, to deliver this
Warrant (with the election at the end hereof duly executed) for exercise, which
exercise would be considered effective for all purposes of this Warrant only
upon the resolution of the dispute as to such calculation confirming that the
applicable milestone has been met.
2. Exercise or Conversion of Warrant.
2.1. Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.
2.2. Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:
X = Y (A - B)
--------
A
where X = the number of shares of Common Stock to be issued to
the holder;
Y = the number of shares of Common Stock subject to this
Warrant being surrendered for conversion;
A = the fair market value of one share of Common Stock;
and
B = the Warrant Price
As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares
X-0 - 0
xx Xxxxxx Xxxxx sold by the Company, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a merger
acquisition or other consolidation pursuant to which the Company will not be the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock pursuant to such
transaction.
2.3. Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise or conversion,
registered in the name of the Holder or its designee. The Holder will be deemed
for all purposes to be the Holder of the shares of Warrant Shares so purchased
as of the first trading day following the date of such exercise. If this Warrant
should be exercised or converted in part only, the Company shall, upon surrender
of the certificate evidencing this Warrant for cancellation, execute and deliver
a new Warrant certificate evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.
2.4. Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
2.5. Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.
3. Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:
3.1. Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this
A-3 - 3
Warrant immediately before such time and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.
3.2. Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.
3.3. Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.
3.4. Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
4. Reorganizations; Reclassifications.
4.1. Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property
A-3 - 4
thereafter deliverable upon exercise or conversion of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company will
not effect any Reorganization involving another person unless, upon or prior to
the consummation thereof, the successor person or the other person involved in
the Reorganization will assume by written instrument the obligation to deliver
to the Holder such shares of stock, securities, cash or property as in
accordance with the foregoing provisions the Holder will be entitled to receive.
4.2. Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.
5. Restriction on Transfer of Warrant; Warrant Agent; Legends.
5.1. Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).
5.2. Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.
5.3. Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST
A-3 - 5
FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"
6. Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, 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 of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.
7. Miscellaneous.
7.1. Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.
7.2. No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.
7.3. Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.
7.4. Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.
A-3 - 6
7.5. Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:
(a) the date on which a record is to be taken for the
purpose of any dividend, distribution or grant of
rights, or, if a record is not to be taken, the date
as of which the shareholders of Common Stock of
record to be entitled to such dividend, distribution
or grant of rights are to be determined;
(b) the date on which a record is to be taken for the
purpose of determining shareholders of Common Stock
entitled to vote on any reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up or
purchase, retirement or redemption; and
(c) the date, if any, as of which holders of record of
the Common Stock will be entitled to exchange their
Common Stock for securities or other property
deliverable upon such reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up,
purchase, retirement or redemption.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.
TRIPATH IMAGING, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
A-3 - 7
FORM OF SUBSCRIPTION
(To be signed only on exercise or conversion of Warrant)
TO: TRIPATH IMAGING, INC.
1. Check Box that Applies:
[] The undersigned hereby elects to purchase ______ shares of
Common Stock pursuant to the terms of the attached Warrant,
and tenders herewith cash payment of the purchase price of
such shares in full.
[] The undersigned hereby elects to convert ______ shares subject
to the attached Warrant into shares of shares of Common Stock
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.
Dated: __________
____________________________________
(Signature must conform to the name of holder as
specified on the face of the Warrant)
____________________________________
____________________________________
(Address)
EXHIBIT A-4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).
TRIPATH IMAGING, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, Quest Diagnostics
Incorporated, a Delaware corporation (the "Holder"), is entitled to subscribe
for and purchase 1,000,000 shares (subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof) of Common Stock of TriPath
Imaging, Inc., a Delaware corporation (the "Company"), at the initial exercise
price of $11.56 per share, subject to adjustment from time to time pursuant to
the provisions of Section 3 hereof (the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.
The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."
1. Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the delivery of the calculation of the Third Milestone Date
(as defined in the Warrant Purchase Agreement) and ending at 5:00 p.m.
