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<PAGE>   1


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        For The Fiscal Year Ended December 31, 2000

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        For The Transition Period From              To           .
                                      ------------    ----------

                         Commission file number 0-20652

                           AccuMed International, Inc.
             (Exact Name of Registrant as Specified in its Charter)


                   Delaware                             36-4054899
        (State or other jurisdiction of              (I.R.S. Employer
        incorporation or organization)              Identification No.)


              920 N. Franklin Street, Suite 402, Chicago, IL 60610
              ----------------------------------------------------
                (Address of principal            (Zip Code)
                  executive offices)

                  Registrant's telephone number: (312) 642-9200

       Securities registered under Section 12(b) of the Exchange Act: None

            Securities registered under Section 12(g) of the Exchange
                                      Act:

                     Common Stock, par value $0.01 per share
                                (Title of Class)

        Indicate by checkmark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

        Indicate by checkmark if disclosure of delinquent filers in response to
Item 405 of Regulation S-K is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]

        The aggregate market value of the common stock held by non-affiliates of
the registrant on March 21, 2001 at a closing sale price of $0.40625 as reported
by the Nasdaq Bulletin Board was approximately $1,811,000. Number of shares of
common stock outstanding on March 21, 2001: 5,739,838.

<PAGE>   2

ITEM 1 OF THIS FORM 10-K ENTITLED "BUSINESS" AND ITEM 7 OF THIS FORM 10-K
ENTITLED "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27a OF THE SECURITIES ACT OF 1933 AND SECTION 21e OF THE SECURITIES
EXCHANGE ACT OF 1934. FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN AND
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED IN OR IMPLIED BY THE
FORWARD-LOOKING STATEMENTS.

                                     PART I

ITEM 1. BUSINESS

        GENERAL DEVELOPMENT OF BUSINESS

        AccuMed International, Inc. is a Delaware corporation. AccuMed's
predecessor was incorporated in California in June 1988 under the name Alamar
Biosciences, Inc. and was engaged in developing, manufacturing and marketing
microbiology products.

        AccuMed has a wholly owned subsidiary, Oncometrics Imaging Corp., a
company continuing under the laws of the Yukon Territory, Canada. Oncometrics
was formed in 1995 to complete the development of an automated instrument
designed to be used in the detection, diagnosis and prognosis of early-stage
lung cancer by measuring the DNA in the nuclei of cells on microscope slides.
AccuMed acquired a two-thirds interest in Oncometrics in 1996. In 1998, we
acquired the final one-third interest in Oncometrics.

        On January 29, 1999, AccuMed sold substantially all of the assets and
certain liabilities related to our microbiology business, including Alamar,
Sensititre and the ESP product line. AccuMed received gross proceeds of $
15,150,000 in cash at the closing. The proceeds were used to retire $8,498,000
in debt, and the balance was retained for general corporate and working capital
purposes.

        AccuMed and Ventana Medical Systems, Inc. entered into a License and
Development Agreement dated March 24, 2000. Under this license agreement Ventana
has paid AccuMed an initial license fee, a prepayment on royalties and a partial
payment for certain development obligations that AccuMed is performing. AccuMed
has granted Ventana license to use AccuMed's core technology, including patents,
in the field of surgical pathology, which involves analyzing tissue samples
ordered by physicians to be taken from surgical patients to determine the
presence or absence of disease. This license agreement has an initial three-year
term which will be extended for additional three-year terms unless either party
gives the other notice of non-renewal within 180 days prior to the end of the
current term.

        On March 29, 2000, AccuMed entered into a patent and technology license
agreement with BCAM International, Inc., renamed CellMetrix, Inc., whereby
AccuMed agreed to license its patents and proprietary information to CellMetrix
for certain medical applications. Under the terms of the agreement, AccuMed
received a license fee upon signing the agreement. Effective September 1, 2000,
AccuMed and CellMetrix mutually agreed to terminate the license agreement.
AccuMed is not required to refund any portion of the license fee it received.

        On March 29, 2000, AccuMed entered into a letter agreement to reinstate
and amend its September 4, 1998 patent and technology license agreement with
Ampersand Medical Corporation. AccuMed received an up-front license fee upon
signing the letter agreement. On June 9, 2000, AccuMed signed a formal amendment
to the agreement and received an advance royalty in the form of cash. AccuMed
also received a convertible note, which was repaid in December 2000, and shares
of Ampersand common stock as an additional advance royalty.

        On December 29, 2000, AccuMed and its subsidiary, Oncometrics, entered
into agreements to license their patents and intellectual property to MonoGen,
Inc. for certain medical applications. Promissory notes in


                                       2
<PAGE>   3

the aggregate amount of $500,000 were issued to AccuMed and Oncometrics as
consideration for the up-front licensing fees due under the agreements.

        On February 7, 2001, AccuMed signed an agreement to merge with
Ampersand. Under the terms of the agreement, holders of AccuMed's common stock
will receive 0.6552 of a share (subject to adjustment) of Ampersand common stock
in exchange for each share of AccuMed common stock. AccuMed's Series A
Convertible Preferred Stock will be exchanged for preferred shares of Ampersand
that will be convertible into Ampersand common stock. Consummation of the merger
is subject to customary closing conditions, including approval by AccuMed's
stockholders, and the registration of the Ampersand common stock with the
Securities and Exchange Commission. Closing of the merger is expected to occur
in the 2nd quarter of 2001.

        On February 7, 2001, AccuMed received a $470,000 advance from Ampersand
to be used for working capital purposes. AccuMed issued a note payable of
$800,000, which includes $330,000 of previously advanced funds, to Ampersand. On
March 1, 2001, AccuMed received an additional advance of $225,000 from Ampersand
and issued a corresponding note payable. These notes bear interest at prime,
plus 2.5%, and are secured by AccuMed's inventory and a certain customer
contract. These notes will be due and payable upon the earliest of May 31, 2001
or the termination of the merger agreement.

        FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

        AccuMed's operations are in one laboratory market segment:
Cytopathology. Cytopatholgy systems are made up of multiple instruments
networked via proprietary software that support the review and analysis of Pap
smears and other microscope slide-based cellular preparations.

        NARRATIVE DESCRIPTION OF BUSINESS

        GENERAL

        AccuMed designs, builds and supplies two product lines. We build these
product lines with either our own microscopes or with commercially available
microscopes which we modify.

        The first product line consists of "AcCells(TM)" computer-aided
microscopes, which help medical experts to examine and diagnose specimens of
human cells. These products include:

        - robotic slide-feeding systems to load and unload slides from the
          microscope,

        - bar-code readers to ensure proper identification of samples being
          analyzed,

        - electro-mechanical scanning stages, that part of the AcCell microscope
          that allows the AcCell computer to move and focus the slide more
          accurately than a human can,

        - automatic physical dotters to mark the locations of cells of interest,
          and

        - data management system software to enable the medical experts to
          review the relevant medical histories and report the results of their
          examination or diagnosis directly into a medical record-keeping system
          without human transcription or repeat entries.

        The second product line consists of "AcCell-Savant(R)." The
AcCell-Savant includes all the AcCell components described above, as well as an
electronic imaging system and our image analysis software. The electronic
imaging system consists of a camera, electronics, optics and software which
together produce digital images of specimens on the microscope slide. The image
analysis software measures properties of the specimen from the digital images.
These AcCell-Savant(R) measurements are objective, as opposed to the subjective
analyses of specimens by human visual examination.


                                       3
<PAGE>   4

        Medical experts can examine and diagnose human medical specimens more
easily and accurately using our products. For example, a clinical laboratory can
eliminate paper requisitions and paper medical reports by using AcCells which
include our data management system. Laboratories that use paper requisitions and
medical reports risk misdiagnosing specimens because of transcription and other
clerical errors. Laboratory staff using our electronic data management system do
not need to reenter data manually, thus saving time and reducing the risk of
clerical error which can lead to misdiagnoses.

        Research scientists use the AcCell-Savant(R) research system, which we
began marketing in 1999, to measure cellular DNA and other properties of medical
specimens. We have sold modest numbers of the AcCell-Savant(R) research system
to academic and medical research laboratories. These laboratories use our
AcCell-Savant research system to more easily and accurately conduct experiments
for a wide range of research applications in biology and pathology. Under FDA
regulations, we are permitted to sell the AcCell-Savant(R) research system for
these uses. The research and academic market is a small market compared to the
commercial, clinical laboratory market which processes and diagnosis human
medical specimens for patient care. Research scientists use the AcCell-Savant(R)
research system in the following manner. In a lung cancer experiment, patients
provide sputum specimens. Laboratory technicians prepare these specimens on
microscope slides with a bar code label identifying the patient. The scientist
inserts these slides into the AcCell-Savant(R) research system. The robotic
slide-feeding system loads the slide into the microscope. The bar code reader
identifies the patient and specimen information and stores this information in
the computer. Digital images are produced using the electronic imaging system
and scanning stage which moves the slide under the microscope. The image
analysis software measures DNA and other properties of the cells in the digital
images. The research scientist uses the statistical image analysis software to
analyze these measurements objectively. Scientists use these statistical
analyses to determine the presence and severity of lung cancer. AcCell-Savant(R)
research systems record the digital images, measurements of cellular properties
and statistical information in computer files which are the records of the
scientist's experiment. The AcCell-Savant(R) then unloads the microscope slide.

        In addition to research applications, we believe the AcCell-Savant(R)
can be adapted for many clinical, commercial laboratory applications. In our
attempt to enter the clinical laboratory market, we are pursuing partnerships
with other technology and product/service distribution companies. We are
exploring arrangements with partners to combine AcCell-Savant(R) and/or AcCell
technology with the partner's intellectual property. In these arrangements, we
would sell our products for use in combination with the partner's intellectual
property and products.

        For example, on March 27, 2000 AccuMed announced that it signed a
multi-year agreement with Ventana Medical Systems, Inc. (Nasdaq: VMSI) to
provide an Automated Cellular Image Analysis System to assist pathologists in
analyzing cancer and infectious diseases. The system will be used to quantitate
immunohistochemistry (IHC) and in-situ hybridization (ISH) stained samples. The
combination of AccuMed's automated and quantitative imaging systems technology
and Ventana's sales and marketing strengths to surgical pathology laboratories,
will enable both companies to participate in the potentially attractive market
for quantitative IHC and ISH image analysis. Built from AccuMed's core
technology and products, Ventana expects to launch the sale of its first IHC
products built upon custom-modified AcCell automated imaging platforms and
imaging software in late 2001. That product will aid pathologists who evaluate
breast cancer specimens, including the use of Ventana's stain for measuring
Her-2/neu receptor overexpression. Physicians order tests to measure Her-2/neu
receptor levels in tissue samples from cancer patients to decide whether breast
cancer patients with metastatic disease will respond to Genentech's anti-cancer
drug, Herceptin(R).

        Furthermore, AccuMed's automated and quantitative imaging instruments,
software, systems, and supplies are not only well suited for tests on tissue
samples from patients with cancer, but they are also ideal analytical instrument
platforms for numerous clinical applications in early disease detection and
medical follow-up.

        Society is at the forefront of significant changes in disease
management. Molecular diagnostics and quantitative analyses of molecular
profiles resulting from gene expression will be used to optimize therapeutic
choices that ultimately improve patient outcomes. AccuMed's instrument and
system platforms are well-suited for


                                       4
<PAGE>   5

numerous emerging tests for a wide variety of diseases including cancer (e.g.,
breast, prostate, colon, lung, bladder, lymphoma, and leukemia).

        We need FDA clearance to market the AcCell-Savant in the United States
for clinical as opposed to research uses. At present, we have no plans to pursue
an FDA clearance.

        AccuMed has generated limited revenues from the sale of our products to
our original target market, clinical laboratories that examine or diagnose
medical specimens including Pap smears. Currently, we do not actively market the
AcCell as a stand-alone product, but we do continue to ship AcCell units when we
receive orders.

        We believe that AccuMed is the only company within the computer-aided
cytology screening cytodiagnostic market with a modular, expandable product,
(our AcCell) that allows customers to upgrade to more fully automated versions
and with a product line that support both gynecological and non-gynecological
specimen analysis using both conventional Pap smears as well as liquid-based
preparations.

MARKETS AND PRODUCTS

        AccuMed is a medical device company developing proprietary diagnostic
instruments for applications in early disease prevention, detection, diagnosis,
prognosis, optimized selection of therapeutic regimens and agents, and
therapeutic monitoring. Quantitative and automated microscopy is a powerful
research tool, which applies complex computer algorithms to measurements of
nuclei, cells, and tissues on a microscopy slide to derive medically significant
information. AccuMed markets its computer-aided, automated, and quantitative
microscopy workstations and systems, including analytical cytology and histology
instruments and supplies, through joint ventures, technology licensing
agreements, and research and development contracts.

        As one of AccuMed's laboratory partners stated, "Through its systems,
AccuMed is not only providing products, but it is redefining the process of
making a diagnosis." AccuMed is expanding its intellectual property portfolio
and applying its proprietary technologies to the development of cost-effective,
accurate, sensitive, easy-to-use, and innovative products that improve patient
outcomes and healthcare provider performance.

        As a result of AccuMed's modular instrument platforms for cytology and
histology applications, AccuMed has focused its efforts to commercialize its
technology through partnerships with companies and institutions with a business
focus in the following markets, among others:

        - Early lung cancer and other pulmonary disease detection and follow-up

        - Cancer and infectious disease diagnostics

        - Quantitative immunohistochemistry

        - Cytogenetics, screening and toxicology including in-situ hybridization

        - Anatomic pathology and information systems

        - Quality control and assurance for cytology/histology quality
          monitoring and reporting

        - Telepathology and medical image archiving/databases

        - Marker and probe development

        - Drug development for cancer patients

        - Linking diagnostics assays to therapeutics

        - Cellular imaging and analysis

        - Quantitative cytology and histology

        - Microscopy-based tests

        - Medical informatics

        PRODUCTS

        AccuMed's product development strategy has focused on taking what the
human experts do best and "wrapping around them" technological solutions that
make them more effective with respect to quality and cost-effectiveness. In
addition, AccuMed provides instruments such as the AcCell-Savant to measure and
analyze what the human eye-brain combination cannot see or perceive. AccuMed has
developed the following technology and


                                       5
<PAGE>   6

products relying upon its core technologies including computer-aided microscopy,
medical informatics, optical and electronic imaging systems, quantitative
microscopy, and cytometry/histometry systems.

        The product development strategy employed at AccuMed is a layered
approach. The underlying support for the product line is the AcCell
computer-aided microscope, which is primarily a quality assurance device
utilizing robotic and medical informatic technologies. The TracCell(TM) layer
above the AcCell provides productivity enhancements by electronically mapping
slides to identify the fields-of-view with the well stained and well preserved
cells for human review. The AcCell-Savant layer immediately above the TracCell
layer adds quantitative microscopy that facilitates systems that measure and
report the content and distribution of DNA and other cellular constituents in
biosamples. Probes analyzers are yet an additional layer of technology that
introduce the capability of quantitatively determining the presence of genetics
markers and probes in cellular and histological samples. Finally, the top layer
of the technological pyramid anticipates the integration of all of these
technologies with a medical informatics system to furnish complete assays from
specimen processing through medical results reporting.

        The AcCell, TracCell and AcCell-Savant are AccuMed's original product
lines (Series 2000) in computer-aided microscopy, slide mapping systems, and
quantitative microscopy systems.

        COMPUTER-AIDED MICROSCOPY: ACCELL CYTOPATHOLOGY WORKSTATIONS

        Clinical cytology laboratories, using technologists and cytopathologists
to prepare, screen and diagnose specimens are facing cost-containment pressures
and a need to improve quality simultaneously. These requirements are increasing
the demands on laboratories and their highly skilled cytologists to both
increase throughput (i.e., laborsaving products that reduce cost and increase
margin per test) and decrease their false negative rate (i.e., minimize
liability exposure). The AcCell workstations were developed to enable
cytologists to do what they do best -- interpret cytological findings -- and to
speed the tedious non-interpretative functions while concurrently providing
improved quality control, assurance and reporting functions during the screening
and diagnostic process.

        The AcCell product line is a comprehensive family of integrated,
expandable and technologically advanced products consisting of proprietary
workstations that provide bar-coding for automated specimen identification,
robotic slide loading to increase throughput and accuracy, support to ensure
that 100% of a slide's sample deposition area is imaged during screening,
electronic marking of cells and other objects-of-interest for rapid and
reproducible automated relocation of selected cells of interest by pathologists
during review sessions, accurate positional information that is continuously
available, automated and high-accuracy physical dotting of slides, a data
management system (DMS; typically interfaced to a Laboratory Information Systems
(LIS)) that speeds and aids pathologists in diagnostic review sessions,
automated report generation for specimen and laboratory management, and
compatibility with both conventionally prepared Pap smears and liquid-based
preparations. The DMS supports both gynecological and other sample processing
and analysis. The primary benefits derived from the use of AcCell workstations
are cost and time-savings, improved process control and quality, proactive risk
management, and reported increases in the detection of abnormal cases.

        AcCells are the reliable, production-oriented workhorses for all of
AccuMed's products. They are optimized review stations that support the human
experts by maximizing their performance and providing a means for quality
assurance in cytology and histology operations.

        Most importantly, however, these AcCell workstations form the basic
building block of semi-automated and automated systems in that they serve as (a)
the core of the human expert's specimen or patient sample review station and (b)
the building block for all of the analytical instruments in the other screening
and diagnostic market sectors.

        ELECTRONIC IMAGING SYSTEMS: TRACCELL SLIDE MAPPING

        Another technology developed by AccuMed is computerized slide mapping.
This technology, implemented in the TracCell Slide Mapping System, has been
FDA-cleared for use with conventional Pap smears as well as with Cytyc
ThinPrep(R) liquid-based preparations. The TracCell stand-alone slide
preprocessor produces electronic "maps" of slide-based cytological samples.
These maps were designed to save slide-screening time and associated labor
costs. The basic principle of TracCell slide mapping is that cytologists do not
need to screen or


                                       6
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review microscope fields-of-view that do not contain any adequately stained,
well-preserved diagnostic cells. By processing slides with a TracCell before the
cytologist screens the slides at an AcCell review station, the cytologist can
save time by being automatically routed past these "empty" fields-of-view. This
productivity enhancement technology is also adaptable to the processing and
review of tissue sections on microscope slides. An indirect benefit of the
TracCell tool is that screeners can spend more time analyzing
difficult-to-interpret cells or regions-of-interest without sacrificing overall
productivity. The TracCell Slide Mapping System, by definition, includes an
AcCell review station. AccuMed would entertain a licensee for the AcCell and
TracCell products for use in the automation of conventional cytology diagnostic
laboratories. Also, AccuMed is utilizing these products and technologies in more
advanced clinical applications (e.g., quantitative immunohistochemistry and
in-situ hybridization systems already licensed to Ventana Medical Systems,
Inc.).

        QUANTITATIVE MICROSCOPY SYSTEMS: ACCELL-SAVANT IMAGE CYTOMETERS

        The AcCell-Savant/research (ACSr) instrument combines an AcCell
computer-aided microscope with the Savant proprietary system of stains,
protocols, imaging hardware and analytical software. This automated image
cytometer generates analytical results regarding individual cells, including DNA
content, optical texture and morphometric features. Statistical, graphical, and
image data are displayed in a variety of formats to support cytology and
histology research scientists, engineers, and clinicians.

        More specifically, AccuMed's Malignancy Associated Changes (MAC) methods
and instruments are one of AccuMed's powerful sets of automated cytophotometry
tools facilitating the cytological detection and diagnosis of cancer at early,
more curable stages of development. The lead research product at AccuMed, known
as the AcCell-Savant, is a high-resolution image cytometer and is currently
available as a research instrument -- the AcCell-Savant/research (ACS/r). This
analytical instrument incorporates an AcCell computer-aided microscope with the
Savant system of stains, protocols, as well as proprietary imaging hardware and
analytical software. The ACSr is a fully automated, high-resolution, absorbance
microscopy-based cytometer that processes Thionin-Feulgen-stained cytology
preparations and presents analytical results regarding the cellular DNA content
of processed samples. This quantitative microscopy system includes an AcCell
equipped with electronic-imaging for the evaluation of cytology samples prepared
with proprietary nuclear DNA stains. Applications of this technology include
measurement of cellular DNA content, chromatin distribution patterns, and
nuclear areas for detection of early cancer and other diseases.

        - ACSr's automated operation makes it possible to measure thousands of
        cells per sample, thus increasing the statistical accuracy of tests.

        - ACSr's proprietary high precision computer-aided microscope with
        robotic slide handling and bar-coded sample identification ensures the
        reproducibility and reliability of results.

        - ACSr's proprietary electronic imaging and digital image processing are
        capable of selecting cells of interest, distinguishing them from
        background debris, cell clusters and non-targeted cells. This speeds the
        tedious non-interpretive functions while improving quality control and
        assurance.

        - ACSr's digital image processing and proprietary statistical analyses
        generate not only quantitative results but graphical displays as well
        (e.g., two-dimensional histograms, scattergrams and cell image gallery
        displays). These enable the user to detect subtle changes and rare
        cellular events readily and reliably.

        - ACSr's automated cell classification capability is customizable to the
        user's specifications. This eliminates the time consuming and
        labor-intensive process of manually classifying cells and provides
        flexibility for user-specific requirements.

        A key competitive advantage of the AcCell-Savant/research is its rapid,
production-oriented automation enabling it to scan and analyze thousands of
cells per sample without human intervention. Rather than relying upon
interactive, labor-intensive approaches with statistical samples too small for
sensitive cell cycle or


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<PAGE>   8

ploidy analyses, the AcCell-Savant approach solves these problems making speedy
analyses of small or large (> 15,000 cellular events) sample sizes practical and
cost-effective. In addition, this robust and unique approach enables users to
select the cells of interest for analysis, free from background debris, cluster,
and non-targeted cells such as non-tumor cells that could mask significant
findings regarding the cells of interest to the operator. Additionally, use of
the ACSr is a complementary approach to flow cytometry. The relative advantages
of the image cytometry approach are that flow cytometry typically requires at
least an order of magnitude more cells per analysis, the AcCell-Savant enables
selectivity (ability to eliminate extraneous objects that mask results), and
unlike the AcCell-Savant, flow cytometry users cannot "see & save" cells with
their corresponding feature data sets. Finally, neither flow nor image cytometry
can process histological sections in general, though the AcCell-Savant can
process some tissue sections (e.g., muscle, heart, brain, nerve, ovary, and
testicle) when the majority of their nuclei are non-overlapping.

        This robust and unique instrument is versatile enough to handle a
variety of applications. Typical applications of the AcCell-Savant include
research and applications development in the following areas: disease detection
from cytology samples, Malignancy Associated Changes (MAC), DNA ploidy analyses,
treatment planning and monitoring, cell cycle analyses of S-phase fractions,
quality assurance via post-screening of cytology samples, infectious disease
investigations, transplant rejection analyses, toxicology, chemoprevention, and
general cellular research.

        Features and benefits of the AcCell-Savant/research system include the
following:

        - Fully automated and high-speed operations

        - Normalized DNA data with calibration

        - Accurate, reproducible, and high resolution

        - Classifiers providing high sensitivity & specificity

        - Tunable to a wide variety of markers and probes

        - Enables rapid generation of feasibility data

        - Speeds drug research via faster protocols

        - Suitable for new clinical screening assays

        - Compatible with production-oriented AcCell-Savant Systems

        AccuMed owns multiple patents related to methods and devices for
automatically detecting malignancy associated changes. Malignancy-associated
changes are subtle changes known to take place in the nuclei of apparently
normal cells found near cancerous or precancerous tissue. David M. Garner,
Ph.D., co-inventor of the MAC patents and Senior Scientist at the British
Columbia Cancer Agency (Vancouver, Canada) indicated "Malignancy-associated
changes (MACs) are subtle changes that are known to take place in the nuclei of
apparently normal cells found near cancer or precancerous tissue. As such, the
measurement of MAC features can potentially improve specimen adequacy rates,
increase the sensitivity of an early cancer detection screening test, and result
in an easier-to-use, simpler, and more reliable assay. Also, MACs can be used to
detect, not only lung cancer, but many other types of cancer and precancerous
conditions."

        The AcCell-Savant products offer the unique combination of patented MAC
methods and the benefits of high accuracy, sensitivity and throughput which
enable research clinicians and scientists to detect and measure early subtle
cellular changes in disease processes that may not be otherwise detectable by
visual analyses alone.

        SYSTEM 3000

        The next generation System 3000 products are being developed to enhance
product features and benefits, and to increase market acceptance in diverse
clinical applications. These products are comprised of the AcCell 3000 Review
Station, the AccuTech and the Cognetix Analyzer.


        (a) ACCELL 3000 REVIEW STATION

        The AcCell 3000 is the human-operated cytology workstation of AccuMed's
System 3000 product line. It is a fully integrated light microscopy and data
management system for use in laboratories that perform slide-based microscopic
examination of cellular materials. This combination microscope and computer was
designed as


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<PAGE>   9

the cytologist's and/or pathologist's flagship "workhorse" tool. Specifically,
the AcCell 3000 supports needs of the gynecological and non-gynecological
cytology (e.g., cervical Pap smears and liquid-based preparations (LBPs), sputum
cytology, fine-needle aspirations) laboratories as well as laboratories that
perform hematology, gastroenterology, urology, cytogenetic, histology and
related cytological and histological interpretations for the screening,
diagnosis and reporting of cell-based samples, and for professional education
and training. The AcCell 3000 provides this support through a set of
user-oriented hardware and software tools integrated within a compact, reliable
and easy-to-use package. The AcCell 3000 microscope automates the microscopy
process while improving process control. It features a highly ergonomic user
interface, a multi-user relational database and an interface to laboratory
information systems (LIS) to improve the speed, accuracy and reliability of the
sample evaluation process while reducing the physical strain that microscopists
face in a clinical production environment. The instrument is capable of
supporting multilingual operations. This computer-aided microscopy workstation
can be operated as a stand-alone device, in a stand-alone network of other
AcCell workstations within a cytology or anatomic pathology laboratory, or as a
network of AcCell workstations interfaced to an LIS through an AcCell file
server. The AcCell 3000 computer-aided microscopy products can also work in
conjunction with the other System 3000 products under development (e.g.,
AccuTech-based versions of the FDA-cleared TracCell Slide Mapping Systems and
AcCell-Savant Quantitative Microscopy Systems) that offer additional information
from computer-aided sample analyses through the use of both interactive and
fully automated electronic imaging systems.

        Features and benefits of the AcCell 3000 Review Station include the
following:

        - Small footprint and compact

        - Enhanced user productivity

        - Optimized slide throughput

        - Data management system

        - Customizable

        - User options protected

        - Excellent optical imaging

        - Coupled to an analyzer

        - Enables "PreView" of images of abnormal cells received from Analyzer

        - AccuTech inside (i.e., "Savant powered")

        (b) ACCUTECH

        Specifically, the AccuTech was developed by AccuMed to remove the need
to use commercially available microscopes in the AcCell and related product
lines. Such commercially available microscopes did not provide adequate
mechanical stability, for example, to enable high-speed focusing on machines
that were being designed to operate consistently during multiple shifts and for
seven days per week.

        Features and benefits of the AccuTech systems include the following:

        - High-precision computer-controlled imaging

        - Fixed optical system without field-operation variability

        - Computer-controlled illumination intensity with feedback control

        - High-resolution, ultra-fast computer-controlled focusing subsystem

        - Power objective changer with full three-dimensional and illumination
          compensation

        - Integral rotating filter mechanism for high-speed multi-spectral
          sensing

        - Rigid and fixed camera mounting system

        - Automatic re-calibration system to ensure slide-by-slide data quality


        (c) COGNETIX ANALYZER

        The AccuTech microscope frame is the core module not only within the
AcCell 3000 Review Station, but also in the instrument designed to handle
semi-automated or full automation with the capability of operating 24 hours/day,
7 days/week. That instrument is the Cognetix Analyzer.


                                       9
<PAGE>   10

        The Cognetix Analyzer is assembled from modular components that enables
it to be easily and rapidly customized to specific clinical assays based upon
microscope slide-based samples. Such sample may be either cellular or
histological.

        Feature and benefits of the Cognetix Analyzer include the following:

        - MAC detection and tunable to a variety of probes

        - Labor savings and walk-away automation

        - Continuous and high-speed operations

        - Image acquisition & sample classification software with classifiers

        - Sample tracking

        - Stable & reliable in field use with precision mechanics and focusing

        - Environment-tolerant

        - Photonic sensors

        - Configurable, scalable, and easy to use

        - Link to Review Station facilitates sending Dx images to Review Station

        - Built-in quality control and assurance

        - AccuTech inside (i.e., "Savant powered")

SUPPLIES

        Supplies for AccuMed products include calibration slides, dotter tape
cartridges, and DNA stain kits (i.e., microscope slides and reagents for DNA
cytophotometry using the AcCell-Savant).

INTELLECTUAL PROPERTY

        AccuMed has a strong intellectual property patent portfolio and core
expertise (i.e., scientific and technical know-how) in computer-aided (AcCell,
TracCell) and quantitative (Savant) optical microscopy; automated electronic
imaging and screening systems; cytochemistry and histochemistry (DNA stains);
analytical instruments and algorithms for cell and tissue image analysis;
methods to measure intracellular malignancy associated changes (MAC); and
medical devices and diagnosis systems.


        AccuMed develops its patent portfolio to establish value for its
investors in areas of its core technologies, such as computer-aided microscopy.
Furthermore, AccuMed pursues patent protection in disabling and competitive
technologies if inventions occur which can protect key markets for AccuMed.
Patents, trade secrets, and copyrights are used by AccuMed to protect its
proprietary technology.

SALES AND MARKETING

        Typically, AccuMed's products are not currently sold to laboratory
end-users unaffiliated with AccuMed. Rather, AccuMed has four classes of
customers. Quadrant I customers are beta-site customers who are used to provide
marketing feedback to AccuMed regarding product design, performance and
preferred enhancements. AccuMed remains confident that its core computer-aided
microscope platform, the AcCell workstation, continues to provide a unique
approach to improving cytology processes even in the conventional Pap test
laboratories. Nevertheless, regardless of the merits of the originally targeted
market, the AcCell workstation is the workhorse platform embedded in all other
products by AccuMed, including the AcCell-Savant research systems, and the
integral review station component of the automated early lung cancer screening
systems, among others.

