EXHIBIT 4.6
FORM OF
WARRANT AGREEMENT
Dated as of
[ ], 1999
among
CARESIDE, INC.,
XXXXXXXXXX & CO. INC.,
WEDBUSH XXXXXX SECURITIES, INC.
and
SOUTHEAST RESEARCH PARTNERS, INC.
Warrants for
Common Stock of
Careside, Inc.
TABLE OF CONTENTS
Page
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ARTICLE 1 Definitions....................................................... 1
SECTION 1.01. Definitions................................................... 1
SECTION 1.02. Other Definitions............................................. 2
SECTION 1.03. Rules of Construction......................................... 3
ARTICLE 2 Warrant Certificates............................................... 3
SECTION 2.01. Form and Dating............................................... 3
SECTION 2.02. Legend........................................................ 3
SECTION 2.03. Execution..................................................... 4
SECTION 2.04. Registration.................................................. 4
SECTION 2.05. Transfer and Exchange......................................... 4
SECTION 2.06. Replacement Certificates...................................... 5
ARTICLE 3 Exercise Terms..................................................... 6
SECTION 3.01. Exercise Price................................................ 6
SECTION 3.02. Exercise Periods.............................................. 6
SECTION 3.03. Expiration.................................................... 6
SECTION 3.04. Manner of Exercise............................................ 6
SECTION 3.05. Issuance of Warrant Shares.................................... 7
SECTION 3.06. Fractional Warrant Shares..................................... 7
SECTION 3.07. Reservation of Warrant Shares................................ 7
ARTICLE 4 Antidilution Provisions........................................... 8
SECTION 4.01. Changes in Common Stock....................................... 8
SECTION 4.02. Cash Dividends and Other Distributions........................ 8
SECTION 4.03. Rights Issue to All Holders of Common Stock................... 9
SECTION 4.04. Other Issuances of Common Stock or Rights.....................10
SECTION 4.05. Combination; Liquidation......................................11
SECTION 4.06. Other Events..................................................11
SECTION 4.07. Superseding Adjustment........................................11
SECTION 4.08. Minimum Adjustment............................................12
SECTION 4.09. Notice of Adjustment..........................................12
SECTION 4.10. Notice of Certain Transactions...............................12
SECTION 4.11. Adjustment to Warrant Certificate.............................13
ARTICLE 5 Registration Rights................................................13
SECTION 5.01. Effectiveness of Registration Statement.......................13
SECTION 5.02. Blue Sky......................................................14
SECTION 5.03. Accuracy of Disclosure........................................14
i
SECTION 5.04. Indemnification...............................................14
SECTION 5.05. Additional Acts...............................................17
SECTION 5.06. Expenses......................................................17
ARTICLE 6 Miscellaneous......................................................18
SECTION 6.01. Securities and Exchange Commission Reports and
Other Information.............................................18
SECTION 6.02. Persons Benefitting...........................................18
SECTION 6.03. Rights of Holders.............................................18
SECTION 6.04. Amendment.....................................................18
SECTION 6.05. Notices.......................................................19
SECTION 6.06. Governing Law.................................................19
SECTION 6.07. Successors....................................................19
SECTION 6.08. Multiple Originals............................................20
SECTION 6.09. Table of Contents.............................................20
SECTION 6.10. Severability..................................................20
EXHIBIT A Form of Face of Warrant Certificate
ii
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of [ ], 1999 (this "Agreement"), among
CARESIDE, INC., a Delaware corporation ("Careside"), XXXXXXXXXX & CO. INC.,
WEDBUSH XXXXXX SECURITIES, INC. and SOUTHEAST RESEARCH PARTNERS, INC., as
Purchasers (the "Purchasers").
WHEREAS, Careside desires to sell to the Purchasers up to 280,000 warrants
(the "Warrants") described herein which will initially entitle the Purchasers to
purchase in the aggregate 280,000 shares of Common Stock, par value $.0l per
share, of Careside ("Common Stock") in connection with an initial public
offering by Careside of 2,800,000 shares of Common Stock (not including shares
offered pursuant to the over-allotment option (the "Shares")); and
WHEREAS, each Warrant will entitle the Purchasers to purchase one (1) share
of Common Stock, subject to adjustment as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth and for other good and valuable consideration, including, but
not limited to, the payment of Twenty-Eight Dollars ($28.00) by the Purchasers
to Careside, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
Definitions
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SECTION 1.01. Definitions.
-----------
"Affiliate" of any Person means any other Person, directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that beneficial
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ownership of 10% or more of the voting securities of a Person shall be decreed
to be control. The terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Board" means the Board of Directors of Careside or any committee thereof
duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day that is not a Saturday, a Sunday or a day on
which banking institutions are not required to be open in the State of New York.
"Cashless Exercise Ratio" means a fraction, the numerator of which is the
excess of the Current Market Value per share of Common Stock on the Exercise
Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
"Combination" means an event in which Careside consolidates with, merges
with or into, or sells all or substantially all of its assets to another Person.
"Current Market Value" per share of Common Stock or any other security at
any date means: (i) if the security is not registered under the Exchange Act,
(a) the value of the security, determined in good faith by the Board and
certified in a board resolution, based on the most recently completed arm's-
length transaction between Careside and a Person other than an Affiliate of
Careside, the closing of which occurred on such date or within the six-month
period preceding such date, or (b) if no such transaction shall have occurred on
such date or within such six-month period, the value of the security as
determined by an independent financial expert; or (ii) if the security is
registered under the Exchange Act, the average of the last reported sale price
of the Common Stock on the Nasdaq National Market or any other exchange or
market on which the Common Stock is traded (or the equivalent in an over-the-
counter market) for each Business Day during the period commencing 15 Business
Days before such date and ending on the date one day prior to such date, or if
the security has been registered under the Exchange Act for less than 15
consecutive Business Days before such date, the average of the last reported
sale prices (or such equivalent) for all of the Business Days before such date
for which daily closing bid prices are available (provided, however, that if the
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closing bid price is not determinable for at least 10 Business Days in such
period, the "Current Market Value" of the security shall be determined as if the
security were not registered under the Exchange Act).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Date" means, for a given Warrant, the day on which such Warrant
is exercised pursuant to Section 3.04.
"Issue Date" means the date on which Warrants are initially issued.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"SEC" means the Securities and Exchange Commission, or any successor agency
or body performing substantially similar functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant Certificates" mean the registered certificates issued by Careside
under this Agreement representing the Warrants.
