Exhibit 10.2
EXECUTION
NOTE AND WARRANT PURCHASE AGREEMENT
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This Note and Warrant Purchase Agreement (this "Agreement") is
made as of the 28th day of February, 2002 by and between Careside, Inc., a
Delaware corporation (the "Company") and Crestview Capital Fund, L.P. Partners,
a Delaware limited partnership (the "Purchaser").
RECITALS
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As consideration for a bridge loan made by Purchaser to
Company on the date hereof, the Purchaser will, subject to the terms and
conditions hereof, receive from the Company (i) a certain convertible secured
promissory note in the amount of $350,000 (the "Note") and (ii) warrants for the
purchase of shares of the Company's common stock, par value $.01 per share (the
"Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto agree
as follows:
Section 1.1. The Note. The Purchaser has loaned the Company
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an aggregate amount of $350,000 (the "Loan") to be used for general working
capital purposes. As evidence of the Loan, the Company will issue the Note to
Purchaser, in accordance with the terms hereof. The Note will (a) be
convertible into shares of Common Stock at the option of the holder prior to
the earlier of repayment of the Note or exercise of the Purchase Option
(defined below), (b) be secured by all of the assets of the Company; and (c) be
substantially in the form set forth in Exhibit A attached hereto.
Section 1.2. Warrants. As further consideration for the Loan,
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the Company has agreed to issue to the Purchaser, upon execution of this
Agreement, warrants (the "Warrants"), in substantially the form set forth in
Exhibit B attached hereto, which shall entitle the Purchaser to purchase from
the Company, a number of shares of Common Stock which shall depend upon the
amount of time the Note remains outstanding.
Section 1.3. Registration Rights. The shares of Common Stock
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issued upon conversion of the Note or exercise of the Purchase Option (as
described below), or issued or issuable upon exercise of the Warrants, shall be
registered on a registration statement filed within 30 days following
conversion of the Note or exercise of the Purchase Option, whichever is
earlier, all in accordance with the registration rights set forth on Exhibit C
hereto; provided that, if the Note is repaid in cash and without conversion,
the Warrant shares shall have the benefit of the piggyback registration rights
set forth in Exhibit C hereto; and provided further that such thirty (30) day
period shall commence to run upon a partial exercise of conversion rights under
the Note or of the Purchase Option if, contemporaneously with such conversion
or exercise, Purchaser gives written notice to the Company of its waiver of any
further right to convert the Note or exercise the Purchase Option.
Section 1.4. Purchase Option by Holder. For a period of
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ninety (90) days following repayment of the Note by the Company (the "Purchase
Period"), Purchaser shall have the right to purchase up to 500,000 shares of
Common Stock at $.30 per share. The Purchase Option shall not be exercisable
prior to repayment of the Note. In order to exercise this purchase right, which
may be exercised in whole or in part until expiration of the Purchase Period,
Purchaser shall provide written notice to the Company of its election to
purchase shares under this Section 1.4, together with the purchase price
therefore, at the Company's address set forth below. Within five (5) business
days after each such notice is given, the Company shall issue (or cause its
transfer agent to issue) and deliver to Holder a stock certificate for the
shares of Common Stock so purchased, registered in the name of Purchaser
ARTICLE II
Section 2.1. Representations, Warranties and Covenants of
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the Company. The Company represents and warrants that:
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(a) The Company is a corporation duly organized and
validly existing and in good standing under the laws of the State of Delaware,
and duly qualified to do business and in good standing as a foreign corporation
in each state in which the nature of its business or properties requires such
qualification (except where failure to qualify would not have a material
adverse effect on the Company taken as a whole), with full power and authority,
corporate and otherwise, to enter into and perform this Agreement, and to
execute and deliver the various instruments and documents provided for herein.
(b) The execution, delivery and performance by the
Company of this Agreement and the issuance and delivery by the Company of the
Note and Warrants as contemplated hereby have been duly authorized by all
necessary corporate action and will not violate any provision of law, court
order or decree, or any provision of the Company's Certificate of Incorporation
or Bylaws, or result in the breach of, constitute a default under or result in
the creation of any lien, charge or encumbrance upon any property or assets of
the Company pursuant to any agreement or instrument to which the Company is a
party, or by which it or any of its property may be bound or affected. This
Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms subject to general principles of equity and
bankruptcy and other laws affecting creditors' rights generally.
(c) There are no material lawsuits or proceedings
pending, or, to the Company's knowledge, threatened, against or affecting the
Company and there are no proceedings before any governmental commission, bureau
or other administrative agency pending, or, to the Company's knowledge,
threatened, against or affecting the Company.
(d) As of February 27, 2002, the authorized capital
stock of the Company consisted of 50,000,000 shares of common stock, $.01 par
value per share and 5,000,000 shares of preferred stock, $.01 par value per
share. As of February 27, 2002, there were 16,904,193 shares of Common Stock
outstanding and 14,735,738 shares of Common Stock issuable upon the exercise of
outstanding warrants and options, all of which are currently exercisable.
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(e) The Common Stock issuable upon conversion of the
Note ("Conversion Shares"), exercise of the Warrants ("Warrant Shares") or
exercise of the Purchase Option ("Purchase Shares")has been duly authorized
and, when issued against payment therefor, will be validly issued, fully paid
and nonassessable and will be issued in reliance upon applicable exemptions
from the registration and qualification provisions of all applicable securities
laws of the United States and each state whose securities laws may be
applicable thereto. All Common Stock issued upon conversion of the Note,
exercise of the Warrants or exercise of the Purchase Option will be issued free
and clear of any preemptive or similar right and free and clear of any claim,
lien, security interest or other encumbrance. The Company has reserved for
issuance upon conversion of the Note, exercise of the Warrants or exercise of
the Purchase Option the full number of shares of Common Stock issuable upon
exercise thereof assuming repayment of the Note on its maturity date.
(f) No governmental permit, consent, approval or
authorization is required in connection with (i) the execution, delivery and
performance of this Agreement by the Company or (ii) the offer, sale, issuance
and delivery by the Company of the Warrants, Purchase Shares, Conversion Shares
or Warrant Shares contemplated hereby; provided that, all representations made
to the Company by the Purchaser in this Agreement and in any other written
document or instrument delivered in connection herewith are assumed for
purposes of this representation and warranty to be accurate and complete.
(g) As of the date hereof, the Company's Common Stock,
shares, and its publicly traded warrants are traded on the American Stock
Exchange ("AMEX") and the Company has no notice, or reason to be aware of any
notice, of impending delistings.
(h) Neither the Company nor anyone acting on its
behalf has effected or will offer the Note or the Warrants for issuance or sale
to, or solicit any offer to acquire the same from, anyone so as to make the
issuance and sale of such Note or Warrants subject to the registration
requirements of Section 5 of the Securities Act of 1933, as amended (the
"Securities Act").
(i) The transactions contemplated by this Agreement
(including the Taibbi Financing (defined below)) do not require the approval,
consent, authorization or act of, or the making by the Company of any
declaration, filing or registration with, any person (including but not limited
to the stockholders of the Company) other than the filing of a Form D with the
Securities and Exchange SEC (the "SEC"), the filing, pursuant to the
registration obligations set forth in Exhibit C hereto of a Form S-3 (or
comparable registration form), and applicable blue sky filings.
(j) The Company owns (or possesses adequate and
enforceable licenses or other rights to use) all trademarks, trade names,
copyrights, patents, inventions, processes, source code, software and other
technical know-how and other proprietary rights now used in its business (the
"Intellectual Property") and to the Company's knowledge, has not infringed and
is not infringing on the trademarks, trade names, copyrights, patents,
inventions, processes or other technical know-how or other proprietary rights
of any other person. Such Intellectual Property is free of all claims, liens or
encumbrances. No proceedings have been instituted or are pending or, to the
Company's knowledge, threatened which challenge the
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validity of, or otherwise adversely affect the ownership or use by the Company
of such Intellectual Property. The Company has no knowledge of the infringing
use of any of such trademarks and trade names or the infringement of any of
such patents or copyrights by any other person. At the request of the
Purchaser, the Company shall promptly purchase insurance coverage for one year
of risks associated with Intellectual Property for the Purchaser, in accordance
with an insurance policy selected by Purchaser (comparable to the form of
policy delivered to Purchaser prior to the date hereof), with coverage limits
in an amount at least equal to $750,000, and shall provide a Certificate of
Insurance therefor to Purchaser.
(k) The Company owns, hold or possesses all licenses,
franchises, permits, privileges, immunities, approvals and other authorizations
from a governmental body which are necessary to entitle it to own or lease,
operate and use the Company's assets and assets by the Company and to carry on
and conduct its business as conducted (herein collectively called "Governmental
Permits") except for such Governmental Permits as to which the failure to own,
hold or possess would not have a material adverse effect on the Company's
assets, the assets leased by the Company or the Company's business. The Company
has performed its material obligations under each Governmental Permit, and no
event has occurred or condition or state of facts exists which constitutes or,
after notice or lapse of time or both, would constitute a breach or default
under any such Governmental Permit or which permits after notice or lapse of
time or both, would permit revocation or termination of any such Governmental
Permit, or which might adversely affect in any material respect the rights of
the Company under any such Governmental Permits. No notice of cancellation, of
default or of any dispute concerning any Governmental Permit, or of any events,
condition or state of facts described in the preceding sentence, has been
received by, or is known to, the Company. Each Governmental Permit is valid,
subsisting and in full force and effect and will not be rendered invalid or
lose its force and effect as a result of the consummation of the transactions
contemplated hereby, in each case without (x) the occurrence of any breach ,
default or forfeiture of rights thereunder, or (y) the consent, approval or act
of, or the making of any filing with, any governmental body.
(l) Subsequent to the respective dates as of which
information is given in the Company's most recent quarterly report filed on
Form 10-Q with the SEC, there has been no material and adverse change in the
condition (financial or otherwise) in the business, prospects, net worth or
results of operations of the Company except as announced by the Company in its
press release on February 26, 2002 and as evidenced by the Company's need to
undertake the transactions contemplated by this Agreement.