        Quandrant II customers are research and development scientists and
clinicians who execute a commercialization agreement with AccuMed. Quadrant II
creates an opportunity for a product pipeline for AccuMed through a virtual R&D
organization that frees AccuMed from the direct expense of funding R&D for new
applications development. This extramural R&D program is designed for leading
researchers actively developing new clinical applications with commercial
potential. These physicians, scientists and engineers are conducting


                                       10
<PAGE>   11

funded research using cytometry and histometry at teaching hospitals,
universities and research institutes. Benefits to participating researchers
include:

        - Discounted purchases of AcCell-Savant/ research and other R&D products

        - Royalty-based revenue stream from AccuMed commercialized products

        - Access to powerful and proprietary development tools

        - Ongoing technical support, services and updates

        - Access to advanced training and collaborations

        - Potential to participate in new product beta-tests and clinical trials

        - Participation in joint development projects

        - Expedited commercialization of new clinical assays

        - Support for patents and other intellectual property protection

        To date this AccuMed program has sites in Japan and Australia selecting
AccuMed as their sole source for the commercialization of clinical tests
involving cytology, histology, cytometry and histometry.

        Quadrant III customers are the primary business opportunity for AccuMed.
This is the area in which AccuMed believes that significant and multiple
business opportunities exist today, and that these opportunities are reliant
upon the core existing technologies of AccuMed. The R&D and analytical
instrument sales agreement with Ventana Medical Systems, as well as the
agreement with Dianon Systems announced in December of 2000 to provide DNA
measurement systems, are excellent examples of Quadrant III opportunities.
Typically, with Quadrant III customers, AccuMed seeks a combination of (a)
license fees, (b) R&D contracts, (c) use-based royalty stream, (d) product
supply contracts, and (e) equity participating in the licensee's business.

        Quadrant IV customers are typically businesses in which AccuMed can
either license its technology into a field-of-use that is remote from AccuMed's
primary fields-of-interest in business development, or in which AccuMed can
provide the customer with product on an OEM basis. This "technology transfer"
market opportunity has already generated revenues for AccuMed in the area of
point-of-care diagnostic systems.

COMPETITION

        AccuMed believes that its cytopathology products must compete on the
basis of functionality, product features and effectiveness of the product in
standard medical practice, although price is also an important competitive
factor.

        AccuMed's cytopathology products will face competition from companies
that have developed or may be developing competing or alternative systems.
AccuMed's competitors possess substantially greater financial, marketing, sales,
distribution and technical resources than AccuMed, and more experience in
research and development, clinical trials, regulatory matters, manufacturing and
marketing.

OPERATIONS

        AccuMed assembles and tests its cytopathology products at its Chicago
facility. Currently, AccuMed is not manufacturing product, though it assembles
and tests manufactured subassemblies. AccuMed anticipates future AcCell(TM)
production will be done on a contract basis based on customer orders.

GOVERNMENTAL REGULATION

        AccuMed's products and manufacturing processes are regulated by state
and federal authorities, including the FDA and comparable authorities in certain
states and other countries.

        The Federal Food, Drug and Cosmetic Act (the "FDA Act") regulations
provide that some of AccuMed's products may not be shipped in interstate
commerce without prior authorization from the FDA. Such authorization is based
on a review by the FDA of the product's safety and efficacy as indicated for its
intended uses. Medical devices may be authorized by the FDA for marketing in the
United States either pursuant to a 510(k) Pre-


                                       11
<PAGE>   12

market Notification or a Pre-marketing Approval ("PMA"). The process of
obtaining FDA marketing clearance and other applicable regulatory authorities
may be costly. Some FDA 510(k) Notification applications and PMA's require
preliminary internal studies, field studies and/or clinical trials in addition
to an FDA submission to attain market clearance (the 510(k) process or market
approval (the PMA process)).

        A 510(k) Notification, among other things, requires an applicant to show
that its products are "substantially equivalent" in terms of safety and
effectiveness to an existing FDA cleared predicate product. An applicant may
only market a product submitted through the 510(k) Notification at such time as
the FDA issues a written clearance determining that the product has been found
to be substantially equivalent.

        A PMA is the FDA submission process where the product must demonstrate,
independently of other like devices, that it is safe and effective for its
indications for intended use. A PMA must be supported by extensive data,
including preclinical and clinical trial data, as well as extensive literature
to prove the safety and effectiveness of the device. The approval process
usually takes substantially longer. During the review period, the FDA may
conduct extensive reviews of AccuMed's facilities, deliver multiple requests for
additional information and clarifications and convene advisory panels to assist
in its determination.

        FDA enforcement policy strictly prohibits the promotion of learned or
approved medical devices for non-approved or "off-label" uses. In addition,
product clearances or approvals may be withdrawn for failure to comply with
regulatory standards.

        Marketing in the United States of some of AccuMed's products under
development may require additional FDA clearances. The FDA Act and other
statutes and regulations, including various state statutes and regulations,
govern the marketing, advertising and promotion of AccuMed's products. Failure
to comply with applicable requirements can result in fines, recall or seizure of
products, total or partial suspension of production, withdrawal of existing
product approvals or clearances, refusal to approve or clear new applications or
notices and criminal prosecution.

        Sales of medical devices outside the United States are subject to
foreign regulatory requirements that vary from country to country. The time
required to obtain clearance by a foreign country may be longer or shorter than
that required for FDA clearance, and the requirements may differ. Export sales
of certain devices that have not received FDA marketing clearance generally are
subject to both FDA Certificate for Foreign Governments and, in some cases,
general U.S. export regulations. In order to obtain a FDA export permit, AccuMed
may be required to provide the FDA with documentation from the medical device
regulatory authority of the country in which the purchaser is located.

        AccuMed has secured "CE" mark for the AcCell(TM) 2000 series and will
seek the mark for its proposed products. The CE mark is recognized by countries
that are members of the European Free Trade Association and will be required to
be affixed to all medical devices sold in the European Union.

RAW MATERIALS AND COMPONENTS

        Certain key components and raw materials used in assembling AccuMed's
products are currently available through single-source vendors. Although AccuMed
believes that alternative sources for such components and raw materials are
available, any supply interruption in a single-sourced component or raw material
would have a material adverse effect on AccuMed's ability to manufacture
products until a new source of supply were qualified.

RESEARCH AND DEVELOPMENT

        AccuMed's research and development efforts are focused on enhancing its
existing products to address unmet needs within the diagnostic cytopathology
market. During the fiscal years ended December 31, 2000, 1999, and 1998
expenditures for research and development were approximately $1,100,000,
$1,900,000, and $2,600,000 respectively.


                                       12
<PAGE>   13

        AccuMed is currently developing the following products:

        ACCELL/SAVANT(TM) DNA IMAGE CYTOMETER

        This product ("AcCell-Savant") is an automated high-resolution image
cytometer (nuclear DNA analyzer) that processes Thionin-Feulgen stained cytology
specimens for DNA analysis. Designed for both the research and clinical
laboratory markets, this product line offers a unique combination of features
and benefits including: (a) highly accurate, reliable, and reproducible system
operation, (b) easy-to-use, rapid, and well documented instrument operation, (c)
optimized accompanying specimen preparation/staining kits, (d) full
automation---"load and walk-away" operation, (e) multi-slide cassette with
random-access robotic slide handling, (f) high-resolution images with square
pixels and large field-of-view, (g) stable, reliable, DNA specific
Thionin-Feulgen stain, (h) suitable for many applications including ploidy, MAC,
general cellular research, (i) ability to process conventional smears and
monolayer preparations, (j) automated focus, (k) automated image segmentation,
(l) optional automated cell/object classifier based upon user-supplied and
defined training sets, (m) cell or object relocation and review capability in
microscope or on monitor, (n) normalization: 1-D and 2-D histograms, (o) ability
to normalize DNA histograms with internal and/or external references, (p)
ability to extract measurements by cell populations or by individual
cells/objects, (q) statistical analyses of measured data sets with graphical
output displays, (r) display capabilities include cell image gallery displays,
(s) report generator, (t) option for networked review microscopes to increase
productivity, and (u) data export routines to interface to third-party
applications such as multivariate statistical analyses packages.

        This product focuses on the clinical research and the clinical
laboratory market, for clinical applications of image cytometry technology.
Benefits of this product are anticipated to be:

        (1) High-quality instrumentation for automated and quantitative analyses
        (e.g., assays that cannot be performed by human experts alone).

        (2) Optimized for clinical application in production laboratory settings
        (e.g., high-volume tests).

        (3) Unattended slide handling; integrated with staining and cover
        slipping systems; custom reports, interface with LIS.

        (4) Use of (e.g., integrated solutions) DNA/Fuelgen stain kits,
        calibration slides and clinical laboratory protocols.

        AccuMed estimates that there are approximately 600 images processing and
analysis systems installed worldwide for research purposes and additional 600
clinical systems. Because of uncertainty of current market provider commitment,
AccuMed believes there is an opportunity for a competitive image analysis
system. The size of this worldwide market is estimated to be over 1200 units at
a cost of $100,000 per unit. Consumables such as staining kits used in
conjunction with the DNAnalyzer would represent a potentially high margin
continuing revenue stream.

        AccuMed believes various factors will influence market demand for this
product within the domestic healthcare marketplace.

        The pressure for cost containment drives the need for tools that
streamline aspects of the operational process. This product offers a
user-friendly, general-purpose image analysis that operates on the AcCell(TM)
technology platform, designed for clinical laboratory use.

        Also, competitive image analysis systems currently serving this market
have been designed largely for the research market, but the level of customer
support necessary to accommodate the clinical laboratory market is not readily
available. AccuMed intends to offer strong field service and support along with
this product.


                                       13
<PAGE>   14

        Lastly, the consolidation of the healthcare industry drives the need to
integrate various functions within the clinical laboratory. This product is part
of an integrated family of tools that support a wide variety of functions within
the clinical laboratory.

        AccuMed believes the AcCell-Savant platform can be applied effectively
for tissue sites other than for lung tissue. In particular, the AcCell-Savant,
with its MAC's capabilities, has the ability to not only detect early stage
cervical cancer in an automated manner, but it has the potential ability to
determine whether pre-cancerous cells will develop into cancer or not.

INTELLECTUAL PROPERTY

        AccuMed relies on a combination of patents, licensing arrangements,
trade names, trademarks, copyrights, trade secrets, know-how and proprietary
technology as well as policies and procedures for maintaining the secrecy of
trade secrets, know-how and proprietary technology in order to secure and
protect its intellectual property rights. AccuMed has twenty-seven issued
patents, three allowed patents, and forty pending patents in related
technologies. AccuMed is also developing products (e.g., AcCell-Savant) that
rely upon or utilizes the intellectual property of its wholly--owned subsidiary,
Oncometrics. Oncometrics has five issued patents, two allowed patents, and
twelve pending patents in related technologies.

        AccuMed is continuing to prepare additional patent applications. Since
patent applications in the United States are maintained in secrecy until patents
issue, and since publications of discoveries in the scientific or patent
literature tend to lag behind actual discoveries by several months, AccuMed
cannot be certain that AccuMed or other relevant patent application filer was
the first creator of inventions covered by pending patent applications or that
such persons were the first to file patent applications for such inventions.
Protections relating to portions of such technologies may be challenged or
circumvented by competitors, and other portions may be in the public domain or
protectable only under state trade secret laws.

        AccuMed owns trademark applications for "SpeciFind", "TracCell",
"MacCell", "AcCell-Savant", "Improving Cytology Processes", and is currently
preparing and may file additional U.S. and foreign trademark applications in the
future.

        EMPLOYEES

        As of March 21, 2001, AccuMed employed 4 full-time employees. None of
AccuMed's employees are represented by a labor union. AccuMed considers its
relations with its employees to be good.

        AVAILABLE INFORMATION.

        We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy the documents we have
filed at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information about
the Public Reference Room. Our SEC filings are also available to the public at
the SEC's Internet site found at "http://www.sec.gov." You can also inspect our
SEC filings at the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006.

        AccuMed's Internet website is "http://www.accumed.com".

ITEM 2. PROPERTY

        AccuMed currently leases a 10,062 square foot facility at 920 North
Franklin Street, Chicago, Illinois, pursuant to a lease expiring September 30,
2004. We have initiated a search to retain a real estate company to assist us in
subleasing unneeded excess space.


                                       14
<PAGE>   15

ITEM 3. LEGAL PROCEEDINGS

        Except as described below, AccuMed is not currently a party to any
material litigation and is not aware of any pending or threatened litigation
against AccuMed that could have a material adverse effect upon AccuMed's
business, operating results or financial condition.

        In June 1997, Merrill Corporation filed a complaint against AccuMed in
the Circuit Court of Cook County, Illinois. The complaint alleges that AccuMed
entered into a contract for printing services and has failed to pay for the
services rendered. AccuMed alleges that the invoices submitted to it are
inaccurate and excessive, and that Merrill did not perform all of the services
for which it has purported to charge AccuMed. Merrill is seeking an award of
$430,033, plus interest, attorneys' fees and costs.

        Discovery has been completed, and a trial has been set for July 16,
2001. AccuMed intends to defend the claims vigorously unless an acceptable
settlement can be reached. However, if Merrill prevails in the litigation and is
awarded the full amount it is seeking, the judgement would have a material
adverse effect on AccuMed's financial condition and cash flows.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote of security holders during the
quarter ended December 31, 2000.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

        Our common stock is quoted on the Nasdaq Bulletin Board under the symbol
"ACMI.OB". The table below sets forth, for the periods indicated, the range of
high and low sales prices for the common stock during the periods specified.

<TABLE>
<CAPTION>
1999 FISCAL YEAR                    High           Low
                                    ----           ---
<S>                                 <C>            <C>
        First Quarter               1.91           0.59
        Second Quarter              1.31           0.72
        Third Quarter               1.22           0.47
        Fourth Quarter              4.00           0.56
</TABLE>

<TABLE>
<CAPTION>
2000 FISCAL YEAR                    High           Low
                                    ----           ---
<S>                                 <C>            <C>
        First Quarter               3.69           1.31
        Second Quarter              2.34           0.63
        Third Quarter               0.97           0.50
        Fourth Quarter              0.72           0.03
</TABLE>

        As of March 21, 2001, AccuMed had approximately 203 record holders of
common stock. As of March 21, 2001, AccuMed estimates that there are
approximately 4,127 beneficial holders of common stock, based on results of a
broker search conducted in April 2000.

        AccuMed has never paid dividends on its common stock and does not intend
to pay cash dividends for the foreseeable future.


                                       15
<PAGE>   16

ITEM 6. SELECTED FINANCIAL DATA

        On January 29, 1999, AccuMed closed the sale of its microbiology
business. The income statement and balance sheet data presented below reflects
the microbiology business as a discontinued operation. See Note 1 in the
accompanying Financial Statements starting on page F-1.

<TABLE>
<CAPTION>
                                                FISCAL YEARS ENDED DECEMBER 31,
                                            (IN THOUSANDS, EXCEPT PER SHARE DATA)
                               ------------------------------------------------------------------
                                 2000         1999           1998           1997           1996
                               -------       -------       --------       --------       --------
<S>                            <C>           <C>           <C>            <C>            <C>
INCOME STATEMENT DATA:

Net revenues                   $   477       $   136       $    327       $  1,001       $  1,412

Cost of sales                      122         1,146            856          1,557          1,394

Operating loss                  (3,654)       (6,446)        (9,796)       (15,800)       (13,387)

Interest expense                    39           501          1,411          3,569            458
Loss from continuing
  operations before             (3,098)       (6,803)       (10,360)       (18,858)       (10,904)
  income taxes

Income taxes                        --            --             --             --             --

Loss from continuing            (3,098)       (6,803)       (10,360)       (18,858)       (10,904)
  operations
Income (loss) from
  discontinued                      --         8,199          3,351          1,939           (670)
  operations

Net (loss) income               (3,098)        1,396         (8,176)       (16,919)       (11,574)

PER SHARE DATA:
Basic loss from
  continuing operations        ($ 0.55)      ($ 1.24)      ($  2.04)      ($  5.13)      ($  3.85)
Income (loss) from
  discontinued operations           --          1.49           0.66           0.53          (0.24)

Extraordinary loss                  --            --          (0.23)            --             --

Basic net (loss) income        ($ 0.55)      $  0.25       ($  1.61)      ($  4.60)      ($  4.09)
Weighted average shares
  outstanding (000's)            5,653         5,491          5,080          3,675          2,829

BALANCE SHEET DATA:

Working capital (deficit)      ($  812)      $    39       ($ 1,393)      ($ 1,600)      $  2,150


Total assets                     6,051         7,222         13,448         16,085         13,444

Long-term debt                      --           167          5,782         11,455            231

Stockholders' equity             2,384         5,668          4,223            733         10,136
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

        AccuMed markets and develops cost effective screening instruments and
systems for clinical diagnostic laboratories, hospitals and others. Our
integrated systems use reliable, accurate and innovative products and methods to
provide laboratories with comprehensive solutions that are intended to improve
efficiency and reduce costs while significantly improving disease detection.
AccuMed currently is developing cytology computer-aided image cytometry
instruments and systems that support early detection and diagnosis programs for
screening high-risk individuals for cellular diseases, such as lung cancer.


                                       16
<PAGE>   17

        During 1998, AccuMed received stockholder approval to sell its
microbiology business. Accordingly, the results of the microbiology business are
reported as a discontinued operation in the accompanying financial statements.
On January 29, 1999, AccuMed closed the sale of the microbiology business for
net proceeds of $14,400,000.

        The following management discussion and analysis of financial condition
and results of operations relate only to the cytopathology business, AccuMed's
only business line. Also, AccuMed is committed to a research and development
program. Accordingly, AccuMed expects to incur additional operating losses over
at least the next 12 months due to corporate overhead and development.

OVERVIEW

        On February 7, 2001, AccuMed signed an agreement to merge with Ampersand
Medical Corporation. Under the terms of the agreement, holders of AccuMed's
common stock will receive 0.6552 of a share (subject to adjustment) of Ampersand
common stock in exchange for each share of AccuMed common stock. Each share of
AccuMed's Series A Convertible Preferred Stock will be exchanged for one share
of preferred stock of Ampersand that will be convertible into Ampersand common
stock. Consummation of the merger is subject to customary closing conditions,
including the approval of AccuMed's stockholders, and the registration of the
Ampersand common stock with the Securities and Exchange Commission. Closing of
the merger is expected to occur in the second quarter of 2001.

        On February 7, 2001, AccuMed received a $470,000 advance from Ampersand
to be used for working capital purposes. AccuMed issued a note payable of
$800,000, which includes $330,000 of previously advanced funds, to Ampersand. On
March 1, 2001, AccuMed received an additional advance of $225,000 from Ampersand
and issued a corresponding note payable. These notes bear interest at prime plus
2.5%, and are secured by AccuMed's inventory and a certain customer contract.

        On December 29, 2000, AccuMed and its subsidiary, Oncometrics, entered
into agreements to license their patents and intellectual property to MonoGen,
Inc. ("MonoGen") for certain medical applications. Promissory notes were issued
to AccuMed and Oncometrics as consideration for the up-front license fees due
under the agreements.

        On March 29, 2000, AccuMed entered into a letter agreement to reinstate
and amend its September 4, 1998 patent and technology license agreement with
Ampersand. AccuMed received an up-front license fee upon signing the letter
agreement. On June 9, 2000, AccuMed signed a formal amendment to the agreement
and received an advance royalty in the form of cash. AccuMed also received a
convertible note, which was repaid in December 2000, and shares of Ampersand
common stock as an additional advance royalty.

        On March 29, 2000, AccuMed entered into a patent and technology license
agreement with BCAM International, Inc., renamed CellMetrix, Inc., whereby
AccuMed agreed to license its patents and proprietary information to CellMetrix
for certain medical applications. Under the terms of the agreement, AccuMed
received a license fee upon signing of the agreement. Effective September 1,
2000, AccuMed and CellMetrix mutually agreed to terminate the license agreement.
AccuMed is not required to refund any portion of the license fee it received.

        On March 24, 2000, AccuMed entered into a license and development
agreement with Ventana Medical Systems, Inc., whereby AccuMed agreed to license
its patents and proprietary information to Ventana for certain medical
applications. Under the terms of the agreement, AccuMed received an up-front
licensing fee, advance royalty payment, and development funds. Additional funds
are required to be paid by Ventana to AccuMed during 2001 for contract research.
The agreement also provides for the sale of AcCell(TM) Systems to Ventana and
royalties to be received in the future on the sale of covered products by
Ventana.


                                       17
<PAGE>   18

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2000 COMPARED WITH YEAR ENDED DECEMBER 31, 1999

        REVENUES AND COST OF SALES

        AccuMed's net revenues were $477,000 for the year ended December 31,
2000 compared to $136,000 for the year ended December 31, 1999. Net revenues for
the 2000 period reflect the sale of AcCell(TM) and AcCell-Savant(TM) units and
licensing fees and royalties earned on our license agreements with Ampersand,
CellMetrix, and Ventana, which were signed in 2000. Net revenues for the 1999
period represent the sale of one AcCell-Savant unit and sales of consumables and
computer support equipment. Cost of sales represents the cost of products sold.
Cost of sales for 1999 includes a non-cash charge of $1,106,000 to write-down
inventories to net realizable value.

        OPERATING EXPENSES

        General and administrative expenses decreased by $414,000, or 13.2%,
from $3,147,000 in the 1999 period to $2,733,000 in the 2000 period. The
decrease in these expenses is a result of reduced corporate level activity due
to the sale of the microbiology business and our efforts to reduce expenditures,
less administrative cost following our 1999 consolidation of AccuMed's
operations, and the application of qualifying costs to development funds
received under our development obligation with Ventana.

        Research and development expenses decreased by $727,000, or 38.9%, from
$1,870,000 in 1999 to $1,143,000 in 2000. The decrease in these expenses is a
result of the application of qualifying costs to development funds received
under our development obligation with Ventana, and benefits achieved from the
consolidation of our research and development activities along with the 1999
consolidation of our operations.

        Sales and marketing expenses were $133,000 for the year ended December
31, 2000 compared to $282,000 for the 1999 period. The decrease in these
expenses is primarily a result of personnel reductions, reduced spending on
consultants, and the application of qualifying costs to development funds
received under our development obligation with Ventana.

        For the year ended December 31, 1999, an asset impairment loss of
$137,000 was recorded for the write-down of certain leasehold improvements. The
impairment loss is a result of our consolidation of facilities and
re-negotiation of facility leasing arrangements in February 2000.

        OTHER INCOME AND EXPENSE

        Interest expense for the year ended December 31, 2000 was $39,000
compared to $501,000 for the 1999 period. The decline in interest expense is a
result of the repayment in January 1999 of AccuMed's 14.5% secured note payable
and 12.0% unsecured convertible notes with proceeds from our sale of the
microbiology division. Interest expense for the 1999 period also includes
$370,000 from a non-cash write-off of deferred financing costs and debt
discounts related to the repayment of these notes.

        During 2000, we sold a total of 85,776 of the common shares we hold in
Ampersand on the open market for proceeds of $331,574. A realized gain on the
sale of these shares of $331,574 was recorded in 2000.

        Other income for the year ended December 31, 2000 substantially
represents interest income and $229,000 of income recorded upon the termination
of our patent and technology license agreement with CellMetrix. The amount
recognized as income is the remaining balance of deferred licensing fees at the
date of termination. Other income for the year ended December 31, 1999,
primarily represents interest income and non-refundable licensing fees of
$100,000 recognized as income upon the termination of a patent and technology
license agreement.


                                       18
<PAGE>   19

        DISCONTINUED OPERATIONS

        AccuMed's loss of $158,000 in 1999 from discontinued operations reflects
the results of operations of AccuMed's microbiology business before its sale in
January 1999. In 1999, we recorded a gain of $8,357,000, net of income taxes of
$140,000, on the disposal of the microbiology business.

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

        REVENUES AND COST OF SALES

        AccuMed's net revenues were $136,000 for the year ended December 31,
1999 compared to $327,000 for the year ended December 31, 1998, a decrease of
$191,000. The decrease in sales reflects a decline in the number of units of
AccuMed's AcCell(TM) products sold. Cost of sales for the year ended December
31, 1999 includes a fourth quarter non-cash charge of $1,106,000 to write-down
inventories to net realizable value. In October 1998, we ceased our
manufacturing operations to eliminate the associated indirect overhead costs.
Cost of sales for the year ended December 31, 1998 also includes
non-capitalizable overhead costs and costs associated with suspending the
manufacturing operations.

        OPERATING EXPENSES

        General and administrative expenses decreased by $2,161,000, or 40.1%,
from $5,308,000 in 1998 to $3,147,000 in 1999. The decrease in these expenses is
a result of reduced corporate level activity, including a reduction in personnel
due to the sale of the microbiology business and less administrative cost due to
the consolidation of AccuMed's cytopathology operations.

        Research and development expenses decreased by $700,000, or 27.2%, from
$2,570,000 in 1998 to $1,870,000 in 1999. The decrease in these expenses
reflects a reduction in personnel and research activity levels. Expenses in 1998
include costs associated with the AcCell 2000 and TracCell slide mapping
systems, which were completed in August 1998.

        Sales and marketing expenses decreased by $1,107,000, or 80.0%, from
$1,389,000 in 1998 to $282,000 in 1999. This decrease is a result of a reduction
in our marketing personnel beginning in October 1998.

        OTHER INCOME AND EXPENSE

        Interest expense for the year ended December 31, 1999 was $501,000
compared to $1,411,000 for 1998. The decline in interest expense is a result of
the repayment in January 1999 of AccuMed's 14.5% secured note payable and our
12.0% unsecured convertible notes with proceeds received from our sale of the
microbiology division and the conversion in 1998 of convertible notes into
Series A convertible preferred stock. Interest expense in 1999 also includes
$370,000 from a non-cash write-off of deferred financing costs and debt
discounts related to the repayment of these notes.

        Other income for the year ended December 31, 1999 was $145,000 compared
to $848,000 for 1998. The decrease in other income is a result of a reduction in
licensing fee income and a reduction in invested cash on hand, which had been
available from proceeds received in a private placement in March 1998.

        EXTRAORDINARY LOSS

        For the year ended December 31, 1998, AccuMed incurred a $1,168,000
extraordinary loss related to the conversion of $5,275,000 in par value of
convertible notes and $329,000 in accrued interest thereon into 1,245,340 shares
of Series A Convertible Preferred Stock. Of the total expense, $193,000
represented cash fees and expenses.


                                       19
<PAGE>   20

LIQUIDITY AND CAPITAL RESOURCES

        AccuMed has incurred, and continues to incur, losses from operations and
has a working capital deficiency. For the years ended December 31, 2000, 1999,
and 1998, AccuMed incurred net losses from continuing operations of $3,098,000,
$6,803,000, and $10,360,000, respectively. At December 31, 2000, AccuMed has a
working capital deficiency of $812,000, and its available resources are not
presently sufficient to fund its expected cash requirements through the end of
2001. These conditions raise substantial doubt about AccuMed's ability to
continue as a going concern.

        In 2000 and early 2001, management of AccuMed implemented strategies to
reduce losses from operations and cash used in operating activities. These
strategies have included a reduction in personnel, curtailment of certain
research and development efforts, and cutting of discretionary expenditures. As
a result of the signing of the merger agreement with Ampersand, AccuMed has
received in 2001 an aggregate of $695,000 in advances from Ampersand to be used
for working capital purposes. The merger agreement requires additional advances
of $225,000 per month from Ampersand in April and May 2001. The Ampersand
advances will be dissolved upon the consummation of the merger or will be due
and payable upon the earliest of May 31, 2001 or the termination of the merger
agreement. The due date for repayment of these advances may be extended upon
mutual agreement of AccuMed and Ampersand. Through February 28, 2001, AccuMed
has collected $300,000 on $500,000 of notes due from MonoGen, Inc. as of
December 31, 2000. The remaining amount of $200,000 due from MonoGen is payable
on March 31, 2001. Development milestone payments in the aggregate amount of
$400,000 are scheduled to be received in 2001 from Ventana under AccuMed's
license and development agreement with Ventana. In addition, AccuMed expects to
begin shipping licensed product to Ventana beginning in the fourth quarter of
2001.

        Management expects the merger agreement with Ampersand to be consummated
in the second quarter of 2001. If AccuMed is not able to consummate the merger
agreement with Ampersand, or if MonoGen or Ventana are not able to meet their
payment obligations to AccuMed, or the development timetable with Ventana is not
met or is substantially delayed, AccuMed would be required to pursue other
strategies to maintain its liquidity. These strategies would include
substantially curtailing its development and marketing efforts, liquidating its
inventories and technology portfolio or ceasing operations. This would
materially and adversely affect AccuMed's business, financial condition, results
of operations, and cash flows.

        At December 31, 2000, AccuMed has current debt of $668,000. The debt
consists of a Canadian dollar note of $151,000 ($218,000 in Canadian dollars), a
non-interest bearing repayable contribution of $187,000, and a $330,000 note
payable to Ampersand. The Canadian dollar note is due on demand, or in the event
not called, principal payments are required at a rate of $25,000 U.S. dollars
per month, plus interest at a rate of 6.0% over the Canadian prime rate. The
Canadian dollar note is convertible into shares of AccuMed's common stock at a
price of $1.43 per share. The repayable contribution was received under a
Canadian government program and calls for semi-annual installments based on
future sales of product and available funds, as defined. AccuMed is currently
past due in making certain of its payment obligations under this program. As a
result, AccuMed's repayment obligation is callable. The Ampersand note bore
interest at a rate of prime, plus 2.5%, and was converted into a new $800,000
note upon the signing of the merger agreement with Ampersand on February 7,
2001. The Ampersand note is due and payable upon the earliest of May 31, 2001 or
the termination of the merger agreement. The due date of the note may be
extended upon mutual agreement of the parties.

        OPERATING ACTIVITIES

        Cash used in operating activities decreased to $1,117,000 in 2000 from
$5,273,000 in 1999 and $10,418,000 in 1998. The decrease in the use of cash in
operations in 2000 compared to 1999 is primarily a result of a decrease in
operating expenses, exclusive of non-cash charges of $740,000, the receipt of
$2,000,000 under AccuMed's agreements with Ventana, CellMetrix, and Ampersand,
and other working capital changes. The decrease in cash used in 1999 compared to
1998 primarily reflects AccuMed's reduced operating costs. The 1999 period also
reflects over $1,000,000 of cash used to reduce extended vendor payment terms
carried over from the third and fourth quarters of 1998.


                                       20
<PAGE>   21

        INVESTING ACTIVITIES

        For the year ended December 31, 2000, investing activities generated
$804,000 in cash compared to $13,976,000 generated in 1999 and the use of
$500,000 in cash in 1998. In 2000, AccuMed received $332,000 from the sale of
shares it held in Ampersand and collected $500,000 from outstanding notes
receivable. In 1999, AccuMed received $14,400,000 in proceeds, net of expenses
incurred, from the sale of AccuMed's microbiology business. In 1998 we used
$343,000 to acquire the remaining stock of our Oncometrics subsidiary. Capital
expenditures in 2000, 1999, and 1998 were $28,000, $24,000 and $157,000,
respectively. We do not anticipate material capital expenditures during 2001.

