EXHIBIT 10.1
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APPLIED IMAGING CORP.
STOCK AND WARRANT PURCHASE AGREEMENT
May 22, 1997
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TABLE OF CONTENTS
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Page
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1. Purchase and Sale of Stock............................................. 1
1.1 Closing....................................................... 1
1.2 Delivery...................................................... 1
2. Representations and Warranties of the Company.......................... 1
2.1 Organization and Standing........................................ 1
2.2 Capitalization................................................... 2
2.3 Authority........................................................ 2
2.4 Valid Issuance of Common Stock and Warrant....................... 2
2.5 Governmental Consents............................................ 3
2.6 Conflicts........................................................ 3
2.7 SEC Documents; Material Contracts; Financial Statements.......... 3
2.8 Changes.......................................................... 4
2.9 Litigation....................................................... 4
2.10 Solvency; No Default............................................. 4
3. Representations and Warranties of the Investors........................ 4
3.1 Authorization.................................................... 4
3.2 Purchase Entirely for Own Account................................ 4
3.3 Disclosure of Information........................................ 5
3.4 Investment Experience............................................ 5
3.5 Accredited Investor.............................................. 5
3.6 Restricted Securities............................................ 5
3.7 Further Limitations on Disposition............................... 5
3.8 Legends.......................................................... 6
4. Registration Rights.................................................... 6
4.1 Request for Registration......................................... 6
4.2 Obligations of the Company....................................... 7
4.3 Expenses of Registration......................................... 8
4.4 Indemnification.................................................. 9
i.
5. Conditions of Each Investor's Obligations at Closing................... 11
5.1 Representations and Warranties................................... 11
5.2 Performance...................................................... 11
5.3 Qualifications................................................... 11
5.4 Proceedings and Documents........................................ 11
6. Conditions of the Company's Obligations at Closing..................... 11
6.1 Representations and Warranties................................... 11
6.2 Payment of Purchase Price........................................ 11
6.3 Qualifications................................................... 12
7. Miscellaneous.......................................................... 12
7.1 Survival of Warranties........................................... 12
7.2 Assignment; Successors and Assigns............................... 12
7.3 Governing Law.................................................... 12
7.4 Counterparts..................................................... 12
7.5 Titles and Subtitles............................................. 12
7.6 Notices, etc..................................................... 12
7.7 Finder's Fee..................................................... 13
7.8 Expenses......................................................... 13
7.9 Amendments and Waivers........................................... 14
7.10 Severability..................................................... 14
7.11 Entire Agreement................................................. 14
Exhibits and Schedules
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Schedule A - Schedule of Investors
Exhibit A - Form of Warrant
Exhibit B - Opinion of Company Counsel
ii.
STOCK AND WARRANT PURCHASE AGREEMENT
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THIS STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") is made as of
the 22nd day of May, 1997, by and among Applied Imaging Corp., a Delaware
corporation (the "Company"), and the entities listed on Schedule A hereto
("Investors").
1. Purchase and Sale of Stock. Subject to the terms and conditions of this
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Agreement, Investors agree to purchase at the Closing (as hereinafter defined)
and the Company agrees to sell and issue to each of the Investors at the Closing
(i) that number of whole shares of the Company's Common Stock set forth opposite
each Investor's name on Schedule A hereto (collectively, the "Shares"), at a
purchase price of $5.025 (which is the average of the closing prices of the
Company's Common Stock as reported on the Nasdaq National Market System for the
five trading days prior to the day of the Closing) per share (the "Purchase
Price"), and (ii) warrants (the "Warrants") giving the Investors the right for
three years from the Closing Date to purchase at an exercise price per share
equal to 115% of the Purchase Price that number of whole shares of the Company's
Common Stock set forth opposite each Investor's name on Schedule A hereto.
1.1 Closing. The purchase and sale of the Shares and the Warrants (the
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"Closing") shall be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, on May 22, 1997 at 10:00 a.m., or at such
other time and place upon which the Company and Investors shall agree (which
date and time shall be referred to as the "Closing Date").