(m) The Company has filed all forms, reports and
documents required to be filed by it with the SEC, and has made available to
the Purchaser all registration statements (on all forms applicable to the
registration of securities), periodic reports and other documents filed by the
Company with the SEC, including all exhibits filed in connection therewith, and
prior to the date of this Agreement. As of their respective dates, such
filings (i) complied in all material respects with the requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934, and (ii) did
not contain any untrue statement of a material fact to omit to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
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(n) To the Company's knowledge, neither the Company
nor any of their respective directors, officers or controlling persons has,
with respect to the Company (i) taken, failed to take or will take, directly or
indirectly, any action resulting in a violation of Rule l0b-5 under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or designated to
cause or result under the Act or otherwise, in, or which has constituted or
which reasonably might be expected to constitute a device, scheme of artifice
designed to defraud any person, in connection with the purchase or sale of the
Company's securities (including, but not limited to, the Securities); (ii) made
any untrue statement of material fact or failed to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made not misleading; or (iii) engaged in any act,
practice, or course of business which operates or would operate as a fraud or
deceit upon any person, in connection with the purchase or sale of a security
(including, but not limited to, the Shares, Warrants or Warrant Shares).
(o) The Company shall use its best efforts to close
the Taibbi Ltd. financing or otherwise raise financing of at least $3 million
within 75 days (the "Taibbi Financing").
(p) The proceeds from Purchaser's loan will not be
used to satisfy any antecedent debt.
(q) The Company is eligible to register the Conversion
Shares, Warrants Shares and Purchase Shares on a Form S-3.
(r) The Company shall promptly file the executed
Intellectual Property Security Agreement with the appropriate office and
provide proof of filing to Purchaser.
ARTICLE III
Section 3.1. Purchaser Representations, Warranties and
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Covenants. The Purchaser hereby acknowledges, represents and warrants to, and
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agrees with, the Company and its affiliates as follows:
(a) The Purchaser is acquiring the Note and Warrants
for the Purchaser's own account as principal, not as a nominee or agent, for
investment purposes only, and not with a view to, or for, resale, distribution
or fractionalization thereof in whole or in part, which resale, distribution or
fractionalization would violate the Securities Act. Further, the Purchaser does
not have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to the Note or Warrants.
(b) The Purchaser has full power and authority to
enter into this Agreement. The execution and delivery of this Agreement has
been duly authorized by the Purchaser and this Agreement constitutes a valid
and legally binding obligation of the Purchaser.
(c) The Purchaser acknowledges the Purchaser's
understanding that the issuance of the Note and Warrants is intended to be
exempt from registration under the Securities Act by virtue of Section 4(2)
thereof and the provisions of Regulation D promulgated
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thereunder ("Regulation D"). In furtherance thereof, the Purchaser represents
and warrants to and agrees with the Company that the Purchaser has the
financial ability to bear the economic risk of the Purchaser's investment, has
adequate means for providing for the Purchaser's current needs and personal
contingencies and has no need for liquidity with respect to the Purchaser's
investment in the Company.
(d) The Purchaser is an "accredited investor," as that
term is defined in Rule 501 of Regulation D as described in Appendix1 hereto.
(e) The Purchaser acknowledges that it currently has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of this investment and further
acknowledges that it is able to bear the economic risk of this investment.
During the course of this transaction, the Purchaser acknowledges that it has
had the opportunity to ask questions of, and receive answers from, management
of the Company concerning the terms and conditions of this investment and
obtain any additional information of the same kind that is specified in Rule
501 of Regulation D of the Securities Act, or that is necessary to verify the
accuracy of the other information obtained. The Purchaser acknowledges that it
has received such information as it deems necessary to enable it to make its
investment decision.
(f) The Purchaser further represents, warrants and
agrees that the Purchaser will not sell or otherwise transfer the Notes or
Warrants, without registration under the Securities Act or an exemption
therefrom, and that the Purchaser fully understands and agrees that the
Purchaser must bear the economic risk of the Purchaser's purchase because,
among other reasons, neither of the Note or Warrants has been registered under
the Securities Act or under the securities laws of any state and, therefore,
none can be resold, pledged, assigned or otherwise disposed of unless they are
subsequently registered under the Securities Act and under the applicable
securities laws of such states or an exemption from such registration is
available. In particular, the Purchaser is aware that the Common Stock
underlying the Warrants is a "restricted security," as such term is defined in
Rule 144 promulgated under the Securities Act ("Rule 144"), and may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The
Purchaser also understands that, except as expressly otherwise provided in the
Note and Warrant Purchase Agreement between the Company and Purchaser dated of
even date hereof (the "Note and Warrant Purchase Agreement"), the Company is
under no obligation to register the Common Stock on the Purchaser's behalf or
to assist the Purchaser in complying with any exemption from registration under
the Securities Act or applicable state securities laws. The Purchaser further
understands that sales or transfers of the Note and Warrants are further
restricted by state securities laws and the provisions of this Agreement.
(g) No representations or warranties have been made to
the Purchaser by the Company, or any officer, employee, agent or affiliate of
the Company, other than the representations and warranties of the Company
contained herein, and in purchasing the Note and Warrants, the Purchaser is not
relying upon any representations other than those contained herein.
(h) Any information which the Purchaser has heretofore
furnished to the Company in writing with respect to the Purchaser's financial
position and business
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experience is correct and complete in all material respects as of the date of
this Agreement and if there should be any material change in such information
the Purchaser will immediately furnish such revised or corrected information to
the Company.
(i) The Purchaser understands and agrees that, at
issuance, Common Stock issued upon exercise of the Warrants shall bear the
following legend, or a similar legend to the same effect, until (i) such Common
Stock shall have been registered under the Securities Act and effectively been
disposed of in accordance with a registration statement that has been declared
effective; or (ii) in the opinion of counsel for the Company such Common Stock
be may sold without registration under the Securities Act or any applicable
"Blue Sky" or state securities laws:
"THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND IS SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THE COMMON
STOCK REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE
EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE
EFFECTUATED WITHOUT REGISTRATION UNDER THE ACT."
ARTICLE IV
Section 4.1. Indemnification of the Company. The Purchaser
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agrees to indemnify and hold harmless the Company, its officers and directors,
employees, agents and affiliates and each other person, if any, who controls
any thereof within the meaning of Section 15 of the Securities Act or Section
20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), against any
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty made in writing or breach or failure by the
Purchaser to comply with any covenant or agreement made by the Purchaser herein
or in any other document furnished by the Purchaser to any of the foregoing in
connection with this transaction.
Section 4.2. Indemnification of Purchaser. The Company agrees
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to indemnify and hold harmless the Purchaser against any loss, liability,
claim, damage and expense whatsoever (including, but not limited to, any and
all expenses (including reasonable attorneys' fees) whatsoever reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the Company to
comply with any covenant or agreement made by the Company herein or in any
other document furnished by the Company to any of the foregoing in connection
with the transaction contemplated by this Agreement.
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Section 4.3. Modification. Neither this Agreement nor any
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provisions hereof shall be modified, discharged or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.
Section 4.4. Notices. All notices, authorizations, demands or
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requests required or permitted to be delivered to any party in connection with
this Agreement shall be in writing and shall be deemed to have been duly given
if personally delivered, if sent by facsimile transmission (with receipt
confirmed by automatic transmission report), if sent by a nationally-recognized
overnight courier with charges prepaid, if sent by registered or certified
mail, return receipt requested and postage prepaid (or by the most nearly
comparable method if mailed from or to a location outside the United States),
or addressed as follows:
If to the Company, to:
0000 Xxxxxxx Xxxxxxx
Xxxxxx Xxxx, XX 00000
Attn: X. Xxxxxxx Stoughton
Fax: 000-000-0000
With copies (which copies shall not constitute
notice) to:
Xxxxxx Xxxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esquire
Fax: 000-000-0000
If to the Purchaser, to:
Crestview Capital Fund, L.P.
00 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxx
Tel: 000-000-0000
Fax:
With copies (which copies shall not constitute
notice) to:
Xxxxx Xxxxx, Esq.
Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
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or to such other address as the party to whom the notice is to be given may have
furnished to the other party hereto in writing in accordance with the provisions
of this Section 4.4. Any such notice or communication shall be deemed to have
been received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of facsimile transmission (with receipt confirmed by
automatic transmission report), on the date of such transmission, (iii) in the
case of a nationally-recognized overnight courier, on the next business day
after the date when delivered to such courier, and (iv) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted.
Section 4.5. Counterparts. This Agreement may be executed
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through the use of separate signature pages or in any number of counterparts
(and by facsimile signature), and each of such counterparts shall, for all
purposes, constitute one agreement binding on all parties, notwithstanding that
all parties are not signatories to the same counterpart.
Section 4.6. Binding Effect. Except as otherwise provided
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herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors, legal
representatives and assigns.
Section 4.7. Severability. In the event that any provision
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of this Agreement shall be deemed to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 4.8. Entire Agreement. This Agreement and the
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documents referenced herein contain the entire agreement of the parties and
there are no representations, covenants or other agreements except as stated or
referred to herein and therein.
Section 4.9. Assignability. This Agreement is not
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transferable or assignable by either party except that Purchaser may transfer
and assign is rights and obligations under this Agreement to Crestview Capital
Fund II, L.P., Crestview Capital Offshore, Inc. and to the owners of Purchaser
and their assignees.
Section 4.10. Applicable Law. This Agreement shall be
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governed by and construed in accordance with the laws of the State of Illinois,
without giving effect to conflicts of law principles.
Section 4.11. Consent to Jurisdiction/Dispute Resolution. The
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parties hereto hereby irrevocably submit to the exclusive jurisdiction of any
federal or state court located within the State of Illinois over any dispute
arising out of or relating to this Agreement or any of the transactions
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto may be
heard and determined in such courts. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may
now or hereafter have to the laying of venue of any such dispute brought in
such court or any defense of inconvenient forum for the maintenance of such
dispute. Each of the parties hereto agrees that a judgment in any such dispute
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
Section 4.12. Waiver of Trial by Jury. The Purchaser and the
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Company each hereby waive trial by jury in any action or proceeding involving
any matter (whether sounding in
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tort, contract, fraud or otherwise) in any way arising out of or relating to
this Agreement, the Note or the Warrants.