        FINANCING ACTIVITIES

        For the year ended December 31, 2000, AccuMed generated $120,000 from
financing activities compared to the use of $8,498,000 in cash in 1999 and the
generation of $4,943,000 in 1998. In 2000, we received $330,000 from the
issuance of notes payable to Ampersand, and we used $210,000 for the pay down of
AccuMed's Canadian dollar note payable. In 1999, we repaid all of our
outstanding 14.5% secured notes and 12% unsecured convertible notes with
proceeds from the sale of AccuMed's microbiology division. In 1998, AccuMed
received $4,852,000 in net proceeds from a private placement of its common stock
and warrants to purchase common stock.

        AccuMed currently has no commitments with respect to sources of
additional financing other than with respect to funds to be received under our
agreements with Ampersand, MonoGen, and Ventana.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        AccuMed holds shares of common stock of Ampersand Medical Corporation, a
publicly traded company. As a result, our financial results could be
significantly affected by changes in the traded market price of this security.
AccuMed has debt instruments that are denominated in Canadian dollars. The
interest rate for one of the Canadian dollar denominated debt instruments is
variable based on changes in the Canadian prime rate of interest. AccuMed also
has a note payable with an interest rate that varies based on the U.S. prime
rate of interest. As a result, our financial results could be significantly
affected by changes in the exchange rate for Canadian dollars and to changes in
the U.S. and Canadian prime rates of interest. Management does not actively
employ strategies to minimize AccuMed's risks to these exposures.

        The following table presents information about the shares we hold in
Ampersand as of December 31, 2000.

<TABLE>
<CAPTION>
                                                SHARES                FAIR
                                                 HELD                 VALUE
                                                -------             --------
<S>                                             <C>                 <C>
    Ampersand Medical Corporation               192,088             $195,085
</TABLE>

        The following tables present information about AccuMed's debt
instruments that are subject to foreign currency and interest rate risk. The
table presents principal cash flows, related weighted-average interest rate by
expected maturity, and the applicable average Canadian to U.S. dollar exchange
rate.

<TABLE>
<CAPTION>
                                                                                 FAIR
                                      2001          2002           TOTAL         VALUE
                                    --------        ----          --------      --------
<S>                                 <C>             <C>           <C>           <C>
    Foreign currency risk:
      Principal                     $338,288          --          $338,288      $338,288
      Average interest rate          11.3%            --
      Exchange rate                 1.4995            --
</TABLE>


                                       21
<PAGE>   22

<TABLE>
<CAPTION>
                                      2001          2002           TOTAL         VALUE
                                    --------        ----         --------      --------
<S>                                 <C>             <C>          <C>           <C>
    Interest rate risk:
      Principal                     $481,288          --         $481,288      $481,288
      Average interest rate          12.5%
</TABLE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The following financial statements are filed with this report as pages
F-1 through F-18 following the signature page:

               Independent Auditors' Report
               Consolidated Balance Sheets
               Consolidated Statements of Operations
               Consolidated Statements of Stockholders' Equity and Comprehensive
                 Income (Loss)
               Consolidated Statements of Cash Flows
               Notes to Consolidated Financial Statements

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

        None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS AND DIRECTORS

        The sole executive officer and directors of AccuMed and their ages are
as follows:

<TABLE>
<CAPTION>
                NAME                      AGE                         POSITION
                ----                      ---                         --------
<S>                                       <C>      <C>
Paul F. Lavallee...................       61       Chairman of the Board and Chief Executive Officer
Mark Banister......................       38       Director
Jack H. Halperin, Esq..............       55       Director
Robert L. Priddy...................       55       Director
Leonard M. Schiller, Esq...........       60       Director
</TABLE>

        Set forth below is certain information regarding the business experience
of the directors and executive officers of AccuMed.

DIRECTORS

        PAUL F. LAVALLEE. Mr. Lavallee has been a member of the board of
directors since December 1995 and has been Chairman of the Board and Chief
Executive Officer of AccuMed since January 30, 1998. From January 30, 1998
through March 2, 2000, he also served as President. Since 1995, he has been
Chairman of the Board of Biorthex, Inc., a venture capital backed start-up firm
specializing in surgical and non-surgical orthopedics located in Montreal. From
January 1996 until January 1997, Mr. Lavallee served as a consultant to
Sigmedics, Inc., a biomedical company. From 1989 until December 1995, Mr.
Lavallee served as Chairman, President and Chief Executive Officer of Sigmedics,
Inc. Mr. Lavallee has a Bachelor of Science degree in Biology from Bates College
and a Masters in Business Administration from the University of Chicago.


                                       22
<PAGE>   23

        MARK BANISTER. Mr. Banister has been a director of AccuMed since April
1, 1998. Since January 1993, Mr. Banister has been an independent management
consultant and investment advisor specializing in identifying investment
opportunities in the smaller and medium company sector and assisting such
companies with their development. Mr. Banister previously held senior positions
at Bisgood Bishop Ltd. and Morgan Stanley International in London, England.

        JACK H. HALPERIN, ESQ. Mr. Halperin has been a director of AccuMed since
June 1991 and served as Chairman of the board of directors from April 1995
through December 29, 1995. He also served as Secretary of AccuMed from August
until December 1996 and from February 2000 to the present. Mr. Halperin is a
corporate attorney with expertise in venture capital financing and has been
practicing law independently since 1987. Mr. Halperin has a B.A. degree in
English from Columbia University and a law degree from New York University
School of Law. Mr. Halperin is also a member of the boards of directors of
I-Flow Corporation, Memry Corporation, and Nocopi Technologies, Inc.

        ROBERT L. PRIDDY. Mr. Priddy has been a director of AccuMed since May
1997. Mr. Priddy has been Chairman of the Board and Chief Executive Officer of
ValuJet, Inc., since its inception in October 1995. He was one of the founding
partners of ValuJet Airlines, a wholly owned subsidiary of ValuJet, Inc., and
served as Chairman of its board and its Chief Executive Officer from July 1992
until November 1996. From July 1991 until January 1993, Mr Priddy served as
President of Florida Gulf Airlines. From January 1988 to November 1991, he
served as President and Chief Executive Officer of Air Midwest, Inc., for which
he also served as a director from November 1987 to November 1991. From 1979 to
1987, Mr. Priddy served as Vice President and Chief Financial Officer of
Atlantic Southeast Airlines, Inc., which he also served as a director from 1981
to 1987. Mr. Priddy has a B.A. degree in economics from Tulane University. Mr.
Priddy is also a member of the board of directors of Datalink, Inc.,
Commonwealth Associates and AirTran Holdings, Inc.

        LEONARD M. SCHILLER, ESQ. Mr. Schiller has been a director of AccuMed
since April 1995. Mr. Schiller is a partner in the law firm of Schiller, Klein &
McElroy, P.C. He has also been President of The Dearborn Group, a residential
property management and real estate company involved in the ownership of
residential properties throughout the Midwest. Mr. Schiller serves on the board
of directors of Milestone Scientific, Inc., which develops dental equipment and
disposable products for use by health care providers. Mr. Schiller served as a
director of iMall, Inc. prior to its acquisition by Excite@Home. Mr. Schiller
also serves as a consultant to several private and public companies.

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

        AccuMed's board of directors held 5 meetings during the 2000 fiscal
year. Each director attended a minimum of 75% of the aggregate of such meetings
and the meetings held by each committee, if any, of the board of directors on
which such director served during the last fiscal year.

        AccuMed has an Executive Committee, an Audit Committee and a
Compensation Committee. Each of these committees is responsible to the full
board of directors, and its activities are therefore subject to approval of the
board of directors. The board of directors does not have a nominating or similar
committee. The functions performed by the Audit Committee and the Compensation
Committee and their membership are summarized below.

        The Audit Committee is responsible for reviewing AccuMed's internal
accounting controls, meeting and conferring with AccuMed's certified public
accountants, and reviewing the results of the accountants' auditing engagement.
During fiscal year 2000, the Audit Committee held one meeting. The Audit
Committee consists of Messrs. Halperin (Chairman), Banister, Priddy and
Schiller.

        The Compensation Committee of the board of directors is comprised
entirely of "disinterested" directors within the meaning of Rule16b-3 under the
Securities Exchange Act of 1934. The Compensation Committee determines base
compensation and discretionary cash bonuses for AccuMed's senior executives, if
not determined by the full board of directors. These determinations are subject
to the approval or ratification of the full


                                       23
<PAGE>   24

board of directors. The Compensation Committee also determines the number and
terms of stock options to be granted to employees, directors (other than
pursuant to the Board of Directors Compensation Plan described below), and
consultants of AccuMed under AccuMed' stock option plans, unless previously
determined by the full board of directors. During fiscal year 2000, the
Compensation Committee held one meeting. The Compensation Committee consists of
Messrs. Schiller (Chairman), Banister, Halperin and Priddy.

DIRECTOR COMPENSATION

        Pursuant to the Board of Directors Compensation Plan as amended, each
non-employee director is entitled to the following compensation for services as
a director: (1) an immediately exercisable, five-year, nonqualified stock option
to purchase 3,334 shares of common stock to be granted upon election to the
board of directors, and (2) an immediately exercisable, nonqualified stock
option to purchase 3,334 shares of common stock to be granted upon reelection of
a non-employee director to serve an additional year on the board of directors.
Such options are to be granted under AccuMed's stock option plans. The exercise
price per share shall be the fair market value of a share of common stock on the
date of grant. Directors are reimbursed for reasonable expenses incurred in
attending meetings of the board of directors and committees thereof.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Based upon a review of AccuMed's records, AccuMed believes that each
report disclosing beneficial ownership of securities of AccuMed pursuant to
Section 16(a) of the Securities Exchange Act required to be filed by the
executive officers and directors of AccuMed during the fiscal year ended
December 31, 2000 and prior fiscal years were timely filed except as follows.
Each of Messrs. Banister, Halperin, Priddy and Schiller filed a late Form 4
disclosing stock options granted in May 1999. Each of Messrs. Lavallee and
Pressman filed late Forms 4 disclosing stock options granted in March 1999 and
March 2000.

ITEM 11. EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

        COMPENSATION COMMITTEE: The Compensation Committee of AccuMed's board of
directors is composed entirely of outside directors. The committee is
responsible for setting and adjusting the base salaries of all corporate
officers, establishing cash incentive programs for officers, and the awarding of
stock option grants to officers and all other employees. The committee is also
responsible for the review and approval of any employment related contracts.

        COMPENSATION PHILOSOPHY: It is the goal of AccuMed to attract and retain
a strong executive management team. The committee believes that there should be
a link between the performance of AccuMed, from both financial and stockholder
value standpoints, and executive compensation. Accordingly, base salaries are
set to conformity with compensation market requirements for comparable sized
companies, taking into account levels of responsibility and office location.
However, short-term cash incentive compensation and long-term stock option
incentive awards, are primarily related to the achievement of AccuMed's
financial performance goals and to the enhancement of stockholder value.
Internal and personal performance objectives play a lesser role in the executive
incentive package.

        The committee is confident that the compensation and incentive policies
and practices followed by AccuMed are appropriate for the industry and the
compensation market in which AccuMed competes.

        Submitted by the 2000 Compensation Committee of AccuMed's board of
directors:

        Mark Banister, Jack H. Halperin, Robert L. Priddy, and Leonard M.
Schiller


                                       24
<PAGE>   25

        SUMMARY COMPENSATION INFORMATION. The following tables set forth
information regarding compensation paid or accrued with respect to the three
preceding fiscal years to AccuMed's Chief Executive Officer and other executive
officers of AccuMed whose total salary and bonus exceeded $100,000 for the 2000
fiscal year.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                         Annual Compensation        Long Term Compensation Awards
                                                                                         Securities
   Name and Principal                                                  All Other         Underlying
        Position              Year       Salary         Bonus        Compensation         Options
--------------------------    ------   -----------   -----------   ----------------    -------------
<S>                           <C>      <C>           <C>           <C>                 <C>
Paul F. Lavallee(1)           2000       $238,391            --              --            100,000
 Chairman and Chief           1999        225,000      $135,000              --            100,000
 Executive Officer            1998        208,212            --              --            250,000

Norman J. Pressman, Ph.D.(2)  2000        200,000            --        $135,021(3)         100,000
  President and Chief         1999        192,917        65,000          61,575(4)         100,000
  Scientific Officer          1998        157,500            --          41,049(4)          50,000
</TABLE>


(1) Mr. Lavallee joined AccuMed as Chairman, Chief Executive Officer and
President in January 1998.

(2) Dr. Pressman resigned as President and Chief Scientific Officer on December
31, 2000.

(3) The amount shown as Other Compensation in 2000 represents separation
benefits accrued pursuant to a separation agreement entered into between AccuMed
and Dr. Pressman on December 29, 2000, which was a modification of an employment
agreement between Dr. Pressman and AccuMed entered into on July 5, 1996.

(4) The amount shown as Other Compensation in 1999 and 1998 represents amortized
forgiveness of a portion of a loan made by AccuMed to Dr. Pressman.


                            OPTION GRANTS DURING THE
                          YEAR ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                       % of Total
                                         Shares
                         Number of     Underlying
                          Shares        Options                                       Grant
                        Underlying     Granted to     Exercise                         Date
                         Options      Employees in      Price        Expiration       Present
     Name                Granted         Year         ($/Share)         Date          Value(1)
-------------------     ----------    ------------   -----------    -------------    -----------
<S>                     <C>           <C>            <C>            <C>              <C>
Paul F. Lavallee         100,000         50.0%          $2.31          3/14/10          $2.10


Norman J. Pressman,      100,000         50.0%          $2.31          3/14/10          $2.10
Ph.D.

</TABLE>


                                       25
<PAGE>   26
(1) AccuMed utilizes the Black-Scholes pricing model to determine the fair value
    of options granted. The following assumptions were incorporated into the
    model: risk-free rate -- 6.52%, expected volatility -- 143%, dividend yield
    -- 0%, and time of exercise -- 5 years. No adjustments were made for
    non-transferability of risk or risk of forfeiture.

                AGGREGATE OPTION EXERCISES DURING THE YEAR ENDED
               DECEMBER 31, 2000 AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
                       Number of Shares                            Value of
                         Underlying                              Unexercised
                        Unexercised                             in-the-Money
                         Options at                              Options at
                      December 31, 2000                        December 31, 2000
     Name                Exercisable        Unexercisable         Exercisable        Unexercisable
-------------------   -----------------  -----------------   ------------------     ---------------
<S>                   <C>                <C>                 <C>                    <C>
Paul F. Lavallee          331,668             125,000                --                     --
Norman J. Pressman,       158,334             125,000                --                     --
Ph.D.
</TABLE>

                            10-YEAR OPTION REPRICINGS

<TABLE>
<CAPTION>
                                  Number of       Market                                      Length of
                                 Securities       Price of       Exercise                      Original
                                 Underlying      Stock At        Price At                    Option Term
                                   Options        Time of        Time of           New        Remaining
                                 Repriced or     Repricing     Repricing or     Exercise      at Date of
                                   Amended      or Amendment    Amendments        Price       Repricing
                     Date            (#)            ($)            ($)             ($)        Amendment
----------------  -----------  --------------  -------------  --------------   -----------  -------------
<S>               <C>          <C>             <C>            <C>              <C>          <C>
Paul F. Lavallee    3/23/98        250,000         $4.50          $9.375          $4.50       9.8 years
</TABLE>

EMPLOYMENT AGREEMENTS AND SEVERANCE ARRANGEMENTS

        LAVALLEE COMPENSATION ARRANGEMENT; PROFESSIONAL SERVICES AGREEMENT.
Effective January 30, 1998, AccuMed's board of directors appointed Mr. Lavallee
Chairman of the Board, Chief Executive Officer and President of AccuMed,
approved his compensation arrangements for his services, and directed management
to memorialize those compensation arrangements in a professional services
agreement to be effective retroactive to January 30, 1998. Mr. Lavallee's
services are provided through an agreement dated April 13, 1998 (effective
January 30, 1998) between AccuMed and Gypsy Hill LLC, a professional services
entity. Mr. Lavallee's compensation is $225,000 annually, and he is eligible for
an annual bonus of up to 30% thereof. The services can be terminated by AccuMed
upon 12 months' written notice, or by Mr. Lavallee upon 30 days' written notice.
Mr. Lavallee has been granted a non-qualified stock option to purchase 250,000
shares of common stock at an initial exercise price of $9.375, the closing sales
price per share of AccuMed common stock on the grant date, January 30, 1998. If
in AccuMed's first equity offering subsequent to the grant date, it sold common
stock, or securities convertible or exercisable for common stock, at a price per
share lower than the initial exercise price, then the option exercise price was
to be reduced to equal the lower price sale per share. In March 1998, AccuMed
completed an equity offering for shares of common stock and warrants exercisable
to purchase common stock at $4.50 per share. Accordingly the


                                       26
<PAGE>   27

initial exercise price has been reset to $4.50. The option is exercisable as
follows: (1) one-third of the underlying shares were immediately exercisable,
(2) an additional one-third became exercisable on January 30, 1999, and (3) the
final one-third of the underlying shares became exercisable on January 30, 2000.
Mr. Lavallee is reimbursed for reasonable travel expenses from South Dakota to
Chicago and living expenses while in Chicago.

        PRESSMAN EMPLOYMENT AGREEMENT AND OTHER COMPENSATION ARRANGEMENTS. Dr.
Pressman and AccuMed entered into an Employment Agreement dated June 13, 1996,
as amended, for a five-year term which began July 5, 1996. Pursuant to the
agreement, Dr. Pressman served as an executive officer under various titles,
most recently as President and Chief Scientific Officer. Dr. Pressman's annual
salary was $200,000 and he was eligible to receive annually (1) cash bonuses of
up to 30% of his annual salary, and (2) incentive stock options to purchase up
to 8,334 shares of common stock based on the achievement of mutually agreed
goals and objectives. On July 8, 1996, Dr. Pressman was granted an option to
purchase an aggregate of 41,665 shares of common stock at an exercise price of
$37.50 per share (the last reported sale price of the common stock on the date
on which Dr. Pressman's employment commenced) which was immediately exercisable
with respect to 8,333 shares and was to become exercisable with respect to 8,333
additional shares on each of the first through fourth anniversaries of the grant
date. Dr. Pressman surrendered those options in February 1997 in order that the
shares reserved for issuance upon exercise thereof could be reserved for
issuance in a private placement of AccuMed's securities completed in March 1997.
Dr. Pressman was entitled to receive replacement options to purchase 41,667
shares of common stock, exercisable at the fair market value, in May 1997.
However, he waived his right to receive 8,333 of those options and was granted
options to purchase 33,334 shares of common stock, exercisable at the then fair
market value, in May 1997. Dr. Pressman was granted 4,167 shares of common stock
on the date on which his employment commenced.

        Pursuant to Dr. Pressman's employment agreement, AccuMed loaned him an
aggregate of $164,409.20, to cover relocation expenses and taxes in connection
with the common stock issued to him when he began his employment, pursuant to
promissory notes made in October and December 1996. In 1997 and 1996, Dr.
Pressman repaid an aggregate of $51,000 of the loan. Until November 1997, 50% of
bonuses awarded to Dr. Pressman were to be withheld by AccuMed in partial
repayment of the loans. Pursuant to the employment agreement, AccuMed was
obligated to cover various expenses relating to Dr. Pressman's efforts to sell
his home and his living expenses in Chicago until the home was sold. In November
1997, AccuMed and Dr. Pressman agreed that the loan balance would be forgiven
over the remaining term of his employment agreement, and AccuMed would have no
further obligations related to Dr. Pressman's relocation expenses.

        On December 29, 2000, AccuMed and Dr. Pressman entered into a voluntary
separation agreement, whereby Dr. Pressman resigned as President and Chief
Scientific Officer on December 31, 2000. Pursuant to the separation agreement,
AccuMed agreed to continue Dr. Pressman's current salary, automobile allowance,
and health, life, and dental benefits through July 4, 2001. AccuMed also agreed
to forgive the remaining portion of Dr. Pressman's loan balance of $10,785 due
to AccuMed.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        No member of the Compensation Committee of AccuMed serves as a member of
the board of directors or compensation committee of any entity that has one or
more executive officers serving as a member of AccuMed's board of directors or
Compensation Committee.

ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        COMMON STOCK

        The table below sets forth certain information as of March 21, 2001 with
respect to the beneficial ownership of common stock by (1) each person known by
AccuMed to be the beneficial owner of more than 5% of the outstanding shares of
common stock, (2) each director, (3) the executives named in the Summary
Compensation Table, and (4) executive officers and directors as a group. As of
March 21, 2001, there were 5,739,838 shares of common stock outstanding.


                                       27
<PAGE>   28

        Unless otherwise noted, AccuMed believes that all persons named in the
table have sole voting and investment power with respect to all shares of
AccuMed common stock listed as beneficially owned by them. A person is deemed to
be the beneficial holder of securities that can be acquired by the person
currently or within 60 days of March 21, 2001 upon the exercise of warrants or
options or the conversion of convertible preferred stock. Each beneficial
owner's percentage ownership is determined by including shares, underlying
options or warrants which are exercisable or preferred stock which is
convertible by the person currently or within 60 days following this date, and
excluding shares underlying options, warrants and convertible preferred stock
held by any other person.

<TABLE>
<CAPTION>
                                                                                   PERCENT OF
                                                                                     SHARES
                     NAME AND ADDRESS                         NUMBER OF SHARES    BENEFICIALLY
                    OF BENEFICIAL OWNER                     BENEFICIALLY OWNED       OWNED
                    -------------------                     ------------------    ------------
<S>                                                         <C>                   <C>
Bellingham Capital Industries.....................              1,333,334(1)          20.8%
  P.O. Box 323
  St. Helier Jersey, Chan. Islands

Robert L. Priddy..................................                911,152(2)          14.5%
  c/o AccuMed International, Inc.
  920 N. Franklin St., Ste 402
  Chicago, Il  60610

Edmund Shea.......................................                306,663(3)           5.2%
  655 Brea Canyon Rd.
  Walnut, CA  91789

Paul F. Lavallee..................................                431,334(4)           7.1%

Mark Banister.....................................                 10,002(5)             *

Jack H. Halperin..................................                 13,336(6)             *

Leonard Schiller..................................                 20,826(7)             *

Norman J. Pressman................................                212,501(8)           3.6
---------------
All directors and executive officers as a group
  (5 persons).....................................              1,386,650(9)          20.7%
</TABLE>

----------------------------


 *   Represents less than 1%.

(1) Includes 667,667 shares underlying warrants held by Bellingham Capital
    Industries.

(2) Mr. Priddy directly owns 355,555 shares of AccuMed common stock and warrants
    to purchase up to 306,230 shares of AccuMed common stock. The number shown
    includes 13,336 shares underlying stock options and 236,031 shares
    underlying Series A Convertible Preferred Stock. The number shown includes
    an additional 120,926 shares, and 147,373 shares underlying warrants, held
    by Commonwealth Associates, excluding securities held in Commonwealth
    Associates' trading account. Mr. Priddy is a control person of the corporate
    general partner of Commonwealth Associates and may be deemed to be
    beneficial owner of securities held by Commonwealth Associates. Mr. Priddy
    disclaims beneficial ownership of the securities held by Commonwealth
    Associates except to the extent of his percentage ownership interests in
    Commonwealth Associates.


                                       28
<PAGE>   29

(3) Includes 110,219 shares underlying warrants held by Mr. Shea.

(4) Includes 378,334 shares underlying stock options held by Mr. Lavallee.

(5) Includes 10,002 shares underlying stock options held by Mr. Banister.

(6) Includes 13,336 shares underlying stock options held by Mr. Halperin.

(7) Includes 13,336 shares underlying stock options held by Mr. Schiller.

(8) Includes 208,334 shares underlying stock options held by Dr. Pressman.

(9) Includes 236,031 shares underlying Series A Convertible Preferred Stock,
    306,230, shares underlying warrants, and 428,344 shares underlying options
    held by executive officers and directors.

PREFERRED STOCK

        The table below sets forth certain information as of March 21, 2001 with
respect to the beneficial ownership of the Series A Convertible Preferred Stock
by (1) each person known by AccuMed to be the beneficial owner of more than 5%
of the outstanding shares of Series A Convertible Preferred Stock, (2) the only
director, nominee or executive officer who owns any Series A Convertible
Preferred Stock, and (3) executive officers and directors as a group. As of
March 21, 2001, there were 572,485 shares of Series A Convertible Preferred
Stock outstanding. Unless otherwise noted, AccuMed believes that all persons
named in the table have sole voting and investment power with respect to all
shares of Series A Convertible Preferred Stock listed as beneficially owned by
them.

<TABLE>
<CAPTION>
               NAME AND ADDRESS OF                      AMOUNT AND NATURE OF         PERCENT OF
                 BENEFICIAL OWNER                       BENEFICIAL OWNERSHIP           CLASS
----------------------------------------------------  --------------------------    -------------
<S>                                                   <C>                           <C>
Robert L. Priddy....................................          354,046                  61.8%
  c/o AccuMed International, Inc.
  920 N. Franklin St., Ste 402
  Chicago, IL  60610

France Finance IV...................................           47,250                   8.3%
  51, rue Vivienne
  75002 Paris, France

Fifth Third Bank of Western Ohio, Trustee Piqua.....           35,405                   6.1%
Enterprises Corp. Profit Sharing Plan
P.O. Box 703
Piqua, OH  45356

Shannon P. Acks.....................................            29,504                   5.2%
  502 Reston Mill Lane
  Marietta, GA  30067

All executive officers and directors as a group                354,046                 61.8%
(5 persons)
</TABLE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        None


                                       29
<PAGE>   30

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

                (a) Financial Statements. The following financial statements are
        filed as part of this report as pages F-1 through F-18 following the
        signature page:

               Independent Auditors' Report
               Consolidated Balance Sheets
               Consolidated Statements of Operations
               Consolidated Statements of Stockholders' Equity and Comprehensive
                  Income (Loss)
               Consolidated Statements of Cash Flows
               Notes to Consolidated Financial Statements

                (b) No reports on Form 8-K were filed during the three month
        period ended December 31, 2000.

                (c) Exhibit Index

<TABLE>
<CAPTION>
Exhibit
Number     Description of Exhibit
-------    ----------------------
<S>        <C>
  3.1      Bylaws of AccuMed.(1)

  3.2      Amendment No. 1 to Bylaws of AccuMed.(19)

  4.1      Certificate of Incorporation of AccuMed(1)

  4.2      Certificate of Amendment to Certificate of Incorporation of AccuMed
           increasing authorized common stock(14)

  4.3      Certificate of Designation, Rights and Preferences of Series A
           Convertible Preferred Stock(15)

  4.4      Certificate of Correction to Certificate of Designation, Rights and
           Preferences of Series A Convertible Preferred Stock(15)

  4.5      Certificate of Amendment to Certificate of Incorporation of AccuMed
           effecting reverse stock split(21)

  4.6      Specimen Certificate for common stock(1)

  4.7      Bylaws of AccuMed(1)

  4.8      Amendment No. 1 to Bylaws of AccuMed(19)

  4.9      Warrant Agreement dated as of February 23, 1998 between AccuMed and
           Commonwealth Associates, including form of Warrant Certificate
           attached as Exhibit A thereto, representing an aggregate of 1,245,340
           (pre split) common stock purchase Warrants issued to investors in a
           Note Exchange Offer.(15)

  4.10     Warrant Agreement dated March 19, 1998 between AccuMed and
           Commonwealth Associates representing an aggregate of 350,000(pre
           split) common stock purchase warrants issued to
</TABLE>


                                       30
<PAGE>   31

<TABLE>
<S>        <C>
           Commonwealth Associates and/or its designees in exchange for warrants
           issued thereto in connection with a Note Exchange Offer(19)

  4.11     Form of Subscription Agreement and Registration Rights Agreement
           dated as of February 23, 1998 between AccuMed and each of the
           investors in a Note Exchange Offer(15)

  4.12     Warrant Agreement dated as of March 19, 1998, as amended by Amendment
           No. 1 dated as of March 23, 1998, between AccuMed and Commonwealth
           Associates pertaining to an aggregate of 8,686,667 (pre split) common
           stock purchase Warrants issued to investors in a private placement.
           (19)

  4.13     Form of Warrant Certificate representing an aggregate of 8,686,667
           (pre split) common stock purchase Warrants issued to investors in a
           private placement in March 1998(19)

  4.14     Form of Warrant to Purchase Common Stock dated March 19, 1998 or
           March 23, 1998, including form of Warrant Certificate attached as
           Exhibit A thereto, representing an aggregate of 1,337,333 (pre split)
           common stock purchase Warrants issued to Commonwealth Associates,
           Bellingham Capital Industries, and Harold S. Blue and/or their
           respective designees in connection with a private placement.(19)

  4.15     Form of Subscription Agreement and Registrant Rights Agreement dated
           March 19, 1998 or March 23, 1998 between AccuMed and each of the
           investors in a private placement(19)

  4.16     Specimen stock certificate for common stock.(1)

 10.1      AccuMed's Board of Directors Compensation Plan as amended by Minutes
           of Board of Directors meeting dated January 18, 1996 authorizing
           grants of stock options to non-employee directors.(1)(4)

 10.2      Employment Agreement between AccuMed and Norman J. Pressman dated
           June 13, 1996 and Addendum to Employment Agreement between AccuMed
           and Norman J. Pressman dated July 16, 1996.(4)(5)

 10.3      Separation Agreement dated December 29, 2000 between Norman J.
           Pressman and AccuMed.

 10.4      1995 Stock Option Plan.(1)(4)

 10.5      Amendment No. 1 to AccuMed's 1995 Stock Option Plan.(4)(7)

 10.6      Amendment No. 2 to the 1995 Stock Option Plan.(4)(16)

 10.7      Amendment No. 3 to the 1995 Stock Option Plan.(4)(19)

 10.8      Form of Non-Qualified Stock Option Agreement governing options
           granted to former employees of AccuMed, Inc. pursuant to the
           Agreement and Plan of Reorganization dated as of April 21, 1995, as
           amended.(1)(4)

 10.9      Form of Non-Qualified Stock Option Agreement governing options
           granted to employees and consultants under the 1995 Stock Option
           Plan.(1)(4)

 10.10     Form of Incentive Stock Option Agreement governing options granted to
           employees under the 1995 Stock Option Plan.(1)(4)

 10.11     Amended and Restated 1992 Stock Option Plan.(4)(8)

 10.12     Amendment No. 1 to Amended and Restated 1992 Stock Option
           Plan.(4)(16)
</TABLE>


                                       31
<PAGE>   32

<TABLE>
<S>        <C>
 10.13     Franklin Square Commercial Lease dated February 1, 2000 between
           AccuMed and the Lumber Company as Agent for the Beneficiary of
           LaSalle National Trust, N.A. pertaining to the premises located at
           Suite 405, 900 North Franklin Street and Suites 400, 401, 402, 920
           North Franklin Street, Chicago, Illinois.