"Warrant Shares" mean the shares of Common Stock (and any other securities)
for which the Warrants are exercisable.
2
SECTION 1.02. Other Definitions
-----------------
SECTION
-------
"Agreement".................................... Recitals
"Cashless Exercise"............................ 3.04
"Certificate Register"......................... 2.04
"Common Stock"................................. Recitals
"Exercise Price"............................... 3.01
"Expiration Date".............................. 3.02(b)
"Holder"....................................... 2.04
"Indemnified Holders".......................... 5.04(a)
"Registrar..................................... 3.07
"Registration Statement"....................... 5.01
"Shares"....................................... Recitals
"Successor Company"............................ 4.05(a)
"Transfer Agent"............................... 3.05
"Warrants"..................................... Recitals
SECTION 1.03. Rules of Construction .
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(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE 2
Warrant Certificates
--------------------
SECTION 2.01. Form and Dating. Each Warrant Certificate shall be
---------------
substantially in the form of Exhibit A attached hereto, which is hereby
---------
incorporated in and expressly made a part of this Agreement. The Warrant
Certificates may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which Careside is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to Careside) and shall bear the legends required by Section 2.02. Each Warrant
Certificate shall be dated the date of its countersignature. The terms of the
Warrant Certificate set forth in Exhibit A are part of the terms of this
---------
Agreement.
SECTION 2.02. Legend. Each Warrant Certificate shall bear the
------
following legend:
THE COMMON STOCK, PAR VALUE $.0l PER SHARE, OF CARESIDE FOR WHICH THIS
WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN
APPLICABLE EXEMPTION
3
FROM SUCH REGISTRATION REQUIREMENTS. ACCORDINGLY, NO HOLDER SHALL BE
ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE TIME
OF EXERCISE, (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING
TO THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAS BEEN FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF
SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC, OR (ii) THE
ISSUANCE OF SUCH SHARES IS PERMITTED PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED WITHIN THE "UNITED STATES" OR TO "U.S. PERSONS" (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT.
SECTION 2.03. Execution. Warrants entitling the Purchasers to purchase
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in the aggregate up to 280,000 Warrant Shares shall be executed on behalf of
Careside by the Chief Executive Officer or Chief Financial Officer of Careside
and attested by the signature of the Secretary or Assistant Secretary of
Careside.
SECTION 2.04. Registration. The Warrants shall be numbered and shall be
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registered by Careside as they are issued. Careside shall keep a register
("Certificate Register") of the Warrant Certificates and of their transfer and
exchange. The Certificate Register shall show the names and addresses of the
respective Holders (as defined below) and the date and number of Warrants
represented on the face of each Warrant Certificate. Careside shall be entitled
to treat the registered holder of any Warrant (the "Holder") as the owner in
fact thereof for all purposes and shall not be bound to recognize any equitable
or other claim to or interest in such Warrant on the part of any other Person,
and shall not be liable for any registration or transfer of any Warrant which is
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary. [Ninety-Three Thousand Three Hundred Thirty-Four (93,334)] Warrants
shall be registered initially in the name of "Xxxxxxxxxx & Co. Inc." and
[Ninety-Three Thousand Three Hundred Thirty-Three (93,333)] Warrants shall be
initially registered in each of the names of "Wedbush Xxxxxx Securities, Inc."
and "Southeast Research Partners, Inc.".
SECTION 2.05. Transfer and Exchange. The Warrants may not be
---------------------
transferred, assigned, sold or hypothecated by the Holder except in accordance
with this Section 2.05 or in an involuntary assignment by operation of law to
the Holder's personal representative.
4
(a) Each Holder of Warrants, by acceptance thereof, represents and
acknowledges that such Warrants have not been and will not be registered under
the Securities Act on the grounds that the issuance of such Warrants is exempt
from registration under Section 4(2) of the Securities Act as not involving any
public offering. Each Holder of Warrants represents and warrants that such
Holder (i) is acquiring these Warrants for investment for such Holder's own
account, with no intention of reselling or otherwise distributing the same,
subject, nevertheless, to any requirement of law that the disposition of such
Holder's property shall at all times be within such Holder's control, (ii) is an
"accredited investor" as defined in Rule 501 of Regulation D under the
Securities Act, (iii) has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investments made or to be made in connection with the acquisition and exercise
of the Warrants, and (iv) has been provided all such information and access to
information concerning such Holder's investment hereunder as such Holder has
requested from Careside. The Warrants may not be transferred except (1) to
officers and partners of the Purchasers, (2) (x) pursuant to an effective
registration statement under the Securities Act or (y) in the case of transfers
other than those described in clause (2) (x), upon the conditions specified in
Section 2.02 hereof, which conditions are intended, among other things, to
ensure compliance with the provisions of the Securities Act in respect of the
transfer of such Warrant, and (3) upon compliance with applicable state
securities laws.
(b) The Warrant Certificates shall be issued in registered form only and
shall be transferable only upon the surrender of such Warrant Certificate for
registration of transfer. When a Warrant Certificate is presented to Careside
with a request to register a transfer, Careside shall register the transfer as
requested if the requirements of Section 8-401(1) of the Uniform Commercial Code
as in effect in the State of New York are met. All Warrant Certificates issued
upon any registration of transfer or exchange of Warrant Certificates shall be
valid obligations of Careside, entitled to the same benefits under this
Agreement as the Warrant Certificates surrendered upon such registration of
transfer or exchange. No service charge will be made to a Holder for any
registration of transfer or exchange upon surrender of any Warrant Certificate.
However, Careside may require payment of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in connection with
any registration of transfer or exchange of Warrant Certificates but not for any
exchange or original issuance (not involving a transfer) pursuant to Section
3.04 or 3.05.
SECTION 2.06. Replacement Certificates. If a mutilated Warrant
------------------------
Certificate is surrendered to Careside or if the Holder of a Warrant Certificate
claims that the Warrant Certificate has been lost, destroyed or wrongfully
taken, Careside shall issue a replacement Warrant Certificate if the
requirements of Section 8-405 of the Uniform Commercial Code as in effect in the
State of New York are met. Such Holder shall furnish an indemnity bond
sufficient in the judgment of Careside to protect Careside from any loss which
it may suffer if a Warrant Certificate is replaced. Careside may charge the
Holder for its expenses in replacing a Warrant Certificate. Every replacement
Warrant Certificate is an additional obligation of Careside. Careside may not
issue new Warrant Certificates to replace Warrant Certificates to the extent
they represent Warrants which have been exercised or Warrants which Careside has
purchased or otherwise acquired.