1.2 Delivery. At the Closing, the Company will deliver the Warrants, and
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within three days of the Closing, the Company will issue to Investors
certificates registered in the Investors' names, representing the number of
Shares purchased by the Investors against payment therefor. Such payment shall
be paid to the Company by check payable to the Company or by wire transfer.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to the Investors that:
2.1 Organization and Standing. The Company is a corporation duly
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organized and validly existing under the laws of the State of Delaware and is in
good standing under such laws. The Company has all requisite corporate power to
own and operate its properties and assets, and to carry on its business as
presently conducted. The Company is qualified to do business as a foreign
corporation in the State of California. Such qualification is not presently
required in any other jurisdiction where a failure to so qualify would have a
material adverse effect on the Company.
2.2 Capitalization. The authorized capital stock of the Company consists
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of 20,000,000 shares of Common Stock and 6,000,000 shares of Preferred Stock.
6,834,949 shares
of Common Stock are issued and outstanding. No shares of Preferred Stock are
issued and outstanding. All such issued and outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable. Options to
purchase 849,500 shares of the Company's Common Stock are outstanding under the
Company's Amended and Restated 1988 Incentive Stock Option Plan and 207,238
shares are available for future grant (not including the additional 350,000
shares for which stockholder consent is being solicited pursuant to the
Company's recent proxy statement for it Annual Meeting to be held on May 27,
1997). No options to purchase shares of the Company's Common Stock are
outstanding under the Company's 1994 Director Option Plan and 120,000 shares are
available for future grant. The Company has reserved 200,000 shares of Common
Stock for issuance under its Employee Stock Purchase Plan. Except as disclosed
in the Company SEC Documents (as defined below), there are no other options,
warrants, conversion privileges, or preemptive or other rights or agreements
presently outstanding to purchase or otherwise acquire any authorized but
unissued shares of the capital stock or other securities of the Company.
2.3 Authority. The Company has full power and authority to execute and
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deliver this Agreement, and to consummate the transactions contemplated by this
Agreement. All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the execution and delivery of, and the
consummation of the transactions contemplated by this Agreement and the
performance of all obligations of the Company under this Agreement has been
taken. This Agreement, upon execution and delivery by the Company and assuming
the due and proper execution and delivery by Investor, constitutes a legal,
valid and binding obligation of the Company, enforceable in accordance with its
respective terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors rights generally, and (ii) the effect of
rules of law governing the availability of equitable remedies.
2.4 Valid Issuance of Common Stock and Warrant. The Common Stock to be
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sold hereby has been duly authorized and, when issued, delivered and paid for in
the manner set forth in this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable, and will be free of restrictions on transfer other
than restrictions on transfer under this Agreement and under applicable state
and federal securities laws. The Warrant to be sold hereby has been duly
authorized and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be duly authorized and validly issued, and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws. No preemptive
rights or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Common Stock and Warrant by the Company pursuant to
this Agreement.
2.5 Governmental Consents. Other than compliance with the Securities Act
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of 1933, as amended (the "Act") and such filings as may be required to be made
with the National Association of Securities Dealers (the "NASD"), no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
2.
governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement.
2.6 Conflicts. The execution and delivery of this Agreement will not
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conflict with or result in a material breach of the terms, conditions or
provisions of, or constitute a material default under, any contract, covenant or
instrument under which the Company is now obligated.
2.7 SEC Documents; Material Contracts; Financial Statements. The Company
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has filed each statement, annual, quarterly and other report, registration
statement and definitive proxy statement ("Company SEC Documents") required to
be filed (other than preliminary material) by the Company with the SEC
subsequent to November 7, 1996 (the date of effectiveness of the Company's
registration statement on Form S-1 for the Company's initial public offering of
its Common Stock). As of their respective filing dates, the Company SEC
Documents complied in all material respects with the requirements of the Act or
the Securities Exchange Act of 1934 (the "1934 Act"), as the case may be, and
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading, except to the extent corrected by any
subsequently filed Company SEC Document. The Company's Registration Statement
on Form S-1, which became effective on November 7, 1996 (the "Registration
Statement"), and the Company SEC Documents, include certain contracts as
required by the SEC's rules and regulations. The contracts so described in the
Registration Statement and in the Company SEC Documents, are currently material
to the Company and its business, and are in full force and effect on the date
hereof. Neither the Company nor any of its subsidiaries, nor to the Company's
knowledge, any other party is in breach of or default under any of such
contracts, except as to breaches or defaults which, in any single case or in the
aggregate would not have a material adverse effect on the Company taken as a
whole.