 10.14     Form of Warrant Certificate dated as of March 13, 1997 evidencing
           right to acquire an aggregate of 850,000 shares of Common stock
           issued to several investors in a private placement consummated March
           13, 1997.(16)

 10.15     Form of Subscription Agreement between AccuMed and several investors
           in the private placement consummated on March 13, 1997.(16)

 10.16     Form of Warrant to Purchase Common Stock dated February 23, 1998
           between AccuMed and Commonwealth Associates representing an aggregate
           of 200,000 (pre-split) common stock purchase Warrants issued to
           Commonwealth Associates and/or its designees in exchange for warrants
           previously issued thereto in connection with the placement of 12%
           Convertible Promissory Notes.(19)

 10.17     Warrant Agreement dated as of February 2, 1998 between AccuMed and
           Robert L. Priddy representing warrants to purchase 100,000
           (pre-split) shares of common stock.(19)

 10.18     Agreement between AccuMed and Paul F. Lavallee and Gypsy Hill LLC
           effective January 29, 1998(21)

 10.19     Warrant Agreement dated as of February 23, 1998 between AccuMed and
           Commonwealth Associates, including form of Warrant Certificate
           attached as Exhibit A thereto, representing an aggregate of 1,245,340
           (pre-split) common stock purchase Warrants issued to investors in a
           Note Exchange Offer.(15)

 10.20     Warrant Agreement dated March 19, 1998 between AccuMed and
           Commonwealth Associates representing an aggregate of 350,000
           (pre-split) common stock purchase Warrants issued to Commonwealth
           Associates and/or its designees in exchange for warrants issued
           thereto in connection with a Note Exchange Offer.(19)

 10.21     Form of Subscription Agreement and Registration Rights Agreement
           dated as of February 23, 1998 between AccuMed and each of the
           investors in a Note Exchange Offer.(15)

 10.22     Warrant Agreement dated as of March 19, 1998, as amended by Amendment
           No. 1 dated as of March 23, 1998, between AccuMed and Commonwealth
           Associates pertaining to an aggregate of 8,686,667 (pre-split) common
           stock purchase Warrants issued to investors in a private placement.
           (19)

 10.23     Form of Warrant Certificate representing an aggregate of 8,686,667
           (pre-split) common stock purchase Warrants issued to investors in a
           private placement in March 1998.(19)

 10.24     Form of Warrant to Purchase Common stock dated March 19, 1998 or
           March 23, 1998, including form of Warrant Certificate attached as
           Exhibit A thereto, representing an aggregate of 1,337,333 (pre-split)
           common stock purchase Warrants issued to Commonwealth Associates,
           Bellingham Capital Industries, and Harold S. Blue and/or their
           respective designees in connection with a private placement.(19)

 10.25     Form of Subscription Agreement and Registration Rights Agreement
           dated March 19, 1998 or March 23, 1998 between AccuMed and each of
           the investors in a private placement.(19)

 10.26     1997 Stock Option Plan and Amendment No. 1 to the 1997 Stock Option
           Plan(19)
</TABLE>


                                       32
<PAGE>   33

<TABLE>
<S>        <C>
 10.27     Floating Rate Convertible Promissory Note dated June 26, 1998 by
           AccuMed in favor of Xillix Technologies Corp. in the original
           principal amount of CDN$500,000.(22)

 10.28     Amendment to Floating Rate Convertible Promissory Note dated March
           15, 2000 between AccuMed and Xillix Technologies Corp.(23)

 10.29     License and Development Agreement dated March 24, 2000 between
           AccuMed and Ventana Medical Systems, Inc.+(23)

 10.30     Patent and Technology License and Registration Rights Agreement dated
           March 29, 2000 between AccuMed and BCAM International, Inc.+(23)

 10.31     Letter Agreement dated October 3, 2000 between AccuMed and
           CellMetrix, Inc. (formerly known as BCAM International, Inc.)
           terminating the Patent and Technology License and Registration Rights
           Agreement dated March 29, 2000.

 10.32     Amendment to Patent and Technology License Agreement dated June 9,
           2000 between AccuMed and Ampersand Medical Corporation.(24)

 10.33     License Agreement dated December 29, 2000 between AccuMed and
           MonoGen, Inc.++

 10.34     Agreement and Plan of Merger dated February 7, 2001 among AccuMed,
           AccuMed Acquisition Corp., and Ampersand Medical Corporation.

 10.35     Secured Promissory Note made February 7. 2001 by AccuMed in favor of
           Ampersand Medical Corporation in the original principal amount of
           $800,000.

 10.36     Security Agreement dated February 7, 2001 between AccuMed and
           Ampersand Medical Corporation.

 10.37     Secured Promissory Note made March 1, 2001 by AccuMed in favor of
           Ampersand Medical Corporation in the original principal amount of
           $225,000.

 10.38     Promissory Note dated December 29, 2000 made by MonoGen, Inc. in
           favor of AccuMed in the original principal amount of $320,000.

 21.1      Subsidiary of AccuMed.

 23.1      Consent of KPMG LLP
</TABLE>

---------------



+    Confidential treatment granted for portions of this document.

++   Confidential treatment sought for portions of this document.

(1)  Incorporated by reference to AccuMed's Transition Report on Form 10-KSB for
     the transition period ended December 31, 1995.

(2)  Incorporated by reference to Pre-Effective Amendment No. 4 to the
     Registration Statement on Form S-1 (Reg. No. 33-48302), filed with the
     Commission on October 9, 1993.


                                       33
<PAGE>   34

(3)  Incorporated by reference to AccuMed's Registration Statement on Form S-4
     (File No. 33-99680), filed with the Commission on November 22, 1995.

(4)  Represents a management contract or compensatory plan or arrangement.

(5)  Incorporated by reference to AccuMed's Registration Statement Form S-2
     (Regis. No. 333-09011) filed with the Commission on July 26, 1996.

(6)  Incorporated by reference to AccuMed's Annual Report on Form 10-KSB for the
     year ended September 30, 1994.

(7)  Incorporated by reference to Pre-effective Amendment No. 1 to the
     Registration Statement on Form S-2 (Regis. No. 333-09011) filed with the
     Commission on August 29, 1996.

(8)  Incorporated by reference to AccuMed's Registration Statement on Form S-1
     (Reg. No. 33-48302), filed with the Commission on June 3, 1992.

(9)  Incorporated by reference to Pre-effective Amendment No. 4 to the
     Registration Statement of Form S-2 (Regis. No. 333-09011) filed with the
     Commission on October 3, 1996.

(10) Incorporated by reference to Pre-Effective Amendment No. 1 to Form SB-2,
     filed with the Commission on November 8, 1993).

(11) Incorporated by Reference to Pre-effective Amendment No. 2 to the
     Registration Statement on Form S-2 (Regis. No. 333-09011) filed with the
     Commission on September 23, 1996.

(12) Incorporated by reference to AccuMed's Registration Statement on Form S-3
     (Reg. No. 333-07681), filed with the Commission on July 3, 1996.

(13) Incorporated by reference to AccuMed's Current Report on Form 8-K dated
     March 3, 1997.

(14) Incorporated by reference to AccuMed's Registration Statement on Form S-3
     (Regis. No. 333-28125) filed with the Commission on May 30, 1997.

(15) Incorporated by reference to AccuMed's Current Report on Form 8-K dated
     March 20, 1998.

(16) Incorporated by reference to AccuMed's Annual Report on Form 10-KSB for the
     year ended December 31, 1996.

(17) Incorporated by reference to AccuMed's Quarterly Report on Form 10-QSB for
     the quarter ended June 30, 1997.

(18) Incorporated by reference to AccuMed's Quarterly Report on from 10-QSB for
     the quarter ended September 30, 1997.

(19) Incorporated by reference to AccuMed's Annual Report on Form 10-K for the
     year ended December 31, 1997.

(20) Incorporated by reference to the Registration Statement on Form S-3 (Regis.
     No. 333-56393) filed with the Commission on June 9, 1998.


                                       34
<PAGE>   35

(21) Incorporated by reference to AccuMed's Quarterly Report on Form 10-Q for
     the quarter ended June 30, 1998.

(22) Incorporated by reference to AccuMed's Registration Statement on Form S-3
     filed with the Commission on November 9, 1999 (Regis. No. 333-90637).

(23) Incorporated by reference to AccuMed's Annual Report on Form 10-K for the
     year ended December 31, 1999.

(24) Incorporated by reference to AccuMed's Quarterly Report on Form 10-Q for
     the quarter ended June 30, 2000.

               (d) Financial Statement Schedules. The following financial
               statement schedule is filed as part of this report as page F-20
               and F-21 following the signature page:

Schedule II - Valuation and Qualifying Accounts

        All other schedules required by Form 10-K Annual Report have been
omitted because they were not applicable, were included in the notes to be
consolidated financial statements, or were otherwise not required under the
instructions contained in Regulation S-X.


                                       35
<PAGE>   36

                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

Dated: March 30, 2001


                                            ACCUMED INTERNATIONAL, INC.


                                            By: /s/  PAUL F. LAVALLEE
                                               ---------------------------------
                                               Paul F. Lavallee,
                                               Chairman of the Board
                                               and Chief Executive Officer
                                               (principal executive officer
                                               and principal accounting officer)


        Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates so indicated.

        Each Director of the registrant whose signature appears below, hereby
appoints Paul F. Lavallee individually as his attorney-in-fact to sign in his
name and on his behalf as a director of the registrant, and to file with the SEC
any and all Amendments to this Annual Report on Form 10-K to the same extent and
with the same effect as if done personally.


DATED: March 30, 2001                       By:     /s/  PAUL F. LAVALLEE
                                               ---------------------------------
                                               Paul F. Lavallee, Chairman


DATED: March 30, 2001                       By:     /s/  JACK H. HALPERIN
                                               ---------------------------------
                                               Jack H. Halperin, Director


DATED: March 30, 2001                       By:     /s/  MARK BANISTER
                                                --------------------------------
                                                Mark Banister, Director


DATED: March 30, 2001                       By:    /s/  LEONARD M. SCHILLER
                                               ---------------------------------
                                               Leonard M. Schiller, Director


DATED: March 30, 2001                       By:    /s/  ROBERT L. PRIDDY
                                                --------------------------------
                                                Robert L. Priddy, Director


                                       36
<PAGE>   37

<TABLE>
<CAPTION>
Exhibit
Number     Description of Exhibit
-------    ----------------------
<S>        <C>
  3.1      Bylaws of AccuMed. (1)

  3.2      Amendment No. 1 to Bylaws of AccuMed. (19)

  4.1      Certificate of Incorporation of AccuMed (1)

  4.2      Certificate of Amendment to Certificate of Incorporation of AccuMed
           increasing authorized common stock (14)

  4.3      Certificate of Designation, Rights and Preferences of Series A
           Convertible Preferred Stock (15)

  4.4      Certificate of Correction to Certificate of Designation, Rights and
           Preferences of Series A Convertible Preferred Stock (15)

  4.5      Certificate of Amendment to Certificate of Incorporation of AccuMed
           effecting reverse stock split (21)

  4.6      Specimen Certificate for common stock (1)

  4.7      Bylaws of AccuMed (1)

  4.8      Amendment No. 1 to Bylaws of AccuMed (19)

  4.9      Warrant Agreement dated as of February 23, 1998 between AccuMed and
           Commonwealth Associates, including form of Warrant Certificate
           attached as Exhibit A thereto, representing an aggregate of 1,245,340
           (pre split) common stock purchase Warrants issued to investors in a
           Note Exchange Offer. (15)

  4.10     Warrant Agreement dated March 19, 1998 between AccuMed and
           Commonwealth Associates representing an aggregate of 350,000(pre
           split) common stock purchase warrants issued to Commonwealth
           Associates and/or its designees in exchange for warrants issued
           thereto in connection with a Note Exchange Offer (19)

  4.11     Form of Subscription Agreement and Registration Rights Agreement
           dated as of February 23, 1998 between AccuMed and each of the
           investors in a Note Exchange Offer (15)

  4.12     Warrant Agreement dated as of March 19, 1998, as amended by Amendment
           No. 1 dated as of March 23, 1998, between AccuMed and Commonwealth
           Associates pertaining to an aggregate of 8,686,667 (pre split) common
           stock purchase Warrants issued to investors in a private placement.
           (19)

  4.13     Form of Warrant Certificate representing an aggregate of 8,686,667
           (pre split) common stock purchase Warrants issued to investors in a
           private placement in March 1998 (19)

  4.14     Form of Warrant to Purchase Common Stock dated March 19, 1998 or
           March 23, 1998, including form of Warrant Certificate attached as
           Exhibit A thereto, representing an aggregate of 1,337,333 (pre split)
           common stock purchase Warrants issued to Commonwealth Associates,
           Bellingham Capital Industries, and Harold S. Blue and/or their
           respective designees in connection with a private placement. (19)
</TABLE>


                                       37
<PAGE>   38

<TABLE>
<S>        <C>
  4.15     Form of Subscription Agreement and Registrant Rights Agreement dated
           March 19, 1998 or March 23, 1998 between AccuMed and each of the
           investors in a private placement (19)

  4.16     Specimen stock certificate for common stock. (1)

 10.1      AccuMed's Board of Directors Compensation Plan as amended by Minutes
           of Board of Directors meeting dated January 18, 1996 authorizing
           grants of stock options to non-employee directors. (1)(4)

 10.2      Employment Agreement between AccuMed and Norman J. Pressman dated
           June 13, 1996 and Addendum to Employment Agreement between AccuMed
           and Norman J. Pressman dated July 16, 1996. (4)(5)

 10.3      Separation Agreement dated December 29, 2000 between Norman J.
           Pressman and AccuMed.

 10.4      1995 Stock Option Plan. (1)(4)

 10.5      Amendment No. 1 to AccuMed's 1995 Stock Option Plan.(4)(7)

 10.6      Amendment No. 2 to the 1995 Stock Option Plan. (4)(16)

 10.7      Amendment No. 3 to the 1995 Stock Option Plan. (4)(19)

 10.8      Form of Non-Qualified Stock Option Agreement governing options
           granted to former employees of AccuMed, Inc. pursuant to the
           Agreement and Plan of Reorganization dated as of April 21, 1995, as
           amended. (1)(4)

 10.9      Form of Non-Qualified Stock Option Agreement governing options
           granted to employees and consultants under the 1995 Stock Option
           Plan. (1)(4)

 10.10     Form of Incentive Stock Option Agreement governing options granted to
           employees under the 1995 Stock Option Plan. (1)(4)

 10.11     Amended and Restated 1992 Stock Option Plan. (4)(8)

 10.12     Amendment No. 1 to Amended and Restated 1992 Stock Option
           Plan.(4)(16)

 10.13     Franklin Square Commercial Lease dated February 1, 2000 between
           AccuMed and the Lumber Company as Agent for the Beneficiary of
           LaSalle National Trust, N.A. pertaining to the premises located at
           Suite 405, 900 North Franklin Street and Suites 400, 401, 402, 920
           North Franklin Street, Chicago, Illinois.

 10.14     Form of Warrant Certificate dated as of March 13, 1997 evidencing
           right to acquire an aggregate of 850,000 shares of Common stock
           issued to several investors in a private placement consummated March
           13, 1997. (16)

 10.15     Form of Subscription Agreement between AccuMed and several investors
           in the private placement consummated on March 13, 1997. (16)

 10.16     Form of Warrant to Purchase Common Stock dated February 23, 1998
           between AccuMed and Commonwealth Associates representing an aggregate
           of 200,000 (pre-split) common stock purchase Warrants issued to
           Commonwealth Associates and/or its designees in exchange for warrants
           previously issued thereto in connection with the placement of 12%
           Convertible Promissory Notes. (19)
</TABLE>


                                       38
<PAGE>   39

<TABLE>
<S>        <C>
 10.17     Warrant Agreement dated as of February 2, 1998 between AccuMed and
           Robert L. Priddy representing warrants to purchase 100,000
           (pre-split) shares of common stock. (19)

 10.18     Agreement between AccuMed and Paul F. Lavallee and Gypsy Hill LLC
           effective January 29, 1998 (21)

 10.19     Warrant Agreement dated as of February 23, 1998 between AccuMed and
           Commonwealth Associates, including form of Warrant Certificate
           attached as Exhibit A thereto, representing an aggregate of 1,245,340
           (pre-split) common stock purchase Warrants issued to investors in a
           Note Exchange Offer. (15)

 10.20     Warrant Agreement dated March 19, 1998 between AccuMed and
           Commonwealth Associates representing an aggregate of 350,000
           (pre-split) common stock purchase Warrants issued to Commonwealth
           Associates and/or its designees in exchange for warrants issued
           thereto in connection with a Note Exchange Offer. (19)

 10.21     Form of Subscription Agreement and Registration Rights Agreement
           dated as of February 23, 1998 between AccuMed and each of the
           investors in a Note Exchange Offer. (15)

 10.22     Warrant Agreement dated as of March 19, 1998, as amended by Amendment
           No. 1 dated as of March 23, 1998, between AccuMed and Commonwealth
           Associates pertaining to an aggregate of 8,686,667 (pre-split) common
           stock purchase Warrants issued to investors in a private placement.
           (19)

 10.23     Form of Warrant Certificate representing an aggregate of 8,686,667
           (pre-split) common stock purchase Warrants issued to investors in a
           private placement in March 1998. (19)

 10.24     Form of Warrant to Purchase Common stock dated March 19, 1998 or
           March 23, 1998, including form of Warrant Certificate attached as
           Exhibit A thereto, representing an aggregate of 1,337,333 (pre-split)
           common stock purchase Warrants issued to Commonwealth Associates,
           Bellingham Capital Industries, and Harold S. Blue and/or their
           respective designees in connection with a private placement. (19)

 10.25     Form of Subscription Agreement and Registration Rights Agreement
           dated March 19, 1998 or March 23, 1998 between AccuMed and each of
           the investors in a private placement. (19)

 10.26     1997 Stock Option Plan and Amendment No. 1 to the 1997 Stock Option
           Plan (19)

 10.27     Floating Rate Convertible Promissory Note dated June 26, 1998 by
           AccuMed in favor of Xillix Technologies Corp. in the original
           principal amount of CDN$500,000. (22)

 10.28     Amendment to Floating Rate Convertible Promissory Note dated March
           15, 2000 between AccuMed and Xillix Technologies Corp.(23)

 10.29     License and Development Agreement dated March 24, 2000 between
           AccuMed and Ventana Medical Systems, Inc.+(23)

 10.30     Patent and Technology License and Registration Rights Agreement dated
           March 29, 2000 between AccuMed and BCAM International, Inc.+(23)

 10.31     Letter Agreement dated October 3, 2000 between AccuMed and
           CellMetrix, Inc. (formerly known as BCAM International, Inc.)
           terminating the Patent and Technology License and Registration rights
           Agreement dated March 29, 2000
</TABLE>


                                       39
<PAGE>   40

<TABLE>
<S>        <C>
 10.32     Amendment to Patent and Technology License Agreement dated June 9,
           2000 between AccuMed and Ampersand Medical Corporation. (24)

 10.33     License Agreement dated December 29, 2000 between AccuMed and
           MonoGen, Inc.++

 10.34     Agreement and Plan of Merger dated February 7, 2001 among AccuMed,
           AccuMed Acquisition Corp., and Ampersand Medical Corporation.

 10.35     Secured Promissory Note made February 7, 2001 by AccuMed in favor of
           Ampersand Medical Corporation in the original principal amount of
           $800,000.

 10.36     Security Agreement dated February 7, 2001 between AccuMed and
           Ampersand Medical Corporation.

 10.37     Secured Promissory Note name March 1, 2001 by AccuMed in favor of
           Ampersand Medical Corporation in the original principal amount of
           $255,000.

 10.38     Promissory Note dated December 29, 2000 made by MonoGen, Inc. in
           favor of AccuMed in the original principal amount of $320,000.

 21.1      Subsidiary of AccuMed.

 23.1      Consent of KPMG LLP
</TABLE>

---------------


+    Confidential treatment granted for portions of this document.

++   Confidential treatment sought for portions of this document.

(1)  Incorporated by reference to AccuMed's Transition Report on Form 10-KSB for
     the transition period ended December 31, 1995.

(2)  Incorporated by reference to Pre-Effective Amendment No. 4 to the
     Registration Statement on Form S-1 (Reg. No. 33-48302), filed with the
     Commission on October 9, 1993.

(3)  Incorporated by reference to AccuMed's Registration Statement on Form S-4
     (File No. 33-99680), filed with the Commission on November 22, 1995.

(4)  Represents a management contract or compensatory plan or arrangement.

(5)  Incorporated by reference to AccuMed's Registration Statement Form S-2
     (Regis. No. 333-09011) filed with the Commission on July 26, 1996.

(6)  Incorporated by reference to AccuMed's Annual Report on Form 10-KSB for the
     year ended September 30, 1994.

(7)  Incorporated by reference to Pre-effective Amendment No. 1 to the
     Registration Statement on Form S-2 (Regis. No. 333-09011) filed with the
     Commission on August 29, 1996.

(8)  Incorporated by reference to AccuMed's Registration Statement on Form S-1
     (Reg. No. 33-48302), filed with the Commission on June 3, 1992.


                                       40
<PAGE>   41

(9)  Incorporated by reference to Pre-effective Amendment No. 4 to the
     Registration Statement of Form S-2 (Regis. No. 333-09011) filed with the
     Commission on October 3, 1996.

(10) Incorporated by reference to Pre-Effective Amendment No. 1 to Form SB-2,
     filed with the Commission on November 8, 1993).

(11) Incorporated by Reference to Pre-effective Amendment No. 2 to the
     Registration Statement on Form S-2 (Regis. No. 333-09011) filed with the
     Commission on September 23, 1996.

(12) Incorporated by reference to AccuMed's Registration Statement on Form S-3
     (Reg. No. 333-07681), filed with the Commission on July 3, 1996.

(13) Incorporated by reference to AccuMed's Current Report on Form 8-K dated
     March 3, 1997.

(14) Incorporated by reference to AccuMed's Registration Statement on Form S-3
     (Regis. No. 333-28125) filed with the Commission on May 30, 1997.

(15) Incorporated by reference to AccuMed's Current Report on Form 8-K dated
     March 20, 1998.

(16) Incorporated by reference to AccuMed's Annual Report on Form 10-KSB for the
     year ended December 31, 1996.

(17) Incorporated by reference to AccuMed's Quarterly Report on From 10-QSB for
     the quarter ended June 30, 1997.

(18) Incorporated by reference to AccuMed's Quarterly Report on from 10-QSB for
     the quarter ended September 30, 1997.

(19) Incorporated by reference to AccuMed's Annual Report on Form 10-K for the
     year ended December 31, 1997.

(20) Incorporated by reference to the Registration Statement on Form S-3 (Regis.
     No. 333-56393) filed with the Commission on June 9, 1998.

(21) Incorporated by reference to AccuMed's Quarterly Report on Form 10-Q for
     the quarter ended June 30, 1998.

(22) Incorporated by reference to AccuMed's Registration Statement on Form S-3
     filed with the Commission on November 9, 1999 (Regis. No. 333-90637).

(23) Incorporated by reference to AccuMed's Annual Report on Form 10-K for the
     year ended December 31, 1999.

(24) Incorporated by reference to AccuMed's Quarterly Report on Form 10-Q for
     the quarter ended June 30, 2000.

               (d) Financial Statement Schedules. The following financial
               statement schedule is filed as part of this report as page F-20
               and F-21 following the signature page:

Schedule II - Valuation and Qualifying Accounts


                                       41
<PAGE>   42

        All other schedules required by Form 10-K Annual Report have been
omitted because they were not applicable, were included in the notes to be
consolidated financial statements, or were otherwise not required under the
instructions contained in Regulation S-X.






                                       42
<PAGE>   43


                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Independent Auditors' Report ............................................   F-2

Consolidated Balance Sheets as of December 31, 2000 and 1999 ............   F-3

Consolidated Statements of Operations for the Years Ended December 31,
2000, 1999 and 1998 .....................................................   F-4

Consolidated Statements of Stockholders' Equity and Comprehensive Income
(Loss) for the Years Ended December 31, 2000, 1999 and 1998 .............   F-5

Consolidated Statements of Cash Flows for the Years Ended December 31,
2000, 1999 and 1998 .....................................................   F-6

Notes to Consolidated Financial Statements ..............................   F-7
</TABLE>










                                       F-1
<PAGE>   44


                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
AccuMed International, Inc.:

We have audited the accompanying consolidated balance sheets of AccuMed
International, Inc. and subsidiary as of December 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity and
comprehensive income (loss), and cash flows for each of the years in the
three-year period ended December 31, 2000. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of AccuMed
International, Inc. and subsidiary as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in a
three-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

                                            /s/  KPMG LLP



Chicago, Illinois
March 8, 2001











                                       F-2

<PAGE>   45


                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                                     -------------------------------
                         ASSETS                                          2000               1999
                                                                     ------------       ------------
<S>                                                                  <C>                <C>
CURRENT ASSETS
  Cash and cash equivalents                                          $        462       $    196,303
  Accounts receivable                                                      19,600                 --
  Prepaid expenses and other current assets                                18,984              7,944
  Available-for-sale security                                             195,085            121,301
  Notes receivable                                                        492,772            400,000
  Inventories                                                             639,220            700,919
                                                                     ------------       ------------
     TOTAL CURRENT ASSETS                                               1,366,123          1,426,467
                                                                     ------------       ------------

Property and equipment, net                                               385,372            705,273
Purchased technology, net of accumulated amortization of
  $2,876,000 in 2000 and $2,214,000 in 1999                             3,523,866          4,185,868
Patents, net of accumulated amortization of $193,000 in 2000
  and $130,000 in 1999                                                    775,416            842,484
Note receivable, officer                                                       --             62,237
                                                                     ------------       ------------

                                                                     $  6,050,777       $  7,222,329
                                                                     ============       ============

  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Current portion of debt                                            $    668,288       $    362,550
  Accounts payable                                                        330,168            223,822
  Accrued interest                                                         13,161             15,415
  Income taxes                                                                 --             35,000
  Deferred revenues, current portion                                      419,739                 --
  Other current liabilities                                               747,020            750,183
                                                                     ------------       ------------
     TOTAL CURRENT LIABILITIES                                          2,178,376          1,386,970
                                                                     ------------       ------------

Debt                                                                           --            167,000
Deferred revenues                                                       1,487,973                 --

STOCKHOLDERS' EQUITY
  Preferred stock, Series A convertible, 5,000,000 shares
     authorized; 590,197 issued and outstanding at December 31,
     2000; 944,384 issued and outstanding at December 31, 1999;         2,655,893          4,249,735
  Common stock, $0.01 par value; 50,000,000 shares authorized;
     5,728,028 issued and outstanding at December 31, 2000;
     5,491,901 issued and outstanding at December 31, 1999;                57,280             54,919
  Additional paid-in capital                                           61,210,743         59,619,262
  Accumulated other comprehensive income (loss)                          (190,939)            (4,960)
  Accumulated deficit                                                 (61,131,812)       (58,033,860)
  Treasury stock; 6,326 shares at December 31, 2000 and 1999             (216,737)          (216,737)
                                                                     ------------       ------------
     TOTAL STOCKHOLDERS' EQUITY                                         2,384,428          5,668,359
                                                                     ------------       ------------

                                                                     $  6,050,777       $  7,222,329
                                                                     ============       ============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       F-3


<PAGE>   46

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                                 ------------------------------------------------
                                                                    2000              1999               1998
                                                                 -----------       -----------       ------------
<S>                                                              <C>               <C>               <C>
Net sales                                                        $   303,034       $   136,405       $    326,862
Licensing fees                                                       130,285                --                 --
Royalties                                                             44,000                --                 --
                                                                 -----------       -----------       ------------
     Total net revenues                                              477,319           136,405            326,862
                                                                 -----------       -----------       ------------

Operating expenses:
     Cost of sales                                                   122,471         1,146,291            855,788
     General and administrative                                    2,732,958         3,147,154          5,308,417
     Research and development                                      1,142,805         1,869,587          2,569,864
     Asset impairment                                                     --           137,211                 --
     Sales and marketing                                             133,063           282,398          1,388,826
                                                                 -----------       -----------       ------------
        Total operating expenses                                   4,131,297         6,582,641         10,122,895
                                                                 -----------       -----------       ------------

Operating loss                                                    (3,653,978)       (6,446,236)        (9,796,033)
                                                                 -----------       -----------       ------------

Other income (expense):
     Interest expense                                                (38,932)         (501,379)        (1,411,335)
     Realized gain on available for sale security                    331,574                --                 --
     Other income, net                                               263,384           144,794            847,613
                                                                 -----------       -----------       ------------
        Total other income (expense)                                 556,026          (356,585)          (563,722)
                                                                 -----------       -----------       ------------

Loss before income taxes from continuing operations               (3,097,952)       (6,802,821)       (10,359,755)

Income tax expense                                                        --                --                 --
                                                                 -----------       -----------       ------------

Loss from continuing operations before extraordinary item         (3,097,952)       (6,802,821)       (10,359,755)
                                                                 -----------       -----------       ------------

Discontinued operations:
  (Loss) income from discontinued operations                              --          (158,250)         3,351,486
  Gain on disposal, net of income taxes of $140,000                       --         8,357,449                 --
                                                                 -----------       -----------       ------------

Income from discontinued operations                                       --         8,199,199          3,351,486
                                                                 -----------       -----------       ------------

Extraordinary item - debt extinguishment loss                             --                --         (1,168,080)
                                                                 -----------       -----------       ------------

        Net (loss) income                                        $(3,097,952)      $ 1,396,378       $ (8,176,349)
                                                                 ===========       ===========       ============

Basic and diluted loss per share from continuing operations
  before extraordinary item                                      $     (0.55)      $     (1.24)      $      (2.04)

Income per share from discontinued operations                             --              1.49               0.66

Extraordinary loss per share from debt extinguishment                     --                --              (0.23)
                                                                 -----------       -----------       ------------

Basic and diluted net (loss) income per share                    $     (0.55)      $      0.25       $      (1.61)
                                                                 ===========       ===========       ============

Weighted average common shares outstanding
   - basic and diluted                                             5,653,060         5,491,480          5,079,894
                                                                 ===========       ===========       ============
</TABLE>