5
ARTICLE 3
Exercise Terms
--------------
SECTION 3.01. Exercise Price. Each Warrant shall initially entitle
--------------
the Holder thereof, subject to adjustment pursuant to the terms of this
Agreement, to purchase one share of Common Stock for a per share exercise price
(the "Exercise Price") of $[___] [120% of the initial public offering price].
SECTION 3.02. Exercise Periods.
----------------
(a) Subject to the terms and conditions set forth herein, the
Warrants shall be exercisable at any time or from time to time after [ ]
[the first anniversary of the date the warrants are issued]; provided, however,
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that Holders will be able to exercise their Warrants only if (i) the
Registration Statement relating to the Warrant Shares is effective, or (ii) the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act, and the Warrant Shares are qualified for sale or exempt from
qualification under the applicable securities laws of the states or other
jurisdictions in which such holders reside.
(b) No Warrant shall be exercisable after [insert the date which is
the fifth anniversary of the date the warrants are issued] (the "Expiration
Date").
SECTION 3.03. Expiration. Each Warrant shall terminate and become
----------
void as of the earlier of (i) the close of business on the Expiration Date or
(ii) the date such Warrant is exercised. Careside shall give notice not less
than 90 and not more than 120 days prior to the Expiration Date to the Holders
of all then outstanding Warrants to the effect that the Warrants will terminate
and become void as of the close of business on the Expiration Date; provided
--------
however, that if Careside fails to give notice as provided in this Section 3.03,
-------
the Warrants will nevertheless expire and become void on the Expiration Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised upon (i)
------------------
surrender to Careside, or its duly authorized agent, of the related Warrant
Certificate, together with the form of election to purchase Common Stock
attached thereto, duly filled in and signed by the Holder thereof, and (ii)
payment to Careside, or its duly authorized agent, for the account of Careside,
of the Exercise Price for each Warrant Share issuable upon the exercise of such
Warrants then exercised. Such payment shall be made (i) in cash or by certified
or official bank check payable to the order of Careside or by wire transfer of
funds to an account designated by Careside for such purpose or (ii) without the
payment of cash, by reducing the number of shares of Common Stock obtainable
upon the exercise of a Warrant so as to yield a number of shares of Common Stock
upon the exercise of such Warrant equal to the product of (a) the number of
shares of Common Stock issuable as of the Exercise Date upon the exercise of
such Warrant (if payment of the Exercise Price were being made in cash) and (b)
the Cashless Exercise Ratio. An exercise of a Warrant in accordance with the
immediately preceding sentence is herein called a "Cashless Exercise". Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the Holder's option to elect a Cashless Exercise, the number of
shares of Common Stock deliverable upon a Cashless Exercise shall be equal to
the number of
6
shares of Common Stock issuable upon the exercise of Warrants that the Holder
specifies are to be exercised pursuant to a Cashless Exercise multiplied by the
Cashless Exercise Ratio. All provisions of this Agreement shall be applicable
with respect to a surrender of a Warrant Certificate pursuant to a Cashless
Exercise for less than the full number of Warrants represented thereby. Subject
to Section 3.02, the rights represented by the Warrants shall be exercisable at
the election of the Holders thereof either in full at any time or from time to
time in part. In the event that a Warrant Certificate is surrendered for
exercise of less than all the Warrants represented by such Warrant Certificate
at any time prior to the Expiration Date, a new Warrant Certificate representing
the remaining Warrants shall be issued by Careside.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.06, upon
--------------------------
the surrender of Warrant Certificates and payment of the per share Exercise
Price, as set forth in Section 3.04, Careside shall issue and cause a transfer
agent for the Common Stock ("Transfer Agent") to countersign and deliver, upon
the written order of the Holder in such name or names as the Holder may
designate, a stock certificate or certificates for the number of full Warrant
Shares so purchased upon the exercise of such Warrants or other securities or
property to which it is entitled, registered or otherwise, to the Person or
Persons entitled to receive the same, together with cash as provided in Section
3.06 in respect of any fractional Warrant Shares otherwise issuable upon such
exercise. Such stock certificate or certificates shall be deemed to have been
issued and any Person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the surrender
of such Warrant Certificates and payment of the per share Exercise Price, as
previously stated; provided, however, that if, at such date, the transfer books
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for the Warrant Shares shall be closed, the stock certificates for the Warrant
Shares in respect of which such Warrants are then exercised shall be issuable as
of the date on which such books shall next be opened and until such date
Careside shall be under no duty to deliver any stock certificates for such
Warrant Shares; provided further, however, that such transfer books, unless
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otherwise required by law, shall not be closed at any one time for a period
longer than 20 calendar days.
SECTION 3.06. Fractional Warrant Shares. Careside shall not be required
-------------------------
to issue fractional Warrant Shares on the exercise of Warrants. If more than
one Warrant shall be exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
pursuant thereto. If any fraction of a Warrant Share would, except for the
provisions of this Section 3.06, be issuable on the exercise of any Warrant (or
specified portion thereof), Careside shall pay, at the time of exercise, an
amount in cash equal to the Current Market Value per Warrant Share, as
determined on the day immediately preceding the date the Warrant is exercised,
multiplied by such fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. Careside shall at all
-----------------------------
times keep reserved out of its authorized shares of Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of all outstanding
Warrants. The registrar for the Common Stock (the "Registrar") shall, at all
times until the Expiration Date, reserve such number of authorized shares as
shall be required for such purpose. Careside will keep a copy of this Agreement
on file with the Transfer Agent. All Warrant Shares which may be issued upon
7
exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
created by or through Careside, with respect to the issue thereof. Careside
will supply such Transfer Agent with duly executed stock certificates for such
purpose and will itself provide or otherwise make available any cash which may
be payable as provided in Section 3.06. Careside will provide such Transfer
Agent with a copy of all notices of adjustments (and certificates related
thereto) transmitted to each Holder.
Before taking any action which would cause an adjustment pursuant to
Article 4 to reduce the Exercise Price below the then par value (if any) of the
Common Stock, Careside shall take any and all corporate action which may, in the
opinion of its counsel, be necessary in order that Careside may validly and
legally issue fully paid and nonassessable shares of Common Stock at the
Exercise Price as so adjusted.