Burlington, North Carolina time on the fourth anniversary of the date hereof;
provided, however, if the calculation as to the Third Milestone Date shall be
delivered on or after such fourth anniversary, then the purchase or conversion
right represented by this Warrant shall
A-4 - 1
remain exercisable until 5:00 p.m. Burlington, North Carolina time on the tenth
day after delivery of such calculation as to the Third Milestone Date; and
provided further, however, that, in the event the Holder contests such
calculation within five (5) business days after receipt of such calculation by
notice accompanied by reasonable detail concerning such contest, the Holder
shall retain the right, exercisable until such tenth day, to deliver this
Warrant (with the election at the end hereof duly executed) for exercise, which
exercise would be considered effective for all purposes of this Warrant only
upon the resolution of the dispute as to such calculation confirming that the
applicable milestone has been met.
2. Exercise or Conversion of Warrant.
2.1. Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.
2.2. Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:
X = Y (A - B)
--------
A
where X = the number of shares of Common Stock to be issued to
the holder;
Y = the number of shares of Common Stock subject to this
Warrant being surrendered for conversion;
A = the fair market value of one share of Common Stock; and
B = the Warrant Price
As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares
X-0 - 0
xx Xxxxxx Xxxxx sold by the Company, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a merger
acquisition or other consolidation pursuant to which the Company will not be the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock pursuant to such
transaction.
2.3. Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise or conversion,
registered in the name of the Holder or its designee. The Holder will be deemed
for all purposes to be the Holder of the shares of Warrant Shares so purchased
as of the first trading day following the date of such exercise. If this Warrant
should be exercised or converted in part only, the Company shall, upon surrender
of the certificate evidencing this Warrant for cancellation, execute and deliver
a new Warrant certificate evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.
2.4. Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
2.5. Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.
3. Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:
3.1. Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this
A-4 - 3
Warrant immediately before such time and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.
3.2. Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.
3.3. Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.
3.4. Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
4. Reorganizations; Reclassifications.
4.1. Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property
A-4 - 4
thereafter deliverable upon exercise or conversion of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company will
not effect any Reorganization involving another person unless, upon or prior to
the consummation thereof, the successor person or the other person involved in
the Reorganization will assume by written instrument the obligation to deliver
to the Holder such shares of stock, securities, cash or property as in
accordance with the foregoing provisions the Holder will be entitled to receive.
4.2. Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.
5. Restriction on Transfer of Warrant; Warrant Agent; Legends.
5.1. Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).
5.2. Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.
5.3. Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST
A-4 - 5
FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"
6. Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, 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 of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.
7. Miscellaneous.
7.1. Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.
7.2. No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.
7.3. Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.
7.4. Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.
A-4 - 6
7.5. Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:
(a) the date on which a record is to be taken for the
purpose of any dividend, distribution or grant of
rights, or, if a record is not to be taken, the date
as of which the shareholders of Common Stock of
record to be entitled to such dividend, distribution
or grant of rights are to be determined;
(b) the date on which a record is to be taken for the
purpose of determining shareholders of Common Stock
entitled to vote on any reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up or
purchase, retirement or redemption; and
(c) the date, if any, as of which holders of record of
the Common Stock will be entitled to exchange their
Common Stock for securities or other property
deliverable upon such reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up,
purchase, retirement or redemption.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.
TRIPATH IMAGING, INC.
By: __________________________________
Name:__________________________________
Title:_________________________________
A-4 - 7
FORM OF SUBSCRIPTION
(To be signed only on exercise or conversion of Warrant)
TO: TRIPATH IMAGING, INC.
1. Check Box that Applies:
[] The undersigned hereby elects to purchase ______ shares of
Common Stock pursuant to the terms of the attached Warrant,
and tenders herewith cash payment of the purchase price of
such shares in full.
[] The undersigned hereby elects to convert ______ shares subject
to the attached Warrant into shares of shares of Common Stock
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.
Dated: __________
________________________________________
(Signature must conform to the name of holder as
specified on the face of the Warrant)
________________________________________
________________________________________
(Address)
EXHIBIT A-5
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT
AND ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR EXCHANGE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF ARE FURTHER RESTRICTED AS DESCRIBED HEREIN AND IN A CERTAIN
WARRANT PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ISSUABLE UPON EXERCISE OR
CONVERSION HEREOF (OR SUCH OWNER'S PREDECESSOR IN INTEREST).