The financial statements of the Company included in the Company SEC
Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the consolidated financial position of
the Company and any subsidiaries at the dates thereof and the consolidated
results of operations and consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring
adjustments).
2.8 Changes. Since March 31, 1997 (the date of the most recent Financial
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Statements), there has not been any event or condition of any character that
might materially and adversely affect the business, properties, prospects or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted).
3.
2.9 Litigation. There is no pending or threatened lawsuit,
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administrative proceeding, arbitration, labor dispute or governmental
investigation ("Litigation") to which the Company is a party or by which any
material portion of its assets, taken as a whole, may be bound and which
Litigation, if adversely determined, would have a material adverse effect on the
Company's assets, liabilities, financial condition or operations.
2.10 Solvency; No Default. As of the date of this Agreement, the company
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has sufficient funds and cash flow to pay its debts and other liabilities, and
the company is not in default with respect to any material debt or liability.
3. Representations and Warranties of the Investors. Each investor hereby
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represents and warrants that:
3.1 Authorization. Investor has full power and authority to execute and
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deliver, and to consummate the transactions contemplated by the Closing and this
Agreement. All corporate action on the part of Investor, its officers,
directors and stockholders necessary for (i) the execution and delivery of, and
the consummation of the transactions contemplated by, this Agreement, and (ii)
as of the Closing, the performance of all obligations of Investor under this
Agreement, has been taken. This Agreement, upon execution and delivery by
Investor and assuming the due and proper execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Investor, enforceable in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors rights generally, and (ii)
the effect of rules of law governing the availability of equitable remedies.
3.2 Purchase Entirely for Own Account. This Agreement is made with
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Investor in reliance upon Investor's representation to the Company, which by
Investor's execution of this Agreement, Investor hereby confirms, that the
Common Stock, the Warrant, and the shares of Common Stock issuable upon exercise
of the Warrant, to be received by Investor (collectively, the "Securities") will
be acquired for investment for Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Investor further represents that Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
3.3 Disclosure of Information. Investor believes it has received all the
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information it considers necessary or appropriate for deciding whether to
purchase the Common Stock and Warrant. Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Stock and
Warrant and the business, properties, prospects and financial condition of the
Company. The foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the right of
Investor to rely thereon.
4.
3.4 Investment Experience. Investor is an investor in securities of
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companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Common Stock and Warrant. Investor
has not been organized for the purpose of acquiring the Common Stock and
Warrant.
3.5 Accredited Investor. Investor is an "accredited investor" within the
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meaning of SEC Rule 501 of Regulation D, as presently in effect.
3.6 Restricted Securities. Investor understands that the Securities it is
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purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, Investor
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way limiting the
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representations set forth above, Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 provided and to the extent this Section is applicable, and:
(a) There is then in effect a Registration Statement under the Act covering
such proposed disposition and such disposition is made in accordance with such
Registration Statement; or
(b) If reasonably requested by the Company, Investor shall have furnished
the Company with an opinion of counsel, reasonably satisfactory to the Company
that such disposition will not require registration of such shares under the
Act. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
3.8 Legends. Each certificate or instrument representing Shares shall
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bear legends in substantially the following forms:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') AND ARE
'RESTRICTED SECURITIES' AS DEFINED IN RULE 144 PROMULGATED UNDER THE
SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT (I) IN CONJUNCTION WITH AN EFFECTIVE
REGISTRATION STATEMENT FOR
5.
THE SECURITIES UNDER THE SECURITIES ACT, OR (II) IN COMPLIANCE WITH RULE
144, OR (III) PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
OF THESE SECURITIES THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS
TO SUCH SALE, OFFER OR DISTRIBUTION."
(ii) Any other legends required by California law or other applicable
blue sky or state securities laws.
The Company need not register a transfer of any Shares, and may also instruct
its transfer agent not to register a transfer of any Shares, unless the
conditions specified in the foregoing legends are satisfied to the extent
applicable.
4. Registration Rights.
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4.1 Request for Registration.
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(a) If the Company shall receive a written request from each Investor that
the Company file a registration statement under the Act covering the
registration of the Common Stock purchased hereunder or acquired upon exercise
of the Warrants then, provided that the Company is eligible to use the Form S-3
registration statement within 30 days of such request to register shares of the
Company's Common Stock, the Company shall prepare and file with the SEC as soon
as practicable but in no event later than 30 days after the date of such
request, a Form S-3 registration statement to register under the Act all Common
Stock of the Company acquired pursuant to this Agreement (including the Common
Stock acquired upon exercise of the Warrants) held by the Investors which each
Investor requests to be registered.