ARTICLE 4
Antidilution Provisions
-----------------------
SECTION 4.01. Changes in Common Stock. In the event that at any time or
-----------------------
from time to time Careside shall (i) pay a dividend or make a distribution on
its Common Stock in shares of its Common Stock or other shares of its capital
stock, (ii) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) increase or
decrease the number of shares of Common Stock outstanding by reclassification of
its Common Stock, then the number of shares of Common Stock issuable upon
exercise of each Warrant immediately after the happening of such event shall be
adjusted to a number determined by multiplying the number of shares of Common
Stock that a Holder would have owned or have been entitled to receive upon
exercise had such Warrants been exercised immediately prior to the happening of
the events described above (or, in the case of a dividend or distribution of
Common Stock or other shares of capital stock, immediately prior to the record
date therefor) by a fraction, the numerator of which shall be the total number
of shares of Common Stock outstanding immediately after the happening of the
events described above and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the happening of the
events described above; and subject to Section 4.08, the Exercise Price for each
Warrant shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such event by such fraction. An adjustment made pursuant
to this Section 4.01 shall become effective immediately after the effective date
of such event, retroactive to the record date therefor in the case of a dividend
or distribution in shares of Common Stock or other shares of Careside's capital
stock.
SECTION 4.02. Cash Dividends and Other Distributions. In the event that
--------------------------------------
at any time or from time to time Careside shall distribute to all holders of
Common Stock (i) any dividend or other distribution of cash, evidences of its
indebtedness, shares of its capital stock or any other assets, properties or
securities or (ii) any options, warrants or other rights to subscribe for or
purchase any of the foregoing (other than, in each case, (w) the issuance of any
rights under a shareholder rights plan, (x) any dividend or distribution
described in Section 4.01, (y)
8
any rights, options, warrants or securities described in Section 4.03 and (z)
any cash dividends or other cash distributions from current or retained
earnings), then the number of shares of Common Stock issuable upon the exercise
of each Warrant shall be increased to a number determined by multiplying the
number of shares of Common Stock issuable upon the exercise of such Warrant
immediately prior to the record date for any such dividend or distribution by a
fraction, the numerator of which shall be the Current Market Value per share of
Common Stock on the record date for such dividend or distribution and the
denominator of which shall be such Current Market Value per share of Common
Stock on the record date for such dividend or distribution less the sum of (x)
the amount of cash, if any, distributed per share of Common Stock and (y) the
fair value (as determined in good faith by the Board, whose determination shall
be evidenced by a board resolution, a copy of which will be sent to Holders upon
request) of the portion, if any, of the distribution applicable to one share of
Common Stock consisting of evidences of indebtedness, shares of stock,
securities, other assets or property, warrants, options or subscription or
purchase rights; and, subject to Section 4.08, the Exercise Price shall be
adjusted to a number determined by dividing the Exercise Price immediately prior
to such record date by the above fraction. Such adjustments shall be made
whenever any distribution is made and shall become effective as of the date of
distribution, retroactive to the record date for any such distribution;
provided, however, that Careside is not required to make an adjustment pursuant
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to this Section 4.02 if at the time of such distribution Careside makes the same
distribution to Holders of Warrants as it makes to holders of Common Stock pro
rata based on the number of shares of Common Stock for which such Warrants are
exercisable (whether or not currently exercisable). No adjustment shall be made
pursuant to this Section 4.02 which shall have the effect of decreasing the
number of shares of Common Stock issuable upon exercise of each Warrant or
increasing the Exercise Price.
SECTION 4.03. Rights Issue to All Holders of Common Stock. In the event
-------------------------------------------
that at any time or from time to time Careside shall issue to all holders of
Common Stock, without any charge, rights, options or warrants entitling the
holders thereof to subscribe for shares of Common Stock, or securities
convertible into or exchangeable or exercisable for Common Stock, entitling such
holders to subscribe for or purchase shares of Common Stock at a price per share
that is lower at the record date for such issuance than the then Current Market
Value per share of Common Stock other than in connection with the adoption of a
shareholder rights plan by Careside, then the number of shares of Common Stock
issuable upon the exercise of each Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock theretofore
issuable upon exercise of each Warrant by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights, options, warrants or securities plus the number of
additional shares of Common Stock offered for subscription or purchase or into
or for which such securities that are issued are convertible, exchangeable or
exercisable, and the denominator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights, options,
warrants or securities plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by Careside (assuming the
exercise or conversion of all such rights, options, warrants or securities)
would purchase at the then Current Market Value per share of Common Stock.
Subject to Section 4.08, in the event of any such adjustment, the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to
9
such date of issuance by the aforementioned fraction. Such adjustment shall be
made immediately after such rights, options or warrants are issued and shall
become effective, retroactive to the record date for the determination of
stockholders entitled to receive such rights, options, warrants or securities.
No adjustment shall be made pursuant to this Section 4.03 which shall have the
effect of decreasing the number of shares of Common Stock purchasable upon
exercise of each Warrant or of increasing the Exercise Price.
SECTION 4.04. Other Issuances of Common Stock or Rights. In the event
-----------------------------------------
that at any time or from time to time Careside shall issue (i) shares of Common
Stock (subject to the provisions below), (ii) rights, options or warrants
entitling the holders thereof to subscribe for shares of Common Stock (provided,
--------
however, that no adjustment shall be made upon the exercise of such rights,
-------
options or warrants) or (iii) securities convertible into or exchangeable or
exercisable for Common Stock (provided, however, that no adjustment shall be
-------- -------
made upon the conversion, exchange or exercise of such securities (other than
issuances specified in (i), (ii) or (iii) which are made as the result of anti-
dilution adjustments in such securities)), at a price per share at the record
date of such issuance that is less than the then Current Market Value per share
of Common Stock, then the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such sale or
issuance plus the number of additional shares of Common Stock offered for
subscription or purchase or into or for which such securities that are issued
are convertible, exchangeable or exercisable, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
sale or issuance plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by Careside (assuming the
exercise or conversion of all such rights, options, warrants or securities, if
any) would purchase at the then Current Market Value per share of Common Stock;
and, subject to Section 4.08, the Exercise Price shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to such date of
issuance by the aforementioned fraction; provided, however, that no adjustment
-------- -------
to the number of Warrant Shares issuable upon the exercise of the Warrants or to
the Exercise Price shall be made as a result of (i) the issuance of shares of
Common Stock under any warrants, options or other rights existing on the date
hereof, (ii) the issuance of shares of Common Stock in bona fide public
offerings that are underwritten or in which a placement agent is retained by
Careside or (iii) the issuance of options, or shares of Common Stock pursuant to
any option, under any employee benefit plans approved by the Board. Such
adjustments shall be made whenever such rights, options or warrants or
convertible securities are issued. No adjustment shall be made pursuant to this
Section 4.04 which shall have the effect of decreasing the number of shares of
Common Stock issuable upon exercise of each warrant or of increasing the
Exercise Price. For purposes of this Section 4.04 only, any issuance of Common
Stock, or rights, options or warrants to subscribe for, or other securities
convertible into or exercisable or exchangeable for, Common Stock, which
issuance (or agreement to issue) (A) is in exchange for or is otherwise in
connection with the acquisition of the property (excluding any such exchange
exclusively for cash) of any Person and (B) is at a price per share equal to the
lower of the Current Market Value at the time an agreement in principle is
reached or at the time a definitive agreement is entered into, shall be deemed
to have been made at a price
10
per share equal to the Current Market Value per share at the record date with
respect to such issuance (the time of closing or consummation of such exchange
or acquisition) if such definitive agreement is entered into within 90 days of
the date of such agreement in principle.