           See accompanying notes to consolidated financial statements


                                       F-4

<PAGE>   47

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         AND COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                          PREFERRED STOCK                   COMMON STOCK             ADDITIONAL
                                                     ----------------------------       ----------------------        PAID-IN
                                                       SHARES            AMOUNT          SHARES        AMOUNT         CAPITAL
                                                     ----------       -----------       ---------      -------      -----------
<S>                                                  <C>              <C>               <C>            <C>          <C>
 Balances at December 31, 1997                               --       $        --       3,788,145      $37,881      $52,143,231
                                                     ----------       -----------       ---------      -------      -----------
 Issuances of common stock                                   --                --       1,494,869       14,949        6,066,070
 Issuances of preferred stock                         1,245,338         5,604,030              --           --               --
 Conversion of preferred stock to common               (283,236)       (1,274,564)        188,824        1,888        1,272,676
 Stock options exercised                                     --                --           8,250           83           57,672
 Cumulative translation adjustment                           --                --              --           --               --
 Net loss                                                    --                --              --           --               --
                                                     ----------       -----------       ---------      -------      -----------
 Balances at December 31, 1998                          962,102         4,329,466       5,480,088       54,801       59,539,649
                                                     ----------       -----------       ---------      -------      -----------
 Conversion of preferred stock to common                (17,718)          (79,731)         11,813          118           79,613
 Cumulative translation adjustment                           --                --              --           --               --
 Change in value of available-for-sale security              --                --              --           --               --
 Net income                                                  --                --              --           --               --
                                                     ----------       -----------       ---------      -------      -----------
 Balances at December 31, 1999                          944,384         4,249,735       5,491,901       54,919       59,619,262
                                                     ----------       -----------       ---------      -------      -----------
 Conversion of preferred stock to common               (354,187)       (1,593,842)        236,127        2,361        1,591,481
 Cumulative translation adjustment                           --                --              --           --               --
 Change in value of available-for-sale security              --                --              --           --               --
 Net loss                                                    --                --              --           --               --
                                                     ----------       -----------       ---------      -------      -----------
 Balances at December 31, 2000                          590,197       $ 2,655,893       5,728,028      $57,280      $61,210,743
                                                     ==========       ===========       =========      =======      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                  ACCUMULATED
                                                     OTHER
                                                 COMPREHENSIVE     ACCUMULATED       TREASURY      STOCKHOLDERS'     COMPREHENSIVE
                                                 INCOME (LOSS)       DEFICIT           STOCK          EQUITY         INCOME (LOSS)
                                                 -------------     ------------      ---------      -----------      -------------
<S>                                              <C>               <C>               <C>            <C>              <C>
 Balances at December 31, 1997                      $  22,586      $(51,253,889)     $(216,737)     $   733,072      $(16,928,576)
                                                    ---------      ------------      ---------      -----------      ------------
 Issuances of common stock                                 --                --             --        6,081,019                --
 Issuances of preferred stock                              --                --             --        5,604,030                --
 Conversion of preferred stock to common                   --                --             --               --                --
 Stock options exercised                                   --                --             --           57,755                --
 Cumulative translation adjustment                    (76,581)               --             --          (76,581)          (76,581)
 Net loss                                                  --        (8,176,349)            --       (8,176,349)       (8,176,349)
                                                    ---------      ------------      ---------      -----------      ------------
 Balances at December 31, 1998                        (53,995)      (59,430,238)      (216,737)       4,222,946        (8,252,930)
                                                    ---------      ------------      ---------      -----------      ------------
 Conversion of preferred stock to common                   --                --             --               --                --
 Cumulative translation adjustment                    (72,266)               --             --          (72,266)          (72,266)
 Change in value of available-for-sale security       121,301                --             --          121,301           121,301
 Net income                                                --         1,396,378             --        1,396,378         1,396,378
                                                    ---------      ------------      ---------      -----------      ------------
 Balances at December 31, 1999                         (4,960)      (58,033,860)      (216,737)       5,668,359         1,445,413
                                                    ---------      ------------      ---------      -----------      ------------
 Conversion of preferred stock to common                   --                --             --               --                --
 Cumulative translation adjustment                     (2,621)               --             --           (2,621)           (2,621)
 Change in value of available-for-sale security      (183,358)               --             --         (183,358)         (183,358)
 Net loss                                                  --        (3,097,952)            --       (3,097,952)       (3,097,952)
                                                    ---------      ------------      ---------      -----------      ------------
 Balances at December 31, 2000                      $(190,939)     $(61,131,812)     $(216,737)     $ 2,384,428      $ (3,283,931)
                                                    =========      ============      =========      ===========      ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F-5

<PAGE>   48


                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                                    -------------------------------------------------
                                                                       2000               1999               1998
                                                                    -----------       ------------       ------------
<S>                                                                 <C>               <C>                <C>
OPERATING ACTIVITIES:
        Net (loss) income                                           $(3,097,952)      $  1,396,378       $ (8,176,349)
        Adjustments to reconcile net (loss) income to
        net cash used in operating activities:
          Income from discontinued operations                                --         (8,199,199)        (3,351,486)
          Non-cash expenses of asset disposal                                --            432,500                 --
          Write-off of leasehold improvements                                --            137,211                 --
          Write-down of inventory                                            --          1,106,399                 --
          Depreciation and amortization                               1,076,726          1,111,655          1,534,034
          Realized gain on sale of available for sale security         (331,574)                --                 --
          Bad debt expense                                                   --                 --            337,353
          Debt extinguishment loss                                           --                 --          1,168,080
          Minority interest                                                  --                 --           (191,560)
          Expenses paid with issuances of stock or warrants                  --                 --             99,000
          Changes in assets and liabilities:
            (Increase) decrease in accounts receivable                  (19,600)            33,348             58,950
            (Increase) decrease in prepaid expenses and other           (11,040)            56,104             34,600
            Decrease (increase) in inventories                           61,699            (68,707)          (456,472)
            Decrease (increase) in patents and other assets              62,237            (15,821)           (66,975)
            Increase (decrease) in accounts payable                     106,346         (1,584,427)        (1,241,309)
            Increase in deferred revenues                             1,057,798                 --                 --
            (Decrease) increase in other current liabilities            (21,704)           321,237           (165,825)
                                                                    -----------       ------------       ------------
CASH USED IN OPERATING ACTIVITIES                                    (1,117,064)        (5,273,322)       (10,417,959)
                                                                    -----------       ------------       ------------

INVESTING ACTIVITIES:
        Capital expenditures                                            (27,755)           (23,999)          (157,132)
        Purchase of Oncometrics stock                                        --                 --           (342,500)
        Payments for note receivable                                         --           (400,000)                --
        Proceeds from note receivable                                   500,000                 --                 --
        Proceeds from sales of available-for-sale security              331,574                 --                 --
        Proceeds from sale of Microbiology division                          --         15,150,000                 --
        Expenses related to sale of Microbiology division                    --           (750,000)                --
                                                                    -----------       ------------       ------------
CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES                        803,819         13,976,001           (499,632)
                                                                    -----------       ------------       ------------

FINANCING ACTIVITIES:
        Proceeds from issuances of common stock, net                         --                 --          4,852,394
        Payments of notes payable                                      (209,975)        (8,497,551)          (909,305)
        Proceeds from issuance of notes payable                         330,000                 --          1,000,000
                                                                    -----------       ------------       ------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                         120,025         (8,497,551)         4,943,089
                                                                    -----------       ------------       ------------
CASH TRANSFER (TO) FROM DISCONTINUED OPERATIONS                              --           (209,945)         5,872,486
                                                                    -----------       ------------       ------------
EFFECT OF EXCHANGE RATES ON CASH                                         (2,621)           (12,266)           (16,581)
                                                                    -----------       ------------       ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS                              (195,841)           (17,083)          (118,597)
                                                                    -----------       ------------       ------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                        196,303            213,386            331,983
                                                                    -----------       ------------       ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                          $       462       $    196,303       $    213,386
                                                                    ===========       ============       ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       F-6
<PAGE>   49


                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. DESCRIPTION OF BUSINESS

        AccuMed International, Inc. and subsidiary ("AccuMed") engage in the
development and marketing of cost effective screening instruments and systems
for clinical diagnostic laboratories, hospitals and others. These activities are
conducted primarily in the United States and Canada. AccuMed markets its
products primarily to the cytopathology and immunohistochemistry laboratory
markets. Our integrated systems use reliable, accurate and innovative products
and methods to provide laboratories with comprehensive solutions that are
intended to improve efficiency and reduce costs while achieving significant
improvements in disease detection. AccuMed operates in one business segment and
substantially all of its assets are located in the United States.

        Basis of Presentation

        The consolidated financial statements include the accounts of AccuMed
International, Inc. and its wholly-owned subsidiary, Oncometrics Imaging Corp.
("Oncometrics"). All significant intercompany balances and transactions have
been eliminated in consolidation.

        On December 22, 1998, (the measurement date), AccuMed received
shareholder approval to sell its microbiology division under a sales agreement
negotiated by management under the approval of the board of directors. On
January 29, 1999, AccuMed closed the sale of the microbiology division for
proceeds of $15,150,000. AccuMed recognized a gain of $8,357,000, net of income
taxes of $140,000 and after working capital adjustments, on the disposal of the
microbiology division. Accordingly, the microbiology division is accounted for
as a discontinued operation in the accompanying consolidated balance sheets,
statements of operations and statements of cash flows.

        Reverse Stock Split

        On May 19, 1998, the stockholders approved a reverse one-for-six stock
split, which was affected by the Board of Directors as of May 21, 1998. The
reverse split covered all outstanding common shares and all agreements
concerning stock options, warrants, convertible notes and other commitments
payable in shares of AccuMed's common stock. All references to per-share
information in the accompanying financial statements and notes to the
consolidated financial statements have been adjusted to reflect the reverse
split on a retroactive basis.

2. GOING CONCERN AND MANAGEMENT'S PLANS

        AccuMed has incurred, and continues to incur, losses from operations and
has a working capital deficiency. For the years ended December 31, 2000, 1999,
and 1998, AccuMed incurred net losses from continuing operations of $3,098,000,
$6,803,000, and $10,360,000, respectively. At December 31, 2000, AccuMed has a
working capital deficiency of $812,000, and its available resources are not
presently sufficient to fund its expected cash requirements through the end of
2001. These conditions raise substantial doubt about AccuMed's ability to
continue as a going concern.

        In 2000 and early 2001, management of AccuMed implemented strategies to
reduce losses from operations and cash used in operating activities. These
strategies have included a reduction in personnel, curtailment of certain
research and development efforts, and cutting of discretionary expenditures. On
February 7, 2001, AccuMed entered into a merger agreement with Ampersand Medical
Corporation ("Ampersand"). As a result of the signing of the merger agreement
with Ampersand, AccuMed has received in 2001 an aggregate of $695,000 in
advances from Ampersand to be used for working capital purposes. The merger
agreement requires additional advances of $225,000 per month from Ampersand in
April and May 2001. The Ampersand advances will be dissolved upon the
consummation of the merger or will be due and payable upon the earliest of May
31, 2001 or the termination of the merger agreement. The due date for repayment
of these advances may be extended upon mutual agreement of AccuMed and
Ampersand. Through February 28, 2001, AccuMed has collected $300,000 on $500,000
of notes due from MonoGen, Inc. ("MonoGen") as of December 31, 2000. The
remaining amount of $200,000 due from MonoGen is payable on March 31, 2001.
Development milestone payments in the aggregate amount of $400,000 are scheduled
to be received in 2001 from Ventana Medical Systems, Inc. ("Ventana") under
AccuMed's license and development agreement with Ventana. In addition, AccuMed
expects to begin shipping licensed product to Ventana beginning in the fourth
quarter of 2001.

        Management expects the merger agreement with Ampersand to be consummated
in the second quarter of 2001. If AccuMed is not able to consummate the merger
agreement with Ampersand, or if MonoGen or Ventana are not able to meet their


                                      F-7
<PAGE>   50

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


payment obligations to AccuMed, or the development timetable with Ventana is not
met or is substantially delayed, AccuMed would be required to pursue other
strategies to maintain its liquidity. These strategies would include
substantially curtailing its development and marketing efforts, liquidation of
its inventories and technology portfolio, or cessation of operations. This would
materially and adversely affect AccuMed's business, financial condition, results
of operations, and cash flows.

3. SIGNIFICANT ACCOUNTING POLICIES

        Revenue Recognition

        Product revenue is recognized when products have been shipped, and the
customer has made final acceptance. Fees that are received up-front for licenses
are deferred and recognized as revenue systematically over the term of the
related agreement. Royalty payments that are received in advance are deferred
and recognized as revenue during the period that the royalties are earned on the
sale of covered products. Funds received under contractual development
obligations are deferred. Qualifying development costs incurred during the
development process are charged against the deferred development funds received.
The excess amount of development funds, if any, over the amount of qualifying
costs incurred is recognized in income upon the completion of the development
process. Contractual development costs in excess of the amount of development
funds received are charged to operations as incurred.

        Cash and Cash Equivalents

        Cash and cash equivalents include cash held by financial institutions
and money market fund investments with original maturities of three months or
less.

        Inventories

        Inventories consist primarily of raw materials and finished product and
are stated at the lower of cost (average cost) or market. Cost is determined by
the first-in first-out method (FIFO).

        Available-for-Sale Security

        The available-for-sale security is reported at fair market value.
Unrealized gains and losses on the available-for-sale security are excluded from
earnings and reported as a component of accumulated other comprehensive income
(loss) within stockholders' equity until realized.

        Property and Equipment

        Property and equipment are stated at cost. Depreciation of property and
equipment is provided using the straight-line method over the estimated useful
lives of the assets. Amortization of leasehold improvements is provided on the
straight-line method over the shorter of the estimated useful life of the
improvement or the term of the lease. Expenditures for repairs and maintenance
are charged to operations when incurred.

        Purchased Technology

        Purchased technology consists principally of values assigned to acquired
proprietary technology. Such amounts are being amortized on a straight-line
basis over the expected periods to be benefited, generally 10 years.

        Patents

        The cost of patents is amortized straight line over the estimated useful
lives of the patent, generally 17 years.

        Impairment of Long-Lived Assets

        AccuMed accounts for long-lived assets in accordance with the provisions
of Statement of Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This Statement
requires that long-lived assets and certain intangibles be reviewed for
impairment whenever events of changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by comparison of the carrying amount of an asset to
future net cash flows expected to be generated by the asset. If such assets are


                                      F-8
<PAGE>   51

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.

        Income Taxes

        Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to the difference between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

        Research and Development Costs

        Research and development costs are charged to operations as incurred.

        Warranty

        Estimated future warranty obligations related to certain products are
provided by charges to operations in the period in which the related revenue is
recognized.

        Use of Estimates

        Management of AccuMed has made a number of estimates and assumptions
relating to the reporting of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported amounts of revenues and
expenses to prepare these financial statements in conformity with generally
accepted accounting principles. Estimates are used when accounting for the
allowance for un-collectable accounts receivable, inventory valuation,
depreciation, warranty costs, income taxes and contingencies, among others.
Actual results could be materially different from those estimates.

4. ACCOUNTS RECEIVABLE

        Accounts receivable are carried at estimated net realizable value. At
December 31, 2000 and 1999, AccuMed had provided no allowances for doubtful
accounts as the carrying value of accounts receivable approximated their net
realizable value. Bad debt expense was zero for each of the years ended December
31, 2000 and 1999 and $337,353 for the year ended December 31, 1998.

5. NOTES RECEIVABLE

        On December 29, 2000, AccuMed and Oncometrics entered into agreements
with MonoGen for the license of certain proprietary technology. Promissory notes
in the aggregate amount of $500,000 were issued as consideration for the license
fees due under the agreements. The notes are due in aggregate non-interest
bearing installments of $100,000 on January 3, 2001, $100,000 on January 31,
2001, $100,000 on February 28, 2001, and $200,000 on March 31, 2001. The notes
are carried in the consolidated balance sheet at the present value of the future
cash flows using an interest rate of 9.5%. At December 31, 2000, the carrying
amount of these notes is $492,772.

        Under an amendment to AccuMed's patent and technology license agreement
with Ampersand, AccuMed received a $100,000 convertible promissory note from
Ampersand. The note was originally due on March 29, 2001 and earned interest at
a rate of 11.0% per annum. The full amount of the note was repaid on December
12, 2000.

        On November 16, 1999, AccuMed entered into a merger agreement with
Microsulis Corporation ("Microsulis"), which was subsequently terminated on
February 28, 2000. At December 31, 1999, AccuMed had advanced $400,000 under a
line of credit to Microsulis. On March 31, 2000, AccuMed received $417,747,
including interest, in full satisfaction of the amounts advanced to Microsulis.
AccuMed has no obligation to make further advances to Microsulis.


                                      F-9
<PAGE>   52

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


6. AVAILABLE-FOR-SALE SECURITY

        On December 4, 1998, AccuMed received 85,776 common shares of Bell
National Corporation, ("Bell"), a public shell corporation, and warrants to
purchase an additional 63,517 common shares of Bell at a price of $0.001 per
share in exchange for its 2,000 membership units of InPath, L.L.C., a privately
held company. No value was assigned to the Bell shares received because the
underlying market value of Bell at the date of the transaction was deminimus.
During 1999, the Company exercised all of the warrants. On May 26, 1999, Bell
was merged into its wholly-owned subsidiary, Ampersand Medical Corporation. As a
result of this merger, AccuMed's shares of Bell were exchanged for an equal
number of shares of Ampersand.

        During 2000, AccuMed received an additional 128,571 common shares of
Ampersand upon the amendment of AccuMed's patent and technology license
agreement with Ampersand. These shares were recorded at a fair market value of
$257,142 on their date of issuance.

        A total of 85,776 shares of Ampersand stock were sold during 2000 on the
open market for proceeds of $331,574. A realized gain on the sale of these
shares of $331,574 has been recorded in the statement of operations for the year
ended December 31, 2000.

        AccuMed's investment in Ampersand shares is as follows at December 31:


<TABLE>
<CAPTION>
                                               2000           1999
                                            ----------      --------
<S>                                         <C>             <C>
Shares held                                   192,088        149,293
Market value                                $ 195,085       $121,301
Unrealized (depreciation) appreciation      $ (62,057)      $121,301
</TABLE>

7. INVENTORIES

        Inventories include the following at December 31:


<TABLE>
<CAPTION>
                                           2000          1999
                                         --------      --------
<S>                                       <C>           <C>
Raw material and packaging supplies      $539,944      $529,919
Work in process                                --            --
Finished goods                             99,276       171,000
                                         --------      --------
           Total                         $639,220      $700,919
                                         ========      ========
</TABLE>

8. PROPERTY AND EQUIPMENT

        Property and equipment includes the following at December 31:

<TABLE>
<CAPTION>
                                       Estimated
                                       Useful Life        2000           1999
                                      ------------    ------------   -----------
<S>                                   <C>             <C>            <C>
Equipment                             3 - 5 Years     $ 1,885,280    $ 1,876,344
Leasehold improvements                    5 Years         182,646        140,290
                                                      -----------    -----------
                                                        2,067,926      2,016,634
Less accumulated depreciation and
    amortization                                       (1,682,554)    (1,311,361)
                                                      -----------    -----------

         Total                                        $  385,372     $   705,273
                                                      ==========     ===========
</TABLE>

        Maintenance and repair expenses for the years ended December 31, 2000,
1999 and 1998 were $2,539, $14,663 and $55,942, respectively. There were no
material capital commitments outstanding as of December 31, 2000.


                                      F-10
<PAGE>   53

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


9. OTHER CURRENT LIABILITIES

        Other current liabilities consist of the following at December 31:


<TABLE>
<CAPTION>
                               2000          1999
                             --------      --------
<S>                          <C>           <C>
Litigation reserves          $392,683      $485,000
Accrued franchise taxes        84,284            --
Accrued rent                   22,248       103,247
Payroll and related           178,065       136,787
Other                          69,740        25,149
                             --------      --------
        Total                $747,020      $750,183
                             ========      ========
</TABLE>

10. DEBT

        Debt at December 31, 2000 and 1999, respectively, consists of the
following:

<TABLE>
<CAPTION>
                                                              2000           1999
                                                            --------      --------
<S>                                                         <C>           <C>
Note payable to Ampersand                                   $330,000      $     --
Floating rate convertible note payable                       151,288       342,550
Non-interest bearing repayable contribution                  187,000       187,000
                                                            --------      --------
        Total long-term debt                                 668,288       529,550
        Less current installments                            668,288       362,550
                                                            --------      --------
        Long-term debt, excluding current installments      $     --      $167,000
                                                            ========      ========
</TABLE>

        As a result of the signing of a letter of intent to merge with Ampersand
on September 22, 2000, AccuMed received an aggregate of $330,000 in advances
from Ampersand in the form of a note payable. The note bears interest at a rate
of prime, plus 2.5%, per annum and was converted into a new $800,000 note upon
the signing of a definitive merger agreement with Ampersand on February 7, 2001.
See Note 19 Subsequent Events.

        The floating rate convertible note payable, which is denominated in
Canadian dollars ($217,855 Canadian at December 31, 2000), is due on demand, or
in the event not called, principal payments are required at a rate of $25,000
U.S. dollars per month, plus interest at a rate of 6.0% over the Canadian prime
rate. The note is convertible into shares of AccuMed's common stock at a price
of $1.43 per share.

        The repayable contribution was received under a Canadian government
program and calls for semi-annual installments based on sales of product and
available funds. At December 31, 2000, AccuMed was past due in making certain of
its payment obligations under this program. As a result, AccuMed's repayment
obligation is callable.

        Aggregate maturities of long-term debt for each of the five years
subsequent to December 31, 2000 are as follows:

<TABLE>
<S>                                                 <C>
                                  2001              $668,288
                                  2002                    --
                                  2003                    --
                                  2004                    --
                                  2005                    --
                                  Thereafter              --
</TABLE>


                                      F-11
<PAGE>   54

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


11. STOCKHOLDERS' EQUITY

        On February 23, 1998, AccuMed exchanged $5,275,000 in principal amount
of its 12% convertible promissory notes plus accrued interest thereon of
$329,030 for 1,245,338 shares of Series A convertible preferred stock and 3-year
warrants to purchase 207,557 shares of common stock at an exercise price of
$6.75 per share. The preferred stock is convertible into common stock at a
conversion price of $6.75 per share. The Company registered the resale of the
shares of common stock underlying the preferred stock and warrants with the
Securities and Exchange Commission during 1998. See Note 18 Debt Extinguishment.

        During March 1998, the Company completed a private placement of
1,447,778 shares of common stock and 7-year warrants to purchase an aggregate of
1,447,778 shares of common stock at an exercise price of $4.50 per share for
gross proceeds of $6,515,000, including $1,000,000 in notes payable converted
into common stock, and net proceeds of $5,864,000 after payment of fees,
commissions and expenses related thereto. The Company has registered the resale
of the outstanding common stock and the common stock underlying the warrants
with the Securities and Exchange Commission.

        During the years ended December 31, 2000, 1999 and 1998, 354,187 shares,
17,718 shares and 283,236 shares, respectively, of Series A convertible
preferred stock were converted into 236,127 shares, 11,813 shares and 188,824
shares, respectively, of common stock. At December 31, 2000, there are 590,197
shares of Series A convertible preferred stock outstanding that are convertible
into 393,465 shares of common stock.

        Warrants

        At December 31, 2000, AccuMed had outstanding warrants to purchase
shares of common stock at any time through the expiration date as follows:

<TABLE>
<CAPTION>
                         Shares             Price         Expiration Date
                       ---------            -----         ---------------
<S>                                         <C>           <C>
                          20,266             4.92         None
                          20,266             9.84         None
                          20,266            14.82         None
                          16,667             7.50         January, 2001
                          16,667            12.75         January, 2001
                         207,557             6.75         March 2001
                          33,334             6.75         March, 2002
                           8,334            15.00         August, 2002
                          40,964            15.56         September, 2002
                          16,667             4.50         February, 2003
                       1,561,817             4.50         March, 2005
</TABLE>


                                      F-12
<PAGE>   55

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


        Stock Option Plan

        AccuMed has the following stock option plans for its employees,
directors and consultants: the 1992 plan, the 1995 plan and the 1997 plan. Terms
of the plans are summarized as follows:

Exercise Price - Fair market value as determined by the closing price of the
common stock on the date of issuance as reported by NASDAQ.

Vesting Period - A portion of the options granted to certain participants vest
immediately with the remaining options vesting on varying schedules not
exceeding six years from date of grant. Options granted to others vest on
varying schedules not exceeding six years from date of grant.

Shares Available - At December 31, 2000 there were 126,339 shares available for
grant under the Plans. The maximum number of shares that may be issued under the
plans is 494,259 at December 31, 2000.

        AccuMed applies APB Opinion No. 25 and related interpretations in
accounting for its Stock Option Plans for employees. Accordingly, no
compensation cost has been recorded. Had compensation cost for the Company's
Stock Option Plans been determined consistent with FASB Statement No. 123, the
Company's net (loss) income and net (loss) income per share would have been as
indicated below.

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                              -------------------------------------------------------
                                                   2000                 1999                1998
                                              --------------       --------------      --------------
<S>                                           <C>                  <C>                 <C>
Net (loss) income, as reported                $   (3,097,952)      $    1,396,378      $   (8,176,349)
Net (loss) income, pro forma                  $   (4,258,602)      $      715,784      $  (10,476,223)
Net (loss) income per share, as reported      $        (0.55)      $         0.25      $        (1.61)
Net (loss) income per share, pro forma        $        (0.75)      $         0.13      $        (2.06)
</TABLE>


        The compensation cost of each option grant is estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 2000, 1999 and 1998.



<TABLE>
<CAPTION>
                               Year Ended December 31,
                             -------------------------
                              2000     1999      1998
                             -----     -----     -----
<S>                          <C>       <C>       <C>
Dividend yield                  0%        0%       0%
Volatility                    143%      143%      30%
Risk free interest rate      6.53%     5.23%    7.00%
Expected life in years          5         5       10
</TABLE>


                                      F-13
<PAGE>   56

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


Stock option activity during the periods indicated was as follows:


<TABLE>
<CAPTION>
                                                                               Weighted
                                                    Number of              Average Exercise
                                                     Options                    Price
                                                    ---------              ----------------
<S>                                                 <C>                    <C>
                  Balance at December 31, 1997       416,252                   $ 20.70

                             Granted                 370,004                   $  4.87

                             Exercised                (8,250)                  $  7.00

                             Forfeited              (277,852)                  $ 18.23

                             Expired                      --                        --
                                                    --------

                  Balance at December 31, 1998       500,154                   $ 10.60

                             Granted                 307,670                   $  1.20

                             Exercised                    --                        --

                             Forfeited              (114,925)                  $ 19.10

                             Expired                    (792)                  $  8.34
                                                    --------

                  Balance at December 31, 1999       692,107                   $  4.98

                             Granted                 246,670                   $  2.23

                             Exercised                    --                        --

                             Forfeited               (18,751)                  $  3.23

                             Expired                  (5,243)                  $  5.51
                                                    --------

                  Balance at December 31, 2000       914,783                   $  5.05
                                                    ========
</TABLE>

The fair value of options granted in 2000, 1999 and 1998 was $2.02, $1.09 and
$2.72 per share, respectively.

The following table summarizes information about stock options outstanding as of
December 31, 2000:

<TABLE>
<CAPTION>
                                   Options outstanding                     Options exercisable
                       -----------------------------------------       -------------------------
                                        Weighted
                                        Average         Weighted                        Weighted
                                       Remaining         Average                         Average
       Range of           Number      Contractual       Exercise          Number        Exercise
   exercise prices     Outstanding        Life            Price        Exercisable        Price
   ----------------    -----------    -----------      ---------       -----------      --------
<S>                    <C>            <C>              <C>             <C>              <C>
    $0.97 to $1.31       289,006         8.24            $ 1.21          144,756         $ 1.21

        $2.31            200,000         9.17              2.31           50,000           2.31

    $3.94 to $4.50       270,004         7.11              4.46          270,004           4.46

    $6.00 to $6.78        50,417         6.40              6.01           50,417           6.01

        $10.50            19,890         0.08             10.50           19,890          10.50

   $22.50 to $23.64       80,882         5.05             23.52           80,882          23.52

   $37.50 to $50.28        4,584         0.57             40.98            4,584          40.98
                         -------                                         -------
   $0.97 to $50.28       914,783         7.51              5.05          620,533           6.60
                         =======                                         =======
</TABLE>


                                      F-14
<PAGE>   57

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


12. INCOME TAXES

        AccuMed's income tax provision for the years ended December 31, 2000,
1999 and 1998 was allocated as follows:

<TABLE>
<CAPTION>
                                                      2000      1999          1998
                                                    --------  --------      --------
<S>                                                 <C>       <C>           <C>
             Income from continuing operations      $     --  $     --      $     --
             Discontinued operations                      --   140,000            --
             Extraordinary item                           --        --            --
                                                    --------  --------      --------
                                                    $     --  $140,000      $     --
                                                    ========  ========      ========
</TABLE>

        A reconciliation of the significant differences between AccuMed's
effective tax rate applicable to income from continuing operations and the
federal statutory tax rate for the years ended December 31, 2000, 1999, and 1998
is as follows:

<TABLE>
<CAPTION>
                                        2000          1999          1998
                                       --------      --------      --------
<S>                                    <C>           <C>           <C>
Federal statutory income tax rate       (34.0)%       (34.0)%       (34.0)%
State taxes, net of federal
    benefit                              (6.0)         (6.0)         (6.0)
Increase in valuation allowance          40.0          40.0          40.0
                                       ------        ------        ------
Effective income tax rate                 0.0%          0.0%          0.0%
                                       ======        ======        ======
</TABLE>

        The net deferred tax assets and liabilities consist of the following at
December 31:

<TABLE>
<CAPTION>
                                                 2000               1999
                                             ------------       ------------
<S>                                          <C>                <C>
Deferred tax assets:
   Net operating loss carryforwards          $ 14,593,000       $ 12,972,000
   Research and development credits               657,000            595,000
   Other                                        1,235,000          1,763,000
                                             ------------       ------------
                      Total                    16,485,000         15,330,000
Valuation allowance                           (16,485,000)       (15,330,000)
                                             ------------       ------------
Net deferred tax assets and liabilities      $         --       $         --
                                             ============       ============
</TABLE>

        At December 31, 2000, AccuMed had approximately $36,483,000 and
$20,667,000 in net operating losses for federal and state tax purposes,
respectively, available to be carried forward to future periods. The carry
forwards expire from 2006 to 2020 for federal purposes and from 2012 to 2020 for
state purposes.

        AccuMed's credits for research and development available to offset
future federal income taxes expire from 2002 to 2014.

        In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment.

        Based upon the level of historical taxable losses and projections for
future taxable income over the periods which the deferred tax assets are
deductible, management believes it is more likely than not AccuMed will not
realize the benefits of these deductible differences. In addition, utilization
of net operating loss carryforwards and research and development credits
available to offset future taxable income may be subject to annual limitations
as a result of previous changes in ownership of the AccuMed. Accordingly,
management of AccuMed has provided a valuation allowance equal to its recorded
deferred tax assets. The net change in the valuation allowance for the years
ended December 31, 2000 and 1999 was an increase of $1,155,000 and a decrease of
$1,322,000, respectively.


                                      F-15
<PAGE>   58

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


13. LEASES

        Operating Leases

        AccuMed leases its facility under an operating type lease expiring in
2004. Rental expense is recognized on a straight-line basis over the life of the
lease. As a result of AccuMed's consolidation of certain of its facilities and
re-negotiation of its leasing arrangements, AccuMed recorded an expense in 1999
for the write-off of $137,211 in net book value of impaired leasehold
improvements. At December 31, 2000 and 1999, accounts payable and other current
liabilities include an accrual of $68,915 and $103,247, respectively, for rent
concessions as part of the re-negotiated leasing arrangements. Total rental
expense under operating leases during the years ended December 31, 2000, 1999
and 1998 was $251,000, $531,000 and $379,000, respectively.