(b) If the Investors intend to distribute the securities covered by its
request by means of an underwriting, the Investors shall so advise the Company
as a part of its request made pursuant to subsection (a) above. The underwriter
will be selected by the Company and shall be reasonably acceptable to each
Investor. Each Investor shall (together with the Company) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting.
(c) Notwithstanding the foregoing, if the Company shall furnish to each
Investor a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed, and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer taking action with respect to such filing for a period of not
more than 60 days after receipt of the request of the Investors; provided,
however, that the Company may not utilize this right more than once in any
twelve-month period.
6.
(d) In addition, the Company shall not be obligated to effect, or to take
any action to effect, any registration pursuant to this Section 4.1:
(i) After the Company has effected two registrations pursuant to this
Agreement, and such registrations have been declared or ordered effective;
(ii) If, as to each Investor, all securities which each such Investor
requests to be registered may immediately be sold under Rule 144 during any 90-
day period;
(iii) More than once in any 12-month period; or
(iv) If the Company shall not be eligible to use Form S-3 for such
registrations.
4.2 Obligations of the Company. Whenever required under this Section 4 to
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effect the registration of any securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to
such securities and use commercially reasonable efforts to cause such
registration statement to become effective, and, upon the request of each
Investor, keep such registration statement effective for a period of up to two
hundred (200) days; provided, however, that such 200-day period shall be
extended for a period of time equal to the period each Investor refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to each Investor such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of securities.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by each Investor; provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Act.
7.
(e) In the event of any underwritten public offering, enter into and perform
its obligations under an underwriting agreement, in usual and customary form,
with the managing underwriter of such offering, said form to be agreeable to the
Company and its counsel. Each Investor shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Investor at any time when a prospectus relating to such
registration statement is required to be delivered under the 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 a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Cause all such securities registered pursuant hereunder to be listed on
each securities exchange on which similar securities issued by the Company are
then listed.
(h) Furnish, at the request of each Investor, on the date that securities
are delivered to the underwriters for sale in connection with a registration
pursuant to this Section 4, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to each Investor and (ii) a letter dated such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to Investor.
4.3 Expenses of Registration. All expenses other than underwriting
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discounts and commissions incurred in connection with the requests for
registration pursuant to Section 4.1, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company shall be borne by the Company,
provided, however, that with respect to any registration proceeding begun
pursuant to Section 4.1 if the registration request is subsequently withdrawn at
the request of the Investors participating therein then such withdrawn
registration shall reduce the number of available requested registrations for
the Investors.
4.4 Indemnification. In the event any securities are included in a
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registration statement under this Section 4:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor and each person, if any, who controls such Investor
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act or the 1934 Act or other federal or state law,
8.
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) 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 Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Act, or the 1934
Act or any state securities law; and the Company will pay to each Investor or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 4.4(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action 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 action 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 expressly for use in connection
with such registration by any Investor or controlling person.
(b) To the extent permitted by law, each Investor will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls the Company within
the meaning of the Act, any underwriter, and any controlling person of any such
underwriter or Investor, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, or the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) 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 each Investor expressly for use in connection
with such registration; and each Investor will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 4.4(b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 4.4(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of such Investor,
which consent shall not be unreasonably withheld; provided, that, in no event
shall any indemnity under this subsection 4.4(b) exceed the gross proceeds from
the offering received by such Investor.
(c) Promptly after receipt by an indemnified party under this Section 4.4 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 4.4, 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
9.
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties which may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 4.4, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 4.4.
(d) If the indemnification provided for in this Section 4.4 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Investor under this Section 4.4 shall
survive the completion of any offering of securities in a registration statement
under this Section 5, and otherwise.
5. Conditions of Each Investor's Obligations at Closing. The obligations
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of each Investor under subsection 1.2 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective without each Investor's consent thereto:
5.1 Representations and Warranties. The representations and warranties of
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the Company contained in Section 2 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of such Closing.
10.