TRIPATH IMAGING, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, Quest Diagnostics
Incorporated, a Delaware corporation (the "Holder"), is entitled to subscribe
for and purchase 1,500,000 shares (subject to adjustment from time to time
pursuant to the provisions of Section 3 hereof) of Common Stock of TriPath
Imaging, Inc., a Delaware corporation (the "Company"), at the initial exercise
price of $12.03 per share, subject to adjustment from time to time pursuant to
the provisions of Section 3 hereof (the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's Common
Stock, par value $0.01 per share, and any stock or other security into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant to purchase Common Stock (this "Warrant") is issued
pursuant to that certain Warrant Purchase Agreement dated as of May 1, 2004 (the
"Warrant Purchase Agreement"), between the Holder and the Company, reference to
which is hereby made for a statement of certain of the terms and conditions
relating to this Warrant.
The shares of Common Stock issuable upon exercise or conversion of this
Warrant are referred to herein as "Warrant Shares."
1. Term of Warrant. The purchase or conversion right represented
by this Warrant is exercisable, in whole or in part, at any time during the
period beginning on the delivery of the calculation of the Fourth Milestone Date
(as defined in the Warrant Purchase Agreement) and ending at 5:00 p.m.
Burlington, North Carolina time on the fourth anniversary of the date hereof;
provided, however, if the calculation as to the Fourth Milestone Date shall be
delivered on or after such fourth anniversary, then the purchase or conversion
right represented by this Warrant
A-5 - 1
shall remain exercisable until 5:00 p.m. Burlington, North Carolina time on the
tenth day after delivery of such calculation as to the Fourth Milestone Date;
and provided further, however, that, in the event the Holder contests such
calculation within five (5) business days after receipt of such calculation by
notice accompanied by reasonable detail concerning such contest, the Holder
shall retain the right, exercisable until such tenth day, to deliver this
Warrant (with the election at the end hereof duly executed) for exercise, which
exercise would be considered effective for all purposes of this Warrant only
upon the resolution of the dispute as to such calculation confirming that the
applicable milestone has been met.
2. Exercise or Conversion of Warrant.
2.1. Procedure for Exercise. Subject to Section 1 hereof, this
Warrant may be exercised by the Holder hereof as to the whole or any lesser
number of the Warrant Shares covered hereby, by the surrender of this Warrant
(with the election at the end hereof duly executed) to the Company at its main
office at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx (the "Main Office"),
or at such other place as may be designated in writing by the Company, together
with a certified or bank check payable to the order of the Company (or
contemporaneous wire transfer to an account in a bank located in the United
States designated for such purpose by the Company) in an amount equal to the
Warrant Price multiplied by the number of Warrant Shares for which such Warrants
are being exercised or converted.
2.2. Procedure for Conversion. Subject to Section 1 hereof, this
Warrant may, in lieu of paying the Warrant Price in cash, be converted by the
Holder hereof as to the whole or any lesser number of the Warrant Shares covered
hereby, into the number of Warrant Shares calculated pursuant to the following
formula by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at the Main Office:
X = Y (A - B)
--------
A
where X = the number of shares of Common Stock to be
issued to the holder;
Y = the number of shares of Common Stock subject
to this Warrant being surrendered for
conversion;
A = the fair market value of one share of Common
Stock; and
B = the Warrant Price
As used herein, the "fair market value" of a share of Common Stock
shall mean the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or, if not then listed or admitted to trading on any such
exchange, on the Nasdaq National Market, or if not then listed or traded on any
such exchange or market, the bid price per share on the Nasdaq Small Cap Market
or, in the sole discretion of the Board of Directors of the Company, any other
over-the-counter market, including the OTC Bulletin Board, which reports bid and
asked or last sale prices and volume of sales, in each case volume-weighted
averaged over the last ten (10) consecutive trading days before the day on which
notice of exercise duly executed and this Warrant are duly delivered to the
Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
that the Company could obtain from a willing buyer (not a then current employee
or director) for shares
X-0 - 0
xx Xxxxxx Xxxxx sold by the Company, as determined in good faith by the Board of
Directors of the Company, unless the Company shall become subject to a merger
acquisition or other consolidation pursuant to which the Company will not be the
surviving party, in which case the current fair market value of a share of
Common Stock shall be deemed to be the value received by the holders of the
Company's Common Stock for each share of Common Stock pursuant to such
transaction.