Section 4.13. Survival. The respective indemnities,
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representations, warranties and agreements of the Company and the Purchaser
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall remain in full force and effect regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them for a period of two years from the date hereof.
Section 4.14. Expenses. Each party shall bear its respective
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expenses incurred in connection with the transactions contemplated hereby,
except that the Company shall pay legal fees incurred by Purchaser in
connection herewith in an amount up to Six Thousand Dollars ($6,000). Due to
the $10,000 fee payable under the Note and legal fees under this Section 4.14,
the Company understands that Purchaser will wire transfer $340,000, less legal
fees up to $6,000, on the closing date to the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
PURCHASER:
CRESTVIEW CAPITAL FUND, L.P.
By: ___________________________
Name:
Title:
COMPANY:
CARESIDE, INC.
By: /s/ X. Xxxxxxx Stoughton
Name: X. Xxxxxxx Stougton
Title: Chief Executive Officer
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Appendix 1
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Pursuant to Rule 501 of Regulation D promulgated under the
Securities Act, an accredited investor means:
(a) A bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered pursuant to
Section 15 of the Exchange Act; any insurance company as defined in Section
2(13) of the Securities Act, any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees if such plan
has total assets in excess of $5,000,000; any employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 if the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of
such act, which is either a bank, savings and loan association, insurance
company, or registered investment advisor, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decision made solely by persons that are accredited investors;
(b) Any private business development company as
defined in Section 202 (a)(22) of the Investment Advisers Act of 1940;
(c) Any organization described in Section 501(c)(3) of
the Internal Revenue Code (the "Code"), corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of $5,000,000;
(d) Any director or executive officer of the Company;
(e) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of such person's
purchase exceeds $1,000,000;
(f) Any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and who
reasonably expects to reach the same income level in the current year;
(g) Any trust, with assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a person having such knowledge and experience in
financial and business matters so such person is capable of evaluating the
merits and risks of the investment to be made; or
(h) Any entity in which all of the equity owners are
accredited investors.
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In addition, a participant in a defined contribution or profit
sharing plan qualified under Section 401 of the Code may be deemed the purchaser
of the Common Stock for the purpose of determining whether the plan is an
accredited investor if the following conditions are satisfied: (x) the plan
trust must provide for segregated accounts for each plan participant, (y) the
plan document must provide the participant with the power to direct the trustee
to make each particular investment to the extent of the participant's voluntary
contributions plus that portion of employer contributions that have vested to
the participant's benefit and (z) the investment in the Common Stock must have
been made pursuant to an exercise by the participant of the power to direct the
investment of his or her account in the plan trust.
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EXHIBIT A
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND NEITHER MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THIS NOTE IS SUBJECT TO THE TERMS AND PROVISIONS OF A NOTE AND WARRANT PURCHASE
AGREEMENT, DATED AS OF FEBRUARY 28, 2002, BY AND BETWEEN CARESIDE, INC. AND
CRESTVIEW CAPITAL FUND, L.P., AS SUCH AGREEMENT MAY BE SUPPLEMENTED, MODIFIED,
AMENDED, OR RESTATED FROM TIME TO TIME (THE "NOTE AND WARRANT AGREEMENT").
COPIES OF SUCH NOTE AND WARRANT AGREEMENT ARE AVAILABLE AT THE EXECUTIVE OFFICES
OF THE COMPANY.
CONVERTIBLE SECURED NOTE
$350,000 February 28, 2002
FOR VALUE RECEIVED, CARESIDE, INC., a Delaware corporation
with offices at 0000 Xxxxxxx Xxxxxxx, Xxxxxx Xxxx, Xxxxxxxxxx 00000 (the
"Company") promises to pay to the order of Crestview Capital Fund, L.P., a
Delaware limited partnership, (the "Holder"), or to such other person or at such
other place as the Holder may designate from time to time in writing, the
outstanding amount of Three Hundred Fifty Thousand Dollars ($350,000) in lawful
money of the United States of America. This Convertible Secured Note (this
"Note") is issued pursuant to a Note and Warrant Purchase Agreement dated the
date hereof (the "Purchase Agreement"). All capitalized terms used herein but
not otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement.
1. Maturity. The amount outstanding under this Note will be
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due and payable on the earlier of (i) the 75th day after the date hereof (the
"Maturity Date") or (ii) the closing of the Company's financing with Taibbi
Ltd. or its affiliates (or other financing in the amount of at least Three
Million Dollars ($3,000,000) (either being a "Substantial Financing"). The
Company may prepay this Note at any time without penalty or premium.
2. Optional Conversion. Up to One Hundred Fifty Thousand
-------------------
Dollars ($150,000) of the principal of this Note shall be convertible at the
option of the Holder, at any time prior to the Maturity Date, into a number of
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"), equal to the principal being converted divided by the Conversion
Price. The "Conversion Price" shall be $.30; provided that such price shall be
adjusted as and to the same extent as the exercise price of the Warrants is
adjusted prior to the date of conversion of the shares.
In order to exercise the conversion privilege, Holder shall
surrender this Note and give written notice to the Company of its election so to
convert this Note. Within five (5) business days after such notice is given, the
Company shall issue (or cause its transfer agent to
issue), and deliver to Holder (i) a certificate or certificates for the number
of full shares issuable upon the conversion of this Note registered in the name
of Holder in accordance with the provisions of this Section 3 and (ii) a new
note, containing the same terms as this Note, for the portion of this Note that
is not converted.
Each conversion shall be deemed to have been effected on the
date on which the conversion notice shall have been given, as aforesaid; and
Holder shall be deemed to have become on said date the holder of record of the
shares of Common Stock issuable upon such conversion.
No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of this Note. If any
fractional share of Common Stock would be issuable upon the conversion of this
Note, the Company shall make an adjustment therefor in cash at the conversion
price.
3. Security. As security for the repayment of all liabilities
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arising under this Note (including amounts payable under Section 8 of this Note
and amounts payable under Section 2.5 of the Warrant Agreement), the Company
hereby grants to Holder a security interest in and lien on all of its assets,
including without limitation its patents and trademarks, and all accessions,
additions, attachments, substitutions, proceeds, profits and products thereof,
whether now or hereafter existing. Holder shall have all rights provided to a
secured party under the Intellectual Property Security Agreement executed by
the Company in favor of the Holder and dated the date hereof, and under the
Uniform Commercial Code of the State of Illinois. The Company shall execute and
deliver such documentation as Holder may reasonably request to evidence and
perfect Holder's security interest granted in this Section 3.
4. Events of Default. The occurrence of one or more of the
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following events (after the expiration of any stated notice or cure period)
shall constitute an event of default ("Event of Default") hereunder and shall
result in the holder being deemed to have made a demand for payment:
a. The Company shall fail to make any payment due to
the Holder under this Note within ten (10) days after the same shall become due
and payable;
b. If the Company becomes insolvent, bankrupt or
generally fails to pay its debts as such debts become due; is adjudicated
insolvent or bankrupt; admits in writing its inability to pay its debts; or
shall suffer a custodian, receiver or trustee for it or substantially all of
its property to be appointed and if appointed without its consent, not be
discharged within thirty (30) days; makes an assignment for the benefit of
creditors; or suffers proceedings under any law related to bankruptcy,
insolvency, liquidation or the reorganization, readjustment or the release of
debtors to be instituted against it, and if contested by it, not dismissed or
stayed within thirty (30) days; if proceedings under any law related to
bankruptcy, insolvency, liquidation, or the reorganization, readjustment or the
release of debtors is instituted or commenced by the Company; if any order for
relief is entered relating to any of the foregoing proceedings; if the Company
shall call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts; or if the Company shall by any act or failure to act
indicate its consent to, approval of or acquiescence in any of the foregoing;
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c. The Company fails to perform in accordance with any
other terms or conditions in this Note and the Company has failed to cure the
same within thirty (30) days following its receipt of written notice of said
Event of Default hereunder or of a default thereunder;
d. The Company sells or otherwise transfers
substantially all of its assets, discontinues its business, or voluntarily or
involuntarily dissolves; or
e. Breach of any representation, covenant or warranty
in the Purchase Agreement.
5. Remedies. Upon the occurrence of any Event of Default, at
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the option of the Holder, the Holder may execute on the collateral securing
this Note and exercise any and all other rights and remedies at law or in
equity. Nothing herein shall limit the Company's rights in such collateral
prior to any default under this Note. In the event that all or any portion of
the intellectual property included in such collateral may be transferred to
Holder pursuant to a default under this Note, Holder and Company shall enter
into a mutually agreeable license agreement pursuant to which Company shall,
upon payment of a mutually agreeable royalty to Holder, have the right to
continued use of such intellectual property, which use shall be on an exclusive
basis for a period of five (5) years provided such royalty shall be paid by the
Company. In the event the parties are unable to agree as to the amount of such
royalty, then the Company and Holder shall jointly select an independent
appraiser to conduct an evaluation of such intellectual property and determine
a reasonable royalty rate.
6. Remedies Cumulative, etc.
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a. No right or remedy conferred upon or reserved to
the Holder hereunder or now or hereafter existing at law or in equity is
intended to be exclusive of any other right or remedy, and each and every such
right or remedy shall be cumulative and concurrent, and in addition to every
other such right or remedy, and may be pursued singly, concurrently,
successively or otherwise, at the sole discretion of the Holder, and shall not
be exhausted by any one exercise thereof but may be exercised as often as
occasion therefor shall occur.
b. The Company agrees that any action or proceeding
against it to enforce this Note may be commenced in state or federal court in
any county in the State of Delaware.
7. Setoff. The Company shall be permitted to set off any
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obligation owed to the Holder hereunder against any obligations owed by the
Holder to the Company, if any.
8. Costs and Expenses. Following the occurrence of any Event
------------------
of Default, the Company shall pay upon demand all costs and expenses (including
all attorneys' fees and expenses) incurred by the Holder in the exercise of any
of its rights, remedies or powers to enforce this Note.
