-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AKNJXXADeF2vz9YegAt/FtmlfZoGbeQpvAma0y27vLbMNNnMIJq53le5vzOsccmK DFkNG9ao22e37Bsv8w12wQ== 0000950123-01-509077.txt : 20020412 0000950123-01-509077.hdr.sgml : 20020412 ACCESSION NUMBER: 0000950123-01-509077 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20011207 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011207 FILER: COMPANY DATA: COMPANY CONFORMED NAME: I STAT CORPORATION /DE/ CENTRAL INDEX KEY: 0000882365 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 222542664 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19841 FILM NUMBER: 1809197 BUSINESS ADDRESS: STREET 1: 104 WINDSOR CENTER DRIVE CITY: EAST WINDSOR STATE: NJ ZIP: 08520 BUSINESS PHONE: 6094439300 MAIL ADDRESS: STREET 1: 104 WINDSOR CENTER DRIVE CITY: EAST WINDSOR STATE: NJ ZIP: 08520 8-K 1 y55595e8-k.txt FORM 8-K ==================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: DECEMBER 7, 2001 i-STAT CORPORATION ------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-19841 22-2542664 -------- ------- ---------- (STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NO.)
104 WINDSOR CENTER DRIVE, EAST WINDSOR, NJ 08520 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (609) 443-9300 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ================================================================================ Item 5. Other Events i-STAT Corporation today announced the signing of a $30 million financing with Cerberus Partners, L.P. and certain of its affiliates ("Cerberus"). The transaction involves the sale of 30,000 shares of a new Series D Convertible Preferred Stock (the "Series D Stock") at $1,000 per share. The Company intends to use the net proceeds of the Series D Stock for general corporate purposes, including the implementation of its marketing plans, new product research and development programs, expansion of manufacturing capacity, and for working capital. The Series D Stock to be issued in the financing may be converted into Common Stock at each holder's option at a conversion price of $8.00, subject to beneficial ownership restrictions. The Series D Stock may not be converted to the extent that any such conversion would violate certain beneficial ownership limitations placed upon it by the Company, initially 14.99%. The holders of the Series D Stock are entitled to vote on an "as-converted" basis with the holders of the Common Stock but such voting rights are limited to the extent the Series D Stock is actually convertible after giving effect to the conversion limitations. In addition, the Series D Stock will bear preferential dividends at a rate of 8.0% per year, which may be paid in cash or accrue and become payable in cash upon redemption or in shares of Common Stock upon conversion. During periods that the Common Stock trades at or above $15.00 per share for 45 trading days, the dividend rate is reduced to 2.0%, and if during subsequent periods the Common Stock trades below $10.00 per share for 45 trading days, the dividend rate will again be increased to 8.0%. The Series D Stock is mandatorily redeemable on the tenth anniversary of issuance and may be redeemed by i-STAT on or after the sixth anniversary of issuance. Under certain circumstances, the investors will have the right to participate in i-STAT financings which are concluded after the closing of the placement. Cerberus will be entitled to appoint one person to the Company's Board of Directors for so long as it holds 10% of the outstanding securities of the Company on a fully diluted basis. In connection with the new financing, Cerberus will be issued 6-year warrants (the "Warrants") to purchase up to an additional 937,500 shares of i-STAT Common Stock at a per share exercise price of $8.00. The Warrants may not be exercised to the extent any such exercise would violate certain beneficial ownership limitations placed on it by the Company, initially 14.99%. The Warrants are subject to anti-dilution protection, including full-ratchet anti-dilution adjustments for issuances of equity or equity equivalent securities below $8.00. The Company has agreed to register with the Securities and Exchange Commission the resale of the shares of Common Stock issuable upon conversion of the Series D Stock and exercise of the Warrants. The foregoing summary does not contain all the material terms of the private placement. For a more complete description of the terms of the private placement, please see the copies of the transaction documents attached hereto as exhibits to this Current Report on Form 8-K, which are incorporated by reference into this report. i-STAT also announced today that it has elected to redeem all of its Series C Convertible Preferred Stock (the "Series C Stock") issued in August to group of institutional investors, for a redemption price of approximately $20.5 million. The Series C Stock would have been convertible into approximately 3.7 million shares of the Company's Common Stock had it been converted. The redemption of the Series C Stock resulted in the cancellation of 555,000 warrants to purchase Common Stock at an exercise price of $10.139 issued along with the Series C Stock. Immediately following the Closing, the remaining warrants will be automatically adjusted in accordance with their terms to represent the right to purchase 937,857.50 shares of Common Stock for an exercise price of $8.00. The full text of the press release is set forth in Exhibit 99.1 which is attached hereto and is incorporated by reference into this report. Item 7. Exhibits. (c) Exhibits Item No. Exhibit List 3.7 Form of Certificate of Designation, Preferences and Rights of Series D Convertible Preferred Stock to be filed with the Secretary of State of the State of Delaware. 10.60 Securities Purchase Agreement, dated as of December 6, 2001, between the Registrant and the Purchasers named therein. 10.61 Form of Registration Rights Agreement to be entered into between Registrant and the Purchasers named therein. 10.62 Form of Warrant issued to each of the Series D Stock investors to purchase Common Stock of Registrant. 99.1 Press Release SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, i-STAT Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. i-STAT CORPORATION By: /s/ Roger J. Mason ------------------------------------ Roger J. Mason Vice President of Finance, Treasurer and Chief Financial Officer Date: December 7, 2001 EX-3.7 3 y55595ex3-7.txt FORM OF CERTIFICATE OF DESIGNATION Exhibit 3.7 i-STAT CORPORATION CERTIFICATE OF DESIGNATION OF SERIES D CONVERTIBLE PREFERRED STOCK i-STAT Corporation (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that, pursuant to authority conferred upon the Corporation's Board of Directors (the "Board") by the Corporation's Restated Certificate of Incorporation, as amended and including any Certificate of Designations filed therewith (the "Certificate"), and pursuant to Section 151 of the General Corporation Law of the State of Delaware, the Board at a meeting duly held on December 5, 2001, adopted resolutions (i) authorizing a new series of the Corporation's previously authorized preferred stock, $0.10 par value per share, and (ii) providing for the designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of 30,000 shares of Series D Convertible Preferred Stock of the Corporation, as follows: RESOLVED, that the Corporation is authorized to issue 30,000 shares of Series D Convertible Preferred Stock, $0.10 par value per share, which shall have the following powers, designations, preferences and other special rights: Section 1. Designation, Amount and Par Value. The series of preferred stock shall be designated as the Corporation's Series D Convertible Preferred Stock (the "Preferred Stock") and the number of shares so designated shall be 30,000 (which shall not be subject to increase without the consent of the holders (each, a "Holder" and collectively, the "Holders") of a majority of the Preferred Stock.). Each share of Preferred Stock shall have a par value of $.10 and a stated value equal to $1,000 (the "Stated Value"). Capitalized terms used and not defined elsewhere in this Certificate of Designation shall have the respective meanings ascribed to them in Section 9. Section 2. Ranking. The Preferred Stock shall rank, with respect to dividend distributions and distributions upon a Liquidation Event (as defined herein), senior to all classes of common stock of the Corporation (including the Common Stock) and senior to any other class of capital stock or series of preferred stock established by the Corporation prior to or after the date hereof (the "Original Issue Date"). All classes of Common Stock of the Corporation and any other class of capital stock or series of preferred stock established prior to or after the Original Issue Date to which the Preferred Stock is senior are collectively referred to herein as "Junior Securities." Section 3. Dividends. (a) Each holder of Preferred Stock shall be entitled to receive, out of funds legally available for the payment of dividends, cumulative dividends in an amount per share equal to the Applicable Percentage (as defined herein) of the Series D Liquidation Preference Payment (as defined herein) as of the immediately preceding Dividend Payment Date (as defined herein) (or, for the initial Dividend Period (as defined herein), as of the Original Issue Date). Dividends paid pursuant to this Section 3(a) shall be payable in arrears on March 31, June 30, September 30 and December 31 of each year (each of such dates being a "Dividend Payment Date" and each such quarterly period being a "Dividend Period"). Each such dividend shall be payable to the holders of record of shares of the Preferred Stock on the 10th day prior to the relevant Dividend Payment Date, as they appear on the stock records of the Corporation at the close of business on such record dates. Such dividends shall accrue quarterly from the Original Issue Date to the Holders thereof (except that dividends on any amounts added to the Series D Liquidation Preference Payment pursuant to Section 3(b) shall accrue from the date such amounts are added to the Series D Liquidation Preference Payment), whether or not declared by the Board and whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends. (b) At the Corporation's option, dividends may be paid in cash. If dividends are not paid in cash on any Dividend Payment Date for the immediately preceding Dividend Period (or portion thereof if less than a full Dividend Period), the unpaid amount shall be added to the Series D Liquidation Preference Payment for purposes of calculating succeeding Dividend Periods' dividends. Notwithstanding anything else contained herein, once any dividends for the immediately preceding Dividend Period (or portion thereof if less than a full Dividend Period) are so added to the Series D Liquidation Preference Payment, such dividends will no longer be payable in cash. (c) The "Applicable Percentage" shall be eight percent (8%) per annum; provided that if at any time the Per Share Market Value of the Common Stock is at or above $15.00 per share (subject to equitable adjustment for stock splits, combinations, stock dividends and similar events) for 45 consecutive Trading Days, such rate shall be reduced to two percent (2%) per annum beginning on the next Trading Day and shall continue at such rate unless and until the Per Share Market Value of the Common Stock is below $10.00 per share (subject to equitable adjustment for stock splits, combinations, stock dividends and similar events) for 45 consecutive Trading Days, at which point such rate shall re-adjust to eight percent (8%) per annum the next Trading Day. The adjustment to the Applicable Percentage pursuant to this Section 3(c) shall continue until all shares of Preferred Stock shall have been converted pursuant to Section 7 or redeemed pursuant to Section 8 hereto. The Applicable Percentage for the initial Dividend Period, or any other period shorter or longer than a full Dividend Period, on the Preferred Stock shall be computed on the basis of the actual number of days elapsed over four (4) 90-day quarters and a 360-day year. The Applicable Percentage shall also be subject to adjustment in accordance with Section 8(c) hereof. Section 4. Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the Corporation (a "Liquidation Event"), whether voluntary or involuntary, the Holders of the shares of Preferred Stock then outstanding shall be entitled to receive, prior and in preference to any payment or distribution of any of the assets of the Corporation to the holders of any Junior Securities, by reason of their ownership thereof, an amount per share equal to the sum of $1,000 per share (the "Series D Issuance Price") (subject to equitable adjustment for stock splits, combinations, stock dividends and similar events) and (ii) an amount equal to all accrued and/or -2- declared but unpaid dividends on such share, computed to the date payment thereof is made as provided in Section 3 hereof (together with the Series D Issuance Price, the "Series D Liquidation Preference Payment"). If upon the occurrence of any Liquidation Event, the assets and funds to be distributed among the holders of the Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the Corporation available for distribution shall be distributed pro rata among the Holders of the Preferred Stock in proportion to the number of shares of Preferred Stock owned by each such Holder bears to the total number of shares of Preferred Stock then outstanding. (b) (i) For purposes of this Section 4(b)(i), (x) any merger, reorganization or consolidation of the Corporation into or with any other corporation or entity (including a stock for stock exchange or stock for cash exchange), or (y) a sale, conveyance, transfer, license, lease, abandonment or other disposition or transfer of all or substantially all of the assets of the Corporation, including without limitation, all or substantially all of its intellectual property (other than by means of a license in the ordinary course of business), in one or more related transactions shall be deemed a Liquidation Event of the Corporation unless the holders of capital stock of the Corporation immediately prior thereto shall, immediately thereafter, hold as a group the right to cast at least a majority of votes of all holders of voting securities of the resulting or surviving corporation or entity, or the parent of such surviving corporation or entity, on any matter on which any such holder of voting securities shall be entitled to vote. (ii) In any such events, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value; provided that, the fair market value of any securities or assets shall be valued as follows: (x) Securities not subject to an investment letter or other similar restrictions on free marketability: (A) If traded on Nasdaq, the value shall be deemed to be the average of the closing bid prices of the securities on Nasdaq or such exchange, as applicable, over the thirty (30) day period ending three (3) days prior to the consummation of the Liquidation Event; (B) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the consummation of the Liquidation Event; and (C) If there is no active public market, the value shall be the fair market value thereof, as determined by an investment banking firm selected by the Corporation and reasonably approved by holders of a majority of the then outstanding shares of Preferred Stock. (y) The method of valuation of securities subject to an investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder's status as an affiliate or former affiliate) shall be to make an -3- appropriate discount from the market value determined as above in (x)(A), (B) or (C) to reflect the approximate fair market value thereof, as determined by an investment banking firm selected by the Corporation and reasonably approved by holders of a majority of the then outstanding shares of Preferred Stock. (c) The Corporation shall give each holder of record of Preferred Stock written notice of an impending Liquidation Event not later than fifteen (15) days prior to the stockholders' meeting called to approve such transaction or not later than fifteen (15) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending Liquidation Event and the provisions of this Section 4, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than fifteen (15) days after the Corporation has given the first notice provided for herein or sooner than fifteen (15) days after the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock that represent at least a majority of the voting power of all then outstanding shares of the Preferred Stock. Section 5. Voting Rights. Except as may be otherwise provided in this Certificate of Designation or required by law, the Preferred Stock shall vote together with all other classes and series of stock of the Corporation as a single class on all actions to be taken by the stockholders of the Corporation. The Holders shall have the right to one vote on each such action for each whole share of Common Stock into which such Preferred Stock could then be converted (taking into account the Conversion limitations then applicable pursuant to Section 7(a)(iii), and with respect to such vote, such Holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders' meeting in accordance with the By-Laws of the Corporation. Section 6. Protective Provisions. The Corporation shall not, and shall not permit any of its Subsidiaries to, without the affirmative vote or written consent of the Holders of a majority of the then outstanding shares of Preferred Stock, voting or consenting as a separate class: (a) make any Restricted Payment (as defined below). For the purposes hereof, "Restricted Payment" means (i) the declaration or payment of any dividends or any other distributions of any sort by the Corporation in respect of its Junior Securities, (ii) the direct or indirect purchase, redemption or other acquisition or retirement for value of any of the Corporation's capital stock or any security exercisable or exchangeable for its capital stock (other than the redemption of the Preferred Stock) or the exercise by the Corporation of any option to exchange any capital stock that by its terms is exchangeable solely at its option, or (iii) the setting