SECTION 4.05. Combination; Liquidation.
------------------------
(a) Except as provided in Section 4.05(b), in the event of a Combination,
each Holder shall have the right to receive upon exercise of the Warrants the
kind and amount of shares of capital stock or other securities or property which
such Holder would have been entitled to receive upon or as a result of such
Combination had such Warrant been exercised immediately prior to such event.
Unless paragraph 4.05(b) is applicable to a Combination, Careside shall provide
that the surviving or acquiring Person (the "Successor Company") in such
Combination will enter into an agreement confirming the Holders' rights pursuant
to this Section 4.05(a) and providing for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
4. The provisions of this Section 4.05(a) shall similarly apply to successive
Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to the holders of
Common Stock in exchange for their shares is payable solely in cash or (ii) the
dissolution, liquidation or winding-up of Careside, the holders of the Warrants
shall be entitled to receive, upon surrender of their Warrant Certificates,
distributions on an equal basis with the holders of Common Stock or other
securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such event, less the Exercise Price.
In case of any Combination described in this Section 4.05(b), the Successor
Company and, in the event of any dissolution, liquidation or winding-up of
Careside, Careside, shall deposit promptly with an independent agent appointed
for such purpose the funds, if any, necessary to pay to the Holders the amounts
to which they are entitled as described above. After such funds and the
surrendered Warrant Certificates are received, such agent is required to deliver
a check in such amount as is appropriate (or, in the case of consideration other
than cash, such other consideration as is appropriate) to such Person or Persons
as it may be directed in writing by the Holders surrendering such Warrants.
SECTION 4.06. Other Events. If any event occurs as to which the
------------
foregoing provisions of this Article 4 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
and adequately protect the purchase rights of the Holders in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of such Board, to protect such purchase rights as aforesaid, but
in no event shall any such adjustment have the effect of increasing the Exercise
Price or decreasing the number of shares of Common Stock issuable upon exercise
of any Warrant.
SECTION 4.07. Superseding Adjustment. Upon the expiration of any
----------------------
rights, options, warrants or conversion or exchange privileges which resulted in
adjustments pursuant to this Article 4, if any Warrants shall not have been
exercised, the number of Warrant Shares
11
issuable upon the exercise of each Warrant shall be readjusted pursuant to the
applicable section of this Article 4 as if (A) the only shares of Common Stock
issuable upon exercise of such rights, options, warrants, conversion or exchange
privileges were the shares of Common Stock, if any, actually issued upon the
exercise of such rights, options, warrants or conversion or exchange privileges
and (B) shares of Common Stock actually issued, if any, were issuable for the
consideration actually received by Careside upon such exercise plus the
aggregate consideration, if any, actually received by Careside for the issuance,
sale or grant of all such rights, options, warrants or conversion or exchange
privileges whether or not exercised and the Exercise Price shall be readjusted
inversely; provided, however, that no such readjustment shall (except by
-------- ------
reason of an intervening adjustment under Section 4.01) have the effect of
decreasing the number of Warrant Shares purchasable upon the exercise of each
Warrant or increase the Exercise Price by an amount in excess of the amount of
the adjustment initially made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion or exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by the
------------------
preceding Sections of this Article 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of shares of Common Stock issuable upon
exercise of Warrants that would otherwise be required shall be made unless and
until such adjustment either by itself or with other adjustments not previously
made increases or decreases by at least l% the Exercise Price or the number of
shares of Common Stock issuable upon exercise of Warrants immediately prior to
the making of such adjustment. Any adjustment representing a change of less
than such minimum amount shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Article 4 and not
previously made, would result in a minimum adjustment. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence. In computing adjustments under this
Article 4, fractional interests in Common Stock shall be taken into account to
the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise Price or the
--------------------
number of shares of Common Stock and other property, if any, issuable upon
exercise of the Warrants is adjusted, as herein provided, Careside shall
promptly deliver to the Holders in accordance with Section 6.05 a certificate of
a firm of independent accountants selected by the Board (who may be the regular
accountants employed by Careside) setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was calculated
(including a description of the basis on which (i) the Board determined the fair
value of any evidences of indebtedness, other securities or property or
warrants, options or other subscription or purchase rights and (ii) the Current
Market Value of the Common Stock was determined, if either of such
determinations were required), and specifying the Exercise Price and the number
of shares of Common Stock issuable upon exercise of Warrants after giving effect
to such adjustment.
SECTION 4.10. Notice of Certain Transactions. In the event that
------------------------------
Careside shall propose to (a) pay any dividend payable in securities of any
class to the holders of its Common Stock or to make any other non-cash dividend
or distribution to the holders of its Common Stock (b) offer the holders of its
Common Stock rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of stock of any class or any other
securities,
12
rights or options, (c) issue any (i) shares of Common Stock, (ii) rights,
options or warrants entitling the holders thereof to subscribe for shares of
Common Stock, or (iii) securities convertible into or exchangeable or
exercisable for Common Stock (in the case of (i), (ii) and (iii), if such
issuance or adjustment would result in an adjustment hereunder), (d) effect any
capital reorganization, reclassification, consolidation or merger, (e) effect
the voluntary or involuntary dissolution, liquidation or winding-up of Careside
or (f) make a tender offer or exchange offer with respect to the Common Stock,
Careside shall within 5 days send to the Holders a notice of such proposed
action or offer. Such notice shall be mailed to the Holders in accordance with
Section 6.05, which shall specify the record date for the purposes of such
dividend, distribution or rights, or the date such issuance or event is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall briefly indicate the effect of such
action on the Common Stock and on the number and kind of any other shares of
stock and on other property, if any, and the number of shares of Common Stock
and other property, if any, issuable upon exercise of each Warrant and the
Exercise Price after giving effect to any adjustment pursuant to Article 4 which
will be required as a result of such action. Such notice shall be given as
promptly as possible and (x) in the case of any action covered by clause (a) or
(b) above, at least 10 days prior to the record date for determining holders of
the Common Stock for purposes of such action or (y) in the case of any other
such action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Common Stock,
whichever shall be the earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of Warrant
---------------------------------
Certificate need not be changed because of any adjustment made pursuant to this
Article 4, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock issuable upon
exercise of the Warrants as are stated in the Warrant Certificates initially
issued pursuant to this Agreement. Careside, however, may at any time in its
sole discretion make any change in the form of Warrant Certificate that it may
deem appropriate to give effect to such adjustments and that does not affect the
substance of the Warrant Certificate, and any Warrant Certificate thereafter
issued or countersigned, whether in exchange or substitution for an outstanding
Warrant Certificate or otherwise, may be in the form as so changed.