5.2 Performance. The Company shall have performed and complied with all
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agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 Qualifications. All authorizations, approvals, or permits, if any, of
--------------
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
5.4 Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Investor, and it shall have received all such counterpart original and certified
or other copies of such documents as it may reasonably request.
5.5 Opinion of Company Counsel. The Investors shall have received an
--------------------------
opinion from counsel to the Company in form and substance reasonably
satisfactory to the Investors and attached hereto as Exhibit B.
6. Conditions of the Company's Obligations at Closing. The obligations of
--------------------------------------------------
the Company to each Investor under this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions by each Investor:
6.1 Representations and Warranties. The representations and warranties of
------------------------------
Investor contained in Section 3 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the Closing.
6.2 Payment of Purchase Price. Each Investor shall have delivered the
-------------------------
purchase price specified in Section 1.
6.3 Qualifications. All authorizations, approvals, or permits, if any, of
--------------
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
7. Miscellaneous.
-------------
7.1 Survival of Warranties. The warranties, representations and covenants
----------------------
of the Company and Investor contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of Investor or the Company.
11.
7.2 Assignment; Successors and Assigns. No provision of this Agreement
----------------------------------
may be assigned (other than to an affiliate of any Investor), without the prior
written consent of the other parties hereto. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any Securities). Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
7.6 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be sent by personal delivery,
facsimile, overnight courier or mailed by certified or registered mail, postage
prepaid, return receipt requested, to the facsimile number or address as
follows:
Company: Applied Imaging Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with a copy (which will not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
12.
Investors: New Enterprise Associates
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy (which will not constitute notice) to:
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
or to such other facsimile number or address provided to the parties to this
Agreement in accordance with this Section 7.6. Such notices or other
communications shall be deemed delivered upon receipt, in the case of overnight
delivery, personal delivery or facsimile transmission (as evidenced by the
confirmation thereof), or 2 days after deposit in the mails (as determined by
reference to the postmark).
7.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction.
7.8 Expenses. Irrespective of whether the Closing is effected, each
--------
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement, except that
the Company will pay the reasonable fees (in an amount not to exceed $5,000) and
expenses of Venture Law Group, counsel to the Investors. If any action at law or
in equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investor. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and the Company.
7.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the
13.
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
7.11 Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
APPLIED IMAGING CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
______________________________________
Title: Chief Financial Officer
___________________________________
INVESTORS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________________
NEW ENTERPRISE VII, L.P.
By: NEA Partners VII, L.P.
its General Partner
By: General Partner
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________________
NEA PRESIDENTS FUND, L.P.
By: NEA General Partners, L.P.
By: General Partner
/s/ ▇▇▇▇ ▇▇▇▇▇▇
__________________________________________
NEA VENTURES 1997, LIMITED PARTNERSHIP
By: Vice President
14.
SCHEDULE A
Schedule of Investors
Number of Purchase Price
Number of Shares Subject to be Delivered
Name of Investor Shares Purchased to Warrant on May 22, 1997
-------------------------------------- ---------------- -------------- ---------------
New Enterprise Associates VII, L.P. 779,105 169,334 $3,915,002.63
NEA Presidents Fund, L.P. 15,920 3,460 $ 79,998.00
NEA Ventures 1997, 995 216 $ 4,999.88
Limited Partnership _________ ________ _____________
796,020 173,010 $4,000,000.51
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT
IS IN EFFECT AS TO THESE SECURITIES OR (II) THERE IS AN OPINION OF COUNSEL,
SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION THEREFROM IS AVAILABLE.
APPLIED IMAGING CORP.
COMMON STOCK PURCHASE WARRANT
VOID AFTER MAY 21, 2000
1. Number and Price of Shares Subject to Warrant. Subject to the terms and
---------------------------------------------
conditions set forth herein, _______________________________ is entitled to
purchase from Applied Imaging Corp., a Delaware corporation (the "Company"), at
any time after the date hereof and on or before the date of termination of this
Warrant provided for in Section 2 hereof, _______ fully paid and non-assessable
shares of Common Stock of the Company (the "Warrant Stock"), for a per-share
purchase price of $5.78 (the "Warrant Price"). The issuance and sale of this
Warrant was made pursuant to a Stock and Warrant Purchase Agreement dated of
even date herewith.