apart of money or other property for any redemption, purchase or other analogous fund for the redemption, purchase, or acquisition of any of the Corporation's capital stock or any security exercisable or exchangeable for the Corporation's capital stock; -4- (b) engage in Affiliated Party Transactions, except for transactions (i) on an arm's-length basis for fair value with Abbott Laboratories or other distribution or technology partners; (ii) with any Wholly-Owned Subsidiary; (iii) on an arm's-length basis for fair value with a Qualified Joint Venture; (iv) made for tax planning purposes; (iv) where the aggregate value of the transaction is not in excess of $100,000 or (v) that are loans to officers and employees on terms approved by a majority of the entire Board, provided that the aggregate principal amount and accrued interest on loans to officers and employees outstanding may not exceed $5,000,000 at any one time; (c) reorganize, reclassify or recapitalize any shares of capital stock of the Corporation; (d) acquire any assets (whether by means of an asset purchase, stock purchase or merger) in excess of $1,000,000 in any one transaction or series of related transactions that take place within a twelve-month period that are not reasonably related to the Corporation's business as presently conducted; (e) convey, sell, lease, assign, transfer, exchange or otherwise dispose of any of its property, business or assets whether now owned or hereafter acquired in excess of $1,000,000 in any one transaction or series of related transactions that take place within a twelve-month period, except for: (i) the sale or other disposition of any tangible or intangible personal property that has become obsolete or worn out and is disposed of in the ordinary course of business, (ii) the sale or other disposition of inventory made in the ordinary course of business, (iii) capitalized leases and sale/leaseback transactions (subject to the rights of the Purchasers (as such term is defined in the Purchase Agreement) in Section 4.7 of the Purchase Agreement and to the provisions of Section 6(g) hereof) or (iv) the sale of the Corporation which is structured as a sale of all or substantially all of the assets of the Corporation; (f) make any advance, loan, extension of credit or capital contribution to, or purchase any stock (other than in connection with acquisitions made by the Corporation in accordance with paragraph (d)), bonds, notes, debentures or other securities of, or make any other investment in, any Person except: (i) the Corporation may make investments in, or loans or advances to, any Wholly-Owned Subsidiaries and any Wholly-Owned Subsidiaries may make investments in, or loans or advances to, the Corporation, (ii) the Corporation or its Wholly-Owned Subsidiaries may acquire and hold receivables owing to it, if created in the ordinary course of business and payable or dischargeable in accordance with customary trade terms, (iii) the Corporation may make Full Recourse Loans to Qualified Joint Ventures pro rata to their equity ownership in such Qualified Joint Ventures; provided that such Full Recourse Loans are made on the same terms as, and contemporaneously with, Full Recourse Loans made by the other equity owners of such Qualified Joint Venture; (iv) the Corporation may make loans to officers and employees on terms approved by a majority of the entire Board, provided that the aggregate principal amount and accrued interest on loans outstanding to officers and employees may not exceed $5,000,000 at any one time; (v) direct obligations of the government of the United States of America or any agency or instrumentality therein, (vi) interest-bearing certificates of deposit or repurchase agreements issued by a commercial banking institution located in and authorized to do business as a commercial bank in the United States, and (vii) -5- money market accounts maintained at a commercial bank located in and authorized to do business as a commercial bank in the United States; (g) create, incur, assume, permit, guarantee or otherwise become or remain liable, directly or indirectly, with respect to any Indebtedness except Indebtedness in the aggregate amount at any one time outstanding of $12,000,000, provided that Corporation may, or permit any of its Subsidiaries to, create, incur, assume, permit, guarantee or otherwise become or remain liable, directly or indirectly, for Indebtedness in excess of $12,000,000 at any one time outstanding if at the date of such creation, incurrence, permission, guarantee or becoming or remaining liable for such Indebtedness in excess of $12,000,000, the Corporation and its consolidated Subsidiaries are meeting or surpassing the Operating Targets. The Operating Targets shall mean targets, on a consolidated basis, for the Corporation's revenues, operating income, earnings before interest, taxes, depreciation and amortization, and net income as proposed by the Corporation and approved by the Holders of a majority of the outstanding shares of Preferred Stock in their sole and absolute discretion. For so long as the Corporation and its Subsidiaries are not meeting or surpassing the Operating Targets at a time when there is more than $12,000,000 of Indebtedness in the aggregate outstanding (the "Excess Indebtedness"), the Corporation shall not, or shall not permit any of its Subsidiaries, to incur, assume, permit, guarantee or otherwise become or remain liable, directly or indirectly, with respect to any additional Indebtedness but may refinance or renew the Excess Indebtedness on terms no less favorable to the Corporation and its Subsidiaries than the Excess Indebtedness being refinanced or renewed; (h) permit to exist limitations on the payment of dividends or distributions by the Corporation (with respect to the Preferred Stock) or by its Subsidiaries; (i) amend, alter or repeal its Certificate of Incorporation, this Certificate of Designation or By-laws (whether by merger, consolidation, reclassification, combination or otherwise), or waive any provisions thereof, in a manner that would adversely affect the rights, preferences, privileges or powers of the Preferred Stock or which would increase or decrease the amount of authorized shares of Preferred Stock; (j) create or authorize the creation of or issuance of (including without limitation, by way of merger, consolidation, reclassification, recapitalization or otherwise), or obligate itself to authorize or issue, any equity security of the Corporation, ranking senior to, or pari passu with, the Preferred Stock with respect to rights, privileges, liquidations preferences, dividends or distributions; (k) effect any liquidation, dissolution or winding up of the Corporation; or (l) enter into any contract, agreement or understanding with respect to any of the foregoing. Section 7. Conversion. (a) (i) Optional Conversion. Subject to the limitations set forth in Section 7(a)(iii), each share of Preferred Stock shall be convertible into shares of Common Stock at the Conversion Ratio, at the option of the Holder, at any time and from time to time. Holders shall -6- effect conversions by providing the Corporation with the form of conversion notice attached hereto as Exhibit A (a "Conversion Notice"). Each Conversion Notice shall specify the number of shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the Holder delivers such Conversion Notice by facsimile (the "Conversion Date"). The number of shares of Preferred Stock shown as owned by the Holder prior to and giving effect to a conversion shall control absent manifest or mathematical error. If no Holder Conversion Date is specified in a Conversion Notice, the Holder Conversion Date shall be the date that such Conversion Notice is deemed delivered hereunder. To effect conversions of Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing such shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are so converted. (ii) [Intentionally Omitted] (iii) Certain Conversion Restrictions. Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by a Holder that is not an Institutional Investor upon any conversion of shares of Preferred Stock (or otherwise in respect hereof) shall, until such time as the Standstill Agreement has been terminated or has expired, be limited to the extent necessary to insure that, following such conversion, the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with such Holder's for purposes of Section 13(d) of the Exchange Act, does not exceed 14.99% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). Upon termination or expiration of the Standstill Agreement, the number of shares of Common Stock that may be acquired by such Holder upon any conversion of shares of Preferred Stock (or otherwise in respect hereof) shall be limited to the extent necessary to prevent such Holder from becoming an "Acquiring Person" under the Plan as a result of such conversion. For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Each delivery of a Conversion Notice hereunder will constitute a representation by a Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Underlying Shares requested in such Conversion Notice is permitted under this paragraph. The Corporation will have no obligation to issue shares of Common Stock in excess of the limitation referred to in this Section until such time, if any, as such shares of Common Stock may be issued in compliance with such limitation. (b) (i) Not later than three Trading Days after each Conversion Date, the Corporation will issue and deliver to the Holder at the Corporation's expense a certificate or certificates registered in such name or names as the Holder may direct which shall be free of restrictive legends and trading restrictions (other than those required by Section 4.1 of the Purchase Agreement) representing the number of shares of Common Stock being acquired upon the conversion of shares of Preferred Stock. The Corporation shall, upon request of the Holder, if available, use its best efforts to deliver any certificate or certificates required to be delivered by the Corporation under this Section electronically through the Depository Trust Corporation or -7- another established clearing corporation performing similar functions. If in the case of any Conversion Notice such certificate or certificates are not delivered to or as directed by the applicable Holder by the fourth Trading Day after the Conversion Date, the Holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Corporation shall immediately return the certificates representing the shares of Preferred Stock tendered for conversion. (ii) In addition to any other rights available to the Holder, if the Corporation fails to deliver to the Holder such certificate or certificates pursuant to Section 3(b)(i), by the fourth Trading Day after the Conversion Date, and if after such fourth Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of the Underlying Shares which the Holder was entitled to receive upon such conversion (a "Buy-In"), then the Corporation shall (A) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by (2) the market price of the Common Stock at the time of the sale giving rise to such purchase obligation and (B) at the option of the Holder, either return the shares of Preferred Stock for which such conversion was not honored or deliver to such Holder the number of shares of Common Stock that would have been issued had the Corporation timely complied with its conversion and delivery obligations under Section 3(b)(i). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Preferred Stock with respect to which the market price of the Underlying Shares on the date of conversion totaled $10,000, under clause (A) of the immediately preceding sentence the Corporation shall be required to pay the Holder $1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to the Holder in respect of the Buy-In. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation's failure to timely deliver certificates representing shares of Common Stock upon conversion of the shares of Preferred Stock as required pursuant to the terms hereof. (c) (i) The conversion price for each share of Preferred Stock in effect on any Conversion Date (the "Conversion Price") shall equal $8.00 (subject to equitable adjustment for stock splits, combinations, stock dividends and similar events). (ii) If the Corporation, at any time while shares of Preferred Stock are outstanding, shall distribute to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets or rights or warrants to subscribe for or purchase any security, then in each such case the Conversion Price at which each share of Preferred Stock shall thereafter be convertible shall be determined by multiplying the Conversion Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Per Share Market Value determined as of the record date mentioned above, and of which the numerator shall be such Per Share Market Value on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of Common -8- Stock as determined by the Board in good faith. If the Holder shall dispute the findings of the Corporation's Board, then such fair market value shall be determined by an investment banking firm selected by the Corporation and reasonably approved by the Holders of a majority of the outstanding Preferred Stock. In either case the adjustments shall be described in a statement provided to the Holders of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. (iii) All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. 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 Corporation or its Subsidiaries, and the disposition of any such shares shall be considered an issue or sale of Common Stock. (iv) Whenever the Conversion Price is adjusted pursuant to the terms hereof, the Corporation shall promptly mail to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. (v) In case of any reclassification, reorganization or recapitalization of the Common Stock, or any compulsory share exchange pursuant to which the Common Stock is entitled to receive or is converted into other securities, cash or property, the Holders shall have the right thereafter to convert such shares only into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such reclassification, reorganization, recapitalization or share exchange, and the Holders shall be entitled upon such event to receive such amount of securities, cash or property as a holder of the number of shares of Common Stock of the Corporation into which such shares of Preferred Stock could have been converted immediately prior to such reclassification, reorganization, recapitalization or share exchange would have been entitled. This provision shall similarly apply to successive reclassifications or share exchanges. The Corporation shall not effect any transaction described in this subsection unless the resulting successor or acquiring entity (if not the Corporation) assumes by written instrument the obligation to deliver to the Holders of the Preferred Stock such shares of stock and/or securities as, in accordance with the foregoing provisions, the Holders of Preferred Stock may be entitled to receive. (vi) Subject to Section 8, in case of any merger or consolidation of the Corporation with or into another Person, sale by the Corporation of more than one-half of the assets of the Corporation (on an as valued basis) in one or a series of related transactions or similar transactions, a Holder shall have the right thereafter to convert its shares of Preferred Stock into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such shares of Preferred Stock could have been converted immediately prior to such merger, consolidation or sale would have been entitled. The terms of any such merger, sale or consolidation shall include such terms so as continue to give the Holders the right to receive the securities, cash and property set forth -9- in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events. The Corporation shall not effect any transaction described in this subsection unless the resulting successor or acquiring entity (if not the Corporation) assumes by written instrument the obligation to deliver to the Holders of the Preferred Stock such shares of stock and/or securities as, in accordance with the foregoing provisions, the Holders of Preferred Stock may be entitled to receive. (vii) If (a) the Corporation shall declare a dividend (or any other distribution) on the Common Stock, (b) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (c) the Corporation shall authorize the granting to all holders of Common Stock, rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (d) the approval of any stockholders of the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share of exchange whereby the Common Stock is converted into other securities, cash or property, or (e) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation; then the Corporation shall notify the Holders at their last addresses as they shall appear upon the stock books of the Corporation, at least 20 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 Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange. Holders are entitled to convert shares of Preferred Stock during the 20-day period commencing the date of such notice to the effective date of the event triggering such notice. (d) The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holders, not less than such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding shares of Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized and issued and fully paid and nonassessable. (e) Upon a conversion hereunder the Corporation shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the Per Share Market Value at such time. If any fraction of an Underlying Share would, except for the provisions of this Section, be issuable upon a conversion hereunder, the Corporation shall pay an amount in cash equal to the Conversion Ratio multiplied by such fraction. -10- (f) The issuance of certificates for Common Stock on conversion of Preferred Stock shall be made without charge to the Holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of such shares of Preferred Stock so converted. (g) Any and all notices or other communications or deliveries to be provided by the Holders of the Preferred Stock hereunder, including, without limitation, any Conversion Notice, shall be in writing and delivered personally, by facsimile or sent by a nationally recognized overnight courier service, addressed to the attention of the Chief Financial Officer of the Corporation addressed to 104 Windsor Center Drive, East Windsor, NJ 08520, Facsimile No.: (609) 243-9311, attention Chief Financial Officer, or to such other address or facsimile number as shall be specified in writing by the Corporation for such purpose. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile or sent by a nationally recognized overnight courier service, addressed to each Holder at the facsimile telephone number or address of such Holder appearing on the books of the Corporation, or if no such facsimile telephone number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:30 p.m. (New York City time)(with confirmation of transmission), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:30 p.m. (New York City time) (with confirmation of transmission) on any date and earlier than 11:59 p.m. (New York City time) on such date (with confirmation of transmission), (iii) upon receipt, if sent by a nationally recognized overnight courier service (next day service specified), or (iv) upon actual receipt by the party to whom such notice is required to be given. Section 8. Redemption. (a) Mandatory Redemption. The Corporation shall not have the right to call or redeem at any time all or any shares of Preferred Stock, except as expressly authorized herein. On the Mandatory Redemption Date, the Corporation shall redeem all of the shares of Preferred Stock. The "Mandatory Redemption Date" shall be the tenth (10th) anniversary of the Original Issue Date or if such date is not a Trading Day, the first Trading Day thereafter. (b) Optional Redemption. At any time after the sixth (6th) anniversary of the Original Issue Date (the "Optional Redemption Date", and together with the Mandatory Redemption Date, the "Redemption Date"), the Corporation may redeem at its option all of the shares of Preferred Stock held by the Holders by providing written notice (the "Notice") thereof to the Holders on a date not less than fifteen (15) and not more than sixty (60) days prior to the Optional Redemption Date which shall be fixed by the Corporation and specified on the Notice; provided, that the Corporation may redeem less than all of the shares of Preferred Stock held by the Holders only upon the consent of the Holders of a majority of shares of Preferred Stock. In the event the Corporation redeems pursuant to this Section 8(b) less than all of the shares of -11- Preferred Stock held by the Holders upon the consent to the Holders of a majority of shares of Preferred Stock, the Corporation shall redeem such shares of Preferred Stock on a pro rata basis determined by the aggregate amount of shares of Preferred Stock held by each Holder. (c) Redemption Price and Payment. The Preferred Stock to be redeemed on a Redemption Date shall be redeemed by paying for each share, in cash, out of any assets of the Corporation legally available therefor, an amount equal to the Redemption Price (as defined below). For purposes of this Section 8(c), the "Redemption Price" shall mean $1,000 plus accrued and unpaid dividends on each outstanding share of Preferred Stock. (d) Mechanics of Redemption. At least 10 but not more than 60 days prior to a Redemption Date, written notice (the "Redemption Notice") shall be given by the Corporation by mail, postage prepaid, or by facsimile or email transmission, to each holder of record (at the close of business on the business day next preceding the day on which the Redemption Notice is given) of shares of Preferred Stock notifying such holder of the redemption and specifying the Redemption Price, the Redemption Date and the place where the Redemption Price shall be payable. The Redemption Notice shall be addressed to each Holder of shares of Preferred Stock to be redeemed at his address as shown by the records of the Corporation. From and after the close of business on the Redemption Date, if on the Redemption Date the Redemption Price is paid or tendered for payment, then notwithstanding that the certificates evidencing any of the shares of Preferred Stock elected to be redeemed shall not have been surrendered, dividends with respect to such shares of Preferred Stock shall cease to accrue and all rights of holders of such shares of Preferred Stock subject to redemption (except the right to receive the Redemption Price without interest upon surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. Any shares of Preferred Stock redeemed pursuant to this Section 8 shall be canceled and shall not under any circumstances be reissued; and the Corporation may from time to time take such appropriate corporate action as may be necessary to reduce accordingly the number of authorized shares of Preferred Stock. The Corporation shall not send a Notice to redeem the shares of Preferred Stock pursuant to Section 8(b) unless the assets of the Corporation legally available for redemption are sufficient to redeem the total number of shares of Preferred Stock to be redeemed on an Optional Redemption Date and the Corporation redeems all such shares. In the event of a redemption of Preferred Stock pursuant to Section 8(a), if (i) the assets of the Corporation legally available for redemption of shares of Preferred Stock on the Mandatory Redemption Date are insufficient to redeem the total number of outstanding shares of Preferred Stock to be redeemed on such Mandatory Redemption Date or (ii) the Corporation fails for any other reason to redeem the total number of outstanding shares of Preferred Stock to be redeemed on such Mandatory Redemption Date other than because of a failure on the part of a holder of Preferred Stock to deliver a certificate evidencing such shares (a "Non-Redemption Event"), the holders of shares of Preferred Stock to be redeemed shall share ratably in any assets legally available for redemption of such shares according to the respective amounts which would be payable with respect to the full number of shares owned by them if all such outstanding shares were redeemed in full and with respect to the dividend on the Preferred Stock to be paid under Section 3 hereof, the Applicable Percentage shall increase by 2% over the Applicable Percentage for the prior period on the expiration date of each sixty (60) day period after the Mandatory Redemption Date that the Preferred Stock is not redeemed in full up to a maximum of 16%. The shares of Preferred Stock not redeemed remain -12- outstanding and entitled to all rights and preferences provided herein. At any time thereafter when additional funds of the Corporation are legally available for the redemption of shares of Preferred Stock, such assets will be used immediately to redeem the balance of such shares, or such portion thereof for which assets are then legally available, on the basis set forth above. (e) Non-Redemption Event. (i) Notwithstanding the provisions of Section 3 hereof, in the event of a Non-Redemption Event, the Corporation shall promptly give written notice thereof to each Holder and the Holders shall, immediately upon the giving of written notice to the Corporation by the Holders of at least a majority of the outstanding shares of Preferred Stock voting together as a single class, be entitled to elect the number of additional directors (collectively, the "Series D Directors") which shall provide the Holders with the greater of (x) percentage representation on the Board equal to the ownership percentage of the Corporation represented by the sum of (i) the Preferred Shares held by the Holders on an as converted basis, (ii) all shares of Common Stock held by the Holders and (iii) the shares of Common Stock issuable upon the exercise of unexercised warrants then held by the Holders (in each case without regard to any limitation on percentage ownership as provided for in the Abbott Standstill Agreement, Abbott Purchase Agreement or any other limitation on conversion or exercise) and (y) 20% of the directors on the Board; and the holders of shares of Common Stock and of any other class or series of voting stock, as a class, shall be entitled to elect the remaining members of the Board. (ii) Whenever under the provisions of subsection (i) above the right shall have accrued to the Holders of the shares of Preferred Stock as a class to elect the Series D Directors, the Holders of Preferred Stock shall be entitled immediately thereafter to act by written consent without a meeting to elect the Series D Directors. In the event that the holders of Preferred Stock do not choose to act by written consent in lieu of a meeting, the Board shall, within ten days after delivery to the Corporation at its principal office of a request to such effect by the Holders of at least 10% of the then outstanding shares of Preferred Stock, call a special meeting of the holders of Preferred Stock for the election of directors, to be held upon not less than 20 nor more than 30 days' notice to such holders. At any meeting so called or at any other meeting held while the holders of the outstanding shares of Preferred Stock shall have the voting power provided in subsection (i) above, the holders of a majority of the then outstanding shares of Preferred Stock, present in person or by proxy, shall be sufficient to constitute a quorum for the election of directors as herein provided. So long as the Non-Redemption Event shall continue, any vacancy in the office of a Series D Director may be filled by written consent of the Series D Directors remaining in office or, if none remains in office, by vote of the Holders of a majority of the outstanding shares of Preferred Stock, voting together as a single class. As long as the Non-Redemption Event shall continue, holders of any of the outstanding capital stock (other than the Preferred Stock) of the Corporation entitled to vote on the election of directors shall not be entitled to vote on the election or removal of the Series D Directors. (iii) Upon redemption of all outstanding Preferred Stock pursuant to this Section 8, the holders of the shares of Preferred Stock shall be divested of all of the voting rights specified in subsection (i) above. The term of office of each Series D Director elected by the holders of the Preferred Stock pursuant to such special voting right shall forthwith terminate -13- and the number of directors constituting the entire Board shall be reduced by the number of the Series D Directors. Section 9. Definitions. For the purposes hereof, the following terms shall have the following meanings: "Abbott Purchase Agreement" means the Common Stock Purchase Agreement, dated as of August 3, 1998, between the Corporation and Abbott Laboratories. "Affiliate" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 of the Securities Act. "Affiliated Party Transactions" means any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate. "Common Stock" means the Corporation's common stock, par value $0.15 per share, and stock of any other class into which such shares may hereafter have been reclassified or changed. "Conversion Ratio" means, at any time, a fraction, the numerator of which is the Series D Liquidation Preference Payment and the denominator of which is the Conversion Price at such time. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Full Recourse Loan" means a loan for which the liability to the Corporation is not limited to specific assets for payment. "Indebtedness" means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations under capitalized leases, (d) all obligations or liabilities of others secured by a lien on any asset of the Corporation or any Subsidiary, irrespective of whether such obligation or liability is assumed, (e) all obligations of the Corporation or any Subsidiary for the deferred purchase price of assets (other than trade debt incurred in the ordinary course of business) and (f) any obligation guaranteeing or intended to guarantee any obligation of any other Person. "Institutional Investor" shall have the meaning set forth in the Plan as in effect on the Original Issuance Date. "Nasdaq" means the Nasdaq National Market. "Per Share Market Value" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on the -14- Nasdaq or a Subsequent Market, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) on the Nasdaq or such Subsequent Market on which the Common Stock is then listed or quoted; (b) if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; (c) if prices for the Common Stock are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by a majority-in-interest of the Holders. "Person" means a corporation, an association, a partnership, a limited liability company, an organization, a business, an individual, a government or political subdivision thereof or a governmental agency. "Plan" means the Stockholder Protection Agreement, dated as of June 26, 1995, between the Corporation and First Fidelity Bank, N.A., as rights agent. "Purchase Agreement" means the Securities Purchase Agreement, dated as of December 6, 2001, to which the Corporation and the original Holders are parties, as amended, modified or supplemented from time to time in accordance with its terms. "Qualified Joint Venture" means any joint venture (whether in the form of a corporation, partnership, or other entity) in which the Corporation or a Wholly-Owned Subsidiary has at least a 20% equity interest; provided that the joint venture engages in activity reasonably related to the Corporation's business as conducted on the Original Issuance Date. "Securities Act" means the Securities Act of 1933, as amended. "Standstill Agreement" means the Standstill Agreement, dated as of August 3, 1998, between the Corporation and Abbott Laboratories. "Subsequent Market" means either the New York Stock Exchange, American Stock Exchange or Nasdaq SmallCap Market. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which 50% or more of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person (or combination thereof) and (ii) any partnership or limited liability company (a) the sole general partner or the managing general partner or member of which is such Person or a Subsidiary of such Person or (b) the only general partners or members of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Trading Day" means (a) a day on which the shares of Common Stock are traded on the Nasdaq or on such Subsequent Market on which the shares of Common Stock are then listed or quoted, or (b) if the shares of Common Stock are not listed on the Nasdaq or a -15- Subsequent Market, a day on which the shares of Common Stock are traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if the shares of Common Stock are not quoted on the OTC Bulletin Board, a day on which the shares of Common Stock are quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, that in the event that the shares of Common Stock are not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. "Underlying Shares" means, collectively, the shares of Common Stock into which the shares of Preferred Stock are convertible in accordance with the terms hereof. "Wholly-Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding capital stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person and the Wholly-Owned Subsidiaries of such Person. -16- EXHIBIT A NOTICE OF CONVERSION (To be Executed by the Registered Holder in order to convert shares of Preferred Stock) The undersigned hereby elects to convert the number of shares of Series D Convertible Preferred Stock indicated below, into shares of common stock, par value $0.15 per share (the "Common Stock"), of i-STAT Corporation, a Delaware corporation (the "Corporation"), according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Corporation in accordance therewith. No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any. Conversion calculations: Date to Effect Conversion Number of shares of Preferred Stock to be Converted Stated Value of shares of Preferred Stock to be Converted Number of shares of Preferred Stock remaining after Conversion Number of shares of Common Stock to be Issued Applicable Conversion Price Signature Name Address By the delivery of this Notice of Conversion the undersigned represents and warrants to the Corporation that its ownership of the Common Stock does not exceed the amounts determined in accordance with Section 13(d) of the Exchange Act, specified under Section 7(a)(iii) of the Certificate of Designations governing the rights and privileges of the Series D Convertible Preferred Stock. [Remainder of page intentionally left blank] -17- IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly executed as of the ____ day of _________ 2001. i-STAT Corporation By: ------------------------------ Name: Roger J. Mason Title: Vice President Chief Financial Officer -18- EX-10.60 4 y55595ex10-60.txt SECURITIES PURCHASE AGREEMENT Exhibit 10.60 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "Agreement") is dated as of December 6, 2001 among i-STAT Corporation, a Delaware corporation (the "Company"), and the purchasers identified on the signature pages hereto (each a "Purchaser" and collectively the "Purchasers"). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and not jointly, desire to purchase from the Company, securities of the Company as more fully described in this Agreement. NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated: "Abbott Standstill Agreement" means the Standstill Agreement, dated as of August 3, 1998, between the Company and Abbott Laboratories. "Abbott Securities Purchase Agreement" means the Common Stock Purchase Agreement, dated as of August 3, 1998, between the Company and Abbott Laboratories. "Affiliate" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144. "Aggregate Purchase Price" means the sum of the Closing Date Purchase Amount and the total amount that all Purchasers are required to pay under Section 2.3. "Cerberus" means Cerberus Partners, L.P., a Delaware limited partnership, and its Affiliates. "Certificate Of Designation" means a certificate of designation of rights and preferences of the Company's Series D Convertible Preferred Stock, in the form set forth in Exhibit A. "Closing" means the closing of the purchase and sale of the Securities pursuant to Section 2.1. "Closing Date" means the date of the Closing. "Closing Date Purchase Amount" means the total amount of money paid by all Purchasers to or as directed by the Company in accordance with Section 2.2(b)(i). "Closing Price" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on an Eligible Market or any other national securities exchange, the closing bid price per share of the Common Stock for such date (or the nearest preceding date if there is no price on such date) at 4 P.M. (local time for such Eligible Market or other national securities exchange) on the primary Eligible Market or exchange on which the Common Stock is then listed or quoted; (b) if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; (c) if prices for the Common Stock are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers holding a majority of the Preferred Stock. "Commission" means the Securities and Exchange Commission. "Common Stock" means the common stock of the Company, par value $0.15 per share, or such securities into which such stock shall hereafter be classified. "Company Counsel" means Paul, Hastings, Janofsky & Walker LLP, counsel to the Company. "Effective Date" means the date that an Underlying Shares Registration Statement is first declared effective by the Commission. "Eligible Market" means the New York Stock Exchange, the American Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, together with the rules and regulations promulgated thereunder. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Indebtedness" means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations under capitalized leases, (d) all obligations or liabilities of others secured by a lien on any asset of the Company or any Subsidiary, irrespective of whether such obligation or liability is assumed, (e) all obligations of the Company or any Subsidiary for - 2 - the deferred purchase price of assets (other than trade debt incurred in the ordinary course of business) and (f) any obligation of the Company or any Subsidiary guaranteeing or intended to guarantee any obligation of any other Person. "Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. "Preferred Shares" means the shares of Preferred Stock which are being purchased by and issued to the Purchasers pursuant to this Agreement. "Preferred Stock" means the Series D Convertible Preferred Stock of the Company, which is convertible into shares of Common Stock which shall have the terms set forth in the Certificate of Designation. "Plan" shall have the meaning set forth in Section 4.1(b). "Purchaser Counsel" means Schulte Roth & Zabel LLP, counsel to the Purchasers. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Closing Date, among the Company and the Purchasers, in the form of Exhibit B. "Required Effectiveness Date" means the date on which an Underlying Shares Registration Statement is required to become effective pursuant to the Registration Rights Agreement. "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Securities" means the Preferred Shares, Warrants and Underlying Shares. "Securities Act" means the Securities Act of 1933, as amended. "Series C Preferred Stock Purchase Agreement" means the Securities Purchase Agreement, dated as of August 2, 2001, among the Company and certain purchasers named therein. "Subsidiary" means any subsidiary of the Company that is required to be listed in Schedule 3.1(a). "Trading Day" means (a) any day on which the Common Stock is traded on its primary Trading Market, or (b) if the Common Stock is not then listed or quoted on any national securities exchange, market or trading or quotation facility, then a day on which trading occurs on the New York Stock Exchange (or any successor thereto). - 3 - "Trading Market" means Nasdaq National Market or any other national securities exchange, market or trading or quotation facility on which the Common Stock is then listed or quoted. "Transaction Documents" means this Agreement, the Securities, the Registration Rights Agreement, the Certificate of Designations, the Transfer Agent Instructions and any other documents or agreements executed in connection with the transactions contemplated hereunder. "Transfer Agent Instructions" means instructions to the Company's transfer agent, in the form set forth in Exhibit E. "Underlying Shares" means the shares of Common Stock issuable upon conversion of the Preferred Shares and upon exercise of the Warrants. "Underlying Shares Registration Statement" means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Underlying Shares by the Purchasers and their assignees. "Warrants" means the Common Stock purchase warrants, in the form set forth in Exhibit D, issued to each Purchaser at the Closing. "Warrant Shares" means the shares of Common Stock issuable upon exercise of the Warrants. ARTICLE II PURCHASE AND SALE Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to the Purchasers, and the Purchasers shall, severally and not jointly, purchase from the Company, the Preferred Shares and the Warrants set forth next to the Purchasers' names on the investor allocation table attached hereto as Exhibit F (the "Investor Allocation Table"). The Closing shall take place at the offices of Purchaser Counsel on or before December 14, 2001, subject to the satisfaction or waiver of the conditions set forth in Article V of this Agreement, or at such other location or time as the parties may agree. At the Closing, each Purchaser shall deliver or cause to be delivered to the Company an amount equal to the product of the number of Preferred Shares indicated next to such Purchaser's name on the Investor Allocation Table multiplied by $1,000, all in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose. At or prior to the Closing, each Purchaser may designate in writing its Affiliates to be named as "Purchasers" hereunder. - 4 - ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to the Purchasers as of the date hereof and as of the date of Closing: (a) Subsidiaries. The Company has no subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the Company owns all of the capital stock of each Subsidiary free and clear of any lien, charge, security interest, encumbrance, right of first refusal or other restriction (collectively, "Liens"), and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights. If the Company has no subsidiaries, then references in the Transaction Documents to the Subsidiaries will be disregarded. (b) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate: (i) adversely affect the legality, validity or enforceability of any Transaction Document, (ii) have or result in a material adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair the Company's ability to perform fully on a timely basis its obligations under any of the Transaction Documents (any of (i), (ii) or (iii), a "Material Adverse Effect"). (c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action is required by the Company. Each of the Transaction Documents has been (or upon delivery will be) duly executed by the Company and, when delivered in accordance with the terms hereof and assuming the applicable Transaction Documents constitute the legal, valid and binding agreement of each party other than the Company, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, by-laws or other organizational or charter documents. - 5 - (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not: (i) conflict with or violate any provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) subject to obtaining the Required Approvals (as defined below), conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or result in a Material Adverse Effect. (e) Filings, Consents and Approvals. Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) the filings required under Section 4.8 and the required filing of the Certificate of Designation pursuant to Section 2.2, (ii) the filing with the Commission of the Underlying Shares Registration Statement, (iii) the application(s) to each Trading Market for the listing of the Underlying Shares for trading thereon in the time and manner required thereby and (iv) applicable Blue Sky filings (collectively, the "Required Approvals"). (f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Company has on the date hereof and will, at all times while the Preferred Shares and the Warrants are outstanding, maintain an adequate reserve of duly authorized shares of Common Stock, reserved for issuance to the holders of the Preferred Shares and the Warrants, to enable it to perform its conversion, exercise and other obligations under this Agreement, the Certificate of Designation and the Warrants. Such number of reserved and available shares of Common Stock is not less than 4,687,500 (collectively, the "Initial Minimum"). All such authorized shares of Common Stock shall be duly reserved for issuance to the holders of the Preferred Shares and the Warrants. When issued in accordance with the Certificate of Designation and the Warrants, the Underlying Shares will be duly authorized, validly issued, fully paid and nonassessable, free and clear of all Liens. (g) Capitalization. The number of shares and type of all authorized, issued and outstanding capital stock of the Company is set forth in Schedule 3.1(g). No securities of the Company are entitled to preemptive or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase - 6 - and sale of the Securities and except as disclosed in Schedule 3.1(g), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as set forth in Schedule 3.1(g), the issue and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers and other than to Abbott Laboratories) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. (h) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials being collectively referred to herein as the "SEC Reports" and, together with the Schedules to this Agreement, the "Disclosure Materials") on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except as set forth in Schedule 3.1(h), the financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved ("GAAP"), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. All material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject have been filed as exhibits to the SEC Reports as required under the Exchange Act. (i) Material Changes. Since the date of the latest audited financial statements included within the SEC Reports filed with the Commission prior to the date hereof, except as specifically disclosed in the SEC Reports filed with the Commission prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected or reserved against in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or - 7 - the identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or, except for the redemption of the Company's Series C Convertible Preferred Stock and cancellation of the related warrants in accordance with Section 5, purchased, redeemed, cancelled or made any agreements to purchase, redeem, or cancel any shares of its capital stock or securities, and (v) the Company has not issued any equity securities to any officer, director, consultant or Affiliate, except pursuant to existing Company stock option plans. (j) Litigation. Except as set forth in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an "Action") which: (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, individually or in the aggregate, have or result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. The Company does not have pending before the Commission any request for confidential treatment of information, and the Company does not expect to make any such request prior to the Required Effectiveness Date. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. (k) Labor Relations. No material labor problem exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company. (l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have or result in a Material Adverse Effect. (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not, individually or in the - 8 - aggregate, have or result in a Material Adverse Effect ("Material Permits"), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. (n) Title to Assets. Except as set forth in Schedule 3.1(n), the Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance. (o) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the "Intellectual Property Rights"). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person, and to the knowledge of the Company, as such Intellectual Property Rights violate or infringes upon the rights of any Person, except to the extent any such violation or infringement would not result in a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights that could have or result in a Material Adverse Effect. (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business. (q) Transactions With Affiliates and Employees. Except as set forth in SEC Reports filed prior to the date hereof, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property or the license of Intellectual Property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. - 9 - (r) Redemption of Series C Preferred Stock. The redemption of the Series C Preferred Stock in full, and the related cancellation of 555,000 of warrants to purchase Common Stock (collectively, the "Series C Redemption") have been duly authorized by all necessary corporate actions on the part of the Company. The Series C Redemption does not and will not: (i) conflict with or violate any provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or any event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with our without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected. (s) Certain Fees. Except as described in Schedule 3.1(s), no brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Company agrees that the Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of any Person for fees of the type contemplated by this Section 3.1(s) with the transactions contemplated by this Agreement. (t) Private Placement. Assuming the accuracy of the representations and warranties of the Purchasers set forth in Sections 3.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers as contemplated hereby are exempt from the registration requirements of the Securities Act. Neither the Company nor any Person acting on the Company's behalf has sold or offered to sell or solicited any offer to buy the Securities by means of any form of general solicitation or advertising. Neither the Company nor any of its Affiliates nor any person acting on the Company's behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would: (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale of the Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction Documents to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or shareholder approval provisions, including without limitation under the rules and regulations of any Trading Market. The Company is not, and is not an Affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (u) Form S-3 Eligibility. The Company is eligible to register its Common Stock for resale by the Purchasers under Form S-3 promulgated under the Securities Act. - 10 - (v) Listing and Maintenance Requirements. The Company has not, in the two years preceding the date hereof, received notice (written or oral) from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. (w) Registration Rights. Except as set forth on Schedule 3.1(w), no holder of the Company's securities has any demand or piggyback registration rights with respect to such securities and the Company has not agreed to grant such rights to any Person. (x) Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation the Company's issuance of the Securities and the Purchasers' ownership of the Securities, including the Purchaser's acquisition of the Underlying Shares. The Company and its Board of Directors have taken all necessary action to designate Cerberus as a "Minority Investor" as defined in the Plan (as defined herein) (A) with the right to acquire up to twenty-five percent (25%) of the Company's outstanding voting securities upon termination of the Abbott Standstill Agreement and (B) with the right to acquire up to 34% of the shares of the Common Stock upon termination of the Abbott Purchase Agreement. (y) Disclosure. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Section 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants to the Company as follows: (a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations thereunder. The purchase by such Purchaser of the Securities hereunder has been (or upon delivery will be) duly authorized by all necessary action on the part of such Purchaser. Each of this Agreement and the Registration Rights Agreement has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms. - 11 - (b) Investment Intent. Such Purchaser is acquiring the Securities as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof other than to Affiliates; provided, however, that such Purchaser retains the right, subject to the provisions of this Agreement, the Registration Rights Agreement and the Warrants, at all times to sell or otherwise dispose of all or any part of such Securities pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed a representation or warranty by such Purchaser to hold Securities for any amount of time. Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities. (c) Purchaser Status. At the time such Purchaser was offered the Preferred Shares and the Warrants, it was, and at the date hereof it is, and at each exercise date under its respective Warrants, it will be, an "accredited investor" as defined in Rule 501(a) under the Securities Act. Such Purchaser has not been formed solely for the purpose of acquiring the Securities. (d) Experience of such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. (e) Ability of such Purchaser to Bear Risk of Investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. (f) Access to Information. Such Purchaser acknowledges that it has reviewed the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and the Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel shall modify, amend or affect such Purchaser's right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company's representations and warranties contained in the Transaction Documents. (g) General Solicitation. To the best of its knowledge, such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media - 12 - or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. (h) Reliance. Such Purchaser understands and acknowledges that: (i) the Securities are being offered and sold to it without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and (ii) the availability of such exemption, depends in part on, and the Company will rely upon the accuracy and truthfulness of, the foregoing representations and such Purchaser hereby consents to such reliance. (i) Beneficial Ownership. Such Purchaser does not on the Closing Date (after giving effect to the consummation of the transactions contemplated hereunder), beneficially own (as determined in accordance with Section 13(d) of the Exchange Act) in excess of 14.999% of the shares of Common Stock outstanding on the Closing Date, assuming enforcement of all exercise and conversion limitations set forth in the applicable Transaction Documents. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2. ARTICLE IV OTHER AGREEMENTS OF THE PARTIES Section 4.1 Transfer Restrictions. (a) Securities may only be disposed of pursuant to an effective registration statement under the Securities Act, to the Company or pursuant to an available exemption from or in a transaction not subject to the registration requirements of the Securities Act, and in compliance with any applicable state securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or to the Company, except as otherwise set forth herein, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books of the Company and with any transfer agent for the securities of the Company, without any such legal opinion, any transfer of Securities by a Purchaser to an Affiliate of such Purchaser, provided that the transferee certifies to the Company that it is an "accredited investor" as defined in Rule 501(a) under the Securities Act and that it is acquiring the Securities solely for investment purposes (subject to the qualifications hereof). As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement. (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of the following legend on the Securities: - 13 - NEITHER THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE]] HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. None of the Securities shall contain the legend set forth above or any other legend (other than as required pursuant to the Stockholder Protection Plan, dated as of June 26, 1995 between the Company and First Fidelity Bank, National Association, as rights agent (the "Plan")): (i) while a registration statement is effective under the Securities Act to cover the resale of such security, or (ii) if Rule 144(k) may be utilized by the seller of such security or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). The Company shall cause its counsel to issue the legal opinion included in the Transfer Agent Instructions to the Company's transfer agent on the Effective Date. If any Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Warrant Shares issuable in respect thereto, such Warrant Shares shall be issued without legends (except any legend required by the Plan). If any Warrant is exercised at any time by cashless exercise at a time when Rule 144(k) is applicable to the resale of the Warrant Shares, such Warrant Shares shall be issued without legends (except any legend required by the Plan). The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(b), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Company's transfer agent of a certificate representing Securities issued with a restrictive legend, deliver or cause to be delivered to such Purchaser a certificate representing such Securities that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section. Section 4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance and conversion and exercise (as applicable) of the Securities will result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligation to issue the Securities - 14 - pursuant to the Transaction Documents is unconditional and absolute, regardless of the effect of any such dilution. Section 4.3 Furnishing of Information. As long as any Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Upon the request of any such Person, the Company shall deliver to such Person a written certification of a duly authorized officer as to whether it has complied with the preceding sentence. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. Section 4.4 Integration. The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers. Section 4.5 Reservation and Listing of Securities. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents which number shall not be less than the Initial Minimum. The Company shall: (i) in the time and manner required by each Trading Market, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock equal to no less than the sum of the Common Shares and the Initial Minimum, (ii) take all steps necessary to cause such shares to be approved for listing on each Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing, and (iv) maintain the listing of such shares on each such Trading Market or another Eligible Market. Section 4.6 Conversion and Exercise Procedures. The Transfer Agent Instructions and Conversion Notice, as defined in the Certificate of Designations, set forth the totality of the procedures with respect to the conversion of the Preferred Shares. The Transfer Agent Instructions and Form of Election to Purchase under the Warrants set forth the totality of the procedures with respect to the exercise of the Warrants. No additional legal opinion or other information or instructions shall be necessary to enable the Purchasers to convert their Preferred Shares or exercise their Warrants. The Company shall honor conversions of the Preferred Shares and exercises of the Warrants and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents. Section 4.7 Right of First Refusal. - 15 - (a) So long as the Purchasers and their Affiliates beneficially own shares of Common Stock (such amount to include the Preferred Shares and the Warrant Shares without regard to limitations on conversion or exercise) equal to at least fifteen percent (15%) of the shares of Common Stock outstanding on a fully diluted basis (excluding employee stock options) immediately following the Closing Date, if at any time the Company wishes to, directly or indirectly, (i) sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or the Subsidiaries' equity or equity equivalent securities at a price per share less than $8.00 per share, including without limitation any Indebtedness, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable for Common Stock or (ii) borrow any funds or otherwise become subject to, whether directly or by way of guarantee or otherwise, any Indebtedness (including capitalized leases and sale/leaseback transactions) (any such action under (i) or (ii) being referred to as a "Subsequent Transaction"), pursuant to the terms of a bona fide offer received from a third party, the Company shall submit such offer in writing of the Subsequent Transaction to each of the Purchasers (the "Subsequent Transaction Notice"). The Subsequent Transaction Notice shall describe in reasonable detail the proposed terms of such Subsequent Transaction including price of the proposed sale, transfer or issuance, the amount of proceeds intended to be raised thereunder, the Person with whom such Subsequent Placement is proposed to be effected, and attached to which shall be a commitment letter, proposal letter, term sheet or similar document relating thereto. The Subsequent Transaction Notice shall further state that the Purchasers shall have the right to enter into a Subsequent Transaction for the same price and on the same terms and conditions as set forth in the Subsequent Transaction Notice and that if the Subsequent Transaction involves voting securities, the Company will adjust the terms and conditions as set forth in the Subsequent Transaction Notice so that the Purchaser may participate in full without triggering certain rights under the Plan, the Abbott Standstill Agreement or the Abbott Securities Purchase Agreement. Within ten (10) days after receipt of the Subsequent Transaction Notice, each Purchaser shall give notice to the Company of its intent to provide all financing for a Subsequent Transaction (in full) to the Company on a pro rata basis determined by the aggregate amount of Preferred Shares held by each Purchaser on the same terms and conditions as set forth in the Subsequent Transaction Notice. The Company and the Purchasers shall use their commercially reasonable efforts to complete such mutually acceptable documentation by the later of (a) the time frame, as set forth in the commitment letter, proposal letter, term sheet or similar document or (b) 30th day following the date of the delivery of the Subsequent Transaction Notice. If the Purchasers shall fail to so notify the Company of their willingness to participate in the full Subsequent Transaction, the Company shall not be obligated to negotiate with any Purchaser and may effect such Subsequent Transaction on the terms and to the Persons set forth in the Subsequent Transaction Notice; provided that the Company must provide the Purchasers with a second Subsequent Transaction Notice, and the Purchasers will again have the right of first refusal set forth above in this paragraph (b), if the Subsequent Transaction subject to the initial Subsequent Transaction Notice is not consummated for any reason on the terms set forth in such Subsequent Transaction Notice within 60 Trading Days after the date of the initial Subsequent Transaction Notice with the Person identified in the Subsequent Transaction Notice. If the Purchasers indicate a willingness to provide financing in excess of the amount set forth in the Subsequent Transaction Notice, then each Purchaser will be entitled to provide financing pursuant to such Subsequent Transaction Notice up to an amount equal to such Purchaser's pro rata portion of the - 16 - aggregate purchase price paid for the Securities under this Agreement, but the Company shall not be required to accept financing from the Purchasers in an amount in excess of the amount set forth in the Subsequent Transaction Notice. Notwithstanding the foregoing, the provisions of this Section 4.7(a) shall be subject to any right of first refusal or right of maintenance that the parties to the Series C Preferred Stock Purchase Agreement may have and to any right of maintenance that Abbott Laboratories may have under Section 8.2(a) of the Abbott Securities Agreement. (b) The restrictions contained in paragraph (a) of this Section 4.7 shall not apply to: (i) the granting of shares of Common Stock, restricted stock awards or similar equity incentive awards to employees, officers and directors of the Company pursuant to any stock option plan duly adopted by the Company or to the issuance of Common Stock upon exercise of such options or, (ii) the issuance of options, warrants, stock appreciation rights or shares of Common Stock to bona fide consultants of the Company in payment of consulting fees of up to an aggregate of $500,000 in any twelve month period based upon the applicable market price of the Common Stock, (iii) the issuance of warrants or shares of Common Stock in connection with bona fide acquisitions by the Company, (iv) the sale of shares of Common Stock to Abbott Laboratories, or (v) the issuance of shares of Common Stock upon exercise of any warrant or option permitted to be issued pursuant to this Section 4.7(d). (c) The Company shall not create any Lien, claim or encumbrance on any of the Company's properties, except (A) pursuant to financings completed in accordance with the procedures of (a) above, (B) leases of equipment or other property and (C) in the ordinary course of business. Section 4.8 Securities Laws Disclosure; Publicity. The Company shall: (i) on the Closing Date, issue a press release acceptable to the Purchasers disclosing the transactions contemplated hereby and (ii) make such other filings and notices relating to the transactions contemplated hereby in the manner and time required by the Commission. The Company shall, at least two Trading Days prior to the filing or dissemination of any disclosure required by this paragraph, provide a copy thereof to the Purchasers for their review. The Company and the Purchasers shall consult with each other in issuing any press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency or Trading Market with respect to the transactions contemplated hereby, and neither party shall issue any such press release or otherwise make any such public statement, filing or other communication without the prior consent of the other, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement, filing or other communication; provided that in the event any press release or public statement or filing of other communications made prior to the Closing Date with respect to the transactions contemplated hereby, such statement, filing or other communication shall state that the consummation of this transaction is subject to customary closing conditions. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except to the extent such disclosure (but not any disclosure as to the controlling Persons thereof) is - 17 - required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure. Section 4.9 Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes. Section 4.10 Indemnification of the Purchasers. The Company will indemnify and hold the Purchasers and their directors, officers, shareholders, partners, employees and agents (each, a "Purchaser Party") harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to any misrepresentation, breach or inaccuracy, or any allegation by a third party that, if true, would constitute a breach or inaccuracy, of any of the representations, warranties or covenants made by the Company in this Agreement or in the other Transaction Documents. The Company will reimburse such Purchaser Party for its reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred. Section 4.11 Indemnification of the Company. Each Purchaser will, severally and not jointly, indemnify and hold the Company and its directors, officers, shareholders, partners, employees and agents (each, a "Company Party") harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation that any such Company Party may suffer or incur as a result of or relating to any misrepresentation, breach or inaccuracy, or any allegation by a third party that, if true, would constitute a breach or inaccuracy of any of the representations, warranties or covenants made by such Purchaser in this Agreement or in the other Transaction Documents. Such Purchaser will, severally and not jointly, reimburse such Company Party for its reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred. Section 4.12 Stockholder Protection Plan; Standstill Agreement; Abbott Securities Purchase Agreement. No claim will be made or enforced by the Company that any Purchaser is an "Acquiring Person" under the Plan or in any way could be deemed to trigger the provisions of the Plan by virtue of receiving Securities under the Transaction Documents. Each Purchaser other than those who are "Institutional Investors" under the Plan severally agree (so long as the Standstill Agreement is in full force and effect) not to acquire in excess of 14.99% (calculated in accordance with Rule 13d of the Exchange Act) of the Company's outstanding voting securities. Each Purchaser severally agrees (so long as Section 6.3(b) of the Abbott Securities Purchase Agreement is in full force and effect and assuming the expiration and termination of the Standstill Agreement) not to acquire in excess of 24.99% (calculated in accordance with Rule 13d of the Exchange Act) of the Company's outstanding voting securities on any date that such Purchaser holds Warrants or Preferred Shares. At any time after Section 6.3(b) of the Abbott Securities Purchase Agreement is terminated in accordance with its terms, each Purchaser severally agrees not to acquire shares of Common Stock that would otherwise trigger the provisions of the Plan on any date that such Purchaser holds Warrants or Preferred - 18 - Shares. For so long as the Purchaser holds any Preferred Stock or Warrants, it agrees that it will not take any action that would make it an "Acquiring Person" under the Plan (including, without limitation, commencing or announcing an intention to commence, a tender or exchange offer for the Company's outstanding securities). Section 4.13 [Intentionally Omitted]. Section 4.14 Certain Trading Restrictions. Each Purchaser agrees that neither it nor its Affiliates will enter into any short sales. Section 4.15 Board of Directors. For so long as Cerberus beneficially owns shares of Common Stock (such amount to include the Preferred Shares and the Warrant Shares without regard to limitations on conversion or exercise) equal to at least ten percent (10%) of the shares of Common Stock outstanding on a fully diluted basis (excluding employee stock options) at any time, Cerberus shall have the right to appoint one member of the Board of Directors ("Board") (the "Cerberus Designee"). The Cerberus Designee shall be either Daniel Frank (so long as he is employed by Cerberus) or Stephen Feinberg (so long as he is employed by Cerberus). The Cerberus Designee shall be entitled to receive reimbursement for all reasonable costs incurred in attending such meetings in accordance with the Company's policies then in effect with respect to such reimbursement. To the extent permitted by law, the Company will indemnify the Cerberus Designee for the actions of such designee as a member of the Board and/or any committee thereof to the same extent the Company indemnifies all other members of the Board. As long as the Cerberus Designee remains as a member of the Board, the Company will maintain director and officer insurance policies in amounts and on terms, which are reasonable for companies similarly situated to the Company. Any vacancy in the position of a director appointed pursuant to this Section 4.15 shall be filled by and only by Cerberus. Such director may, during his or her term of office, be removed at any time, with or without cause, by Cerberus. The Company shall give written notice, to Cerberus and to its designee as director, of each Board meeting and shall