9. Loan Origination Fee. Upon execution and delivery of this
--------------------
Note, the Company shall pay to Holder a fee equal to Ten Thousand Dollars
($10,000) ("Loan Origination Fee"). Company shall pay Holder an additional Loan
Origination Fee on the 60th day after the
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date of this Note and on the 75th day after the date of this Note, if the Note,
or any part thereof, remains outstanding on such date (other than any amount
for which a conversion notice has been given by Holder) for a total of up to
Thirty Thousand Dollars ($30,000), such amount to be prorated to reflect any
partial payments or partial time periods.
10. Notices. All notices required to be given to any of the
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parties hereunder shall be in writing and shall be deemed to have been
sufficiently given for all purposes when presented personally to such party or
sent by certified or registered mail, return receipt requested, to such party
at its address set forth below:
If to the Company: Careside, Inc.
-----------------
0000 Xxxxxxx Xxxxxxx
Xxxxxx Xxxx, XX 00000
Attn: President and
Chief Executive Officer
Facsimile No.: 000-000-0000
With a copy to: Xxxxxx Xxxxxxxx LLP
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3000 Two Xxxxx Square
00xx & Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
If to the Holder: Crestview Capital Fund, L.P.
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00 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxx 00000
Tel: 000-000-0000
Fax: __________________
With copies to: Xxxxx Xxxxx, Esq.
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Xxxx, Gerber & Xxxxxxxxx
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Such notice shall be deemed to be given when received if
delivered personally or five (5) business days after the date mailed. Any notice
mailed shall be sent by certified or registered mail. Any notice of any change
in such address shall also be given in the manner set forth above. Whenever the
giving of notice is required, the giving of such notice may be waived in writing
by the party entitled to receive such notice.
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11. Severability. In the event that any provision of this
------------
Note is held to be invalid, illegal or unenforceable in any respect or to any
extent, such provision shall nevertheless remain valid, legal and enforceable
in all such other respects and to such extent as may be permissible. Any such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Note, but this Note shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Successors and Assigns. This Note inures to the benefit
----------------------
of the Holder and binds the Company, and its respective successors and assigns,
and the words "Holder" and "The Company" whenever occurring herein shall be
deemed and construed to include such respective successors and assigns.
13. Entire Agreement. This Note embodies the entire
----------------
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersedes all prior agreements,
understandings and inducements, whether express or implied, oral and written.
14. Modification of Agreement. This Note may not be modified,
-------------------------
altered or amended, except by an agreement in writing signed by both the
Company and the Holder.
15. No Presentment, Etc. The Company hereby waives
-------------------
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, Event of Default or
enforcement of this Note.
16. No Waiver. The Holder shall not, by any act, delay,
---------
omission or otherwise, be deemed to have waived any of its rights or remedies
hereunder, unless such waiver shall be in writing and signed by the Holder. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
such right or remedy on any future occasion.
17. Governing Law. This Note shall be governed by and
-------------
construed in accordance with the laws of the State of Illinois. IN WITNESS
WHEREOF, The Company has duly executed this Note this 28th day of February 2002.
CARESIDE, INC.
By:
------------------------
Name:
Title:
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EXHIBIT B
EXECUTION
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CARESIDE, INC.
0000 Xxxxxxx Xxxxxxx
Xxxxxx Xxxx, XX 00000
February 28, 2002
Crestview Capital Fund, L.P.
00 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxx, XX 00000
Re: Warrant Agreement
As consideration for a bridge loan provided by Crestview
Capital Fund, L.P. ("Lender") in the amount Three Hundred Fifty Thousand Dollars
($350,000) to Careside, Inc. (the "Company") pursuant to the Note and Warrant
Purchase Agreement dated as of February 28, 2002 (the "Purchase Agreement"), the
Company has issued to Lender, warrants (the "Warrants") to acquire shares of the
common stock, par value $.01 per share (the "Common Stock") of the Company as
follows, each for an exercise price of $0.30 per share: (i) 35,000 shares of
Common Stock; and (ii) for each thirty (30) days after the date that is thirty
(30) days after the date hereof, in which any portion of the principal or loan
origination fees of the promissory note between the Company and the Lender dated
as of the date hereof (the "Note") remains outstanding, an additional 35,000
shares of Common Stock (the Common Stock issuable upon exercise of such Warrants
being referred to herein as the "Warrant Shares"). This letter agreement (the
"Agreement") sets forth the terms of the Warrants.
ARTICLE I
WARRANT CERTIFICATE
Section 1.1. Form of Warrant Certificate. A Warrant certificate ("Warrant
---------------------------
Certificate") shall be issued to the Lender substantially in the form of Exhibit
A attached hereto, together with the form of the election to purchase (the
"Election to Purchase") and assignment (the "Assignment") to be attached
thereto, and, in addition, may have such letters, numbers or other marks of
identification or designation and such legends, summaries, or endorsements
stamped, printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as, in any particular case, may be required in the opinion of counsel for the
Company, to comply with any law or with any rule or regulation of any regulatory
authority or agency, or to conform to customary usage.
Section 1.2. Exchange and Transfer of Warrant Certificate. The Warrant
--------------------------------------------
Certificates (and any Warrant Shares issued upon exercise of the Warrant) shall
bear such restrictive legend or legends as may be required by the Purchase
Agreement and as may be required by law and shall be transferable only in
accordance with the terms of this Agreement and the Purchase Agreement. The
Company may from time to time note the transfer of any outstanding Warrant
Certificates in a warrant register to be maintained by the Company upon
surrender thereof accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company duly executed by the Lender or subsequent
holder thereof
("Holder") or by the duly appointed legal representative thereof. Upon any
such registration of transfer in accordance with this Section 1.2, a new
Warrant Certificate shall be issued to the transferee(s).
Warrant Certificates may be exchanged at the option of the
Holder(s) thereof, when surrendered to the Company at the address set forth in
Section 4.5 hereof for another Warrant Certificate or Warrant Certificates of
like tenor and representing in the aggregate a like number of Warrant Shares;
provided that the Company shall not be required to issue any Warrant Certificate
representing any fractional Warrant Shares.
Section 1.3. Lost, Stolen, Mutilated or Destroyed Warrant
--------------------------------------------
Certificate. If any Warrant Certificate shall be mutilated, lost, stolen or
-----------
destroyed, the Company shall issue, execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Warrant Certificate, or
in lieu of or in substitution for a lost, stolen or destroyed Warrant
Certificate, a new Warrant Certificate representing an equivalent number of
Warrants. If required by the Company, the Holder of the mutilated, lost, stolen
or destroyed Warrant Certificate must provide indemnity sufficient to protect
the Company from any loss which it may suffer if the Warrant Certificate is
replaced. Any such new Warrant Certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
Section 1.4. Cancellation of Warrant Certificate. Any Warrant
-----------------------------------
Certificate surrendered upon the exercise of Warrants or for exchange or
transfer, or purchased or otherwise acquired by the Company, shall be canceled
and shall not be reissued by the Company; and, except as provided in Section
2.5 hereof in case of the exercise of less than all of the Warrants evidenced
by a Warrant Certificate or in Section 1.2 in an exchange or transfer, no
Warrant Certificate shall be issued hereunder in lieu of such canceled Warrant
Certificate. Any Warrant Certificate so canceled shall be destroyed by the
Company.
ARTICLE II
WARRANT EXERCISE PRICE AND EXERCISE OF WARRANT
Section 2.1. Exercise Price. The Warrant Certificate shall,
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when signed by the Chairman or President or any Vice President of the Company,
entitle the Holder thereof to purchase from the Company, subject to the terms
and conditions of this Agreement, (i) 35,000 shares of Common Stock at $0.30
per share, plus (ii) for each thirty (30) days after the date that is thirty
(30) days after the date hereof in which any portion of the principal or loan
origination fees on the Note remains outstanding, an additional 35,000 shares
of Common Stock at $0.30 per share or such adjusted number of Warrant Shares at
such adjusted purchase price as may be established from time to time pursuant
to the provisions of Article III hereof, payable in full in accordance with
Section 2.3 hereof, at the time of exercise of the Warrant (such price, as
adjusted pursuant to the terms hereof, the "Exercise Price").
Section 2.2. Registration of Warrant and Warrant Shares. The
------------------------------------------
Company shall register the Warrant Shares upon the terms and subject to the
conditions set forth in Exhibit C to the Note and Warrant Purchase Agreement.
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Section 2.3. Procedure for Exercise of Warrant. Warrants may
---------------------------------
be exercised prior to 5:00 p.m. EST on February 28, 2007 (the "Expiration
Date") at the Exercise Price. The Warrants may be exercised by surrendering
Warrant Certificate(s) representing Warrants to be exercised to the Company at
its address set forth in Section 4.5 hereof, together with the Election to
Purchase duly completed and executed, accompanied by payment in full, as set
forth below, to the Company of the Exercise Price for each Warrant Share
purchased on exercise of Warrants. Such Exercise Price shall be paid either
(i) by cash or a certified check or a wire transfer in same day funds in an
amount equal to the Exercise Price multiplied by the number of Warrant Shares
then being purchased; (ii) by surrendering to the Company a number of shares of
Common Stock having a Fair Market Value (defined below) as measured on the date
of exercise equal to the Exercise Price for the number of exercised Warrant
Shares; or (iii) by instructing the Company to reduce the number of shares of
Common Stock eligible to be purchased pursuant to this Warrant by that number
(subject to Section 3.4 with respect to any fractional shares which would be
issued) of shares of Common Stock (herein referred to as the "Cancelled Warrant
Shares") having a Net Value (as defined below) equal to the Exercise Price of
the exercised Warrant Shares. For purposes hereof, the term "Net Value" shall
mean the excess of the Fair Market Value (as measured on the Exercise Date)
over the Exercise Price. In the event the Net Value of the Cancelled Warrant
Shares exceeds the Exercise Price of the Exercised Shares by reason of the Net
Value of a fractional share, the Company shall pay the Holder such excess
amount in cash. For purposes hereof, Fair Market Value of a specified security
as of any date, (i) means the average of the closing bid prices for the shares
of the specified security as reported by the National Association of Securities
Dealers Automated Quotation National Market ("NNM") for the five (5) trading
days immediately preceding such date, or (ii) if the NNM is not the principal
trading market for the specified security, the average of the last reported
sale prices on the principal trading market for the specified security during
the same period, or (iii) if market value cannot be calculated as of such date
on any of the foregoing bases, the Fair Market Value shall be the average fair
market value as reasonably determined by a nationally recognized investment
banking firm selected by the Company and reasonably acceptable to the Holder,
with the costs of the appraisal to be borne by the Company. As used herein, the
term "Exercise Date" with respect to any Warrant means the date on which such
Warrant is exercised as provided herein.