2. Termination. This Warrant (and the right to purchase securities upon
-----------
exercise hereof) shall terminate upon the earlier of (i) 5:00 p.m. on May 21,
2000 or (ii) the closing of an acquisition of all or substantially all of the
assets or capital stock of the Company by another person or entity. The Company
shall give the holder of this Warrant written notice of such acquisition at
least twenty (20) and no more than ninety (90) days prior to the closing of any
such acquisition.
3. No Fractional Shares. This Warrant cannot be exercised for a fraction of
--------------------
a share.
4. No Stockholder Rights. This Warrant shall not entitle its holder to any
---------------------
of the rights of a stockholder of the Company.
5. Reservation of Stock. The Company covenants that during the period this
--------------------
Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Warrant Stock upon the exercise of this Warrant. The Company agrees that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Warrant Stock upon the exercise of this
Warrant.
6. Exercise of Warrant.
-------------------
(a) Procedure for Exercise. This Warrant may be exercised by the
----------------------
registered holder or its registered assigns, in whole or in part, by the
surrender of this Warrant at the principal office of the Company, accompanied by
payment in full of the Warrant Price in cash or by check or by the cancellation
of any present or future indebtedness from the Company to the holder hereof.
Upon partial exercise hereof, a new warrant or warrants containing the same date
and provisions as this Warrant shall be issued by the Company to the registered
holder for the number of shares of Warrant Stock with respect to which this
Warrant shall not have been exercised. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Warrant Stock issuable upon such exercise shall be treated for all
purposes as the holder of such shares of record as of the close of business on
such date. As promptly as practicable on or after such date, the Company shall
issue and deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of full shares of Warrant Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
share as provided above.
(b) Net Exercise Rights. Notwithstanding the payment provisions set
-------------------
forth in this Section 6, the holder may elect to receive shares of Warrant Stock
equal to the value (as determined below) of this Warrant by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder the number of
shares of Common Stock determined by use of the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the holder.
Y = the number of shares of Warrant Stock subject to this Warrant.
A = the Fair Market Value (as defined below) of one (1) share of Warrant Stock.
B = Warrant Price per share of Warrant Stock.
For purposes of this Section 6, Fair Market Value of a share of Warrant Stock
as of a particular date shall mean:
(i) For so long as the Company's Common Stock is listed on the Nasdaq
National Market System, a national securities exchange, or the Nasdaq Small Cap
Market, then the fair market value of a share of Warrant Stock shall be the
closing price (the last reported sales price, if not so reported, the average of
the last reported bid and asked prices) of the Company's Common Stock as of the
last business day immediately prior to the exercise of this Warrant.
(ii) If the Company's Common Stock is not so listed, then the fair market
value of a share of Warrant Stock shall be as determined in good faith by the
Company's Board of Directors upon a review of relevant factors.
-2-
7. Adjustment of Warrant Price and Number of Shares. The number and
------------------------------------------------
kind of securities issuable upon the exercise of this Warrant shall be subject
to adjustment from time to time and the Company agrees to provide notice upon
the happening of certain events as follows:
(a) Adjustment for Dividends in Stock. In case at any time or from time
---------------------------------
to time during the term of this Warrant the holders of the Common Stock of the
Company (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional securities or
other property of the Company by way of dividend or distribution, then and in
each case, the holder of this Warrant shall, upon the exercise hereof, be
entitled to receive, in addition to the number of shares of Common Stock
receivable thereupon, and without payment of any additional consideration
therefor, the amount of such other or additional securities or other property of
the Company which such holder would hold on the date of such exercise had it
been the holder of record of such Common Stock on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional securities or
other property receivable by it as aforesaid during such period, giving effect
to all adjustments called for during such period by this Section 7.
(b) Adjustment for Reclassification or Reorganization. In case of any
-------------------------------------------------
reclassification or change of the outstanding Common Stock of the Company or of
any reorganization of the Company during the term of this Warrant (other than a
merger of the Company with and into another corporation), then and in each such
case the Company shall give the holder of this Warrant at least twenty (20) days
notice of the proposed effective date of such transaction, and the holder of
this Warrant, upon the exercise hereof at any time after the consummation of
such reclassification, change or reorganization, shall be entitled to receive,
in lieu of the stock or other securities and property receivable upon the
exercise hereof prior to such consummation, the stock or other securities or
property to which such holder would have been entitled upon such consummation if
such holder had exercised this Warrant immediately prior thereto, all subject to
further adjustment as provided in this Section 7. The terms of this Section 7
shall similarly apply to successive reclassifications, changes or
reorganizations.