ARTICLE 5
Registration Rights
-------------------
SECTION 5.01. Effectiveness of Registration Statement. Careside shall
---------------------------------------
cause to be filed pursuant to Rule 415 (or any successor provision) of the
Securities Act a registration statement covering the issuance of Warrant Shares
to the Holders upon exercise of the Warrants by the Holders thereof (the
"Registration Statement") and shall use its reasonable efforts to cause the
Registration Statement to be declared effective on or before the first
anniversary of the Issue Date. Careside shall cause the Registration Statement
to remain effective until the earlier of (i) such time as all Warrants have been
exercised and (ii) the Expiration Date. Careside shall (a) furnish to each
Holder, without charge, at least one copy of the Registration Statement and any
amendments thereto, (b) for so long as any Registration Statement is effective,
deliver to each
13
Holder, without charge, as many copies of the final prospectus included in such
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request and (c) if in the opinion of counsel for the Holders any
amendment or supplement to the Registration Statement is required to enable the
Holder to resell Warrant Shares, effect such amendments or supplements and
cooperate in any arrangement with respect to such resale.
SECTION 5.02. Blue Sky. Careside shall use its reasonable efforts to
--------
register or qualify the Warrant Shares under all applicable securities laws,
blue sky laws or similar laws of all jurisdictions in the United States [and
Canada] in which any Holder of Warrants may be deemed to purchase Warrant Shares
upon the exercise of Warrants and shall use its reasonable efforts to maintain
such registration or qualification through the earlier of (i) such time as all
Warrants have been exercised and (ii) the Expiration Date; provided, however,
-------- -------
that Careside shall not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 5.02 or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
SECTION 5.03. Accuracy of Disclosure. To the extent any Holder uses the
----------------------
Registration Statement for any resale of Warrant Shares as provided in clause
(c) of Section 5.01, Careside represents and warrants to each Holder and agrees
for the benefit of each Holder that (i) the Registration Statement and any
amendment thereto will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein not misleading; and (ii) the prospectus
delivered to such Holder upon the exercise of Warrants and the documents
incorporated by reference therein will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading; provided, however,
-------- -------
that Careside shall have no liability under clauses (i) or (ii) of this Section
5.03 with respect to any such untrue statement or omission made in any
Registration Statement in reliance upon and in conformity with information
furnished to Careside by or on behalf of the Holders specifically for inclusion
therein.
SECTION 5.04. Indemnification. To the extent any Holder uses the
---------------
Registration Statement for any resale of Warrant Shares as provided in clause
(c) of Section 5.01:
(a) In connection with any Registration Statement, Careside agrees to
indemnify and hold harmless each Holder and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Exchange Act (each
Holder and such controlling persons being referred to collectively as the
"Indemnified Holders") from and against any losses, claims, damages or
liabilities, joint or several, or any actions in respect thereof (including, but
not limited to, any losses, claims, damages, liabilities or actions relating to
purchases and sales of the Warrant Shares) to which each Indemnified Holder may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement or prospectus or in any amendment or
supplement
14
thereto, or arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and shall reimburse, as incurred, the Indemnified Holders
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) Careside shall not be liable in
-------- -------
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement or any
preliminary or final prospectus or in any amendment or supplement thereto in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to Careside by or on behalf of such Holder specifically for
inclusion therein; (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any prospectus relating to such
Registration Statement, the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any person as to which there is a prospectus
delivery requirement (a "Delivering Seller") that sold the Warrant Shares to the
person asserting any such losses, claims, damages or liabilities to the extent
that any such loss, claim, damage or liability of such Delivering Seller results
from the fact that there was not sent or given to such person, on or prior to
the written confirmation of such sale, a copy of the relevant prospectus, as
amended and supplemented, provided that (A) Careside shall have previously
furnished copies thereof to such Delivering Seller in accordance with this
Agreement and (B) such furnished prospectus, as amended and supplemented, would
have corrected any such untrue statement or omission or alleged untrue statement
or omission; and (iii) this indemnity agreement will be in addition to any
liability which Careside may otherwise have to such Indemnified Holder.
(b) In connection with any Registration Statement, each Holder, severally
and not jointly, will indemnify and hold harmless Careside and each person, if
any, who controls Careside within the meaning of the Securities Act or the
Exchange Act and the directors, officers, agents and employees of such
controlling persons from and against any losses, claims, damages or liabilities
or any actions in respect thereof to which Careside or any such controlling
person or director, officer, agent or employee of such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement or preliminary or final prospectus or
in any amendment or supplement thereto, or arise out of or are based upon the
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, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information pertaining to such
Holder and furnished to Careside by or on behalf of such Holder specifically for
inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, Careside for any legal or
other expenses reasonably incurred by Careside or any such controlling person or
director, officer, agent or employee of such controlling person in connection
with investigating or defending any loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
which such Holder may otherwise have
15
to Careside or any of its controlling persons or directors, officers, agents or
employees of such controlling persons.