Section 2.4. Issuance of Common Stock. As soon as practicable
------------------------
after the Exercise Date of any Warrant, the Company shall issue, or cause its
transfer agent to issue, a certificate or certificates for the number of full
Warrant Shares, registered in accordance with the instructions set forth in the
Election to Purchase, together with cash for fractional shares as provided in
Section 3.4. All Warrant Shares issued upon the xercise of any Warrant shall
be validly authorized and issued, fully paid, non-assessable, free of
preemptive rights and (subject to Section 4.1 hereof) free from all taxes,
liens, charges and security interests in respect of the issuance thereof. Each
person in whose name any such certificate for Warrant Shares is issued shall be
deemed for all purposes to have become the holder of record of the Common Stock
represented thereby on the Exercise Date of the Warrant resulting in the
issuance of such shares, irrespective of the date of issuance or delivery of
such certificate for Warrant Shares.
Section 2.5. Put Right. The Lender is entitled to sell this
---------
Warrant Agreement and the Warrant Certificates to the Company as set forth in
this Section 2.5 to the extent this Warrant has not been previously exercised.
In the event of a default in the payment of the Note in accordance with its
terms (a "Payment Default"), within sixty (60) days after such Payment
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Default, the Lender may require the Company to purchase, and in such event the
Company shall purchase, all of Lender's rights in and to this Warrant Agreement
and the Warrant Certificates owned by it (the "Put Right") at a price of Three
and 33/100 Dollars ($3.33) with respect to each unexercised Warrant Share up to
an aggregate price of Three Hundred Fifty Thousand Dollars (the "Put Price").
The Company shall take all necessary actions to pay the Put Price on the Put
Date (as defined below), subject to the provisions of the Delaware General
Corporation Laws amended ("DGCL") applicable to the repurchase of its
securities. If there shall be a legal impediment imposed by the DGCL or any
other applicable law to the Company's repurchase of the Warrant pursuant to
this Section 2.5, the Company shall use its best efforts to remove or remedy
such impediment and pay the Put Price as soon as possible.
(b) Notice of any Put Right shall be sent to the
Company by or on behalf of the Lender exercising such right not less than five
(5) nor more than thirty (30) days prior to the date specified for sale in such
notice (the "Put Date"), by U.S. express mail or overnight courier guaranteeing
next business day delivery, postage or charges prepaid. Such notice shall
state: (i) the Put Date and (ii) the date and the place for the closing of the
Put Right as set forth herein.
(c) Lender's rights under this Section 2.5 shall be
secured in the manner described in Section 3 of the Note.
Section 2.6. Certificates for Unexercised Warrant. In the
------------------------------------
event that, prior to the Expiration Date, a Warrant Certificate is exercised in
respect of fewer than all of the Warrant Shares issuable on such exercise, a
new Warrant Certificate representing the remaining Warrant Shares shall be
issued and delivered pursuant to the provisions hereof; provided that the
Company shall not be required to issue any Warrant Certificate representing any
fractional Warrant Shares.
Section 2.7. Reservation of Shares. The Company shall at all
---------------------
times reserve and keep available, free from preemptive rights, for issuance
upon the exercise of Warrants, the maximum number of its authorized but
unissued shares of Common Stock which may then be issuable upon the exercise in
full of all outstanding Warrants, the initial such reservation being 115,000
shares.
Section 2.8. No Impairment. The Company shall 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 the
Warrants 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 Holders against impairment. Without
limiting the generality of the foregoing, the Company will (a) not increase the
par value of any Warrant Shares receivable upon the exercise of the Warrant
above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable Warrant Shares upon the exercise of any Warrant, and (c) use
all commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be
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necessary to enable the Company to perform its obligations under the Warrants.
Notwithstanding the foregoing paragraph, the Company shall not be required to
issue Warrant Shares upon the exercise of any Warrant if such issuance would
result in a violation by the Company of any applicable law.
ARTICLE III
ADJUSTMENTS AND NOTICE PROVISIONS
Section 3.1. Adjustment of Exercise Price. The Exercise Price
----------------------------
and number of Warrant Shares issuable upon exercise of Warrants are subject to
adjustment from time to time as set forth in this Section 3.1. Upon each such
adjustment of the Exercise Price pursuant to this Section 3.1 (other than
pursuant to Section 3.1(a)), each Holder of Warrant Certificates shall
thereafter and prior to the Expiration Date be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of Warrant Shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares issuable upon exercise of such
Warrant Certificates immediately prior to such adjustment and dividing the
product thereof by the Exercise Price resulting from such adjustment.
(a) If at any time after the date hereof, the Company
issues any shares of Common Stock or other securities of the Company
convertible into or exchangeable for shares of Common Stock (other than
Excluded Stock, as hereinafter defined) without consideration or for a
consideration per share less than the Exercise Price in effect immediately
prior to the issuance of such Common Stock or other securities (as the case may
be), the Exercise Price will be reduced upon such issuance to a price equal to
the consideration (on a Common Stock equivalent basis) paid for such shares of
Common Stock or other securities (as the case may be) but the number of Warrant
Shares purchasable hereunder shall not be increased; provided, however, that in
the case of the issuance of Common Stock for consideration in whole or in part
other than cash, the non-cash consideration shall be deemed to be the fair
market value thereof (as determined in good faith by the Company's Board of
Directors), irrespective of any accounting treatment. For purposes hereof,
"Excluded Stock" shall mean any shares of Common Stock or options or other
rights convertible or exercisable for Common Stock issued by the Company: (i)
under the circumstances contemplated by Section 3.1(b) or 3.1(c) hereof, (ii)
to employees, officers, directors, consultants, customers and vendors to the
Company pursuant to any arrangement approved by the Board of Directors of the
Company, (iii) upon exercise of any warrants to purchase securities of the
Company issued and outstanding as of the date hereof, (iv) pursuant to the
acquisition of another business entity by the Company by merger, purchase of
substantially all of the assets or shares, or other reorganization whereby the
Company or its stockholders owns not less than a majority of the voting power
of the surviving or successor Company, and (v) to any bank or affiliate
thereof, equipment lessor, real property lessor, collaborative partner,
business counterpart, licensor, vendor or other similar entity in a transaction
not primarily for capital-raising purposes, and (vi) to any Strategic Investor.
For purposes hereof, a "Strategic Investor" shall mean any person (including
any natural person, company, limited partnership, general partnership, joint
stock company, joint venture, association, trust, bank trust company, land
trust, business trust, or other organization, whether or not a legal entity,
and any government or agency or political subdivision thereof) who has
significant operations in the Company's industry and is making an investment in
the Company's
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securities for strategic, rather than exclusively financial, purposes.
Notwithstanding anything to the contrary contained herein, the term "Excluded
Stock" shall not include stock or other securities issued in the Taibbi
Financing (as defined in the Purchase Agreement).
(b) If the Company, at any time while Warrants are
outstanding, (i) shall pay a stock dividend (except dividends paid on preferred
stock issuable upon conversion of outstanding debt securities as of the date
hereof which contain a stated dividend rate) or otherwise make a distribution
or distributions on shares of its Common Stock or on any other class of capital
stock and not the Common Stock) payable in shares of Common Stock, (ii)
subdivide or reclassify outstanding shares of Common Stock into a larger number
of shares, or (iii) combine or reclassify outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price in effect immediately prior
thereto shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding before such event and the
denominator shall be the number of shares of Common Stock outstanding after
such event and the number of Warrant Shares shall be adjusted to be such number
of shares of Common Stock as the Holder would own by reason of exercising this
Warrant if such exercise had occurred immediately prior to such event. Any
adjustments made pursuant to this Section 3.1 shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective
immediately after the effective date of a subdivision or combination, and shall
apply to successive subdivisions and combinations.
(c) In case of any reclassification of the Common
Stock, any consolidation or merger of the Company with or into another person,
the sale or transfer of all or substantially all of the assets of the Company
or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, then the Holder shall have
the right thereafter to exercise Warrants only into the shares of stock and
other securities and property receivable upon or deemed to be held by holders
of Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount thereof that
would have been paid or distributed in respect of the Warrant Shares such
Holder would have received had such Holder exercised the Warrants immediately
prior to such reclassification, consolidation, merger, sale, transfer or share
exchange. The terms of any such consolidation, merger, sale, transfer or share
exchange shall include such terms so as to continue to give to the Holder the
right to receive the securities or property set forth in this Section 3.1 upon
any exercise following any such reclassification, consolidation, merger, sale,
transfer or share exchange.
(d) For the purposes of this Section 3.1, the
following clauses shall also be applicable:
(i) Record Date. In case the Company shall take a
-----------
record of the holders of its Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in Common Stock or in
securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or
exchangeable into shares of Common Stock, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed to
-6-
have been issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(ii) Treasury Shares. The number of shares of
---------------
Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock.
(e) All calculations under this Section 3.1 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
(f) If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock of the Company, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
-7-
Section 3.2. Certificate of Adjustments. Whenever any
--------------------------
adjustment is to be made pursuant to this Article III, the Company shall
prepare a certificate executed by the Chief Financial Officer of the Company,
setting forth such adjustments to be mailed to each Holder at least fifteen
(15) days prior thereto, such notice to include in reasonable detail (a) the
events precipitating the adjustment, (b) the computation of any adjustments,
and (c) the Exercise Price and the number of shares or the securities or other
property purchasable upon exercise of each Warrant after giving effect to such
adjustment.