2.3. Certificate for Warrant Shares. As soon as practicable (but in
any event within ten (10) days) after each such exercise or conversion of this
Warrant, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise or conversion,
registered in the name of the Holder or its designee. The Holder will be deemed
for all purposes to be the Holder of the shares of Warrant Shares so purchased
as of the first trading day following the date of such exercise. If this Warrant
should be exercised or converted in part only, the Company shall, upon surrender
of the certificate evidencing this Warrant for cancellation, execute and deliver
a new Warrant certificate evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.
2.4. Taxes. The Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue and delivery of
any certificate in a name other than that of the Holder, and the Company shall
not be required to issue or deliver any such certificate unless and until the
person or persons requesting the issue thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
2.5. Fractional Shares. The Company shall not be required to issue
fractions of shares of Common Stock or other capital stock of the Company upon
the exercise or conversion of this Warrant. If any fraction of a share would be
issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
fair market value of such share of Common Stock on the date of exercise or
conversion of this Warrant, determined in accordance with Section 2.2 hereof.
3. Adjustments. Subject to the provisions of this Section 3, the
Warrant Price in effect and the number of Warrant Shares issuable upon exercise
or conversion hereof from time to time shall be subject to adjustment as
follows:
3.1. Stock Dividend, Split, Combination and Certain
Reclassifications. If the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Stock payable in shares of its
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its Common Stock by reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation,
then, in each such case, the Warrant Price in effect and the number of Warrant
Shares issuable upon exercise or conversion hereof at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the Holder hereof
after such time shall be entitled to receive upon exercise or conversion hereof
the aggregate number and kind of shares that such Holder would have owned upon
exercise or conversion of this
A-5 - 3
Warrant immediately before such time and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification.
3.2. Readjustment. If an adjustment is made under Section 3.1 and
the event to which the adjustment relates does not occur or is rescinded, then
any adjustments in the Exercise Price or the number of Warrant Shares that were
made in accordance with such section shall be adjusted back to the Exercise
Price and the number of Warrant Shares that were in effect immediately before
the date of or record date for such event.
3.3. Certificate of Adjustment. Whenever there shall be an
adjustment as provided in this Section 3, the Company shall within thirty (30)
days after such adjustment cause written notice thereof to be sent by registered
or certified mail, postage prepaid, to the Holder, at its address set forth in
Section 5.3 of the Warrant Purchase Agreement, which notice shall be accompanied
by an officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof. The Company may, but is not obligated to, retain a firm of independent
public accountants of recognized national standing (who may be any such firm
regularly employed by the Company) to make any computation required under this
Section 3, and a certificate signed by such firm shall be conclusive evidence of
the correctness of the computation made under this Section 3 absent manifest
error.
3.4. Limitations. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest one-thousandth of a share, as the
case may be. No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments that by
reason of this Section 3.4 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
4. Reorganizations; Reclassifications.
4.1. Reorganizations. In each case of a consolidation with or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and that does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety or in the
case of a distribution by the Company of its assets with respect to the Common
Stock as a liquidating or partial liquidating dividend (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise or conversion of this Warrant (in lieu
of the number of Warrant Shares theretofore deliverable) the kind and amount of
shares of stock or other securities or property to which a holder of the number
of Warrant Shares that would otherwise have been deliverable upon the exercise
or conversion hereof would have been entitled upon such Reorganization if this
Warrant had been exercised or converted in full immediately before such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property
A-5 - 4
thereafter deliverable upon exercise or conversion of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The Company will
not effect any Reorganization involving another person unless, upon or prior to
the consummation thereof, the successor person or the other person involved in
the Reorganization will assume by written instrument the obligation to deliver
to the Holder such shares of stock, securities, cash or property as in
accordance with the foregoing provisions the Holder will be entitled to receive.