(c) Promptly after receipt by an indemnified party under this section of
notice of the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 5.04, notify the
indemnifying party of the commencement thereof, however, the omission to so
notify the indemnifying party will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in subsections (a) or (b) above, except to
the extent that it is prejudiced or harmed in any material respect by failure to
give such prompt notice. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with one (1) counsel (and local counsel
as necessary) reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election to so assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 5.04 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof. No
indemnifying party shall, without the prior written consent of the indemnified
party, not to be unreasonably withheld, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. No indemnifying party shall be liable for any amounts paid in
settlement of any action or claim without its written consent, which consent
shall not be unreasonably withheld, but if settled in accordance with its
written consent or if there be a final judgment of the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 5.04 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above for any reason other than as provided in subsection (c) above, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the indemnifying party or parties on the one hand and the indemnified
party on the other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities (or actions in respect thereof)
as well as any other relevant equitable considerations. The relative fault of
the parties shall be determined by
16
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by Careside on the one hand or such Holder or
such other indemnified person, as the case may be, on the other, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection 5(d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection 5(d). Notwithstanding any other provision of this subsection 5 (d),
the Holders shall not be required to contribute any amount in excess of the
amount by which the net proceeds received by such Holders from the sale of the
Warrant Shares pursuant to the Registration Statement exceeds the amount of
damages which such Holders would have otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Subsection 5(d), each officer, director, employee, representative and agent of
an indemnified party and each person, if any, who controls such indemnified
party within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as such indemnified party, and each officer,
director, employee, representative and agent of Careside and each person, if
any, who controls Careside within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as Careside.
(e) The agreements contained in this section shall survive the sale of the
Warrant Shares pursuant to the Registration Statement, as the case may be, and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
indemnified party.
SECTION 5.05. Additional Acts. If the issuance or sale of any Common
---------------
Stock or other securities issuable upon the exercise of the Warrants requires
registration or approval of any governmental authority (other than the
registration requirements under the Securities Act), or the taking of any other
action under the laws of the United States of America or any political
subdivision thereof before such securities may be validly offered or sold in
compliance with such laws, then Careside covenants that it will, in good faith
and as expeditiously as reasonably possible, use all reasonable efforts to
secure and maintain such registration or approval or to take such other action,
as the case may be.
SECTION 5.06. Expenses. All expenses incident to Careside's performance
--------
of or compliance with its obligations under this Article 5 will be borne by
Careside, including without limitation: (i) all Securities and Exchange
Commission, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all reasonable fees and expenses incurred in
connection with compliance with state securities or blue sky laws, (iii) all
reasonable expenses of any Persons incurred by or on behalf of Careside in
preparing or assisting in preparing, printing and distributing the Registration
Statement or any other registration statement, prospectus, any amendments or
supplements thereto and other documents relating to
17
the performance of and compliance with this Article 5, (iv) the fees and
disbursements of counsel for Careside and (v) the fees and disbursements of the
independent public accountants of Careside, including the expenses of any
special audits or comfort letters required by or incident to such performance
and compliance.
ARTICLE 6
Miscellaneous
-------------
SECTION 6.01. Securities and Exchange Commission Reports and Other
----------------------------------------------------
Information. Careside shall file with the Securities and Exchange Commission
-----------
and thereupon provide the Holders with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a United States corporation subject to such
Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections.
SECTION 6.02. Persons Benefiting. Nothing in this Agreement is intended
------------------
or shall be construed to confer upon any Person other than Careside and the
Holders any right, remedy or claim under or by reason of this Agreement or any
part hereof.
SECTION 6.03. Rights of Holders. Holders of unexercised Warrants are
-----------------
not entitled to (i) receive dividends or other distributions, (ii) receive
notice of or vote at any meeting of the stockholders, (iii) consent to any
action of the stockholders, (iv) receive notice as stockholders of any other
proceedings of Careside or (v) exercise any other rights whatsoever as
stockholders of Careside.
SECTION 6.04. Amendment. This Agreement may be amended by the parties
---------
hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as Careside may deem necessary
or desirable (including, without limitation, any addition or modification to
provide for compliance with the transfer restrictions set forth herein);
provided, however, that such action shall not adversely affect the rights of any
-------- -------
of the Holders. Any amendment or supplement to this Agreement that has an
adverse effect on the interests of the Holders shall require the written consent
of the Holders of a majority of the then outstanding Warrants. The consent of
each Holder affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares issuable upon
exercise of Warrants would be decreased (other than pursuant to adjustments
provided herein) or the exercise period with respect to the Warrants would be
shortened. In determining whether the Holders of the required number of
Warrants have consented, Warrants owned by Careside or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with Careside shall be disregarded and deemed not to be outstanding.
Subject to the foregoing, only Warrants outstanding at the time shall be
considered in any such determination.
18
SECTION 6.05. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered or certified mail, return receipt requested,
postage prepaid.
if to Careside: Careside, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to: Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx & Xxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
if to the Purchasers: Xxxxxxxxxx & Co. Inc.
Wedbush Xxxxxx Securities, Inc.
Southeast Research Partners, Inc.
c/o Fahnestock & Co. Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: [Xxxxx X. Xxxxxxxx]
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.
All notices, requests and other communications hereunder shall be deemed to
have been given either (i) if by hand, at the time of the delivery thereof to
the receiving party at the address of such party set forth above, (ii) if made
by telex, telecopy or facsimile transmission, at the time that receipt thereof
has been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service or (iv) if sent by registered or certified
mail, on the 5th business day following the day such mailing is made.
SECTION 6.06. Governing Law. The laws of the State of New York
-------------
shall govern this Agreement and the Warrant Certificates.
SECTION 6.07. Successors. All agreements of Careside in this Agreement
----------
and the Warrant Certificates shall bind its successors.
19
SECTION 6.08. Multiple Originals. The parties may sign any number of
------------------
copies of this Agreement. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Agreement.
SECTION 6.09. Table of Contents. The table of contents and headings of
-----------------
the Articles and Sections of this Agreement have been inserted for convenience
of reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
SECTION 6.10. Severability. The provisions of this Agreement are
------------
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
[THE BALANCE OF THIS PAGE LEFT BLANK INTENTIONALLY]
20
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
CARESIDE, INC.
By:
---------------------------
Name:
Title:
XXXXXXXXXX & CO. INC., as Purchaser
By:
---------------------------
Name:
Title:
WEDBUSH XXXXXX SECURITIES, INC., as
Purchaser
By:
---------------------------
Name:
Title:
SOUTHEAST RESEARCH PARTNERS, INC., as
Purchaser
By:
---------------------------
Name:
Title:
21
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
THE COMMON STOCK, PAR VALUE $.0l PER SHARE, OF CARESIDE, INC. ("CARESIDE")
FOR WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN APPLICABLE
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. ACCORDINGLY, NO HOLDER SHALL BE
ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE TIME OF
EXERCISE, (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING TO THE
SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAS BEEN FILED
WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE
"SEC"), AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION
STATEMENT HAS BEEN ISSUED BY THE SEC, OR (ii) THE ISSUANCE OF SUCH SHARES IS
PERMITTED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
WITHIN THE "UNITED STATES" OR TO "U.S. PERSONS" (AS DEFINED IN REGULATION S
UNDER THE SECURITIES ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT.