(c) Stock Splits and Reverse Stock Splits. If at any time during the
-------------------------------------
term of this Warrant the Company shall subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall thereby be proportionately reduced
and the number of shares receivable upon exercise of the Warrant shall thereby
be proportionately increased; and, conversely, if at any time on or after the
date hereof the outstanding number of shares of Common Stock shall be combined
into a smaller number of shares, the Warrant Price in effect immediately prior
to such combination shall thereby be proportionately increased and the number of
shares receivable upon exercise of this Warrant shall thereby be proportionately
decreased.
8. Certificate of Adjustment. Whenever the Warrant Price or the number or
-------------------------
type of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, the Company shall promptly deliver to the record holder of this
Warrant a certificate of an officer of the Company setting forth the nature of
such adjustment and a brief statement of the facts requiring such adjustment.
-3-
9. No Impairment. The Company covenants that it shall not, by amendment of
-------------
its Certificate of Incorporation or through any reorganization, consolidation,
merger, transfer of assets, dissolution, issue or sale of securities or any
other voluntary action, willfully avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but shall at all times in good
faith assist in carrying out all those terms and in taking all actions necessary
or appropriate to protect the rights of the holder of this Warrant against
dilution or other impairment. Without limiting the generality of the above
provision, the Company will take all necessary or appropriate action in order
that the Company may validly and legally issue fully paid and nonassessable
shares upon the exercise of this Warrant.
10. Transfer of Warrant. This Warrant or the Warrant Stock may not be
-------------------
transferred or assigned, in whole or in part, by the holder hereof (except to
any affiliate of such holder) without compliance with applicable federal and
state securities laws. The rights and obligations of the Company and the holder
of this Warrant shall be binding upon and benefit the successors, assignors,
heirs, administrators and transferees of the parties. Any transferee hereof
agrees to be bound by the restrictions set forth herein and in the Note and
Warrant Purchase Agreement.
11. Registration on Form S-3. The Warrant Stock shall be registrable at the
------------------------
demand of the holder as provided in the Stock and Warrant Purchase Agreement of
even date herewith (the "Stock Purchase Agreement").
12. Compliance with Securities Laws.
-------------------------------
(a) The holder represents and agrees that this Warrant (and the Warrant
Stock, if the Warrant is exercised), are purchased only for investment, for
holder's own account, and without any present intention to sell or distribute
the Warrant or the Warrant Stock.
(b) The holder of this Warrant acknowledges and agrees that this Warrant
and the Warrant Stock have not been registered under the Securities Act and
accordingly will not be transferrable except as permitted under the various
exemptions contained in the Securities Act, or upon satisfaction of the
registration and prospectus delivery requirements of the Securities Act.
Therefore the Warrant and the Warrant Stock must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Holder understands that the certificate
evidencing the Warrant Stock will be imprinted with a legend which prohibits the
transfer of the Warrant Stock unless it is registered or unless the Company
receives an opinion of counsel reasonably satisfactory to the Company that such
registration is not required. Holder is aware of the adoption of Rule 144 by
the Securities and Exchange Commission and that Company is not now and, at the
time he wishes to sell the Warrant Stock, may not be satisfying the current
public information requirements of Rule 144 and, in such case, holder would be
precluded from selling the securities under Rule 144. Holder understands that a
stop transfer instruction will be in effect with respect to transfer of the
Warrant Stock consistent with the requirements of the securities laws.
13. Waiver and Amendment. Any provision of this Warrant may be amended or
--------------------
waived upon the written consent of the Company and the majority-in-interest of
the Warrants issued pursuant to the Stock Purchase Agreement.
-4-
14. Miscellaneous. This Warrant shall be governed by the laws of the State
-------------
of California. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be deemed to constitute a part hereof. Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by the Company
and, except as provided in Section 13 hereof, the registered holder hereof. All
notices and other communications from the Company to the holder of this Warrant
shall be mailed by first-class registered or certified mail, postage prepaid, to
the address furnished to the Company in writing by the last holder of this
Warrant who shall have furnished an address to the Company in writing.
ISSUED this 22nd day of May, 1997.
APPLIED IMAGING CORP.
By: _________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Financial Officer
-5-