provide to such persons an agenda and minutes of such Board meeting no later than it gives such notice and provides such items to the other Board members. ARTICLE V CONDITIONS TO CLOSING Section 5.1 Conditions Precedent to the Obligations of the Purchasers. The obligation of each Purchaser to acquire Securities at the Closing is subject to the satisfaction or waiver by such Purchaser, at or before the Closing, of each of the following conditions: (a) Representations and Warranties. The representations and warranties of the Company set forth in Article III shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date (except for (i) representations and warranties that speak of a specific date, which shall be true and correct as of such date and (ii) representations and warranties that are qualified by "in all material respects" or "Material Adverse Effect" shall be true and correct in all respects as of the date when made and as of the Closing as though made on and as of such date); - 19 - (b) Closing Deliveries. At the Closing, the Company shall deliver or cause to be delivered to each Purchaser all of the following documents or instruments, or evidence of completion thereof, each in form and substance satisfactory to the Purchasers and their counsel: (i) one or more stock certificates evidencing a number of Preferred Shares indicated next to such Purchaser's name on the Investor Allocation Table, registered in the name of such Purchaser; (ii) a Warrant, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire the number of Warrant Shares indicated next to such Purchaser's name on the Investor Allocation Table; (iii) evidence that the Certificate of Designation has been filed on or prior to the Closing Date with the Secretary of State (or other appropriate office) of Delaware; (iv) the legal opinion of Company Counsel, in the form set forth in Exhibit C, executed by such counsel and delivered to the Purchasers; (v) a Registration Rights Agreement duly executed by the Company; (vi) a certificate evidencing the incorporation and good standing of the Company issued by the Secretary of State of Delaware as of a date within five days of the Closing Date; (vii) a certified copy of the certificate of incorporation of the Company as certified by the Secretary of State of the State of Delaware as of a date within five days of the Closing Date; (viii) a secretary's certificate, dated as of the Closing Date, certifying as to (A) the resolutions of the Company authorizing the transactions contemplated by the Transaction Documents, (B) the certificate of incorporation and (C) the by-laws, each as in effect at the Closing; and (ix) a certificate, executed by a chief executive officer of the Company, dated as of the Closing Date, as to the conditions in Section 5.1(a). (c) Performance. The Company and each other Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing; (d) Consents. All necessary governmental, shareholder and third party consents and Required Approvals necessary in connection with the consummation of the transactions contemplated herein shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Purchasers) and shall remain in effect; - 20 - (e) Series C Consent. The holders of the Series C Preferred Stock shall have waived their right of first refusal in whole with respect to the transactions contemplated hereby or failed to exercise such right in accordance with the terms of the Series C Preferred Stock Purchase Agreement; (f) Series C Redemption. The outstanding shares of Series C Preferred Stock and related warrants to purchase Common Stock shall have been redeemed by the Company; (g) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated, applied or endorsed by any court or governmental authority of competent jurisdiction that prevents, prohibits or imposes a material adverse condition upon the consummation of any of the transactions contemplated by the Transaction Documents; (h) Adverse Changes. Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would be expected to have or result in a Material Adverse Effect; (i) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the Commission or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for trading on an Eligible Market; and (j) Engagement Letter. The engagement letter between the Company and Delaware Bay shall have been terminated or amended and the Purchasers and the Company shall have agreed in writing with respect to the satisfaction of any fees owing to UBS Warburg and Delaware Bay as a result of the consummation of the transactions contemplated herein. Section 5.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell Securities at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions: (a) Representations and Warranties. The representations and warranties of the Purchasers contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date; and (b) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents. (c) Consents. All necessary governmental, shareholder and third party consents and approvals necessary in connection with the consummation of the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to Purchaser) and shall remain in effect; - 21 - (d) Engagement Letter. The engagement letter between the Company and Delaware Bay shall have been terminated or amended and the Purchasers and the Company shall have agreed in writing with respect to the satisfaction of any fees owing to UBS Warburg and Delaware Bay as a result of the consummation of the transactions contemplated herein; and (e) Series C Consent. The holders of the Series C Preferred Stock shall have waived their right of first refusal in whole with respect to the transactions contemplated hereby or failed to exercise such right in accordance with the terms of the Series C Preferred Stock Purchase Agreement. Section 5.3 Termination. The Purchasers shall have the right to terminate this Agreement, by written notice to the Company, at any time after December 14, 2001, if the Company has not satisfied the conditions set forth in Section 5.1. ARTICLE VI MISCELLANEOUS Section 6.1 Fees and Expenses. At the Closing, the Company shall (a) reimburse Cerberus Partners, L.P. ("Cerberus") for its fees and expenses (including all fees and expenses of Purchaser Counsel) incurred in connection with the preparation and negotiation of the Transaction Documents by paying to Cerberus (or, at Cerberus' election, directly to Purchaser Counsel), an aggregate amount of $30,000 and (b) pay all fees and expenses with respect to the satisfaction of any fees and expenses owing to UBS Warburg and Delaware Bay as a result of the consummation of the transactions contemplated herein. In lieu of the payments required by the immediately preceding sentence, Cerberus shall retain the amount of such payments instead of delivering such amounts to the Company at the Closing and, with respect to clause (b) in the immediately preceding sentence, the Company shall direct Cerberus to pay each of UBS Warburg and Delaware Bay out of such retained amount. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the issuance of the Securities. Section 6.2 Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. Section 6.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 5:30 p.m. (New York City time) (with confirmation of transmission) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via - 22 - facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) (with confirmation of transmission) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service (next day service specified), or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Company: i-STAT Corporation 104 Windsor Center Drive East Windsor, NJ 08520 Facsimile No.: (609) 243-9311 Attn: Chief Financial Officer With a copy to: Paul, Hastings, Janofsky & Walker LLP 1055 Washington Boulevard Stamford, CT 06901 Facsimile No.: (203) 359-3031 Attn: Esteban A. Ferrer, Esq. If to a Purchaser: To the address set forth under such Purchaser's name on the signature pages hereof; or such other address as may be designated in writing hereafter, in the same manner, by such Person. Section 6.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each of the Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. Section 6.5 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. Section 6.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers. Section 6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. - 23 - Section 6.8 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the "New York Courts"). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient venue for such proceeding. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Section 6.9 Survival. The representations and warranties contained herein shall survive the Closing and the delivery, exercise and/or conversion of the Securities, as applicable, until the third year anniversary of the Closing Date. The agreements and covenants shall survive the Closing and the delivery, exercise and/or conversion of the Securities, as applicable, in accordance with their terms. Section 6.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. Section 6.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the - 24 - parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. Section 6.12 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. Section 6.13 Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOLLOW] - 25 - IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. i-STAT CORPORATION By: /s/ William P. Moffitt ------------------------------------ Name: William P. Moffitt Title: President & Chief Executive Officer [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR PURCHASERS FOLLOW] - 26 - CERBERUS PARTNERS, L.P. By: CERBERUS ASSOCIATES LLC, its General Partner By: /s/ Mark Neporent ----------------------------------- Name: Mark Neporent Title: Managing Director & Chief Operating Officer Address for Notice: Cerberus Partners, L.P. 450 Park Avenue New York, NY 10022 Facsimile No.: 212-935-2874 Attn: Mark Neporent With copies to: Schulte Roth & Zabel LLP 919 Third Avenue New York, NY 10022 Facsimile No.: (212) 593-5955 Attn: Stuart D. Freedman, Esq. - 27 - TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.............................................................................................1 Section 1.1 Definitions.................................................................................1 ARTICLE II PURCHASE AND SALE......................................................................................4 ARTICLE III REPRESENTATIONS AND WARRANTIES........................................................................5 Section 3.1 Representations and Warranties of the Company...............................................5 Section 3.2 Representations and Warranties of the Purchasers...........................................11 ARTICLE IV OTHER AGREEMENTS OF THE PARTIES.......................................................................13 Section 4.1 Transfer Restrictions......................................................................13 Section 4.2 Acknowledgment of Dilution.................................................................14 Section 4.3 Furnishing of Information..................................................................15 Section 4.4 Integration................................................................................15 Section 4.5 Reservation and Listing of Securities......................................................15 Section 4.6 Conversion and Exercise Procedures.........................................................15 Section 4.7 Right of First Refusal.....................................................................15 Section 4.8 Securities Laws Disclosure; Publicity......................................................17 Section 4.9 Use of Proceeds............................................................................18 Section 4.10 Indemnification of the Purchasers..........................................................18 Section 4.11 Indemnification of the Company.............................................................18 Section 4.12 Stockholder Protection Plan; Standstill Agreement; Abbott Securities Purchase Agreement.........................................................................18 Section 4.13 [Intentionally Omitted]....................................................................19 Section 4.14 Certain Trading Restrictions...............................................................19 Section 4.15 Board of Directors.........................................................................19 ARTICLE V CONDITIONS TO CLOSING..................................................................................19 Section 5.1 Conditions Precedent to the Obligations of the Purchasers..................................19 Section 5.2 Conditions Precedent to the Obligations of the Company.....................................21 ARTICLE VI MISCELLANEOUS 22 Section 6.1 Fees and Expenses..........................................................................22 Section 6.2 Entire Agreement...........................................................................22 Section 6.3 Notices....................................................................................22 Section 6.4 Amendments; Waivers........................................................................23 Section 6.5 Headings...................................................................................23 Section 6.6 Successors and Assigns.....................................................................23
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Page ---- Section 6.7 No Third-Party Beneficiaries...............................................................23 Section 6.8 Governing Law..............................................................................24 Section 6.9 Survival...................................................................................24 Section 6.10 Execution..................................................................................24 Section 6.11 Severability...............................................................................24 Section 6.12 Remedies...................................................................................25 Section 6.13 Independent Nature of Purchasers' Obligations and Rights...................................25
Exhibits: - -------- A Form of Certificate of Designation B Form of Registration Rights Agreement C Form of Opinion of Company Counsel D Form of Warrant E Form of Transfer Agent Instructions F Investor purchase price allocation
Schedules: - --------- 3.1(a) Subsidiaries 3.1(g) Capitalization 3.1(h) SEC Reports, Financial Statements 3.1(n) Title to Assets 3.1(s) Commissions 3.1(w) Registration Rights
- ii - Page ---- Exhibit F ---------
Shares of Series D Convertible Preferred Aggregate Purchase Purchasers Amount of Warrants Stock Price - ---------- ------------------ ----- ----- Cerberus Partners, L.P. 937,500 30,000 $30,000,000
- iii - EX-10.61 5 y55595ex10-61.txt FORM OF REGISTRATION RIGHTS AGREEMENT Exhibit 10.61 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of December ____, 2001, among i-STAT Corporation, a Delaware corporation (the "Company"), and the investors signatory hereto (each such investor is a "Purchaser" and all such investors are, collectively, the "Purchasers"). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of December 6, 2001, among the Company and the Purchasers (the "Purchase Agreement"). The Company and the Purchasers hereby agree as follows: 1. Definitions Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. "Business Day" means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other government actions to close. "Closing Date" shall have the meaning set forth in the Purchase Agreement. "Commission" means the Securities and Exchange Commission. "Common Stock" means the Company's common stock, par value $0.15 per share, or such securities that such stock shall hereafter be reclassified into. "Effectiveness Date" means, with respect to the initial Registration Statement required to be filed hereunder, the 120th day following the date of this Agreement and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 120th day following the date that such additional Registration Statement is required to be filed pursuant to Section 3(c). "Effectiveness Period" shall have the meaning set forth in Section 2(a). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holder" or "Holders" means the holder or holders, as the case may be, from time to time of Registrable Securities. "Indemnified Party" shall have the meaning set forth in Section 5(c). "Indemnifying Party" shall have the meaning set forth in Section 5(c). "Liquidated Damages" shall have the meaning set forth in Section 3(c). "Losses" shall have the meaning set forth in Section 5(a). "Person" means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. "Preferred Stock" means the Company's Series D Convertible Preferred Stock issued to the Purchasers in accordance with the Purchase Agreement. "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. "Prospectus" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. "Registrable Securities" means the shares of Common Stock issuable upon conversion of the Preferred Stock and exercise of the Warrants. "Registration Statement" means the registration statement and any additional registration statements contemplated by Section 3(c), including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. - 2 - "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder, or any successor statute. "Special Counsel" means one special counsel to the Holders, for which the Holders will be reimbursed by the Company pursuant to Section 4. "Warrants" shall have the meaning set forth in the Purchase Agreement. 