4.2. Reclassifications. In each case of a reclassification or
change of the shares of Common Stock issuable upon exercise or conversion of
this Warrant (other than a change in par value or from a specified par value to
no par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), and in each
case of any consolidation or merger of another corporation into the Company in
which the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash or
other property) of the shares of Common Stock (other than a change in par value,
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), the Holder shall have the right thereafter to receive upon
exercise or conversion of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash, or any combination thereof
receivable upon such reclassification, change, consolidation, or merger by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised or converted immediately before such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments that shall be as nearly equivalent as practicable to the adjustments
required by Section 3.
5. Restriction on Transfer of Warrant; Warrant Agent; Legends.
5.1. Restrictions. The Holder may neither sell, transfer, assign
(except by operation of law) or otherwise dispose of this Warrant to any other
person without the prior, express written consent of the Company or in
connection with an assignment of the Warrant Agreement permitted by Section 5.1
thereof. In no event shall this Warrant be transferred other than in its
entirety (portions of the Warrant may not be transferred).
5.2. Warrant Agent. The Company may, by written notice to the
Holder of this Warrant, appoint an agent for the purpose of issuing securities
upon exercise of this Warrant, exchanging or replacing this Warrant, or any of
the foregoing, and thereafter any such issuance, exchange, or replacement as the
case may be, will be made by and at the office of such agent.
5.3. Legends. The certificate or certificates evidencing the
Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST
A-5 - 5
FURNISHING TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO IT AND
ITS COUNSEL THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION
REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW. THE TRANSFER OR
EXCHANGE OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHER
RESTRICTED AS DESCRIBED IN A CERTAIN WARRANT PURCHASE AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED OWNER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE (OR SUCH OWNER'S PREDECESSOR IN INTEREST)"
6. Authorized Shares. The Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, 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 of this Warrant
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock above the amount payable therefor upon the exercise
of this Warrant and the issuance of the Common Stock immediately prior to such
increase in par value and (b) take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
preemptive rights and any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable upon exercise or conversion
of this Warrant shall, upon receipt by the Company of the full payment therefor,
be validly issued, fully paid, nonassessable, and free of preemptive rights.
7. Miscellaneous.
7.1. Replacement. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant (and upon
surrender of this Warrant if mutilated), upon issuance of an indemnity bond if
required by the Company, and upon reimbursement of the Company's incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor and denomination.
7.2. No Rights as Stockholder. The Holder hereof shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided herein.
7.3. Notice. Any notice given to either party under this Warrant
shall be given in accordance with Section 5.3 of the Warrant Purchase Agreement.
7.4. Governing Law. This Warrant shall be construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed within such state, without regard to principles of conflicts of law.
A-5 - 6
7.5. Prior Notice of Certain Events. The Company will deliver (by
first class mail postage prepaid) to the Holder of this Warrant written notice
at least ten (10) days prior to the occurrence of the following events:
(a) the date on which a record is to be taken for the
purpose of any dividend, distribution or grant of
rights, or, if a record is not to be taken, the date
as of which the shareholders of Common Stock of
record to be entitled to such dividend, distribution
or grant of rights are to be determined;
(b) the date on which a record is to be taken for the
purpose of determining shareholders of Common Stock
entitled to vote on any reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up or
purchase, retirement or redemption; and
(c) the date, if any, as of which holders of record of
the Common Stock will be entitled to exchange their
Common Stock for securities or other property
deliverable upon such reclassification,
reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up,
purchase, retirement or redemption.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
an instrument as of May 5, 2004.
TRIPATH IMAGING, INC.
By: ___________________________________
Name:___________________________________
Title:__________________________________
A-5 - 7
FORM OF SUBSCRIPTION
(To be signed only on exercise or conversion of Warrant)
TO: TRIPATH IMAGING, INC.
1. Check Box that Applies:
[] The undersigned hereby elects to purchase ______ shares of
Common Stock pursuant to the terms of the attached Warrant,
and tenders herewith cash payment of the purchase price of
such shares in full.
[] The undersigned hereby elects to convert ______ shares subject
to the attached Warrant into shares of shares of Common Stock
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned.
Dated: __________
________________________________________
(Signature must conform to the name of holder as
specified on the face of the Warrant)
________________________________________
________________________________________
(Address)