        Future minimum annual lease payments under operating leases as of
December 31, 2000 are:

<TABLE>
<CAPTION>
                                   Year                  Amount
                                   ----                  ------
<S>                             <C>                     <C>
                                      2001              $209,000

                                      2002              $152,000

                                      2003              $160,000

                                      2004              $124,000

                                Thereafter              $     --
</TABLE>


14. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

        Non-cash investing and financing activities:

        During the year ended December 31, 2000, AccuMed received 128,571 shares
of Ampersand common stock and a $100,000 note receivable in exchange for
amending its patent and technology license agreement with Ampersand. AccuMed
also received an aggregate of $500,000 in notes in exchange for license
agreements entered into with MonoGen. During 2000, 354,187 shares of Series A
convertible preferred stock were converted into 236,127 shares of common stock.

        During the year ended December 31, 1999, 17,718 shares of Series A
convertible preferred stock were converted into 11,813 shares of common stock.

        During the year ended December 31, 1998, AccuMed extinguished debt with
a carrying value of $4,818,800 through the issuance of convertible preferred
stock and common stock warrants with a fair value of $5,986,880 including
transaction fees, resulting in an extraordinary loss of $1,168,000. AccuMed
satisfied its obligation under a $1,000,000 note payable through the issuance of
222,223 shares of common stock. During 1998, 283,236 shares of Series A
convertible preferred stock were converted into 188,824 shares of common stock.
AccuMed issued a note in 1998 for $342,550 in connection with the purchase of a
one-third interest in Oncometrics Imaging Corp. stock it did not already own.

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                       -------      --------      ----------
     Cash paid during the year for:                      2000         1999           1998
                                                       -------      --------      ----------
<S>                                                    <C>          <C>           <C>
     Operating Activities

           Interest                                    $41,186      $292,008      $1,336,566

           Income taxes                                     --      $105,000              --

     Investing and Financing Activities

           Deposit reclassified to fixed assets             --            --      $  125,000
</TABLE>

15. COMMITMENTS AND CONTINGENCIES

        The company is involved in a legal proceeding with a certain vendor
regarding a dispute over delivery of services. AccuMed has recorded an estimated
accrual of $393,000 relating to the probable settlement of these legal
proceedings. See Note 9, Other Current Liabilities.


                                      F-16
<PAGE>   59

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


16. LICENSE AGREEMENTS

        On March 24, 2000, AccuMed entered into a license and development
agreement with Ventana Medical Systems, Inc., whereby AccuMed agreed to license
its patents and proprietary information and rights to Ventana for certain
medical applications. Under the terms of the agreement, AccuMed has received and
deferred an up-front licensing fee, advance royalty payment, and development
funds. Additional development funds will be received over the next twelve months
for contract research. The agreement also provides for the sale of AcCell(TM)
Systems to Ventana and royalties to be received in the future on the sale of
covered products by Ventana. The deferred up-front licensing fee is being
recognized as revenue systematically over the 36-month term of the agreement.
The advance royalty payment will be recognized as revenue during the period that
the royalties are earned on the sale of covered products. AccuMed is required
under the agreement to complete certain development obligations. Qualifying
development costs incurred during the development process are being charged
against the deferred development funds received. The excess amount of
development funds, if any, over the amount of qualifying costs incurred will be
recognized in income upon the completion of the development process. AccuMed
does not anticipate that any excess development funds will be material.

        On March 29, 2000, the Company entered into a patent and technology
license agreement with BCAM International, Inc., renamed CellMetrix, Inc.
("CellMetrix"), whereby AccuMed agreed to license its patents and proprietary
information and rights to CellMetrix for certain medical applications. Under the
terms of the agreement, AccuMed received a guaranteed license fee upon signing
of the agreement. The amount of the guaranteed license fee received was deferred
and being recognized over the 60-month term of the agreement. Effective
September 1, 2000, AccuMed and CellMetrix mutually agreed to terminate the
license agreement. As a result of the termination, the carrying amount of the
deferred licensing fees of $229,000 was recognized as other income in the
statement of operations for the year ended December 31, 2000. AccuMed is not
required to refund any portion of the guaranteed license fee it received and has
no further performance commitments under this terminated agreement.

        On March 29, 2000, AccuMed also entered into a letter agreement to
reinstate and amend its September 4, 1998 patent and technology license
agreement with Ampersand. Upon signing of the letter agreement, AccuMed received
an up-front license fee. On June 9, 2000, AccuMed signed a formal amendment to
the agreement and received an advance royalty in the form of cash. AccuMed also
received a $100,000 convertible note and 128,571 shares of Ampersand common
stock as an additional advance royalty. AccuMed has deferred the amount of the
up-front license fee it received. This fee is being recognized as revenue
systematically over the remaining 41-month term of the agreement. The advance
royalties are being recognized as revenue during the period that the royalties
are earned on the sale of covered products.

        On December 29, 2000, AccuMed and Oncometrics entered into agreements to
license their patents and intellectual property to MonoGen for certain medical
applications. Promissory notes in the aggregate amount of $500,000 were issued
by Monogen as consideration for the up-front license fees due under the
agreements. The up-front license fees have been deferred and will be recognized
as revenue in the first quarter of 2001 upon the completion by AccuMed of its
obligations under the agreements.

17. RELATED-PARTY TRANSACTIONS

        On February 2, 1998 a director/stockholder loaned AccuMed $1,000,000 at
12% annual interest plus 16,667 5-year warrants to purchase common stock at an
exercise price of $9.36 per share. The loan was converted into common stock
under the terms of a private placement of common stock in March 1998 and the
exercise price of the warrants were re-priced to $4.50 per share.

18. DEBT EXTINGUISHMENT

        In 1998, AccuMed incurred an extraordinary loss of $1,168,080 related to
the exchange of $5,275,000 in principal amount of its 12% convertible notes into
Series A convertible preferred stock. This loss included stock, warrants and
fees paid to the placement agent, warrants issued as an inducement to the
converting noteholders, and the write-off of a proportional amount of deferred
financing costs associated with the issuance of the convertible notes. The
placement agent received fees of $175,000, 8,334 shares of common stock valued
at $40,000, 7-year warrants to purchase 58,334 shares of common stock at $6.75
per share valued at $84,000, and repricing of previously issued 4-year warrants
to purchase 33,334 shares of common stock at an exercise price of $18.75 per
share to $6.75 per share, valued at $26,000. The converting noteholders received
3-year warrants to purchase 207,557 shares of common stock at an exercise price
of $6.75 per share, valued at $37,380.


                                      F-17
<PAGE>   60

                   ACCUMED INTERNATIONAL, INC. AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


        AccuMed utilized the Black-Scholes pricing model to determine the fair
value of warrants issued. The following assumptions were incorporated into the
model: risk-free rate -- 6%, expected volatility -- 30%, and expected dividend
-- zero. The risk-free rate is determined based on the interest rate of U.S.
government treasury obligations with a maturity date comparable to the life of
the warrant issued. Other assumptions, relating to warrant life, strike price
and stock price, were determined at the date the warrant was issued.

19. SUBSEQUENT EVENTS

        On February 7, 2001, AccuMed signed an agreement to merge with
Ampersand. Under the terms of the agreement, holders of AccuMed's common stock
will receive 0.6552 of a share (subject to adjustment) of Ampersand common stock
in exchange for each share of AccuMed common stock. Each share of AccuMed's
Series A Convertible Preferred Stock will be exchanged for one share of
preferred stock of Ampersand that will be convertible into Ampersand common
stock. Consummation of the merger is subject to customary closing conditions,
including the approval of AccuMed's stockholders, and the registration of the
Ampersand common shares with the Securities and Exchange Commission. Closing of
the merger is expected to occur in the second quarter of 2001.

        On February 7, 2001, AccuMed received a $470,000 advance from Ampersand
to be used for working capital purposes. AccuMed issued a note payable of
$800,000, which includes $330,000 of previously advanced funds, to Ampersand. On
March 1, 2001, AccuMed received an additional advance of $225,000 from Ampersand
and issued a corresponding note payable. These notes bear interest at prime,
plus 2.5%, and are secured by AccuMed's inventory and a certain customer
contract. These notes will be dissolved upon the consummation of the merger or
will be due and payable upon the earliest of May 31, 2001 or the termination of
the merger agreement. The due date of the note may be extended upon mutual
agreement of the parties.






                                      F-18
<PAGE>   61


                        INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
AccuMed International, Inc.:

Under date of March 8, 2001 we reported on the consolidated balance sheets of
AccuMed International, Inc. and subsidiary as of December 31, 2000 and 1999, and
the related consolidated statements of operations, stockholders' equity and
other comprehensive income (loss), and cash flows for each of the years in the
three-year period ended December 31, 2000, which are included in the annual
report on Form 10-K for the year 2000. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
financial statement schedule as listed in the accompanying index. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

The audit report on the consolidated financial statements of AccuMed
International, Inc. and subsidiary referred to above contains an explanatory
paragraph that states that the Company has suffered recurring losses from
operations and has a working capital deficiency that raise substantial doubt
about its ability to continue as a going concern. The financial statement
schedule included in the annual report on Form-10-K for the year 2000 does not
include any adjustments that might result from the outcome of this uncertainty.


                                  /s/ KPMG LLP

Chicago, Illinois
March 8, 2001














                                      F-19
<PAGE>   62


                   ACCUMED INTERNATIONAL, INC AND SUBSIDIARY
                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
   Reserves and
    Allowances
  deducted from
  asset accounts

                                       Additions
                       Balance at      Charged to      Write-offs                          Balance
                       Beginning       Costs and          and                             at End of
   Description         of Period        Expenses        Disposals      Other Changes        Period
-------------------   ------------    ------------    ------------    ---------------    -----------
<S>                   <C>             <C>             <C>             <C>                <C>
  Allowance for
  uncollectible
     accounts
    receivable

    Year Ended
December 31, 1998          --          $245,592            --               --            $245,592

    Year Ended
December 31, 1999      $245,592            --         ($245,593)            --              ---

    Year ended
December 31, 2000          --              --              --               --              ---

    Inventory
Valuation Reserve

    Year ended
December 31, 1998          --              --              --               --              ---

    Year ended
December 31, 1999          --         $1,106,399           --               --           $1,106,399

    Year ended
December 31, 2000     $1,106,399           --         ($921,606)            --            $184,793
</TABLE>

<TABLE>
<CAPTION>
     Reserve
 Allowances which
 support balance
  sheet caption
     reserves

                                      Deductions
                                       Credited
                      Balance at       to Costs        Payments                           Balance
                       Beginning          and            Under                           at End of
   Description         of Period       Expenses        Warranty       Other Changes        Period
-------------------   ------------    ------------    ------------    ---------------    -----------
<S>                   <C>             <C>             <C>             <C>                <C>
Warranty Reserves


    Year ended
December 31, 1998       $30,000            --              --           ($18,000)(a)      $12,000


    Year ended
December 31, 1999       $12,000        ($12,000)           --              --                --


    Year Ended
December 31, 2000          --              --              --              --                --
</TABLE>

     (a) Reserves of Oncometrics Imaging Corp. reclassified in current year



                                      F-20


<PAGE>   63


<TABLE>
<CAPTION>
                                       Additions                         Amounts
                      Balance at      Charged to       Payments        Reclassified      Balance
                       Beginning       Costs and        Against       from Accounts      at End of
   Description         of Period       Expenses         Reserve          Payable           Period
-------------------   ------------    ------------    ------------    ---------------    -----------
<S>                   <C>             <C>             <C>             <C>                <C>
    Litigation
     Reserves


    Year ended
December 31, 1998          --              --              --               --              ---


    Year ended
December 31, 1999          --          $377,517       ($330,937)         $438,420         $485,000


    Year ended
December 31, 2000      $485,000            --          ($92,317)            --            $392,683
</TABLE>

<TABLE>
<CAPTION>
                                      Provisions
                      Balance at       (Credits)                                          Balance
                       Beginning       to Income                                         at End of
   Description         of Period         Taxes                                             Period
-------------------   ------------    ------------    ------------    ---------------    -----------
<S>                   <C>             <C>             <C>             <C>                <C>
   Deferred Tax
 Asset Valuation
    Allowance


    Year ended
December 31, 1998     $13,276,000     $3,376,000           --               --           $16,652,000


    Year ended
December 31, 1999     $16,652,000     ($1,322,000)         --               --           $15,330,000


    Year ended
December 31, 2000     $15,330,000     $1,155,000           --               --           $16,485,000
</TABLE>







                                      F-21
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>2
<FILENAME>v70395ex10-3.txt
<DESCRIPTION>EXHIBIT 10.3
<TEXT>

<PAGE>   1


                                                                   EXHIBIT 10.3





                              (ACCUMED LETTERHEAD)





December 29, 2000


VIA HAND DELIVERY
PERSONAL AND CONFIDENTIAL

Norman J. Pressman, Ph.D.
390 Greenwood Avenue
Glencoe, IL 60022

Re:  SEPARATION AGREEMENT

Dear Norm:

This letter confirms our understanding regarding your voluntary separation from
employment with AccuMed International, Inc. (the "Company"). The agreed
separation arrangements are set out below.

1. SEPARATION FROM EMPLOYMENT

Your voluntary separation from employment with the Company will be effective
January 31, 2001. However, as of December 31, 2000, you will be deemed to have
voluntarily resigned as President and Chief Scientific Officer of the Company
and as Chairman of Oncometrics Imaging Corp. ("Oncometrics"). It is agreed and
understood that (i) except as provided in the paragraph below and (ii) the
nondisclosure agreement appended to this letter agreement as Attachment I, after
December 31, 2000 you will have no further duties, responsibilities or
obligations as an employee of the Company and as Chairman of Oncometrics.

If requested by the Company after December 31, 2000, you will make yourself
available to assist the Company at such mutually convenient times and places for
one (1) day per month, noncumulative, without payment to you of any consulting
fee until the earlier of the closing of a merger agreement between the Company
and Ampersand Medical Corp. ("Ampersand") or July 4, 2001. In the event that
during such time period the Company requests more than one (1) day per month of
your time, you will make reasonable efforts to make yourself available to assist
the Company at such mutually convenient times and places; for such additional
assistance the Company shall pay to your then employer (or to you if you are not
employed) a consulting fee of $1,000.00 per day plus incurred expenses.



<PAGE>   2

2. MONOGEN, INC.

The Company hereby acknowledges (i) that you intend to become employed by
MonoGen, Inc. ("MonoGen") as President, Chief Executive Officer, and Director
subject to an employment agreement between you and MonoGen effective on or about
January 1, 2001, and (ii) that it has no objection to your entering into an
employment agreement with MonoGen with an effective date as early as January 1,
2001. If requested to do so by you, the Company will promptly execute a release
agreement permitting you to enter into an employment agreement with MonoGen. You
hereby acknowledge that the Company has no authority nor responsibility in
negotiating or securing your employment agreement with MonoGen.

3. COMPANY OPTIONS

The Company and you hereby acknowledge that as of February 1, 2001 you shall
have a ninety (90) day period during which you may exercise your Company options
consisting of 100,000 options at an exercise price of $1.50 per share and an
additional 100,000 options at an exercise price of $2.103 per share. The Company
agrees to promptly provide you with documentation regarding your Company options
including, but not limited to, number of options, award dates, vesting dates and
exercise price.

4. SEPARATION BENEFITS

The Company shall, as "Separation Benefits," continue to pay and provide to you
on an uninterrupted basis from January 1, 2001 through July 4, 2001, subject to
the "July 4, 2001 Provision" below, (i) your current salary payments, (ii) your
current automobile allowance and maintenance reimbursements, and (iii) health,
dental, and life insurance payments by the Company. It is agreed and understood
that the salary payments to you, beginning with the salary payments for January
1, 2001 and beyond, shall be capped at a maximum of $100,000.00, exclusive of
any and all other benefits due to you.

5. JULY 4, 2001 PROVISION

The foregoing Separation Benefits shall cease as of the close of business on
July 4, 2001 except as provided hereinbelow:

     (i)  full payment of any balance of the Separation Benefits due to you
          through July 4, 2001 will be paid to you in a lump sum cash payment or
          wire transfer payment on or after January 1, 2001, and on or before
          the earlier of July 4, 2001 or the receipt of a payment of at least
          $1,000,000.00 from Ampersand by the Company resulting from either the
          execution of a definitive merger agreement between Ampersand and the
          Company or the closing of such a merger agreement.

     (ii) Notwithstanding any other provision of this letter agreement (a) the
          Company shall permit you to continue to contribute to the Company's
          401(k) plan until the earlier of July 4, 2001 or the date you no
          longer


                                       2
<PAGE>   3


    (iii) receive regular monthly salary payments from the Company and (b)
          effective July 5, 2001, if you so elect, the Company shall make
          available to you COBRA continuation coverage for 9 months or until the
          merger between the Company and Ampersand is completed, whichever
          occurs first.

6. COMPANY LOANS

The Company agrees to promptly provide you with documentation regarding your
Company loans including, but not limited to, transactions, dates, amounts paid
and amounts forgiven by the Company. The Company further agrees to forgive all
outstanding loans to you, and all amounts due the Company in conjunction with
such loans, effective as of January 1, 2001.

7. VACATION PAY

The Company agrees to pay to you as earned vacation pay the amount of
$11,538.45. This amount shall be paid to you in a lump sum cash payment or wire
transfer payment on or after January 1, 2001, and on or before the earlier of
July 4, 2001 or the receipt of a payment of at least $1,000,000.00 from
Ampersand by the Company resulting from either the execution of a definitive
merger agreement between Ampersand and the Company or the closing of such a
merger agreement.

8. COMPANY OFFICE AND EQUIPMENT

The Company agrees to permit you to use your Company office, equipment,
facilities and telephone/voicemail and e-mail access through January 31, 2001 at
no cost to you. In addition, the Company agrees to permit you to purchase your
current office computing and peripheral equipment for $2,000.00 payable in a
lump sum cash payment.

9. ACKNOWLEDGMENTS

The Company and you hereby acknowledge that the Patent and Technology License
Agreement ("PTLA") between the Company and MonoGen and the employment agreement
between you and MonoGen rely and are conditioned upon the full execution of this
letter agreement.

The Company hereby acknowledges that the execution of this letter agreement is
with the approval of all necessary Company authorities, if any, including, but
not limited to the Executive Compensation Committee of the ACMI Board of
Directors, Company Board of Directors and Ampersand.

The Company and you hereby acknowledge that each will execute this letter
agreement on or before December 31, 2000, subject to the availability of and
concurrent with the PTLA and employment agreement between you and MonoGen. The
Company agrees to use its best efforts to negotiate and execute the PTLA on or
before December 31,


                                       3

<PAGE>   4

2000. You agree to use your best efforts to negotiate and execute the MonoGen
employment agreement on or before December 31, 2000.

10. GENERAL PROVISIONS

     (i) Hold Harmless.

Notwithstanding any other provision of this letter agreement to the contrary,
you shall continue to be covered under the Company's directors' and officers'
liability insurance coverage and the Company will indemnify you and hold you
harmless from and against all costs and expenses incurred by you, including the
concurrent payment of your reasonable legal fees, costs and expenses, arising
out of or resulting from your duties and activities as an employee of the
Company and Chairman of Oncometrics, provided that your actions or failure to
act, as the case may be, that give rise to such fees, costs and expenses did not
constitute criminal conduct. This paragraph shall survive termination of this
letter agreement.

     (ii) Mutual Release.

Except for the right to enforce the terms of this letter agreement, the Company
and you hereby irrevocably, voluntarily, unconditionally and generally release,
acquit and forever discharge each other from any and all charges, complaints,
claims, damages, actions, causes of action, suits, rights, demands and
grievances of any nature whatsoever, known or unknown, which the Company and you
have against each other.

     (iii) Mutual Non-Disparagement.

The Company and you hereby agree not to make any statements or take any actions
whatsoever that disparage or reflect negatively upon each other.

     (iv) Mutual Confidentiality.

The Company and you hereby agree to keep this letter agreement strictly
confidential. The Company agrees not to disclose the terms and existence of this
letter agreement, other than to MonoGen as part of their due diligence process
and except on a strict need-to-know basis or except as may be required by law.
You agree not to disclose the terms and existence of this letter agreement
except to your immediate family, your attorney and your financial advisor, or
except as may be required by law.

     (v) Press Releases.

The Company and you hereby agree that press releases or other public statements
regarding your voluntary separation from employment with the Company will
require mutual prior approval by the Company and you; neither the Company nor
you will unreasonably withhold such approval.



                                       4
<PAGE>   5

     (vi) Death or Disability.

The Company agrees that in the event of your death or disability on or after
December 31, 2000, all Separation Benefits and other payments or benefits due
shall be paid to your estate on an accelerated basis as soon as practicable.

     (vii) Assignment.

The Company agrees that this letter agreement shall be assigned to the successor
of the Company or any controlling entity of the Company, including, but not
limited to Ampersand. This letter agreement shall not be assignable by you.

     (viii) Miscellaneous.

This letter agreement is deemed made and entered into in the State of Illinois,
and in all respects shall be interpreted, enforced and governed under the laws
of the State of Illinois, without giving effect to its choice of laws
provisions, to the extent not preempted by federal law. Any dispute under this
letter agreement shall be adjudicated by a court of competent jurisdiction in
the State of Illinois.

The language of all parts of this letter agreement shall in all cases be
construed as a whole, according to its fair meaning, and not strictly for or
against either party. The provisions of this letter agreement shall survive any
termination of this letter agreement when necessary to effect the intent and
terms of this letter agreement expressed herein.

If any of the provisions of this letter agreement shall be held to be invalid by
a court of competent jurisdiction, such holding shall not in any way whatsoever
affect the validity of the remainder of this letter agreement.

This letter agreement contains the entire agreement between you and the Company
with respect to the matter of your employment and voluntary separation from
employment. No modification of any provision of this letter agreement shall be
effective unless made in writing and signed by you and a duly authorized officer
of the Company.






                                       5

<PAGE>   6

Best wishes for success in your future endeavors.

Sincerely,

ACCUMED INTERNATIONAL, INC.


By: /s/ PAUL F. LAVALLEE
    -------------------------------
        Paul F. Lavallee
        Chairman and CEO

Date: 12/29/00
      --------


AGREED AND ACCEPTED


/s/ NORMAN J. PRESSMAN
-----------------------------------
     Norman J. Pressman


Date: 12/29/00
      --------










                                       6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>3
<FILENAME>v70395ex10-13.txt
<DESCRIPTION>EXHIBIT 10.13
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.13

                                 FRANKLIN SQUARE
                                COMMERCIAL LEASE

1.   BASIC LEASE PROVISIONS AND IDENTIFICATION OF EXHIBITS

                             BASIC LEASE PROVISIONS

          PREMISES: Suite 405 in 900 N. Franklin, 400, 401,402 in 920 N.
          Franklin, Including all built-in improvements presently existing in
          the Premises.

     A. LANDLORD AND ADDRESS:
     The Lumber Co. as Agent for the beneficiary of LaSalle National Trust,
     N.A., successor to Exchange National Bank of Chicago, not personally, but
     as Trustee under Trust Agreement Trust No. 21657. 900 North Franklin,
     Chicago, Illinois 60610.

     B. TENANT AND CURRENT ADDRESS: AccuMed International, Inc., 920 North
     Franklin, Suite 402, Chicago, IL 60610.

     C. DATE OF LEASE EXECUTION: February 1, 2000

     D. LEASE TERM: Four years and 7 months

     E. COMMENCEMENT DATE OF TERM: February 1, 2000

     F. EXPIRATION DATE OF TERM: September 30, 2004

     G. DATE OF OCCUPANCY: February 1, 2000

     H. MONTHLY BASE RENT: Eleven Thousand Three Hundred Seventy Six and 00/100
     ($11,376.00) (subject to adjustments provided herein) (Suite 205 - $950,
     400 - $1,672, 401 - $2,610, 402 - $6,144

     I. RENTABLE AREA OF THE PREMISES: Ten Thousand and Sixty Two. Suite 405 -
     800 sq. ft., 400 - 1,410 sq. ft., 401 - 2,670 sq. ft., 402 - 5,182 sq. ft.
     (10,062 sq. ft.)

     J. SECURITY DEPOSIT: 0 and 00/100 dollars ($0)
     $0 applied to first months rent
     $0 held for term of lease

     K. ANNUAL BASE: 2000



                                       1
<PAGE>   2




     L. PURPOSE: General office use.

1.02 ENUMBERATION OF EXHIBITS
The exhibits set forth below and attached to this Lease by this reference: None
attached.

2. PREMISES AND TERM

2.01 LEASE OF PREMISES
Landlord hereby leases to Tenant and Tenant hereby accepts the Premises shown on
Exhibit A.

2.02 TERM
The term of this Lease ("Term") shall commence on the date ("Commencement Date")
which is the earlier to occur of:

     (i)  the date specified in Subsection 1.01G or
     (ii) the date Tenant first occupies all or part of the Premises.

The Term shall expire on the date ("Expiration Date") specified in Subsection
1.01F, unless sooner terminated as otherwise provided elsewhere in this Lease.

3. RENT
Tenant agrees to pay to Landlord at the office of the managing agent ("Manager")
of the Landlord, or at such other place designated by Landlord, without any
prior demand therefore and without any deduction whatsoever, base rent at the
Monthly Base Rent specified in Subsection 1.01H, and, as applicable, Adjusted
Monthly Base Rent as hereinafter defined. Monthly Base Rent is subject to
adjustment pursuant to Sections 21.02 and 21.03, and as adjusted in hereinafter
called "Adjusted Monthly Base Rent". Unless otherwise provided to the contrary
in this Lease, Adjusted Monthly Base Rent shall be paid monthly in advance on
the first day of each month of the Term, except that the first installment shall
be paid by Tenant to Landlord upon execution of this Lease by Tenant. Adjusted
Monthly Base Rent shall be prorated for partial months within the Lease in
addition to Adjusted Monthly Base Rent shall be deemed additional rent
("Additional Rent"), and Adjusted Monthly Base Rent and Additional Rent shall
hereinafter be collectively called "Rent". Tenant's covenant to pay Rent shall
be independent of every other covenant in this Lease.

4. SECURITY DEPOSIT
As security for the performance of its obligations under this Lese. Tenant upon
its execution of this Lease has paid to Landlord a security deposit, (the
"Security Deposit") in the amount specified in Subsection 1.01J. The Security
Deposit may be applied by Landlord to cure and default of Tenant under this
Lease, and upon notice by Landlord of such application, Tenant shall replenish
the Security Deposit in full by promptly paying to Landlord the amount so
applied. Within Thirty (30) days after the Expiration Date, Landlord shall
return to Tenant the balance, if any, of the Security Deposit. The Security
Deposit shall not be deemed an advance payment of Rent or measure of damages for
any

                                       2
<PAGE>   3



default by Tenant under this Lease, nor shall it be a bar or defense to any
action which Landlord may at any time commence against Tenant.

5. SERVICES

5.01 LANDLORD SERVICES
     Landlord will furnish to Tenant during the term of this Lease all necessary
water for sanitary purposes used in connection with the toilets and wash basins
and showers located in the Premises. If Tenant shall require water for purposes
other than those above mentioned, Landlord may install a water meter and furnish
water to Tenant for purposes other than above named at the same rate that
Landlord shall be required to pay its supplier of water for the amount of water
indicated by said water meter as being used by Tenant.

     Should Tenant fail to pay the bills for such water, and for electric
current and gas, Landlord shall have the right to pay same, the amount whereof,
together with any sums paid by the Landlord to keep the Premises in a healthy
condition as above specified, are declared to be so much additional rent, and to
be payable with the next installment of rent due hereunder.

     Tenant shall have use of passenger elevators in common with other tenants
daily. Tenant shall have use of freight elevators in common with other tenants
during regular hours prescribed by Landlord and any other hours that may be
mutually agreed. Landlord shall not be liable for failure to supply elevator
service occasioned by the breaking down of machinery or equipment or by strikes,
accidents, unavoidable delays or causes beyond the control of Landlord. In any
event, Landlord shall make Timely Repairs to insure elevator service for Tenant
and Tenants invitees.

5.02 TENANT'S SERVICES
     Tenant shall pay for all utility service it requires directly to the
utility furnishing such services. Tenant shall also pay its own heating and
cooling cost. Tenant shall make arrangements directly with the telephone company
servicing the Building for telephone service to the Premises. Tenant shall pay
for the maintenance and replacement of all light fixtures, electrical switches,
electrical outlets and lamps located in the Premises and all bulbs, tubes
ballasts and starters utilized in the Premises. All existing lamps and lights to
be in good working order upon possession date.

5.03 ENERGY CONSERVATION
     Landlord shall have the right to institute such policies, programs and
measures as may be necessary or desirable, in Landlord's discretion, for the
conservation and/or preservation of energy or energy related services, or as may
be reasonably required to comply with any applicable codes, rules and
regulations, whether mandatory or voluntary.

6. POSSESSION, USE AND ENJOYMENT OF PREMISES

6.01 POSSESSION AND USE OF PREMISES



                                       3
<PAGE>   4

     Tenant shall be entitled to possession of the Premises upon Commencement
Date. In the event of the failure of the Landlord to deliver possession of the
Premises upon the Commencement Date, neither the Landlord or its agents shall be
liable for any damages caused thereby, nor shall this Lease thereby become void
or voidable. The Premises shall not be deemed to be unready for Tenant's
occupancy or incomplete if only minor or insubstantial details of construction,
decoration or mechanical adjustments remain to be done in the Premises or any
part thereof, of if the delay in work, changes, alterations or additions
required or made by Tenant in the layout of finish of the Premises or any part
thereof. Tenant shall occupy and use the Premises for purposes indicated in
Section 1.01L only. Tenant shall not occupy or use the Premises (or permit the
use or occupy of the Premises) for any purpose or in any manner which: (a) is
unlawful or in violation of any applicable legal, governmental or
quasi-governmental requirement, ordinance or rule (including the Board of Fire
Underwriters); (b) may be dangerous to persons or property; (c) may invalidate
or materially increase the amount of premiums for any insurance affecting the
Building, and if any additional amounts of insurance premiums are so incurred,
Tenant shall pay to Landlord the additional amounts on demand; or (d) may create
a nuisance, disturb any other tenant of the Building of the occupants of
neighboring property or injure the reputation of the Building. Tenant's
acceptance of possession of the Premises shall be presumed to be Tenant's
acknowledgment that the Premises are in satisfactory condition and that no
further changes in the condition of the Premises shall be the obligation of the
Landlord, except the construction and completion of those items set forth on
EXHIBIT C attached hereto.

6.02 QUIET ENJOYMENT
     So long as Tenant shall not be in default under this Lease, Tenant shall be
entitled to peaceful and quiet enjoyment of the Premises, subject to the terms
of this Lease.