Section 3.3. Warrant Certificate Amendments. Irrespective of
------------------------------
any adjustments pursuant to this Article III, Warrant Certificates theretofore
or thereafter issued need not be amended or replaced, but certificates
thereafter issued shall bear an appropriate legend or other notice of any
adjustments; provided the Company may, at its option, issue new Warrant
Certificates evidencing Warrants in such form as may be approved by its Board
of Directors to reflect any adjustment in the Exercise Price and number of
Warrant Shares purchasable under the Warrants.
Section 3.4. Fractional Shares. The Company shall not be
-----------------
required upon the exercise of any Warrant to issue fractional Warrant Shares
which may result from adjustments in accordance with this Article III to the
Exercise Price or number of Warrant Shares purchasable under each Warrant. If
more than one Warrant is exercised at one time by the same Holder, the number
of full Warrant Shares which shall be issuable upon the exercise thereof shall
be computed based on the aggregate number of Warrant Shares purchasable upon
exercise of such Warrants. With respect to any final fraction of a share
called for upon the exercise of any Warrants by a single Holder, the Company
shall pay an amount in cash to the Holder of the Warrants in respect of such
final fraction in an amount equal to the fair market value of a share of Common
Stock as of the Exercise Date of such Warrants, multiplied by such fraction.
All calculations under this Section 3.4 shall be made to the nearest hundredth
of a share.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Payment of Taxes and Charges. The Company will
----------------------------
pay all taxes (other than income taxes) and other government charges in
connection with the issuance or delivery of Warrants and the initial issuance
or delivery of Warrant Shares upon the exercise of any Warrant and payment of
the Exercise Price. The Company shall not, however, be required to pay any
additional transfer taxes in connection with the subsequent transfer of
Warrants or any transfer involved in the issuance and delivery of Warrant
Shares in a name other than the name in which the Warrant to which such
issuance relates was registered, and, if any such tax would otherwise be
payable by the Company, no such issuance or delivery shall be made unless and
until the person requesting such issuance has paid to the Company the amount of
any such tax, or it is established to the reasonable satisfaction of the
Company that any such tax has been paid.
Section 4.2. Changes to Agreement. The Company, when
--------------------
authorized by its Board of Directors, with the written consent of Crestview
Capital Fund, L.P. may amend or supplement this Agreement. The Company may,
without the consent or concurrence of any Holder, by supplemental agreement or
otherwise, make any changes or corrections in this Agreement that the Company
shall have been advised by counsel (a) add to the covenants and
-8-
agreements of the Company in this Agreement such further covenants and
agreements thereafter to be observed or (b) result in the surrender of any
right or power reserved to or conferred upon the Company in this Agreement, in
each case which changes or corrections do not and will not adversely affect,
alter or change the rights, privileges or immunities of the Holders.
Section 4.3. Assignment. All the covenants and provisions
----------
of this Agreement by or for the benefit of the Company or the Holders shall
bind and inure to the benefit of their respective successors and assigns.
Section 4.4. Successor to Company. In the event that the
--------------------
Company merges or consolidates with or into any other corporation or sells or
otherwise transfers its property, assets and business substantially as an
entirety to a successor corporation, the Company shall use best efforts to have
such successor corporation assume each and every covenant and condition of this
Agreement to be performed and observed by the Company. In the event that such
successor to the Company does not assume this Agreement, the Company shall give
each Holder of a Warrant Certificate at least fifteen (15) days notice of the
closing of the merger or consolidation and a brief statement of the intended
treatment of the Warrants in the subject transaction.
Section 4.5. Notices. Any notice or demand required by this
-------
Agreement to be given or made by any Holder to or on the Company shall be
sufficiently given or made if sent by first-class or registered mail, postage
prepaid, addressed as follows:
Careside, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Chief Executive Officer
Fax: 000-000-0000
With a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
Eighteenth and Arch Streets
Philadelphia, PA 19103
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
Any notice or demand required by this Agreement to be given or made by the
Company to or on any Holder shall be sufficiently given or made if sent by
first-class or registered mail, postage prepaid, addressed to such Holder and
sent to the following address:
-0-
Xxxxxxxxx Capital Fund, L.P.
00 Xxxxxx Xxxxx
Xxxxx X
Xxxxxxxxx, XX 00000
Attn:_________________
Fax: 000-000-0000
With a copy to:
Xxxx, Xxxxxx & Xxxxxxxxx
0 X. XxXxxxx - Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Fax: 000-000-0000
Any notice or demand required by this Agreement to be given or made by the
Company to or on any Holder shall be sufficiently given or made, whether or not
such holder receives the notice, five (5) days after mailing, if sent by
first-class or registered mail, postage prepaid, addressed to such Holder at its
last address as shown on the books of the Company. Otherwise, such notice or
demand shall be deemed given when received by the party entitled thereto.
Section 4.6. Defects in Notice. Failure to file any
-----------------
certificate or notice or to mail any notice, or any defect in any certificate
or notice pursuant to this Agreement shall not affect in any way the rights of
any Holder or the legality or validity of any adjustment made pursuant to
Section 3.1, or any transaction giving rise to any such adjustment, or the
legality or validity of any action taken or to be taken by the Company.
Section 4.7. Governing Law. This Agreement and each Warrant
-------------
Certificate issued hereunder shall be governed by the laws of the State of
Delaware without regard to principles of conflicts of laws thereof.
Section 4.8. Standing. Nothing in this Agreement expressed
--------
and nothing that may be implied from any of the provisions hereof is intended,
or shall be construed, to confer upon, or give to, any person or corporation
other than the Company and the Holders of any right, remedy or claim under or
by reason of this Agreement or of any covenant, condition, stipulation, promise
or agreement contained herein; and all covenants, conditions, stipulations,
promises and agreements contained in this Agreement shall be for the sole and
exclusive benefit of the Company and its successors, and the Holders.
Section 4.9. Headings. The descriptive headings of the
--------
articles and sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
Section 4.10. Availability of the Agreement. The Company
-----------------------------
shall keep copies of this Agreement available for inspection by Holders during
normal business hours. Copies of this Agreement may be obtained upon written
request addressed to the Company at the address set forth in Section 4.5 hereof.
-10-
Section 4.11. Entire Agreement. This Agreement, including the
----------------
Exhibits and Appendixes referred to herein and the other writings specifically
identified herein or contemplated hereby, is complete, reflects the entire
agreement of the parties with respect to its subject matter, and supersedes all
previous written or oral negotiations, commitments and writings.
[signature page follows]
-11-
By acceptance of a Warrant Certificate, the Holder thereof
agrees to be bound by all the terms and conditions of this Agreement as if a
signatory hereto.
Yours truly,
CARESIDE, INC.
By:
------------------------
Name:
Title:
-12-
EXHIBIT C
---------
TERMS OF REGISTRATION OF CONVERSION SHARES AND WARRANT SHARES
-------------------------------------------------------------
1. Registration of the Common Stock.
--------------------------------
a. If shares of Common Stock are issued upon conversion of the
Note or exercise of the Purchase Option, then, subject to paragraph 1(b) below,
within thirty (30) days after conversion of the Note or exercise of the Purchase
Option, whichever occurs first (subject, in the case of any partial conversion
or exercise to waiver of any further such rights, as provided in Section 1.3 of
the Agreement), , the Company will file a registration statement (the
"Registration Statement") on Form S-3 with the SEC registering the Common Stock
issued upon conversion of the Note, or Purchase Option, or issued or issuable
upon exercise of the Warrants, for sale under the Securities Act. The Company
reserves the right to convert such registration to a registration with like
effect on any other form that may be or may become available to the Company with
the Purchaser's consent (not to be unreasonably withheld) and must register such
shares on a different form if Form S-3 is not then currently available. The
Company further reserves the right to include in such registration statement for
registration any shares of its Common Stock which the Company, in its sole
discretion, determines to include therein.
b. If the Company shall furnish to the holders of Common Stock
included in the Registration Statement (each a "Holder", and collectively the
"Holders") a certificate signed by its Chief Executive Officer stating that, in
the good faith judgment of the Company's Board of Directors, it would be
materially detrimental to the Company and its shareholders for the Registration
Statement to be filed by reason of a material activity or pending event or
transaction (such as a material acquisition, joint venture, merger,
consolidation or financing transaction) and it is therefore advisable to defer
the filing of such registration statement, the Company shall have a one-time
right to defer such filing of the Registration Statement for a period of not
more than ninety (90) days after the date upon which the Company would otherwise
have been required to file the Registration Statement pursuant to Section 1(a).
The Company hereby confirms that it is not aware of any event, development, fact
or state of affairs that exists as of the date hereof that constitutes, or that
would reasonably be expected to lead to, a material activity or pending event or
transaction within the meaning of the preceding sentence. If registration is
deferred pursuant to this subsection (b), the Company shall diligently pursue
such course of action as will allow it to resume its registration obligations
hereunder.
c. In the event Purchaser does not elect to purchase shares of
Common Stock pursuant to Section 1.4 of the Agreement or to convert the Note,
the Company shall not have an obligation to file a Registration Statement under
Section 1(a) above within the aforementioned thirty (30) day period. Rather, the
provisions of this subsection (c) shall apply. In such event, the Holder may
request that the Company include the shares underlying the Warrants ("Warrant
Shares") on a Registration Statement in accordance with the following:
-15-
(i) Subject to Section 8 of this Exhibit C, if at any
---------
time the Company proposes to file a Registration Statement,
the Company shall, each such time, promptly give each Holder
written notice of such proposal (a "Piggyback Registration
Notice"). Within 20 days after the Piggyback Registration
Notice is given, Holder shall give notice as to the number of
Warrant Shares, if any, which the Holder requests to be
registered simultaneously with such registration by the
Company ("Piggyback Registration"). The Company shall include
any Warrant Shares in such Registration Statement (or in a
separate Registration Statement concurrently filed) which the
Holder thereof requests to be registered under the Act,
subject to and in accordance with the terms, conditions,
procedures and limitations contained in this Exhibit C.