No. [ ] Certificate for ____ Warrants
to Purchase _____________ shares of Common Stock
VOID AFTER 5.00 P.M. NEW YORK TIME
on [insert the date which is the fifth anniversary of the date of the warrants]
WARRANTS TO PURCHASE COMMON STOCK OF
CARESIDE, INC.
THIS CERTIFIES THAT , or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the registered holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from Careside, Inc., a Delaware
corporation ("Careside"), [ ] shares of Common Stock, par value of $.01 per
share, of Careside (the "Common Stock") at the per share exercise price of $[ ]
(the
I
EXHIBIT A
"Exercise Price"), or by Cashless Exercise referred to below. This Warrant
Certificate shall terminate and become void as of the close of business on
[insert the date which is the fifth anniversary of the date of the warrants],
(the "Expiration Date") or upon the exercise hereof as to all the shares of
Common Stock subject hereto. The number of shares issuable upon exercise of the
Warrants and the Exercise Price per share shall be subject to adjustment from
time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement dated as of [___________], 1999 (the "Warrant Agreement"), among
Xxxxxxxxxx & Co. Inc., Wedbush Xxxxxx Securities, Inc. and Southeast Research
Partners, Inc. (collectively, the "Purchasers") and Careside, and is subject to
the terms and provisions contained in the Warrant Agreement, all of which terms
and provisions the Holder consents by acceptance hereof. The Warrant Agreement
is hereby incorporated herein by reference and made a part hereof. Reference is
hereby made to the Warrant Agreement for a full statement of the respective
rights, limitations of rights, duties and obligations of Careside and the
Holders. Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement may
be obtained for inspection by the Holder hereof upon written request to Careside
at 0000 Xxxxxxx Xxxxxxx, Xxxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Secretary.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part (i) by presentation of this Warrant Certificate
with the Election to Purchase Warrant Shares attached hereto duly executed and
with the simultaneous payment of the Exercise Price in cash (subject to
adjustment) to Careside or its duly authorized agent for the account of Careside
at the principal office of Careside or (ii) by Cashless Exercise. Payment of
the Exercise Price in cash shall be made by certified or official bank check
payable to the order of Careside or by wire transfer of funds to an account
designated by Careside for such purpose. Payment by Cashless Exercise shall be
made without the payment of cash by reducing the amount of Common Stock that
would be obtainable upon the exercise of a Warrant and payment of the Exercise
Price in cash so as to yield a number of shares of Common Stock upon the
exercise of such Warrant equal to the product of (1) the number of shares of
Common Stock for which such Warrant is exercisable as of the Exercise Date (if
the Exercise Price were being paid in cash) and (2) the Cashless Exercise Ratio.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time on
or after [the first anniversary of the date the warrants are issued]; provided,
--------
however, that Holders will be able to exercise their Warrants only if a shelf
-------
registration statement relating to the Common Stock underlying the Warrants is
effective or the issuance of such Common Stock is permitted pursuant to an
exemption from the registration requirements of the Securities Act and such
securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
Holders reside; provided further, however, that no Warrant shall be exercisable
-------- ------- -------
after the Expiration Date.
II
EXHIBIT A
In the event Careside enters into a Combination, the Holder hereof will be
entitled to receive upon exercise of the Warrants the kind and amount of shares
of capital stock or other securities or other property of such surviving entity
as the Holder would have been entitled to receive upon or as a result of the
Combination had the Holder exercised its Warrants immediately prior to such
Combination; provided, however, that in the event that, in connection with such
-------- -------
Combination, consideration to holders of Common Stock in exchange for their
shares is payable solely in cash or in the event of the dissolution, liquidation
or winding-up of Careside, the Holder hereof will be entitled to receive such
cash distributions as the Holder would have received had the Holder exercised
its Warrants immediately prior to such Combination, less the Exercise Price.
As provided in the Warrant Agreement, the number of shares of Common Stock
issuable upon the exercise of the Warrants and the Exercise Price are subject to
adjustment upon the happening of certain events.
Careside may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.05 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the issuance of the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be countersigned and
issued to the Holder hereof a new Warrant Certificate representing those
Warrants which were not exercised. This Warrant Certificate may be exchanged at
the principal office of Careside by presenting this Warrant Certificate properly
endorsed with a request to exchange this Warrant Certificate for other Warrant
Certificates evidencing an equal number of Warrants. No fractional Warrant
Shares will be issued upon the exercise of the Warrants, but Careside shall pay
an amount in cash equal to the Current Market Value per Warrant Share on the day
immediately preceding the date the Warrant is exercised, multiplied by the
fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Common Stock issuable by Careside upon the exercise of the
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.
Careside shall be entitled to treat the Holder of any Warrant as the owner
in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant on the part of any other
Person, and shall not be liable for any registration or transfer of any Warrant
which is registered or to be registered in the name of a fiduciary or the
nominee of a fiduciary.
The Warrants do not entitle any holder hereof to any of the rights of a
shareholder of Careside.
III
EXHIBIT A
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been attested by the Secretary or Assistant Secretary of
Careside.
CARESIDE, INC.
By:
---------------------------
Name:
Title: [Chief Executive Officer or Chief
Financial Officer]
DATED:
Attest:
----------------------------------------
Name:
Title: [Secretary or Assistant Secretary]
IV
EXHIBIT A
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
CARESIDE, INC.
The undersigned hereby irrevocably elects to exercise [________] Warrants
at an exercise price per Warrant (subject to adjustment) of $[___________] to
acquire [________] shares of Common Stock, par value $.01 per share, of
Careside, Inc. on the terms and conditions specified within the Warrant
Certificate and the Warrant Agreement therein referred to, surrenders the
Warrant Certificate attached hereto and all right, title and interest therein to
Careside, Inc. and directs that the shares of Common Stock deliverable upon the
exercise of such Warrants be registered or placed in the name and at the address
specified below and delivered thereto.
Date:
---------------------------------------
(Signature of Owner)
---------------------------------------
(Street Address)
---------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
---------------------------------------
[Signature must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature guarantee
program pursuant to Rule l7Ad-15 of the Securities
Exchange Act of 1934, as amended]
V
EXHIBIT A
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
VI