7. CONDITION OF PREMISES
     The Tenant's taking possession of the Premises shall be conclusive evidence
that the Tenant accepted the Premises in the condition existing on the date
Tenant first took possession, and that Tenant has waived all claims relating to
the condition of the Premises, except claims, if any, which relate to Landlord's
failure to complete the improvements set forth in EXHIBIT C attached hereto. No
agreement of Landlord to alter, remodel, decorate, clean or improve the Premises
or the Building , and no representation regarding the condition of the Premises
has been made by or on behalf of Landlord to Tenant, except as stated in this
Lease. At any time after the Commencement Date, upon the request from time to
time of Landlord or Landlord's mortgagee, Tenant shall execute and deliver to
Landlord or its mortgagee a standard type of estoppel certification.

8. ASSIGNMENT AND SUBLETTING

8.01 ASSIGNMENT
     Tenant shall not assign, mortgage, pledge, hypothecate or otherwise
transfer or permit the transfer of this Lease or the interest of Tenant in this
Lease, in whole or in part, by operation of law or otherwise without prior
written consent of Landlord. Such


                                       4
<PAGE>   5

consent shall not be unreasonably withheld or delayed. If Tenant or the
beneficiary of Tenant is a partnership, a withdrawal or change, voluntary,
involuntary or by operation of law, of any partner or partners owning 51%,
whether by a single transaction or event or by cumulative transactions or
events, or more of the partnership interest, or the dissolution of the
partnership shall be deemed an assignment of this Lease. If Tenant, or the
beneficiary of Tenant is a corporation, any dissolution, merger, consolidation,
or reorganization of the Tenant or the sale or the transfer of a controlling
percentage of the capital stock of the tenant, whether by a single transaction
or event or by cumulative transactions or events, shall be deemed an assignment
of this lease. If the Tenant consists of more than one person, a purported
assignment, voluntary, or by operation of law, from a majority of such persons
to any of a majority of such persons to any or all of the others shall be deemed
an assignment of this Lease.

8.02 SUBLETTING
     Tenant shall not sublet the whole or any part of the Premises without
Landlord's prior written consent. Such consent shall not be unreasonably
withheld or delayed.

9. MAINTENANCE

9.01 LANDLORD'S MAINTENANCE
     Landlord shall maintain and make necessary repairs on a timely basis to the
structural elements of the Building and the electrical, plumbing, heating,
ventilating and air-conditioning systems in the Building and exterior windows
except that: (i) the cost of repairing any damage to any of the foregoing caused
by the act or neglect of Tenant, any subtenant of Tenant, or their respective
agents, employees, guests or invitees shall be paid by Tenant; and (ii) Landlord
shall not be responsible for maintenance or repair of electrical or plumbing
fixtures located within Premises. Landlord is responsible for the maintenance
and repair of in office heating and cooling units. Outside windows will be
cleaned two times per year at Landlord's expense.

9.02 TENANT'S MAINTENANCE
     Tenant, at its expense, shall keep and maintain the Premises in good order,
condition and repair (including the keeping of the Premises in clean and orderly
condition) and in accordance with all applicable legal, governmental and
quasi-governmental and insurance carrier requirements, ordinances and rules. If
Tenant fails to perform any of its obligations set forth in the Section 9,02,
Landlord, in addition to its other remedies with respect to Tenant's breach of a
covenant hereunder, may, in its dole discretion, but with prior notice to
Tenant, perform the same, and Tenant shall pay to Landlord the direct out of
pocket cost, and other costs and expenses arising from Landlord's involvement
with such repairs and replacements, therefore upon demand. The Tenant shall pay
the Landlord for overtime and for any other expenses incurred in the event
repairs, alterations decorating or other work on the Premises are not made
during ordinary business hours at the Tenant's request.

10. ALTERATIONS AND IMPROVEMENTS


                                       5
<PAGE>   6

10.01 TENANT'S ALTERATIONS
     All work performed within the Premises shall be in accordance with all
applicable legal, governmental and quasi-governmental requirements, ordinances
and rules (including the Board of Fire Underwriters), and all requirements of
applicable insurance companies. All such work shall be done in a good and
workmanlike manner and with the use of good grades of materials. Tenant shall
not pledge, mortgage, hypothecate or in any way create a security interest in
and to any of the alterations and improvements provided for herein to any
creditor or third party without the prior written consent of Landlord. Tenant
shall mot perform any work without the prior written consent of Landlord. This
consent is exclusive for all Tenant furnishings. Such consent shall not be
unreasonably withheld or delayed.

10.02 LIENS
     Tenant shall not permit any lien or claim for lien of any mechanic, laborer
or supplier or any other lien to be filed against the Building, the Land, the
Premises, or any part thereof arising out of work performed, or alleged, or
alleged to have been performed by, or at the direction of, or on behalf of
Tenant. If any such lien or claim for lien is filed, Tenant shall immediately
either have such lien or claim for lien released of record or shall deliver to
Landlord a bond in form, content, amount, and issued by surety, satisfactory to
Landlord indemnifying Landlord, the Beneficiaries and others designated by
Landlord against all costs and liabilities resulting from such lien or claim for
lien and the foreclosure or attempted foreclosure thereof. If Tenant fails to
have such lien or claim for lien so released or to deliver such bond to
Landlord, without investigating the validity of such lien, may pay or discharge
the same, and Tenant shall reimburse Landlord upon demand for the amount so paid
by Landlord, including Landlord's expenses and attorneys' fees.

10.03 ACCESS
     The Tenant shall permit the Landlord to erect, use and maintain pipes,
ducts, wiring and conduits in and through the Premises. The Landlord or
Landlord's agents shall have the right to enter upon the Premises, to inspect
the same, and to make such inspections, repairs, alterations, improvements or
additions to the Premises or the Building as the Landlord may deem necessary or
desirable, and the Landlord shall be allowed to take all material into and upon
said Premises that me be required therefore, so long as Tenant is nor
unreasonable interfered with. If the Tenant shall not be personally present to
permit an entry into the Premises, when for any reason an entry therein shall be
necessary or desirable, the Landlord or Landlord's agents may enter the same by
a master key, or may forcibly enter the same, without rendering the Landlord or
such agents liable therefore (if during such entry Landlord or Landlord's agents
shall accord reasonable care to Tenant's property), and without in any manner
affecting the obligations and covenants of this Lease. Whenever possible,
Landlord will give to Tenant advanced notice of its intentions and purpose of
entry to do work. Nothing herein contained, however, shall be deemed or
construed to impose upon the Landlord any obligations, responsibility or
liability whatsoever, for the care, supervision or repair of the Building or any
part thereof, other than as herein provided. The Landlord shall also have the
right at any time without the same constituting an actual or constructive
eviction and without incurring any liability



                                       6
<PAGE>   7

to the Tenant therefore, to change the arrangements and/or location of entrances
or passageways, doors and doorways and corridors, elevators, stairs, toilets or
public parts of the Building, and to close entrances, doors, corridors,
elevators or other facilities, so long as Tenant is not unreasonably interfered
with. The Landlord shall not be liable to the Tenant for any expense, injury,
loss or damage resulting from work done in or upon, or the use of, any adjacent
or nearby building, land, street or alley.

11. WAIVER OF CLAIMS AND INDEMNITY

11.01 WAIVER

          A.   Tenant's Waiver: Tenant releases Landlord and its beneficiaries,
               and their respective agents, employees and contractors from, and
               waives all claims against Landlord, Trustee and its beneficiaries
               and their respective agents, employees contractors, for damage to
               Tenant's property and loss of business, including business
               interruption, sustained by Tenant due to any cause whatsoever
               except for claims resulting from Landlord's gross negligence or
               willful misconduct. If such damage or injury is caused by the
               negligence or Landlord, Trustee or its beneficiaries, or their
               respective agents, employees or contractors, Tenant shall make a
               claim under its insurance policy as its sole remedy for such
               damage. All property belonging to Tenant or any occupant of the
               Premises that is in the building or the Premises shall be there
               at the risk of Tenant or other person only, and Landlord, Trustee
               and its beneficiaries and their respective agents, employees and
               contractors shall not be liable for damage thereto or theft or
               misappropriation thereof.

          B.   Landlord's Waiver: Landlord release Tenant and its agent,
               employees and contractors from and waives all claims against
               Tenant and its agents, employees and contractors for damage to
               Landlord's property and loss of business, including loss of
               rents, sustained by Landlord due to any cause whatsoever except
               for claims resulting from Tenant's gross negligence or willful
               misconduct.

11.02 INDEMNIFICATION

          A.   Tenant's Indemnity: Tenant agrees to indemnify, pay the costs of
               the defense of and hold harmless Landlord, Trustee and its
               beneficiaries and their respective agents, employees and
               contractors, from and against all claims, demands, actions,
               liabilities, damages, costs and expenses (including reasonable
               attorney's fees), for injuries to any persons (other than
               Landlord) and damage to or theft or misappropriation or loss of
               property (other than Landlord's) occurring in or about the
               Building and



                                       7
<PAGE>   8

               arising from the use and occupancy of the Premises or from any
               activity, work or thing done, permitted or suffered by Tenant in
               or about the Premises (including, without limitation, any
               alteration by Tenant) or from any breach or default on the part
               of Tenant in the performance of any covenant or agreement on the
               part of Tenant to be performed under this lease or due to any
               other act or omission of Tenant, its subtenants, assignees,
               invitees, employees, contractors and agents. Without limiting the
               foregoing, Tenant shall indemnify, pay the costs of the defense
               of an hold Landlord Harmless from any claims, liabilities,
               damages, costs and expenses arising out of the use or storage of
               hazardous or toxic materials in the building by Tenant. If any
               such proceeding is filed against Landlord or any such indemnified
               party, Tenant agrees to pay the costs of the defense of Landlord
               or such indemnified party in such proceeding by Landlord shall
               not have the right o settle any such claims with the consent of
               Tenant.

          B.   Landlord's Waiver: Landlord agrees to indemnify, pay the costs of
               the defense and hold harmless Tenant, its agents, employees and
               contractors, from and against all claims, demands, actions,
               liabilities, damages, costs and expenses (including reasonable
               attorney's fees), for injuries to any persons (other than Tenant)
               and damage to or theft or misappropriation or loss of property
               (other than Tenant's) occurring in or about the building and
               arising from any activity, work or thing done, permitted or
               suffered by Landlord in or about the Building or from any breach
               or default on the part of Landlord in the performance of any
               covenant or agreement on Landlord's part to be performed
               hereunder or due to any other act or omission of Landlord, its
               assignees, invitees (to the extent such invitees are at the
               building only), employees, contractors and agents. If any such
               proceeding is filed against Tenant or any such indemnified party,
               Landlord agrees to pay the costs of the defense of Tenant or such
               indemnified party in such proceeding at Landlord's sole cost by
               Tenant shall not have the right to settle any claim without
               consent of Landlord.

11.02 MUTUAL WAIVER OF CLAIMS AND SUBROGATION
     Whenever (a) any loss, cost, damage or expense resulting from fire,
     explosive, or any other occurrence is incurred by either of the parties to
     this lease or anyone claiming by, through or under them in connection with
     the Premises and (b) such party is then either covered in whole or in part
     by insurance with respect to such loss, cost, damage or any other expense,
     or required under this lease to be so insured, then the party so insured
     (or so required) hereby release the other party from any liability the
     other party may have on account of such loss, cost, damage, or expense to
     the extent of any amount recovered by reason of such insurance (or which
     could have been recovered had insurance been carried as so required) and



                                       8
<PAGE>   9

     waives any right of subrogation which might otherwise exist in or accrue to
     any person on account thereof (provided that such releases of liability and
     waiver of the right of subrogation shall not be operative in any case of
     increased cost, the other party shall have the right, within (30) days
     following written notice, to pay such increased cost, thereupon keeping
     such release and waiver in full force and effect). Whether the party
     released form liability hereunder is Landlord or Tenant, said term
     "Landlord" or "Tenant", respectively, and its respective trustees,
     beneficiaries, agents, partners, shareholders, officers, directors and
     employees.

12. LANDLORD'S REMEDIES

12.1 All right and remedies of the Landlord herein enumerated shall be
cumulative and none shall exclude any other right or remedy allowed by law.

12.2
          A.   If the Tenants defaults in any payment of Rent, and the Tenant
               does no cure the default within (10) days after demand for
               payment of such Rent or if the Tenant defaults in the prompt and
               full performance of any other provisions of this Lease, and the
               Tenant does not cure the default with thirty (30) days after
               written demand by the Landlord that the default be cured (unless
               the default involves hazardous condition, which shall be cured
               forthwith); or if the leasehold interest of the Tenant be levied
               upon under execution or be attached by process of law, or if the
               Tenant makes an assignment for the benefit of creditors or admits
               its inability to pay its debts generally, or if a receiver be
               appointed for any property of the Tenant, or if the Tenant
               abandons the Premises, then, and in any such event, the Landlord,
               may if the Landlord so elects by not otherwise, and with or
               without notice of such election, and with or without any demand
               whatsoever, either forthwith terminate this Lease and the
               Tenant's right to possession of the Premises or, without
               terminating this Lease, forthwith terminate the Tenant's right to
               possession of the Premises, Except for defaults in payment of
               Rent, if Tenant is diligently proceeding to cure any default he
               shall have the ability to do so for up to sixty (60) days, after
               which all Landlords remedies will proceed.

          B.   Upon termination of this Lease, whether by lapse of time or
               otherwise, or upon any termination of the Tenant's right to
               possession without termination of the Lease, the Tenant shall
               surrender possession and grants to the Landlord full and free
               license to enter into and upon the Premises in such event with or
               without process of law and to repossess the Landlord of the
               Premises and to remove any and all property therefrom, using such
               force as may be necessary, without being deemed in any manner
               guilty of trespass, eviction or forcible entry or detainer, and
               without relinquishing the Landlord's rights to Rent or any other
               right given to the Landlord hereunder or by operation of law.


                                       9
<PAGE>   10

          C.   (Intentionally omitted)

          D.   If any involuntary action or proceeding under any section or
               sections of any bankruptcy act in any court or tribunal shall
               adjudge or declare Tenant insolvent or unable to pay Tenant's
               debts, or if any voluntary petition or similar proceeding under
               any section or sections of any bankruptcy act shall be filed by
               Tenant in any court or tribunal to declare Tenant insolvent or
               unable to pay Tenant's debts, then and in any such event Landlord
               may, if Landlord so elects by note otherwise, and with or without
               notice of such election, and with or without entry or other
               action by Landlord, forthwith terminate this Lease, and
               notwithstanding any other provision of this Lease, Landlord shall
               forthwith upon such termination be entitled to recover damages in
               an amount equal to the then present value of the Rent for the
               remainder of the Term, less the fair rental value of the Premises
               for the remainder of the Term.

          E.   Any and all property which may be removed from the Premises by
               the Landlord pursuant to the authority of the Lease or of law, to
               which the Tenant is or may be entitled, may be handled, removed
               or stored by the Landlord at the risk, cost and expense of the
               Tenant, and the Landlord shall in no event be responsible for the
               value, preservation or safekeeping thereof. The Tenant shall pay
               to the Landlord, upon demand, any and all expenses incurred in
               such removal and all storage charges against such property so
               long as the same shall be to the conclusively presumed to have
               been conveyed by the Tenant to the Landlord under this Lease as a
               bill of sale without further payment or credit by the Landlord to
               the Tenant.

          F.   The Tenat shall pay upon demand all the Landlord's costs, charges
               and expenses, including the fees of counsel, agents and others
               retained by the Landlord, incurred in enforcing the tenants
               obligations hereunder or incurred by the Landlord in any
               litigation, negotiation or transaction in which the Tenant causes
               the Landlord, without the Landlord's fault, to become involved or
               concerned.

13. SURRENDER OF PREMISES
     Upon expiration or termination of this Lease or termination of Tenant's
right of possession of the Premises, or any part thereof, Tenant shall surrender
and vacate the Premises immediately and deliver possession thereof to Landlord
in a clean, good and tenatable condition, ordinary wear and tear excepted. Upon
any termination, Tenant shall be entitled to remove from the Premises all
movable personal property of Tenant, provided Tenant shall immediately repair
all damages resulting from such removal and shall restore the Premises to its
original condition, ordinary wear and tear excepted. In the event possession of
the Premises is not immediately delivered to Landlord or if Tenant shall fail to
remove all of Tenant's movable personal property. As aforesaid, Landlord may
remove any of such property therefrom without any liability to Tenant,


                                       10
<PAGE>   11

and at Tenant's expense. All movable personal property which may be removed from
the Premises by Landlord shall be conclusively presumed to have been abandoned
by Tenant, and title thereto shall pass to Landlord without any cost or credit
therefore, and Landlord may, at its option ant at Tenant's expense, story and/or
dispose of such property.

14. HOLDING OVER

     Tenant shall pay Landlord 1.5 time the latest adjusted Monthly Base Rent
plus Operating expenses then applicable for each month or portion thereof Tenant
retains possession of the Premises, or any portion thereof, after the expiration
or termination of this Lease, and also shall pay all damages sustained by
Landlord by reason of such retention of possession. The provisions of the
Article shall not constitute a waiver by Landlord of any re-entry rights of
Landlord herein before or by law provided. If Tenant retains possession of the
Premises, or any part thereof, for twenty (20) days after the written notice to
Tenant, but not otherwise, such holding over shall constitute a renewal of the
Lease for a period of One month specified by Landlord at Landlord's option on
the sane terms and condition, except that the Adjusted Monthly Base Rent shall
be increased by 125% of the latest Adjusted Monthly Base Rent, plus any
subsequent escalations. Should Tenant wish to cancel this holdover portion of
this Lease, Tenant must give to Landlord Four months advance written notice of
its intent to cancel this lease.

15. DAMAGE BY FIRE OR OTHER CASUALTY

15.01 UNTENANTABILITY
     (Intentionally omitted)

15.02 DAMAGE BY TENANT
     In the event the Prmises or the Building is damaged by fire or other
casualty resulting from the act or neglect of Tenant, its agents, contractors,
employees or invitees, Tenant shall not be released from any of its obligations
hereunder including, without limitation, its duty to repair the Premises and its
liability to Landlord for damages caused by such fire or other casualty and its
duty to pay Rent, which Rent shall not be abated. Tenant acknowledges that
Landlord shall be entitled to the full proceeds of any insurance coverage,
whether carried by Landlord or Tenant, for damage to alternations, additions,
improvements or decorations provided by Landlord either directly or through an
allowance to Tenant (whether by rent abatement or otherwise).

16. TENANT'S INSURANCE

16.01 Tenant, at Tenant's expense, agrees to purchase and maintain in force
during the Term: (i) Comprehensive General Liability Insurance on an occurrence
basis with minimum limits of liability in an amount of $500,000 for bodily
injury, personal injury or death to any one person and $500,000 for bodily
injury, person injury or death to more than one person, and $100,000 with
respect to damage to property, including water and sprinkler damage; and (ii)
Casualty insurance to cover his personalty.


                                       11
<PAGE>   12

16.02 The policies referred to in Section 16.1 shall name Landlord, the
Beneficiaries, the Manager and their respective agents and employees as
additional insureds; and shall contain the following provisions and
endorsements: (i) that such insurance may not be canceled or amended without
thirty (30) days prior written notice to Landlord, the Beneficiaries and the
Manager; (ii) an express waiver of any right of subrogation by the insurance
company against Landlord, the Beneficiaries, the Manager and their respective
agents and employees; and (iii) that the policy shall not be invalidated should
the insured waive in writing prior to a loss, any or all rights of recovery
against any other party for losses covered by such policies.

16.03 Tenant shall deliver to Landlord, certificates of insurance of all
policies and renewals thereof to be maintained by Tenant hereunder, no less than
ten (10) day prior to the Commencement Date and note less that ten (10) days
prior to the expiration date of each policy. Provided that the insurance
policies of Tenant will not be invalidated nor will the right of the insured to
collect the proceeds payable under such policies be adversely affected by the
waiver contained in the following portion of this sentence, Tenant hereby
expressly waves all rights of recovery which it might otherwise have against
Landlord, the Beneficiaries, the Manager or their agents, and employees, for
loss or damage to person, property or business to the extent that such loss or
damage is covered by valid and collectible insurance policies, notwithstanding
that such loss or damage may result form negligence of Landlord, the
Beneficiaries, the Manager or their agents or employees. Tenant shall use its
best efforts to obtain from its insurer the right to waive claims as set forth
in the preceding sentence without thereby invalidating its insurance or
affecting its right to proceeds payable thereunder.

17. RULES AND REGULATIONS

18. LANDLORD'S RIGHTS
     Landlord shall have the following rights exercisable without notice (except
as expressly provided to the contrary in this Lease), without liability to
Tenant for damage for injury to persons, property or business and without being
deemed an eviction or disturbance of Tenant's use or possession of the Premises
or giving rise to any claim for setoff or abatement of Rent: (i) To change the
Building's name or street address upon ninety (90) days prior written note to
Tenant; (ii) To install, affix and maintain all signs on the exterior and/or
interior of the Building; (iii) To designate and/or approve prior to
installation, all types of signs, window shades, blinds, drapes, awnings or
other similar items, or other similar items, and all internal lighting that may
be visible from the exterior of the Premises or the public corridors of the
Building; (iv) To display the Premises to prospective tenants at reasonable
hours during the last six (6) months of the Term; (v) To change the arrangement
of entrances, doors, corridors, elevators and stairs in the Building, provided
that no such change shall materially adversely affect access to the Premises;
(vi) To grant to any party the exclusive right (to the extent permitted by law)
to conduct any business or render any service in or to the Building, provided
such exclusive right shall not operate to prohibit Tenant from using the
Premises for the purposes permitted hereunder; (vii) To prohibit the placing of
vending or dispensing



                                       12
<PAGE>   13

machines of any kind in or about the Premises; (viii) To have access for
Landlord and other tenants for the Building to any mail chutes and boxes located
in or on the Premises according to the rules of the United States Post Office;
(ix) To close the Building after normal business hours, except that Tenant and
its employees and invitees shall be entitled to admission at all times, under
such regulations as Landlord prescribes for security purposes; (x) To take any
and all reasonable measures, including inspections and repairs to the Premises
or to the Building, as may be necessary or desirable in the operation or
protection thereof; (xi) To retain at all times master keys or passkeys to all
doors in and to the Premises; (xii) To install, operate and maintain a building
security system which monitors, by close circuit television or otherwise, all
persons entering and leaving the Building and all public areas of the Building
including, but not limited to, elevators and staircases; and (xiii) To install
and maintain pipes, ducts, conduits, wires and structural elements located in
the Premises which serve other parts of the Building.

19. MORTGAGE
     Landlord may execute and deliver a mortgage(s) or trust deed(s) in the
nature of a mortgage, both sometimes hereinafter referred to as "Mortgage"
against the Building or Land or any part thereof or interest therein, and may
sell and lease back the Land. This Lease and the rights of Tenant hereunder
shall be and are hereby made expressly subject and subordinate at all times to
all such Mortgages and ground leases, now or hereafter existing an all
amendments, modifications and renewals thereof and extensions, consolidations or
replacements thereof, and to all advances made or hereafter to be made upon the
security thereof. Landlord agrees to obtain in conjunction with any mortgage
placed against Building subsequent to date hereof an agreement by mortgagee to
refrain from disturbing tenancy or tenant so long as Tenant is not in default
hereunder.

20. NOTICES
     All notices required or permitted to be given hereunder shall be in writing
and shall be deemed given and delivered, whether or not received, when
personally delivered, when deposited in the United States Mail, postage prepaid
and properly addressed, certified mail, return receipt requested, at the
addresses for Landlord indicated in Section 1.01(B), or such other address as
Landlord shall designate by written notice to Tenant; and (ii) To Tenant: At the
address specified in Subsection 1.01(C) prior to the Commencement Date, and at
the Premises after the Commencement Date, or such other address as Tenant shall
designate by written to Landlord.

21. ADJUSTMENTS TO MONTHLY BASE RENT

21.01 DEFINITIONS
     For the purposes of this article 21, the following words and phrases shall
have the following meanings:
A.   "Adjustment Date" shall mean February 1, 2001 and each subsequent February
     1 falling with the term.
B.   "Initial Adjustment Year" shall mean the calendar year 2001.


                                       13
<PAGE>   14

C.   "Adjustment Year" shall mean the calendar year in which the `Initial
     Adjustment Date as defined herein below falls and each subsequent calendar
     year during which an Adjustment Date falls.

D.   "Adjustment Monthly Base Rent" shall mean rental (exclusive of Additional
     Rent) as from time to time computed and estimated under Sections 21.02 and
     21.03 herein below, and shall mean "Monthly Base Rent" for all periods of
     time during which no adjustment has been applied.

E.   "Tax expense" shall mean and include all Federal, State and Local
     governmental taxes, assessments and charges (including transit district
     taxes or assessments) of every kind or nature, whether general, special,
     ordinary or extraordinary, which Landlord shall pay or become obligated to
     pay because of or in connection with the ownership, leasing, management,
     control or operation of the Building and the Land, or of the personal
     property, fixtures, machinery, equipment, systems and apparatus located
     therein or used in connection therein or used in connection therewith
     (including reasonable attorney's fees) paid by Landlord during such year.
     If a special assessment payable in installments is levied against the Land,
     Taxes for any year shall include only installments of such assessment and
     any interest payable or paid during such year. Taxes shall not include any
     Federal, State or Locales sales use franchise, capital stock, inheritance,
     general income, gift or estate taxes, except that if a change occurs in the
     method of taxation resulting in whole or in part the substitution of such
     taxes, or any other assessment, for any Taxes as above defined, such
     substituted taxes or assessments shall be included in Taxes.

21.02 ADJUSTMENTS
A.   On February 1, 2001 and on each Adjustment Date thereafter, adjusted
     Monthly Base Rent shall be increased by an amount equal to 5%.

B.   Effective as of February 1, 2001 ("Initial Adjustment Date") and on each
     February 1 falling within the Term, Adjusted monthly base rent shall be
     increased by an amount equal to 1/12th of the product of the Rentable Area
     of the Premises (as specifiedin subsection 1.01I), multiplied by the amount
     by which Per Square Foot Tax Expenses exceeds the actual Tax Expenses Paid
     during the Calendar year 2000.

21.03 PROJECTIONS
     FOR PURPOSES OF CALCULATING Tax Expenses for any Adjustment year, including
the Initial Adjustment Year, Landlord shall deliver to Tenant a written
statement (1) setting forth the Projections of Tax Expenses for the adjustment
Year in which such Adjustment Base Rent based on such Projections to become
effective as of said adjustment date; provided however that the failure of
Landlord to provide any such statement shall not relieve Tenant from it
obligation to continue to pay Adjusted Monthly Base Rent reflected thereby
effective retroactively to the most recent preceding Adjustment Date.



                                       14
<PAGE>   15


21.04 READJUSTMENTS
     On or about April 1st following the end of each Adjustment Year, or at such
later time as Landlord shall be able to determine the actual amounts of Tax
Espenses for the Adjustment Year last ended, Landlord shall notify Tenant in
writing of such actual amounts, if the total Adjusted Monthly Base Rent paid by
Tenant during such Adjustment year exceeds the amount thereof payable for such
year based upon actual Tax Expenses for such Adjustment Year, the Landlord shall
credit such excess to Installments of Adjusted Monthly Base Rent payable after
the date of Landlord's notice until such excess has been exhausted, of if this
lease shall expire prior to full application of such excess, Landlord shall pay
to Tenant the balance thereof not theretofore.

21.05 NO DECREASES IN MONTHLY BASE RENT
     Notwithstanding anything to the contrary contained in this Lease, Adjusted
Monthly Base Rent shall not be adjusted or decreased below the amount set forth
in Subsection 1.01H.

22. MISCELLANEOUS

22.01 LATE AND PENALTY CHARGES
     All rent and other payments due from Tenant to Landlord which are
delinquent by more than ten (10) days shall bear interest at the rate of one and
one-half percent (1-1/2%) per month, not prorated, from time to time, whichever
is less, from the date due until paid. Tenant shall also pay to Landlord on
demand a penalty charge of $25.00 for each check delivered to Landlord for Rent
or other payments due hereunder, which is not honored by the institution on
which it is drawn.

22.02 ENTIRE AGREEMENT
     This Lease and the Exhibits attached hereto contain the entire agreement
between Landlord and Tenant concerning the Premises and there are no other
agreements, either oral or written.

22.03 ACCORD AND SATISFACTION
     No payment by Tenant or receipt by Landlord of a lesser amount than any
installment or payment of Rent due shall be deemed to be other than on account
of the amount due, and no endorsement or statement on any check or any letter
accompanying any check or payment of Rent shall be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such installment or payment of Rent
or pursue any other remedies available to Landlord. No receipt of money by
Landlord form Tenant after the termination of this Lease or Tenant's right of
possession of the Premises shall reinstate, continue or extend the Term.

22.04 LANDLORD'S OBLIGATION ON SALE OF BUILDING


                                       15
<PAGE>   16

     In the event of any sale or other transfer of the Building, Landlord and
the seller or transferor (and the beneficiaries of any selling or transferring
land trust) shall be entirely freed and relieved of all agreements and
obligations of Landlord hereunder accruing or to be performed after the date of
such sale or transfer, provided that Landlord sells the Building to a bona fide
purchaser and that the new landlord agrees to assume the liabilities and
responsibilities under this Lease.

22.05 BINDING EFFECT
     This Lease shall be binding upon and insure to the benefit of Landlord and
Tenant and their respective heirs, legal representatives, successors and
permitted assigns.

22.06 FORCE MAJEURE
     Landlord shall not be deemed in default with respect to any of the terms,
covenants and conditions of this Lease on Landlord's part to be performed, if
Landlord fails to timely perform same and such failure is due in whole or in
part to any cause beyond the reasonable control of Landlord, other than for
those matters set forth in Section 6.01.

22.07 CAPTIONS
     The Article and Section captions in this Lease are inserted only as a
matter of convenience and in no way define, limit, construe, or describe the
scope or intent of such Articles and Sections.

22.08 APPLICABLE LAW
     This Lease shall be construed in accordance with the law of the State of
Illinois.

22.09 TIME
     Time is of the essence of this Lease and the performance of all obligations
hereunder.

22.10 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES
     If Tenant fails to timely perform any of its duties under this Lease,
Landlord shall have the right (but not the obligation), after the expiration of
any grace period elsewhere under this Lease expressly granted to Tenant for the
performance of such duty, to perform such duty on behalf and the expense of the
Tenant without further prior notice to Tenant.

22.11 PARTIAL INVALIDITY
     If any term, covenant, or condition of this Lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of the Lease, or the application of such term,
covenant or condition to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant and condition of this Lease shall be valid and be enforced to the
fullest extent permitted by law.

22.12 RIDERS


                                       16
<PAGE>   17

     All riders attached hereto and executed both by Landlord and Tenant shall
be deemed to be part hereof and hereby incorporated herein.