(ii) Notwithstanding the foregoing, if such
Registration Statement was initiated by the Company to effect
a primary public offering of its securities and, if at any
time after giving written notice of its intention to so
register securities and before the effectiveness of the
Registration Statement, the Company determines for any reason
either not to effect such registration or to delay such
registration, the Company may, at its election, by prior
written notice to the Holder: (i) in the case of a
determination not to effect registration, relieve itself of
its obligation to register the Warrant Shares in connection
with such registration; or (ii) in the case of a determination
to delay registration, delay the registration of such Warrant
Shares for the same period as the delay registration of such
other securities.
d. The Company's obligation to register shares of Common Stock
hereunder is limited to one Registration Statement which becomes effective under
the Securities Act, and, provided that the Company complies with its obligations
under this Agreement, no further registration statements (other than required
amendments or supplements to the original Registration Statement) will be filed
for the benefit of the Holder.
e. The Company shall use its best efforts to obtain
effectiveness of the Registration Statement as soon as practicable and shall
continue to use its best efforts to maintain such effectiveness for the
registration until the date on which the Holder or his permitted transferee or
assignee no longer holds any Warrants or Common Stock acquired upon exercise of
the Purchase Option or Warrants or conversion of the Note. The Registration
Statement filed in connection herewith shall not be deemed to have been effected
unless it has become effective with the SEC.
2. Registration Expenses. Except as provided in Section 7 of
---------------------
this Exhibit C, the Company shall pay all expenses incurred in connection with
the registration of the Common Stock on the Registration Statement.
3. Registration Procedures.
-----------------------
a. In connection with the Company's obligation to register the
Common Stock under the Securities Act as provided in Section 1, the Company, as
expeditiously as possible and subject to the terms and conditions herein, will:
-16-
(i) use best efforts to cause the Registration
Statement filed with the SEC pursuant to Section 1(a) above to
become effective as soon as practicable. In this regard, the
Company will answer SEC comments to the Registration Statement
within fifteen (15) business days for the first set of
comments, eight (8) business days for the second set and five
(5) business days for any subsequent comments;
(ii) prepare and file with the SEC such amendments
and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective and to comply with
the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration
Statement until such time as no Holder or his permitted
transferee or assignee holds any such Common Stock so covered.
(iii) furnish to the Holder such number of conformed
copies of such registration statement and of each such
amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained
in such Registration Statement (including each preliminary
prospectus and any summary prospectus) and any other
prospectus filed under the Securities Act, in conformity with
the requirements of the Securities Act, and such other
documents, in each case, as the Holder may reasonably request;
(iv) use best efforts to register or qualify all
Common Stock covered by such Registration Statement under such
other United States state securities or blue sky laws of such
jurisdictions as any of the Holder shall reasonably request,
to keep such registration or qualification in effect for so
long as such registration remains in effect, and to take any
other action which may be reasonably necessary or advisable to
enable the Holder to consummate the disposition of the Common
Stock owned by the Holder in such jurisdictions;
(v) promptly notify the Holder at any time when a
prospectus relating to the Common Stock is required to be
delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such
Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made, or is otherwise not
usable, and promptly prepare and furnish to the Holder a
reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Common Stock, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they
were made, or use all commercially reasonable efforts to take
such other action as will render such prospectus usable again;
-17-
(vi) comply with all applicable rules and regulations
of the SEC, and not file (or withdraw or correct) any
amendment or supplement to such Registration Statement or
prospectus to which the Holder shall have reasonably objected
in writing on the grounds that such amendment or supplement
does not comply in all material respects with the requirements
of the Securities Act or of the rules or regulations
thereunder;
(vii) provide a transfer agent and registrar for all
Common Stock covered by such Registration Statement not later
than the effective date of such Registration Statement; and
(viii) promptly list all Common Stock covered by such
Registration Statement on the AMEX or any securities exchange
or automated inter-dealer quotation system on which any of the
Company Common Stock is then listed or traded.
b. The Holder agree that upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(a)(v),
the Holder will forthwith discontinue their disposition of Common Stock pursuant
to the Registration Statement until the Holder receive copies of the
supplemented or amended prospectus contemplated by Section 3(a)(v) and, if so
directed by the Company, will deliver to the Company all copies, other than
permanent file copies, then in the possession of the Holder of the prospectus
relating to such Common Stock current at the time of receipt of such notice and
that they will immediately notify the Company, at any time when a prospectus
relating to the registration of such Common Stock is required to be delivered
under the Securities Act, of the happening of any event as a result of which
information previously furnished by the Holder to the Company for inclusion in
such prospectus contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made.
c. As a condition of the fulfillment of its obligations under
this Agreement, the Company may require the Holder, at its own expense, to
furnish the Company with such information and undertakings regarding such Holder
and the distribution of such securities as the Company may from time to time
reasonably request in writing to the extent necessary in order to cause the
registration statement to comply with the Securities Act, and the Holder shall
provide such information and make such undertakings as are requested.
d. In connection with the preparation and filing of each
registration statement under the Securities Act, the Company will give the
Holder and their respective counsel and accountants, the reasonable opportunity
to participate in the preparation of such Registration Statement, each
prospectus included therein or filed with the SEC and each amendment thereof or
supplement thereto, and will give each of them such reasonable access to its
books and records and such reasonable opportunities to discuss the business of
the Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary to conduct a reasonable
investigation within the meaning of the Securities Act.
-18-
e. Promptly after a sale of Common Stock pursuant to the
Registration Statement (assuming that no stop order is in effect with respect to
the registration statement at the time of such sale), the Company shall
cooperate with the Holder and provide the transfer agent for the Common Stock
with such instructions and legal opinions as may be required in order to
facilitate the issuance to the purchaser (or the Holder's broker) of new
unlegended certificates for such Common Stock.
4. Indemnification; Contribution.
a. To the extent permitted by applicable law, the Company
shall indemnify and hold harmless each Holder, each person, if any, who controls
such Holder within the meaning of the Securities Act, and each officer,
director, partner, and employee of such Holder and such controlling person,
against any and all losses, claims, damages, liabilities and expenses (joint or
several), including reasonable attorneys' fees and disbursements and expenses of
investigation, incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation, or to which any of the foregoing
persons may become subject under the Securities Act, the Exchange Act or any
other federal or state laws, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"):
(i) Any untrue statement or alleged untrue statement
of a material fact contained in such Registration Statement,
including any preliminary prospectus or final prospectus
contained therein, or any amendments or supplements thereto;
(ii) The omission or alleged omission to state
therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; or
(iii) Any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any
applicable state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any
applicable state securities law; provided, however, that the
indemnification required by this Section 4(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or expense if such settlement is effected without
the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or
expense to the extent (and only to the extent) that it arises
out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished to
the Company by the indemnified party expressly for use in
connection with such registration.
b. To the extent permitted by applicable law, each Holder
shall indemnify and hold harmless the Company, each of its directors, each of
its officers who shall have signed the registration statement, each person, if
any, who controls the Company within the meaning of the Securities Act, any
other Holder, any controlling Person of any such other Holder and each officer,
director, partner and employee of such other Holder and such controlling Person,
against any and all losses, claims, damages, liabilities and expenses (joint and
several), including
-19-
reasonable attorneys' fees and disbursements and expenses of investigation,
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation, or to which any of the foregoing Persons may
otherwise become subject under the Securities Act, the Exchange Act or any
other federal or state laws, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; provided,
--------
however, that the indemnification required by this Section 4(b) shall not apply
-------
to amounts paid in settlement of any such loss, claim, damage, liability or
expense if settlement is effected without the consent of the relevant Holder
(which consent shall not be unreasonably withheld); and, provided further that
-------- -------
in no event shall the amount of any indemnity under this Section 4(b) exceed
the gross proceeds from the applicable offering received by such Holder.
c. Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which such indemnified party
may make a claim under this Section 4, such indemnified party shall deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party; provided, however, that an indemnified
party shall have the right to retain its own counsel at its own expense (except
as specifically provided below). The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 4 except, if and to the extent that the
indemnifying party is actually prejudiced thereby, but in no event shall it
relieve the indemnifying party of any liability that it may have to any
indemnified party otherwise than pursuant to this Section 4. Any fees and
expenses incurred by the indemnified party (including any fees and expenses
incurred in connection with investigating or preparing to defend such action or
proceeding) shall be paid to the indemnified party, as incurred, within sixty
(60) days of written notice thereof to the indemnifying party (regardless of
whether it is ultimately determined that an indemnified party is not entitled to
indemnification hereunder, but in such event such amounts shall be immediately
refunded). Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party has agreed to pay
such fees and expenses or (ii) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding or (iii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party, it
being understood, however, that the indemnifying party shall not, in connection
with any one such action, claim or proceeding or separate but substantially
similar or related actions, claims or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than
-20-
one separate firm of attorneys (together with appropriate local counsel) at any
time for all such indemnified parties. No indemnifying party shall be liable to
an indemnified party for any settlement of any action, proceeding or claim
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld.
d. If the indemnification required by this Section 4 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to in this
Section 4:
(i) The indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined
by reference to, among other things, whether any violation has
been committed by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation; provided
however, that in no event shall the obligation of any
indemnifying party to contribute under this clause (i) exceed
the amount that such indemnifying party would have been
obligated to pay by way of indemnification if the
indemnification provided for in Section 4(a) had been
available under the circumstances. The amount paid or payable
by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 4(a)
and (b), any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section
4(d) were determined by pro rata allocation or by any other
method of allocation that does not take into account the
equitable considerations referred to in Section 4(d)(i). 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.
e. The obligations of the Company and the Holder under this
Section 4 shall survive the completion of any offering of Common Stock pursuant
to a registration statement.
5. Rule144; Exchange Act Filings. The Company shall file as
-----------------------------
and when applicable, on a timely basis, all reports required to be filed by it
under the Exchange Act. If, for any reason the Company is not required to file
reports pursuant to the Exchange Act, upon the request of any Holder, the
Company shall make publicly available the information specified in subparagraph
(c)(2) of Rule 144 of the Securities Act, and shall use best efforts to take
such further action as may be required from time to time and as may be within
the control of the
-21-
Company, to enable the Holder to transfer the Common Stock to a transferee
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 under the Securities Act or any similar rule or
regulation hereafter adopted by the SEC. The Company further covenants and
agrees that it will furnish to each Holder so long as such Holder owns Common
Stock promptly upon request, (i) a written statement by the Company as to the
status of its compliance with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company,
and (iii) such other information as may be reasonably requested to permit the
Holder to sell such securities pursuant to Rule 144 without registration.