2. Shelf Registration (a) The Company shall promptly prepare and file with the Commission a "Shelf" Registration Statement covering the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith as the Holders may consent) and shall contain (except if otherwise directed by the Holders) the "Plan of Distribution" attached hereto as Annex A, and cause the Registration Statement to become effective and remain effective as provided herein. The Company shall use all commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the Effectiveness Date, and shall use all commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until the date which is two years after the date that such Registration Statement is declared effective by the Commission or such earlier date when all Registrable Securities covered by such Registration Statement have been sold or may be sold without volume limitations or other restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and the affected Holders (the "Effectiveness Period"), provided, that the Company shall not be deemed to have used all commercially reasonable efforts to keep the Registration Statement effective during the Effectiveness Period if it voluntarily takes any action that would result in the Holders not being able to sell the Registrable Securities covered by such Registration Statement during the Effectiveness Period, unless such action is required under applicable law or the Company has filed a post-effective amendment to the Registration Statement and the Commission has not declared it effective. (b) The initial Registration Statement required to be filed hereunder shall include a number of shares of Common Stock equal to no less than 4,687,500. (c) If: (a) the Registration Statement fails to become effective by the 120th day after the Closing Date or (b) the Registration Statement, after it is filed with and declared - 3 - effective by the Commission, ceases to be effective as to all Registrable Securities covered thereby at any time prior to the expiration of the Effectiveness Period without being succeeded within fifteen Trading Days by an amendment to such Registration Statement or by a subsequent Registration Statement filed with and declared effective by the Commission, in each case other than as a result of the Company's ineligibility to use Form S-3 as a result of being delisted from Nasdaq (any such failure or breach being referred to as an "Event," and for purposes of clause (a) the date on which such 120 day period after the Closing Date is exceeded or for purposes of clause (b) the date on which such fifteen Trading Day-period is exceeded, being referred to as "Event Date"), then, on each such Event Date and on each monthly anniversary thereof until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as "Liquidated Damages" for the estimated cost to the Holder of not having liquid securities in the time contemplated by the Transaction Documents (as defined in the Purchase Agreement) and not as penalty, equal to 2% of the stated value of the Preferred Stock then held by such Holder pursuant to the Purchase Agreement. If the Company fails to pay any liquidated damages pursuant to this Section in full within seven (7) days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The liquidated damages pursuant to the terms hereof shall apply on a pro-rata basis for any portion of a month prior to the cure of an Event. 3. Registration Procedures In connection with the Company's registration obligations hereunder, the Company shall: (a) Not less than three Business Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall, (i) furnish to the Holders and their Special Counsel copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review and comment of such Holders and their Special Counsel, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities and their Special Counsel shall reasonably object. (b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible, and in any event - 4 - within ten days, to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and as promptly as reasonably possible provide the Holders and Holders' Counsel with true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented. (c) File additional Registration Statements with the Commission within twenty (20) days if the number of Registrable Securities at any time exceeds the number of shares of Common Stock then registered in the initial Registration Statement. (d) Notify the Holders of Registrable Securities to be sold and their Special Counsel as promptly as reasonably possible (and, in the case of (i)(A) below, not less than five Business Days prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Business Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a "review" of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders and Holders' Counsel); and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) if at any time the Company becomes aware that any of the representations and warranties of the Company contained in any Transaction Document (as defined in the Purchase Agreement) ceases to be true and correct in all material respects; (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (vi) of the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (e) Use all commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. - 5 - (f) Furnish to each Holder and their Special Counsel, without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission. (g) Promptly deliver to each Holder and their Special Counsel, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. (h) Prior to any public offering of Registrable Securities, use all commercially reasonable efforts to register or qualify or cooperate with the selling Holders and their Special Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or subject the Company to any material tax in any such jurisdiction where it is not then so subject. (i) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request. (j) Upon the occurrence of any event contemplated by Section 3(d)(vi), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain 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, in light of the circumstances under which they were made, not misleading. (k) Comply with all applicable rules and regulations of the Commission. 4. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable - 6 - Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Nasdaq, and (B) in compliance with applicable state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel for the Holders in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under the laws of such jurisdictions as the Holders of a majority of Registrable Securities may designate)), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company and, in case of Special Counsel for the Holders, up to $10,000, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. 5. Indemnification (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and approved in writing by such Holder for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in - 7 - writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(e). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. Such indemnification shall remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or its officers, directors, agents and controlling Person of such Holder and shall survive the transfer of the Registrable Securities. (b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of or based solely upon any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus or to the extent that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(e). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Such indemnification shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or such director, officer or controlling Person and shall survive the transfer of the Registrable Securities. (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party. - 8 - An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such 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 a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Business 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; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder). (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each 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, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. - 9 - The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(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 the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 6. Miscellaneous (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (b) No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof and without the consent of the Holders, enter into any agreement providing any such right to any of its security holders. (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 3(d)(ii), 3(d)(iii), 3(d)(iv), 3(d)(v) or 3(d)(vi), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 3(j), or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. - 10 - (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered. (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of at least a majority of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (New York City time) (with confirmation of transmission) on a Business Day, (ii) the Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (New York City time) (with confirmation of transmission) on any date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service (next day service specified), or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: IF TO THE COMPANY: i-STAT Corporation 104 Windsor Center Drive East Windsor, NJ 08520 Facsimile No.: (609) 243-9311 Attn: Chief Financial Officer WITH A COPY TO: Paul, Hastings, Janofsky & Walker LLP 1055 Washington Boulevard Stamford, CT 06901 Facsimile No.: (203) 359-3031 Attn: Esteban A. Ferrer, Esq. - 11 - IF TO A PURCHASER: To the address set forth under such Purchaser's name on the signature pages hereto. IF TO ANY OTHER PERSON WHO To the address of such Holder as it IS THEN THE REGISTERED HOLDER: appears in the stock transfer books of the Company or such other address as may be designated in writing hereafter, in the same manner, by such Person. (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement. (i) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. (j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the "New York Courts"). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the - 12 - prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (m) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (n) Shares Held by the Company and its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its Affiliates (other than any Holder or transferees or successors or assigns thereof if such Holder is deemed to be an Affiliate solely by reason of its holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. (o) Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser hereunder is several and not joint with the obligations of any other Purchaser hereunder, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. - 13 - IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. i-STAT CORPORATION By:_____________________________________ Name: Title: [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES TO FOLLOW] - 14 - _______________________________. By:_____________________________________ Name: Title: Address for Notice: With copies to: - 15 - Annex A PLAN OF DISTRIBUTION The Selling Stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares: -- ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; -- block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; -- purchases by a broker-dealer as principal and resale by the broker-dealer for its account; -- an exchange distribution in accordance with the rules of the applicable exchange; -- privately negotiated transactions; -- broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; a combination of any such methods of sale; and -- any other method permitted pursuant to applicable law. The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. The Selling Stockholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a Selling Stockholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act - 16 - in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Company is required to pay all fees and expenses incident to the registration of the shares, including fees and disbursements of one counsel to the Selling Stockholders. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. - 17 - EX-10.62 6 y55595ex10-62.txt FORM OF WARRANT Exhibit 10.62 THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. i-STAT CORPORATION WARRANT Warrant No. [ ] Originally Issued: December ___, 2001 i-STAT Corporation, a Delaware corporation (the "Company"), hereby certifies that, for value received, [ ], or its registered assigns (the "Holder"), is entitled to purchase from the Company up to a total of [937,500](1) shares of common stock, par value $0.15 per share (the "Common Stock"), of the Company (each such share, a "Warrant Share" and all such shares, the "Warrant Shares"), at any time and from time to time from and after the date hereof and through and including December ___, 2007(2) (the "Expiration Date"), at an exercise price equal to $8.00 per share subject to adjustments provided in Section 9 (the "Exercise Price"). 1. Definitions. In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein that are defined in the Purchase Agreement have the meanings given to such terms in the Securities Purchase Agreement, dated as of December 6, 2001, among the Company and the Purchasers identified on the signature pages thereto (the "Purchase Agreement"). 2. Registration of Warrant. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "Warrant Register"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. 3. Registration of Transfers. The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Transfer Agent or to the Company at its address specified herein. Upon any such registration or transfer, a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a "New Warrant"), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, - ---------- (1) To be allocated among funds. (2) To be the sixth anniversary of the Closing Date. shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant. 4. Exercise and Duration of Warrants. This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after [December ____, 2001] to and including the Expiration Date. At 5:30 P.M., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value. 5. Delivery of Warrant Shares. (a) Upon delivery of the Form of Election to Purchase to the Company (with the attached Warrant Shares Exercise Log) at its address for notice set forth in Section 13 and upon payment of the Exercise Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder, the Company shall promptly (but in no event later than three Business Days after the Date of Exercise (as defined herein)) issue and deliver to the Holder, a certificate for the Warrant Shares issuable upon such exercise with the legend required pursuant to the terms of the Purchase Agreement, if any. Any person so designated by the Holder to receive Warrant Shares shall be deemed to have become holder of record of such Warrant Shares as of the Date of Exercise of this Warrant. The Company shall, upon request of the Holder, if available, use its best efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions, provided, that, the Company may, but will not be required to change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust Corporation. A "Date of Exercise" means the date on which the Holder shall have delivered to the Company (i) the Form of Election to Purchase attached hereto (with the Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the Holder to be purchased. (b) If the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to Section 5(a) by the fourth Trading Day after the Date of Exercise, then the Holder will have the right to rescind such exercise. (c) In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to Section 5(a) by the fourth Trading Day after the Date of Exercise, and if after such fourth Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"), then the Company shall pay (1) in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver pursuant to Section 5(b) to deliver to the Holder in connection with the exercise at issue by (B) the closing bid price of the Common Stock at the time of the obligation giving rise to such purchase obligation and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such 2 exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations under Section 5(b). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with a market price on the date of exercise totaled $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In. (d) The Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. If the Company breaches its obligations under this Warrant, then, in addition to any other liabilities the Company may have hereunder and under applicable law, the Company shall pay or reimburse the Holder on demand for all costs of collection and enforcement (including reasonable attorneys fees and expenses). 6. Charges, Taxes and Expenses. Issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof. 7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. 8. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant 3 Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. 