6. Transfer or Assignment of Registration Rights. The rights
---------------------------------------------
of a Holder provided herein to cause the Company to register the Common Stock
may be transferred or assigned with respect to any Common Stock, Warrant or
Warrant Shares transferred by such Holder to up to three persons who are not
affiliates or owners of such Holder, or to any affiliate of such Holder, or to
any owner of such Holder.
7. Expenses of Registration.
------------------------
a. Except as provided in Section 7(b) and 7(c) of this Exhibit
C, all expenses incurred in connection with a Registration pursuant to this
Agreement, whether or not a registration is consummated, shall be borne by the
Company, including (without limitation) charges, costs, expenses, disbursements,
fees and taxes in connection with (i) the preparation and filing of any
Registration Statement, each preliminary prospectus, the final prospectus, and
any amendments or supplements thereto, (ii) the preparation, issuance and
delivery of the certificates for the Common Stock offered and sold thereunder,
(iii) the qualification of the Common Stock for offering and sale under state
laws (including the legal fees and filing fees and other disbursements of
counsel in connection therewith), (iv) the filing for listing or approval for
quotation of the Common Stock on the American Stock Exchange or on any national
securities exchange (including the legal fees and filing fees and other
disbursements of counsel in connection therewith), (v) the fees and expenses of
any transfer agent or registrar for the Common Stock, (vi) the fees and
disbursements charged by counsel or accountants to the Company, (vii) fees and
disbursements charged by one counsel chosen by the Holder of a majority of the
Common Stock sought to be included in the Registration Statement, in the case a
Piggyback Registration in which the Company or any other holder of contractual
registration rights granted by the Company ("Additional Rights Holders")
initiates such registration. The Company represents and warrants that as of the
date hereof there are no Additional Rights Holders.
b. Each Holder agrees to pay all underwriting discounts and
SECs and the fees and disbursements of any legal counsel retained by it, other
than the legal counsel referred to in clause (vii) of Section 7(a) above.
Additionally, the Company agrees to use its best efforts to cause its transfer
agent (or other designee) to serve as a custodian, to the extent any
underwriters participating in any such registration shall require the
participation of a custodian, for any selling security Holder and, in such
event, the Company shall be responsible for the fees and disbursements of such
person acting in such custodial capacity.
-22-
c. All expenses incurred in connection with a registration
which are, under this Section 7, to be borne by Holder shall be borne pro rata
by the holders included therein on the basis of the number of each holder's
Common Stock included therein (or proposed to be registered, as the case may
be); provided, however, that if any such cost or expense is attributable solely
to one registered holder and does not constitute a normal cost or expense of
such a registration, such cost or expense shall be allocated to and borne by
that registered holder.
8. Underwriting Requirements and Priorities.
----------------------------------------
a. If a registration under Section 1 of this Exhibit C is an
---------
underwritten primary offering initiated by the Company and the managing
underwriters advise the Company that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without materially and adversely affecting the
marketability of the offering, the Company will include in such registration (i)
first, the securities that the Company proposes to sell, (ii) second, before
inclusion of any securities sought to be registered by any other Person, all of
the Common Stock owned by any of the Holders, pro rata among them on the basis
of the number of shares of Common Stock each such Holder has requested to be
registered and (iii) third, the securities that any Additional Rights Holder
obtaining such rights after the date hereof (other than Taibbi, Ltd or its
affiliates in connection with the Taibbi Financing which shall be at least pari
passu with any Holder) proposes to sell, pro rata among them on the basis of the
number of shares of Common Stock such Holder has requested to be registered.
b. No Holder may participate in any underwritten registration
hereunder unless such Holder (i) agrees to sell such Holder's Common Stock on
the basis provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
c. Nothing shall prevent the Company from granting piggyback
or other registration rights to any Person.
-23-
EXHIBIT A
FORM OF
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR "BLUE
SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER
SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER
EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN A WARRANT AGREEMENT DATED AS OF
FEBRUARY 28, 2002, AS AMENDED FROM TIME TO TIME, A COMPLETE AND CORRECT COPY OF
THE FORM OF WHICH WILL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE.
No. _______
Certificate for ______ Warrants
NOT EXERCISABLE AFTER 5:00 P.M.,
NEW YORK TIME, ON FEBRUARY 28, 2007
CARESIDE, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
This Warrant Certificate is issued under and in accordance
with the Warrant Agreement dated as of February 28, 2002 (the "Warrant
Agreement") by and among the Company and the Lender (as defined in the Warrant
Agreement) and is subject to the term and provisions contained in the Warrant
Agreement. All capitalized terms not defined herein shall have the meanings
given such terms as set forth in the Warrant Agreement.
THIS CERTIFIES that Crestview Capital Fund, L.P. or its
registered assigns is the registered holder (the "Registered Holder") of:
Initial Warrant Certificate: (i) 35,000 Warrants plus (ii) an additional 35,000
Warrants for each 30 days after February 28, 2002, in which any portion of the
principal or loan origination fees of the Note (as defined in the Warrant
Agreement) remains outstanding, each of which represents the right to purchase
one (1) fully paid and non-assessable share of common stock, par value $.01 per
share (the "Common Stock"), of Careside, Inc., a Delaware corporation (the
"Company"), at the price and at the times specified in the Warrant Agreement, by
surrendering this Warrant Certificate, with the form of Election to Purchase
attached hereto duly executed and by paying in full the applicable Exercise
Price. Payment of the Exercise Price shall be made as set forth in the Warrant
Agreement (as hereinafter defined). No Warrant may be exercised after 5:00 P.M.,
New York time, February 28, 2007, (the "Expiration Date"). All Warrants
evidenced hereby shall thereafter become void.
Prior to the Expiration Date, subject to any applicable laws,
rules or regulations restricting transferability and to any restriction on
transferability that may appear on this Warrant Certificate and in accordance
with the terms of the Warrant Agreement hereinafter referred to, the Registered
Holder shall be entitled to transfer this Warrant Certificate, in whole or in
part, upon surrender of this Warrant Certificate at the principal office of the
Company with the form of assignment set forth hereon duly executed. Upon any
such transfer, one or more new Warrant Certificates representing the same
aggregate number of Warrants to purchase the shares of the Common Stock will be
issued in accordance with instructions in the form of assignment.
Upon the exercise of less than all of the Warrants to purchase
the shares of the Common Stock evidenced by this Warrant Certificate, there
shall be issued to the Registered Holder one or more new Warrant Certificates in
respect of the Warrants not exercised.
Prior to the Expiration Date, the Registered Holder shall be
entitled to exchange this Warrant Certificate, for one or more other Warrant
Certificates for the same aggregate number of Warrants to purchase the shares of
the Common Stock, upon surrender of this Warrant Certificate at the principal
office of the Company.
Upon certain events provided for in the Warrant Agreement, the
Exercise Price and the number of shares of Common Stock issuable upon the
exercise of each Warrant are required to be adjusted.
No fractional shares will be issued upon the exercise of
Warrants. As to any final fraction of a share of Common Stock which the
Registered Holder of one or more Warrant Certificates, the rights under which
are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company shall pay the cash value
thereof determined as provided in the Warrant Agreement. No Warrant Certificate
representing any fractional Warrant Shares will be issued.
This Warrant Certificate shall not entitle the Registered
Holder to any of the rights of a stockholder of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions, or
to attend or receive any notice of meetings of stockholders or any other
proceedings of the Company, except as set forth in the Warrant Agreement.
By the acceptance of this Warrant Certificate, the Holder
hereof agrees to be bound by all of the terms and conditions of the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its facsimile corporate seal.
CARESIDE, INC.
By:
Name:
Title:
[Form of Assignment]
FOR VALUE RECEIVED, the undersigned hereby irrevocably sells,
assigns and transfers unto the Assignee named below all of the rights of the
undersigned represented by the within Warrant Certificate, with respect to the
number of Warrants to purchase the shares of the Common Stock set forth below,
together with registration rights set forth in Appendix I to the Warrant
Agreement relating to the shares of common stock underlying the below Warrants,
to the terms and conditions of which this Assignee expressly agrees by
Assignee's receipt of such Warrants:
Name of Assignee Address No. of Warrants
---------------- ------- ---------------
The undersigned does hereby irrevocably constitute and appoint
_____________________ true and lawful Attorney, to make such transfer on the
books of Careside, Inc., maintained for that purpose, with full power of
substitution in the premises.
Dated: _________ ____, _____ ____________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
[Form of Election To Purchase]
The undersigned hereby irrevocably elects to exercise
____________ of the Warrants represented by this Warrant Certificate and to
purchase the shares of Common Stock issuable upon the exercise of said Warrants,
and
____ herewith makes payment of $_______ (such payment being
in cash or by check payable to the order of the Company or by wire transfer of
same-day available funds), and/or
____ hereby notifies the Company of its intention to exercise
the Warrant pursuant to the net issuance provisions set forth in Section 2.3 of
this Warrant, and/or
____ hereby notifies the Company of its intention to tender
shares of Common Stock in order to exercise the Warrant; and
requests that certificates for such shares be issued and
delivered as follows:
ISSUE TO:
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER)
DELIVER TO:_____________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
In full payment of the purchase price with respect to the
exercise of Warrants to purchase shares of the Common Stock, the undersigned
hereby tenders payment of $________ by cash, certified check, cashier's check or
money order payable in United States currency to the order of the Company.
[Form of Election To Purchase (cont'd)]
If the number of Warrants to purchase the shares of the Common
Stock hereby exercised is less than all the Warrants represented by this Warrant
Certificate, the undersigned requests that a new Warrant Certificate
representing the number of such full Warrants not exercised be issued and
delivered as follows:
ISSUE TO:
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:
(NAME)
at
(ADDRESS, INCLUDING ZIP CODE)
Date: _________ ____, ______ _________________________________________
Signature(Signature must conform in all
respects to name of holder as specified
on the face of the Warrant Certificate.)
PLEASE INSERT SOCIAL SECURITY OR TAX I.D.
NUMBER OF HOLDER
_________________________________________