9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9. (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. (b) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, distributes to all holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each case, "Distributed Property"), then in each such case the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution shall be adjusted (effective on such record date) to equal the product of such Exercise Price times a fraction of which the denominator shall be such Exercise Price and of which the numerator shall be such Exercise Price less the then fair market value of the Distributed Property distributed in respect of one outstanding share of Common Stock, as determined by the Company's Board of Directors in good faith. If the Holder shall dispute the findings of the Company's Board of Directors, then such fair market value shall be determined by the Company's independent certified public accountants that regularly examine the financial statements of the Company. As an alternative to the foregoing adjustment to the Exercise Price, at the request of the Holder delivered before the 90th day after such record date, the Company will deliver to such Holder, within five Trading Days after such request (or, if later, on the effective date of such distribution), the Distributed Property that such Holder would have been entitled to receive in respect of the Warrant Shares for which this Warrant could have been exercised immediately prior to such record date. (c) Fundamental Transactions. If, at any time while this Warrant is outstanding: (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects 4 any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the "Alternate Consideration"). The aggregate Exercise Price for this Warrant will not be affected by any such Fundamental Transaction, but the Company shall apportion such aggregate Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder's request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder's right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. (d) Subsequent Equity Sales. (i) If, at any time while this Warrant is outstanding, the Company or any Subsidiary issues (x) additional shares of Common Stock or (y) rights, warrants, options or other securities or debt convertible, exercisable or exchangeable for shares of Common Stock or otherwise entitling any Person to acquire shares of Common Stock (collectively, "Common Stock Equivalents") at a price per share of Common Stock (the "Effective Price") less than the Exercise Price then in effect (subject to equitable adjustment for stock splits, combinations, dividends and similar events), then, at the option of the Holder, the Exercise Price shall be reduced to equal the Effective Price. The Exercise Price shall be readjusted to the Exercise Price that was in effect immediately prior to the issuance of such Common Stock Equivalents on the fifth (5th) Trading Day following the delivery to the Holder(s) by the Company of a written notice stating that a Common Stock Equivalent Termination Event has occurred. A Common Stock Equivalent Termination Event shall mean that all Common Stock Equivalents, the issuance of which gave rise to such adjustment in the Exercise Price, shall have expired or terminated in full without any of such Common Stock Equivalent having been exercised, exchanged, converted, repurchased or redeemed. (ii) If, at any time while this Warrant is outstanding, the Company or any Subsidiary issues Common Stock Equivalents with an Effective Price that floats or resets or otherwise varies or is subject to adjustment based on market prices of the Common Stock (a "Floating Price Security"), then for purposes of applying the preceding paragraph in connection with any subsequent exercise, the Effective Price will be determined separately on each Exercise Date and will be deemed to equal the lowest Effective Price at which any holder of 5 such Floating Price Security is entitled to acquire shares of Common Stock on such Exercise Date (regardless of whether any such holder actually acquires any shares on such date). (iii) Notwithstanding the foregoing, no adjustment will be made under this paragraph (d) in respect of: (i) the issuance of shares of Common Stock or the granting of options, restricted stock awards or similar equity incentive awards to employees, officers and directors of the Company at an exercise price not less than the Closing Price on the date immediately prior to the date of award pursuant to any stock option plan duly adopted by the Company or to the issuance of Common Stock upon exercise of such options, (ii) the issuance of options, warrants, stock appreciation rights or shares of Common Stock to bona fide consultants of the Company in payment of consulting fees of up to an aggregate of $500,000 in any twelve month period based upon the applicable Closing Price of the Common Stock, (iii) the issuance of Common Stock or Common Stock Equivalents in connection with strategic alliances by the Company that are approved by the Holders of a majority of the common stock purchase warrants issued pursuant to the Securities Purchase Agreement, (iv) the issuance of shares of Common Stock upon exercise of any warrant or option permitted to be issued pursuant to Section 9(d)(ii), or (v) shares of Common Stock issuable upon conversion of the Preferred Stock and exercise of other common stock purchase warrants issued pursuant to the Purchase Agreement. For purposes of this Agreement, Closing Price shall mean, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on an Eligible Market or any other national securities exchange, the closing price per share of the Common Stock for such date (or the nearest preceding date if there is no price on such date) at 4 P.M. (local time for such Eligible Market or other national securities exchange) on the primary Eligible Market or exchange on which the Common Stock is then listed or quoted; (b) if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; (c) if prices for the Common Stock are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers holding a majority of the Warrants. (e) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to paragraphs (a), (b) or (d) of this Section, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment. (f) Calculations. All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. 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. 6 (g) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company's Transfer Agent. (h) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least 20 calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice. 10. Payment of Exercise Price. (a) The Holder shall pay the Exercise Price in one of the following manners: (i) Cash Exercise. The Holder may deliver immediately available funds; or (ii) Cashless Exercise. The Holder may satisfy its obligation to pay the Exercise Price through a "cashless exercise," in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows: X = Y [(A-B)/A] where: X = the number of Warrant Shares to be issued to the Holder. Y = the number of Warrant Shares with respect to which this Warrant is being exercised. A = the average of the Closing Prices for the five Trading Days immediately prior to (but not including) the Exercise Date. 7 B = the Exercise Price. (b) For purposes of Rule 144 promulgated under the Securities Act of 1933, as amended, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement. 11. Limitation on Exercise. (a) Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by any Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the Exchange Act, do not beneficially own greater than 14.99% of the Company's outstanding voting securities unless (i) the Standstill Agreement, dated as of August 3, 1998, between the Company and Abbott Laboratories has been terminated or has expired, in the case of a Holder that is not an Institutional Investor and (ii) such conversion would not otherwise trigger the Plan, in the case of any Holder. For purposes of this provision, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Each delivery of an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this paragraph. The Company will have no obligation to issue shares of Common Stock in excess of the limitation referred to in this Section until such time, if any, as such shares of Common Stock may be issued in compliance with such limitation. (b) If the Exercise Price of the Warrants at the time of any exercise hereunder is less than the closing sales price of the Common Stock on the Trading Day immediately preceding the Closing Date, then the Company shall not issue on exercise of the Warrants an aggregate number of shares in excess of [4,011,956] shares of Common Stock (which equals 19.999% of the number of shares of Common Stock outstanding on the Trading Day immediately preceding the Original Issue Date) (subject to equitable adjustment for stock splits, combinations, dividends and similar events) (such number of shares, the "Issuable Maximum") unless the Company shall have theretofore (A) obtained the vote of shareholders ("Shareholder Approval"), if any, as may be required by the rules of the Nasdaq Stock Market (or successor thereto) applicable to approve the issuance of Common Stock in excess of the Issuable Maximum in a private placement whereby shares of Common Stock are deemed to have been issued at a price that is less than the greater of book or fair market value of the Common Stock, or (B) obtained an exemption from the requirement for Shareholder Approval from the Nasdaq Stock Market. 12. Fractional Shares. The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon exercise of this Warrant, 8 the Company shall pay an amount in cash equal to the average of the Closing Prices of the Common Stock for the five Trading Days immediately prior to (but not including) the Exercise Date multiplied by such fraction; provided that, unless the Holder requests otherwise, no payment shall be required pursuant to this sentence until the aggregate amount payable exceeds $1,000, at which time all previously deferred payments shall be made. 13. Notices. Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 5:30 p.m. (New York City time) (with confirmation of transmission) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) (with confirmation of transmission) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service (next day delivery specified), or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be: (i) if to the Company, to 104 Windsor Center Drive, East Windsor, NJ 08520, Facsimile No.: (609) 243-9311, attention Chief Financial Officer, or (ii) if to the Holder, to the address or facsimile number appearing on the Warrant Register or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section. 14. Warrant Agent. First Union National Bank shall serve as warrant agent under this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Warrant Register. 15. Miscellaneous. (a) This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns. (b) All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, 9 shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the "New York Courts"). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. (c) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof. (d) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK, SIGNATURE PAGE FOLLOWS] 10 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above. i-STAT CORPORATION By: ----------------------------------------- Name: Title: 11 FORM OF ELECTION TO PURCHASE (To be executed by the Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant) To i-STAT Corporation: The undersigned hereby irrevocably elects to purchase _____________ shares of common stock, $0.15 par value per share, of i-STAT Corporation (the "Common Stock") and , if such Holder is not utilizing the cashless exercise provisions set forth in this Warrant, encloses herewith $________ in cash, certified or official bank check or checks, which sum represents the aggregate Exercise Price (as defined in the Warrant) for the number of shares of Common Stock to which this Form of Election to Purchase relates, together with any applicable taxes payable by the undersigned pursuant to the Warrant. The Exercise Price applicable to the purchase hereunder equals $___________. By its delivery of this Form of Election To Purchase, the Holder represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number of shares of Common Stock (determined in accordance with Section 13(d) of the Securities Exchange Act of 1934) permitted to be owned under Section 11 of this Warrant to which this notice relates. 12 The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER - ----------------------------------------------------- (Please print name and address) - ----------------------------------------------------- Dated: [ ] Name of Holder: (Print) ------------------------------------ (By:) -------------------------------------- (Name:) (Title:) (Signature must conform in all respects to name of holder as specified on the face of the Warrant) 13 WARRANT SHARES EXERCISE LOG
- --------------------------------------------------------------- Date Number of Number of Number of Warrant Shares Warrant Shares Warrant Available to be Exercised Shares Exercised Remaining to be Exercised - ---------------------------------------------------------------- - ----------------------------------------------------------------
14 FORM OF ASSIGNMENT [To be completed and signed only upon transfer of Warrant] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by the within Warrant to purchase ____________ shares of Common Stock of i-STAT Corporation to which the within Warrant relates and appoints ________________ attorney to transfer said right on the books of i-STAT Corporation with full power of substitution in the premises. Dated: _______________, ____ _______________________________________ (Signature must conform in all respects to name of holder as specified on the face of the Warrant) ________________________________ Address of Transferee ________________________________ ________________________________ In the presence of: _______________________________________ 15 EX-99.1 7 y55595ex99-1.txt PRESS RELEASE Exhibit 99.1 FOR MORE INFORMATION CONTACT: Roger J. Mason, Chief Financial Officer (609) 469-0305, http://www.i-stat.com i-STAT ANNOUNCES SIGNING OF $30 MILLION FINANCING WITH AFFILIATES OF CERBERUS CAPITAL MANAGEMENT, L.P. i-STAT TO REDEEM SERIES C CONVERTIBLE PREFERRED STOCK EAST WINDSOR, NJ, December 7, 2001 --- i-STAT Corporation (Nasdaq: STAT) today announced the signing of a $30 million financing with affiliates of Cerberus Capital Management, L.P. The transaction involves the sale of 30,000 shares of a new Series D Convertible Preferred Stock at $1,000 per share. The transaction is subject to customary closing conditions and must close on or before December 14, 2001. i-STAT also announced that it has elected to redeem all of its Series C Convertible Preferred Stock issued in August to institutional investors, for a redemption price of approximately $20.5 million. The effect of this redemption and the issuance of the Series D Convertible Preferred Stock is to reduce the number of shares of Common Stock issuable upon exercise of warrants issued along with the Series C Preferred Stock from approximately 1.3 million to approximately 938 thousand, and to adjust the per share strike price of these warrants to $8.00. William Moffitt, president and chief executive officer of i-STAT, said: "I am delighted that we have been able to secure this financing from Cerberus, which will position i-STAT to achieve its long-term objectives while at the same time avoiding the dilutive effect from the conversion of the Series C Preferred Stock." The Series D Preferred Stock issued to Cerberus will be mandatorily redeemable on the 10th anniversary of issuance and may be redeemed by i-STAT on or after the sixth anniversary of issuance. The Series D Preferred Stock may be converted into Common Stock at the holders' option at a conversion price of $8.00. In addition, the Series D Preferred Stock will bear preferential dividends at a rate of 8.0% per year, which may be paid in cash, or accrue and become payable in cash upon redemption or in shares of Common Stock upon conversion. During periods that the Common Stock trades at or above $15.00 per share, the dividend rate is reduced to 2.0%, and if during subsequent periods the Common Stock trades below $10.00 per share, the dividend rate will again be increased to 8%. The Company intends to use the net proceeds of the Series D Preferred Stock for general corporate purposes, including the implementation of its marketing plans, new product research and development programs, expansion of manufacturing capacity, and for working capital. In connection with the new financing, investors in the Series D Preferred Stock will be issued 6-year warrants to purchase up to an additional 937,500 shares of i-STAT Common Stock at a per share strike price of $8.00. The resale of the shares of Common Stock issuable in the transaction will be registered with the Securities and Exchange Commission. UBS Warburg LLC and The Delaware Bay Company, Inc. acted as placement agents on the transaction. The foregoing summary does not contain all the material terms of the transaction. For a more complete description of the terms of the private placement, please consult i-STAT's Current Report on Form 8-K being filed with the Securities and Exchange Commission. i-STAT Corporation develops, manufactures and markets diagnostic products for blood analysis that provide health care professionals critical diagnostic information accurately and immediately at the point of patient care. Through the use of advanced semiconductor manufacturing technology, established principles of electrochemistry and state-of-the-art computer electronics, i-STAT developed the world's first hand-held automated blood analyzer capable of performing a panel of commonly ordered blood tests on two or three drops of blood in just two minutes at the patient's side. Certain statements in this press release may relate to future events and expectations and as such constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believes," "anticipates," "plans," "expects," and similar expressions are intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements expressed or implied by such forward-looking statements to vary significantly from reporting period to reporting period. Such factors include, among others, competition from existing manufacturers and marketers of blood analysis products who have greater resources than the Company, economic conditions affecting the company's target markets, the uncertainty of new product development initiatives, the ability to attract and retain key scientific, technological and management personnel, dependence upon limited sources for product manufacturing components, upon a single manufacturing facility and upon innovative and highly technical manufacturing techniques, market resistance to new products and point of care blood diagnosis, inconsistency in customer order patterns, domestic and international regulatory constraints, uncertainties of international trade, pending and potential disputes concerning ownership of intellectual property, availability of capital upon favorable terms and dependence upon and contractual relationships with strategic partners, particularly Abbott Laboratories. See additional discussion under "Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the year ended December 31, 2000, and other factors detailed from time to time in the Company's other filings with the Securities and Exchange Commission. -----END PRIVACY-ENHANCED MESSAGE-----