     INWITNESS WHEREOF, this Lease has been executed as of the date set forth in
Subsection 1.01D hereof.



The Lumber Company                         AccuMed International, Inc.


By: /s/ JOHN BAUCHWITZ                     By: /s/ PAUL F. LAVALLEE
    -----------------------                    -----------------------------
Its:        Agent                             Its:  Chairman and CEO
      ---------------------                     ----------------------------
















                                       17
<PAGE>   18





                                    Exhibit 1

This is the first of two exhibits to the FRANKLIN SQUARE COMMERCIAL LEASE
(Lease) dated as of February 1, 2000 between AccuMed International, Inc.
(Tenant) and The Lumber Company as Agent for the beneficiary of LaSalle National
Trust, N.A., not personally, but as Trustee under Trust Agreement Trust No.
21657 (Landlord).

The following are modifications to the Lease:

     Page 1, point L. Suite 405, 900 North Franklin, shall be permitted to be
     used for both general office as well for a machine shop, its current use
     for Tenant. Suite 401, 920 North Franklin shall be permitted to be used for
     both general office use as well as for assembly work.

     Page 8, point 12 C. Point C is modified in whole as follows: If the
     Landlord elects to terminate the Tenant's right to possession only, without
     terminating the Lease, the Landlord may, at the Landlord's option, enter
     into the Premises, remove the tenant's sign and other evidences of tenancy,
     and take and hold possession thereof as provided in Subsection 12.01B,
     without such entry and possession terminating the Lease or releasing the
     Tenant, in whole or in part, from the Tenant's obligation to pay the Rent
     hereunder for the full Term. Upon and after entry into possession without
     termination of the Lease, the Landlord shall make a reasonable effort to
     relet the Premises or any port thereof for the account of the Tenant to any
     person, firm or corporation other than the Tenant for such rent, fir such
     time and upon such terms as the Landlord may reasonably determine, and the
     Landlord shall not be required to accept any tenant offered by the Tenant
     or to observe any instructions given by the Tenant about such reletting. In
     any such case, the Landlord may make reasonable repairs, alterations and
     additions in or to the Premises and redecorate the same to the extent
     deemed by the Landlord necessary or desirable, and the Tenant shall, upon
     demand, pay the reasonable expenses in reletting. If the consideration
     collected by the Landlord upon any such reletting for the Tenant's account
     is nor sufficient to pay monthly the full amount of the Rent reserved in
     this redecorating and the Landlord's expenses, the tenant shall pay to the
     Landlord the amount of each monthly deficiency upon demand.

     Page 10, point 15.01. Point 15.01 is modified in whole as follows: If the
     Building (including machinery or equipment used in its operation) or the
     Premises are made substantially untenantable by fire or other casualty,
     either Party may elect to: (i) terminate this Lease as of the date of the
     fire or other casualty by giving the other party written notice thereof
     within ninety (90) days after said date: or (ii) in the case of the Lessor,
     assuming the Tenant has not given notice to terminate in sub paragraph
     15.01 (i), above, proceed to repair or restore the Building or the
     premises, other than leasehold improvements and personal

<PAGE>   19




     property paid for or installed by Tenant. Rent payments for the premises
     during this re-building period shall abate.

This lease Exhibit 1 is signed as of February 1, 2000.

     The Lumber Company                   AccuMed International, Inc.


     BY /s/ JOHN BAUCHWITZ                  BY /s/ PAUL F. LAVALLEE
        --------------------                   ---------------------------
     Name:  John Bauchwitz                  Name:  Paul F. Lavallee
     Title: Agent                           Title: Chairman and
                                                   Chief Executive Officer











<PAGE>   20


                                    EXHIBIT 2

                     RELEASE OF LEASED SPACES AND SETTLEMENT

This is the second of two exhibits to the FRANKLIN SQUARE COMMERCIAL LEASE
(Lease) dated as of February 1, 2000 between AccuMed International, Inc.
(Tenant) and The Lumber Company as Agent for the beneficiary of LaSalle National
Trust, N.A., not personally, but as Trustee under Trust Agreement Trust No.
21657 (Landlord).

1.   The lease dated July 12, 1994, as supplemented and amended, with respect to
     the following suites in 900 North Franklin Street, Chicago, Illinois 60610,
     numbers 206, 401, 501, 502/503, 504, 505, are terminated as of January 31,
     2000. This termination is conditioned on the concurrent commencement of a
     lease for suite 405 in 900 North Franklin Street and suites 400, 401 and
     402 in 920 North Franklin Street.

2.   The lease of suite 401 in 920 North Franklin building is for a lease rental
     rate which is the same as that existing on suite 206 in 900 North Franklin
     Street.

3.   The sum of $60,000 will be paid by AccuMed International, Inc. ("Lessee")
     over a nine-month period at a rate of $6,666.66 per month commencing March
     1, 2000 and ending with the payment of November 1, 2000.

4.   The cost of the buildout for Suite 600 in 900 North Franklin, to be
     occupied by City Access Providers, in lieu of occupancy of suite 401 in
     that same building will be $10,000 and will be paid by Lessee in two equal
     installments of $5,000 commencing February 21, 2000 and concluding with the
     payment on March 21, 2000.

5.   Lessee will pay the rent difference between suites 600 and 401 in 900 North
     Franklin Street in the amount of $16,848 of which $8,424 shall be payable
     April 1, 2000 and $8,424 one year later.

6.   Lessor, The Lumber Com., will waive the provisions of that letter dated
     June 25, 1996, regarding "Letter of Credit for Future Restoration of
     Stairwell" signed by Mark Santor, Lessee's then current Chief Financial
     Officer. (Copy of Letter attached)

This lease Exhibit 2 is signed as of February 1, 2000

     The Lumber Company                      AccuMed International, Inc.


     BY /s/ JOHN BAUCHWITZ                   BY /s/ PAUL F. LAVALLEE
        ------------------------                ------------------------
     Name:  John Bauchwitz                   Name:  Paul F. Lavallee

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>4
<FILENAME>v70395ex10-31.txt
<DESCRIPTION>EXHIBIT 10.31
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.31



October 3, 2000

VIA FAX
(631) 752-3558

Michael Strauss
Chairman and Chief Executive Officer
CellMetrix, Inc.
1800 Walt Whitman Road
Melville, NY  11747   USA

Dear Michael:

This letter confirms the mutual termination of the Patent and Technology License
and Registration Rights Agreement between AccuMed International, Inc.
("AccuMed") and BCAM International, Inc. (renamed CellMetrix, Inc. "CellMetrix")
dated March 29, 2000, as amended by a letter agreement dated August 11, 2000
(the "Agreement"). Such termination was effective as of September 1, 2000.
Section 9.5 of the Agreement specifies the provisions of the Agreement which
survive its termination and remain in full force and effect.

AccuMed International, Inc.



By:   /s/ NORMAN J. PRESSMAN
    ------------------------------------------
      Norman J. Pressman, Ph.D.
      President and Chief Scientific Officer



Agreed and acknowledged:
CellMetrix, Inc.



By: /s/ MICHAEL STRAUSS                     Date: October 3, 2000
    ------------------------------                ------------------------------
      Michael Strauss
      Chairman and Chief Executive Officer


(Please return executed confirmation to sender via fax)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.33
<SEQUENCE>5
<FILENAME>v70395ex10-33.txt
<DESCRIPTION>EXHIBIT 10.33
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.33


                                LICENSE AGREEMENT

     THIS AGREEMENT is made and entered into as of December 29, 2000, by and
between ACCUMED INTERNATIONAL, INC., a Delaware corporation, with a business
address at 920 North Franklin Street, Suite 402, Chicago, IL 60610 ("AccuMed"),
MONOGEN, INC., a Nevada corporation, with a business address at 6 Taft Court,
Suite 150, Rockville, MD 20850 ("MonoGen"), and AMPERSAND MEDICAL CORP., a
Delaware corporation, with a business address at 414 North Orleans Street, Suite
510, Chicago, IL 60610 ("Ampersand").

                                    RECITALS

     A. AccuMed has developed a portfolio of intellectual property in the area
of (1) computer-aided microscopy, (2) quantitative microscopy systems, (3)
automated cytometry, and (4) disease detection, screening, diagnosis, prognosis,
and therapeutic monitoring using cytometric instruments and methods.

     B. MonoGen is engaged in the research and development as well as the
commercialization of medical devices, products, and services.

     C. MonoGen wishes to license from AccuMed, and AccuMed wishes to license to
MonoGen, all such intellectual property, limited to the Field of Use (as defined
herein), on the terms and conditions set forth in this Agreement.

                                   AGREEMENTS

     NOW, THEREFORE, in consideration of the foregoing recitals, the terms and
conditions set forth below, and other valuable consideration, the receipt and
sufficiency of which the parties acknowledge, the parties agree as follows:

     1. Definitions. In this Agreement, the following terms shall have the
following meanings:

          "AccuMed Intellectual Property Rights" shall mean any and all
intellectual property rights, patent rights, copyrights, trademarks, trade
secrets, information, and know-how, now or hereafter owned by, licensed to, or
controlled by AccuMed or any Affiliate thereof, including without limitation
AccuMed Patent Rights, AccuMed Technical Information, and AccuMed Trademarks.

          "AccuMed Patent Rights" shall mean: the U.S. and other patents
listed in Exhibit A hereto; the U.S. and other patents that issue from the U.S.
and other patent applications listed in Exhibit A hereto; all other patents and
patent applications owned by, licensed to, or controlled by AccuMed or any
Affiliate thereof, on the date hereof; all patents that issue from applications
claiming the priority of any of the foregoing patents or patent applications;
all continuations,


                                        1

<PAGE>   2



continuations-in-part, divisionals, re-examinations, reissues and extensions of
any of the foregoing; and all counterparts of any of the foregoing.

          "AccuMed Technical Information" shall mean any and all trade secrets,
information, and know-how, now or hereafter owned by, licensed to, or controlled
by AccuMed or any Affiliate thereof, including without limitation any and all
software, tools, modules, products, and documentation relating to and updates to
the foregoing (all in both object and source code form), compositions, ideas,
formulas, inventions (whether patentable or not, and whether or not reduced to
practice), methods, processes, products, techniques, clinical data and reports,
technical data and know-how, testing data and specifications, invention records,
research records and reports, development reports, experimental and engineering
reports, pilot and other product designs, models, prototypes and specifications,
production designs and specifications, raw material specifications, quality
control reports and specifications, drawings, blueprints and photographs,
models, tools and parts, manufacturing and production processes and techniques,
and marketing data, reports and studies.

          "AccuMed Trademarks" shall mean the trademarks, trade names, marks,
and other similar items listed in Exhibit B hereto.

          "Affiliate" shall mean any corporation, limited liability company,
partnership, or other business entity controlled by, controlling, or under
common control with, the recited entity. "Control" shall mean direct or indirect
ownership of fifty percent (50%) or more of the voting power of, or fifty
percent (50%) or more of the equity interest in, such business entity.
Notwithstanding the foregoing, "Affiliate" shall exclude Oncometrics Imaging
Corp., a corporation continuing in the Yukon Territory, Canada.

          "Excluded Field of Use" shall mean the use of the AccuMed Intellectual
Property Rights for: [***]1

          "Exclusive Field of Use" shall mean, within the Nonexclusive Field of
Use, the use of AccuMed Intellectual Property Rights for [***]2 "Exclusive Field
of Use" shall exclude the Excluded Field of Use.

          "Field of Use" shall mean Exclusive Field of Use and the Nonexclusive
Field of Use.

          "Nonexclusive Field of Use" shall mean the use of AccuMed Intellectual
Property

--------
         1[***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
         2 [***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.


                                        2

<PAGE>   3



Rights [***]3 "Nonexclusive Field of Use" shall exclude the Excluded Field of
Use.

          "Product" shall mean any component, device, equipment, kit,
instrument, method, product, or system, the making, having made, using, offering
to sell, selling, exporting, and importing of which, in absence of the license
granted hereunder, would infringe or misappropriate any AccuMed Intellectual
Property. The parties acknowledge that "Product" shall include, without
limitation, [***]4.

          "Proposed Transaction" shall mean the transaction proposed, as of the
date hereof, by and between AccuMed and Ampersand, by which AccuMed and
Ampersand are to engage in an acquisition, merger, consolidation, or other
business combination.

     2. Grant.

          2.1. General. Subject to the terms and conditions of this Agreement,
AccuMed hereby grants to MonoGen, and MonoGen hereby accepts from AccuMed, an
irrevocable, worldwide, fully paid-up, and perpetual license to make, have made,
use, offer to sell, sell, export, and import Products in the Field of Use, under
and with respect to AccuMed Intellectual Property Rights.

          2.2. Exclusivity. The license granted by Section 2.1 hereof shall be
exclusive in the Exclusive Field of Use and nonexclusive in the Nonexclusive
Field of Use. If MonoGen fails to generate any revenues from the sale of
Products in the Field of Use on or before the fifth anniversary of this
Agreement, such license shall become, as of such fifth anniversary, nonexclusive
also in the Exclusive Field of Use.

          2.3. License Fee. In consideration of the license granted hereunder,
MonoGen shall pay to AccuMed a license fee of [***]5 of which shall be paid
immediately following the

--------
         3 [***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
         4 [***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
         5 [***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.


                                        3

<PAGE>   4



execution of this Agreement, [***]6 on or before [***]7 before [***]8 before
[***]9 as set forth in a Promissory Note signed by MonoGen for the benefit of
AccuMed (the "Note"). MonoGen shall make the foregoing payments pursuant to
written wiring instructions received from AccuMed.

     3. Term and Termination.

          3.1. Term. The term of this Agreement and the license granted
hereunder shall commence on the date hereof and, unless terminated earlier
pursuant to this Section 3, shall continue in perpetuity.

          3.2. Termination Upon Default. AccuMed and MonoGen each may terminate
this Agreement upon the breach by the other party of a material obligation
hereunder, which breach is not cured by the defaulting party within thirty (30)
days of written notice by the nondefaulting party. Notwithstanding the
foregoing, if AccuMed declares, in accordance with the Note, that the entire
unpaid balance of the Note is immediately due and payable, and if MonoGen fails
to pay such balance within five (5) business days of MonoGen's receipt of
Accumed's written notice declaring such balance immediately due and payable,
AccuMed may terminate this Agreement by prior written notice to MonoGen of three
(3) business days.

          3.3. Termination by MonoGen. MonoGen may terminate this Agreement as
to any country or countries by prior written notice to AccuMed of thirty (30)
days, provided, however, that MonoGen shall not be relieved of its obligations
under Section 2.3 hereof.

          3.4. Effect of AccuMed's Bankruptcy. In the event that AccuMed shall
declare or be declared bankrupt, MonoGen may terminate this Agreement. All
rights and licenses granted under or pursuant to this Agreement by MonoGen or
AccuMed are, and otherwise shall be deemed to be, for purposes of Section 365(n)
of the U.S. Bankruptcy Code, licenses of rights to "intellectual property" as
defined under Section 101 of the U.S. Bankruptcy Code. The parties agree that
MonoGen shall retain and may exercise fully all of its rights and elections
under the U.S. Bankruptcy Code. The parties further agree that, in the event of
the commencement of a bankruptcy proceeding by or against AccuMed under the U.S.
Bankruptcy Code, MonoGen shall be entitled to a complete duplicate of (or
complete access to, as appropriate) any intellectual property and all
embodiments of such intellectual property, and the same, if not already in


--------
         6 [***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
         7 [***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
         8 [***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
         9 [***] Confidential treatment has been requested for the bracketed
portion. The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.


                                        4

<PAGE>   5



MonoGen's possession, promptly shall be delivered to MonoGen (a) upon any such
commencement of a bankruptcy proceeding, upon MonoGen's written request
therefore, unless AccuMed (or a trustee on behalf of AccuMed) elects to continue
to perform all of its obligations under this Agreement or (b) if not delivered
under (a) above, upon the rejection of this Agreement by or on behalf of
AccuMed, upon written request therefore by MonoGen. In the event that MonoGen
elects to terminate this Agreement pursuant to this Section 3.4, all rights and
obligations hereunder shall terminate, provided however, MonoGen shall retain
all licenses granted hereunder to AccuMed Intellectual Property Rights.

     4. AccuMed Intellectual Property Rights.

          4.1. Intellectual Property Records. On or before January 31, 2001,,
AccuMed shall provide MonoGen with copies of all documents and materials
pertaining to AccuMed Intellectual Property Rights then existing. Thereafter,
AccuMed promptly shall provide MonoGen with copies of all documents and
materials pertaining to AccuMed Intellectual Property Rights acquired or
obtained by AccuMed during the term of this Agreement. Notwithstanding the
foregoing, AccuMed shall not be required to provide MonoGen with copies of
opinions of counsel pertaining to AccuMed Intellectual Property Rights

          4.2. Patent Prosecution. At its expense and direction, AccuMed shall
prepare, file, prosecute, maintain, and/or defend the AccuMed Patent Rights.
AccuMed shall provide MonoGen with a reasonable opportunity to review and
comment on, and to propose claim language for, any papers pertaining to proposed
applications, responses, interferences, and oppositions before the filing
thereof by AccuMed with any national, regional, or international patent office.
With respect to the foregoing, if MonoGen concludes, in good faith, that taking
any specific action(s) or failing to take any specific action(s) likely would
have a material adverse effect on MonoGen's ability to commercialize the AccuMed
Patent Rights or to commercialize a particular Product hereunder, and if MonoGen
timely provides AccuMed written notice thereof, AccuMed shall not either take
such specific action(s) or fail to take such specific action(s) without
MonoGen's prior written consent (which consent shall not be unreasonably
withheld), provided, however, that AccuMed shall remain able to fulfill its
obligations to third parties under licenses existing on the date hereof. AccuMed
shall retain outside counsel mutually acceptable to MonoGen to fulfill AccuMed's
obligations under this Section 4.2. AccuMed and MonoGen acknowledge that, as of
the date hereof, the law firm of McDonnell Boehnen Hulbert & Berghoff
constitutes mutually acceptable counsel.

          4.3. Abandonment of Patents or Applications. AccuMed shall be free, at
any time, to elect not to proceed with and/or to abandon the preparation,
filing, prosecution, maintenance or defense of any patent application or patent
within the AccuMed Patent Rights, provided that AccuMed shall provide MonoGen
written notice of such intention at least thirty (30) days before a final due
date which would result in the abandonment or bar of patentability of such
patent or patent application. In such case, MonoGen, at its option, and upon
written notice to AccuMed, may continue prosecution or maintenance, at its own
expense, of such patent or patent application, and AccuMed promptly shall assign
and transfer to MonoGen all of its right, title, and


                                        5

<PAGE>   6



interest in and to such patent or patent application.

          4.4. Infringement. If AccuMed or MonoGen learns, at any time, of any
infringement or misappropriation or threatened infringement or misappropriation
of any AccuMed Intellectual Property Right, such party promptly shall give
written notice to the other party of any such infringement or misappropriation.
Determination of the course of action then to be taken shall be based upon
consultation between the parties. If any such infringement or misappropriation
occurs on a commercial scale in the United States, Canada, European Union,
Japan, China, or Australia, then, subject to any legal advice to the contrary,
the parties agree that steps will be taken to end such infringement or
misappropriation, including the initiation of legal proceedings.

               If AccuMed and MonoGen wish to institute a legal action or
proceeding against an infringer or misappropriator, then the parties shall do so
jointly and shall share equally the costs of any such action or proceeding and
any damages awarded as a result of any such action or proceeding.

               If either AccuMed or MonoGen (but not the other party) wishes to
institute a legal action or proceeding, the party so wishing to commence an
action or proceeding can do so upon supplying to the other party a document
setting out its obligations to pay all costs of and incidental to such action or
proceeding, and to indemnify the other party against all such costs and all
liabilities which might be incurred as a result of any such action or
proceeding. The other party agrees to lend its name to the action or proceeding
and to render all reasonable assistance on technical matters relating to such
action or proceeding.

               Notwithstanding the foregoing, if the validity of any AccuMed
Patent Right is placed in issue in any such action or proceeding, AccuMed, at
its expense, shall defend such issue.

          4.5. Notices. MonoGen shall cause an appropriate trademark notice to
be affixed to or imprinted adjacent to each use of an AccuMed Trademark. AccuMed
agrees that MonoGen may use its own trademark, trade name, or mark in connection
with the sale of Products. MonoGen also shall cause an appropriate copyright
notice in the name of AccuMed to appear on all copyrighted materials licensed to
MonoGen hereunder.

          4.6. Escrow. On or before January 31, 2001, AccuMed, at its own
expense, shall deposit, into escrow, with a nonaffiliated third party, and in a
form, reasonably acceptable to MonoGen, copies of all documentation and
material, in whatever format or medium, evidencing AccuMed Intellectual Property
Rights. AccuMed shall place in escrow at least the documentation and material
listed in Exhibit C hereto. AccuMed shall provide MonoGen with a list of all
documentation and material placed in escrow. The terms of the escrow, which
shall be subject to MonoGen's approval, shall provide that, in the event of the
commencement of a bankruptcy proceeding by or against AccuMed under the U.S.
Bankruptcy Code, or of similar dissolution, insolvency, reorganization, or other
proceeding involving the rights of creditors, MonoGen shall be entitled to
receive promptly all such documentation and material placed in escrow. The
parties


                                        6

<PAGE>   7



acknowledge (I) that AccuMed may open the escrow jointly in its name and in the
name of its wholly owned subsidiary Oncometrics Imaging Corp., and (II) that
both AccuMed and the latter company may deposit, into such escrow, documentation
and material.

     5. Covenants.

          5.1. Nonsolicitation. Without AccuMed's prior written consent, neither
MonoGen nor any Affiliate thereof, for two (2) years from the date hereof, shall
hire, offer to hire, or solicit for employment any person who, on the date
hereof, was employed by AccuMed, until such person has been separated from
employment by AccuMed for at least 270 days. AccuMed and Ampersand hereby
consent to the employment by MonoGen of.Norman Pressman, William Mayer, Marc
Friedman, and Joseph Plandowski. AccuMed hereby acknowledges and agrees that
none of the foregoing individuals are subject to any limitations or restrictions
on employment (such as a covenant not to compete) that would interfere with
their employment by MonoGen. The parties acknowledge that, while employed by
MonoGen, Mr. William Mayer, for two (2) years, may devote up to fifty percent
(50%) of his working time to the provision of services to AccuMed, in exchange
for the payment by AccuMed to MonoGen of a reasonable consulting fee equal to
MonoGen's costs for Mr. Mayer. Without MonoGen's prior written consent, for two
(2) years from the date hereof, neither AccuMed, Ampersand, nor any Affiliate
thereof shall hire, offer to hire, or solicit for employment any person who is
employed by MonoGen, until such person has been separated from employment by
MonoGen for at least 270 days.

          5.2. Confidentiality. No party hereto or any Affiliate thereof shall
use for any purpose inconsistent with this Agreement, disclose to any person
(other than to its attorneys and accountants as required by them to perform
customary services to such party), or keep or make copies of any documents,
tapes, discs, or programs containing any confidential and proprietary
information of any other party hereto or any Affiliate thereof. Each party
hereto and any Affiliate thereof shall keep such information in strictest
confidence. The parties acknowledge that, subject to Section 10.1 hereof, this
Agreement, along with the name of the parties hereto, the license fee required
hereby, the scope of the license granted hereby (such as the definition of Field
of Use), and the patents and patent applications included within the definition
of Licensed Patents, constitute confidential and proprietary information of
AccuMed and MonoGen and may not be used for any purpose inconsistent with this
Agreement or disclosed to any person without the other's prior written consent
(which consent shall not be unreasonably withheld or delayed).

          5.3. Joint Venture. In the event that the Proposed Transaction is
consummated on or before June 30, 2001, MonoGen and Ampersand agree to
negotiate, in good faith, a product development agreement by which [***]10

--------
         10 Confidential treatment has been requested for the bracketed portion.
The confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.


                                        7

<PAGE>   8



          5.4. Contract Research and Development. AccuMed and MonoGen
acknowledge that, on or before June 30, 2001, and subject to their agreement,
they may enter into a contractual relationship by which MonoGen provides
research and development services to AccuMed, in complementary, or at least
non-competitive, areas.

     6. Representations and Warranties.

          6.1. General. Each party hereto makes the following representations
and warranties to any other party hereto, each of which is true and correct on
the date hereof, and shall be unaffected by any investigation heretofore or
hereafter made by the other party or by any knowledge of the other party other
than as disclosed specifically in an exhibit to this Agreement.

               a. Corporate. It is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. It is duly licensed or qualified to do business as a foreign
corporation, and is in good standing, in each jurisdiction in which the failure
to become licensed or qualified would have a material adverse affect on it or
its business as conducted now. It has all requisite corporate power and
authority to own, operate, and lease its properties, to carry on its business as
and where such business is being conducted now, to enter into this Agreement and
the other documents and instruments to be executed and delivered pursuant
hereto, and to perform in full the obligations contemplated hereby and thereby.

               b. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by it pursuant
hereto and the performance by it of the obligations contemplated hereby and
thereby have been duly approved and authorized by it. No other or further
corporate act or proceeding on its part is necessary to approve or authorize
this Agreement or such other documents and instruments or the performance of
such obligations. This Agreement constitutes, and when executed and delivered
such other documents and instruments will constitute, valid binding agreements
on its part, enforceable generally in accordance with their respective terms and
conditions.

               c. No Violation. Neither the execution and delivery of this
Agreement or the other documents and instruments to be executed and delivered by
it pursuant hereto, nor the performance by it of the obligations contemplated
hereby and thereby (I) will violate any applicable statute, law, ordinance,
rule, or regulation, or any order, writ, injunction, judgment, plan, or decree
of any governmental body, (II) will require any authorization, consent,
approval, exemption, or other action by or notice to any governmental body, or
(III) will violate or conflict with, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
will result in the termination of, or accelerate the performance required by, or
result in the creation of any lien, security interest, claim, pledge, license,
assessment, covenant, restriction, charge, or other encumbrance of any nature
whatsoever upon any of its assets or properties under, any term or condition of
its charter or bylaws or of any contract, commitment, understanding,
arrangement, or restriction of any kind or character to which it or any
Affiliate is a party or by which it or any Affiliate or any of its assets or
properties may be bound or affected.


                                        8

<PAGE>   9



          6.2. Intellectual Property. AccuMed makes the following
representations and warranties to MonoGen, each of which is true and correct on
the date hereof, and shall be unaffected by any investigation heretofore or
hereafter made by MonoGen or by any knowledge of MonoGen other than as disclosed
specifically in an exhibit to this Agreement.

               a. Title. AccuMed has good and marketable title to the AccuMed
Intellectual Property Rights, free and clear of all liens, security interests,
claims, pledges, licenses, assessments, covenants, restrictions, charges, or
other encumbrances of any nature whatsoever. AccuMed is the owner of all
interest, right, and title in and to the AccuMed Intellectual Property Rights.
None of the AccuMed Intellectual Property Rights to be licensed hereunder is
subject to any restriction with respect to the assignability, licensability, and
transferability thereof, and AccuMed has complete and unrestricted power and
right to grant the license granted hereunder. Neither AccuMed nor any Affiliate
thereof has any interest, right, or title in, to, or under any patent or patent
application (other than the AccuMed Patent Rights) in the Field of Use.

               b. Compliance. The AccuMed Patent Rights currently are in
material compliance with all legal requirements in the United States, including
the payment of filing, examination, and maintenance fees. No AccuMed Patent
Right has been or is now involved in any interference, reissue, reexamination,
or opposition proceeding, and no such proceeding has been threatened in writing.
To the knowledge of AccuMed or any Affiliate, there is no patent, patent
application, printed publication, or other prior art of any person that
conflicts in any material respect with any AccuMed Patent Right.

               c. Controversies. No litigation is now pending or was pending
during the last two (2) years, and, to the knowledge of AccuMed or any
Affiliate, no litigation has been threatened in writing during the last two (2)
years (I), except as described in Exhibit D hereto, alleging that AccuMed or any
Affiliate has engaged in any activity or conduct that infringes upon,
misappropriates, violates, or constitutes the unauthorized use of any
intellectual property rights of a third party, or (II) challenging the
ownership, use, validity, or enforceability of any AccuMed Intellectual Property
Right. Except as described in Exhibit D hereto, to the knowledge of AccuMed, no
third party is infringing, misappropriating, violating, or using without
authorization any AccuMed Intellectual Property Right, and no claims of the
foregoing has been brought against any third party.

     7. Indemnification.

          7.1. General. Each party shall indemnify, defend, and hold harmless
the other party against and from any claim, suit, action, damages, costs,
losses, and expenses (including without limitation court costs and reasonable
professional fees and disbursements) that, at any time, the other party may
suffer by reason of the breach by the indemnifying party of any covenant,
representation, warranty, or obligation in this Agreement.


                                        9

<PAGE>   10


          7.2. Procedures. Any indemnified party hereunder shall provide the
indemnifying party hereunder with prompt written notice of any action,
proceeding, or claim subject to indemnification hereunder by the indemnifying
party. The indemnifying party shall have the right to defend and settle, at its
or his sole discretion and expense, any such action, suit, proceeding, or claim,
provided, however, that the indemnifying party shall keep the indemnified party
informed fully of any material developments in such action.

     8. Resolution of Disputes.

          8.1. General. Any dispute, controversy, or claim arising out of or
relating to this Agreement or the license granted hereunder, the negotiations
hereof, the entry hereunto, or the performance by the parties of their
obligations hereunder shall be settled by binding arbitration conducted in
English, in Chicago, Illinois, in accordance with the then Commercial
Arbitration Rules of the American Arbitration Association, except as
specifically provided otherwise in this Section. This Section shall be construed
in accordance with the Federal Arbitration Act, notwithstanding any other choice
of law provision in this Agreement.

          8.2. Arbitrators. If the matter in controversy (exclusive of
professional fees and disbursements) shall appear, as at the time of the demand
for arbitration, to exceed U.S. $500,000, then the panel to be appointed shall
consist of three (3) neutral arbitrators. Otherwise, the panel shall consist of
one (1) neutral arbitrator.

          8.3. Authority. The arbitrator(s) shall have authority to award relief
under legal or equitable principles, including interim or preliminary relief,
and to allocate responsibility for the costs of the arbitration and to award
recovery of attorneys fees and disbursements in such manner as is determined to
be appropriate by the arbitrator(s).

          8.4. Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject matter
jurisdiction. Judgment rendered by the arbitrator(s) shall be final and
non-appealable.

          8.5. Confidentiality. All proceedings under this Section, and all
evidence given or discovered pursuant thereto, shall be maintained in confidence
by all parties and by the arbitrator(s).

          8.6. Tolling. All applicable statutes of limitation with respect to
the matters specifically being arbitrated shall be tolled while the procedures
in this Section are pending. The parties shall take such action, if any,
required to effectuate such tolling.

          8.7. Equitable Relief. Notwithstanding anything else to the contrary
in this Section 8, the parties acknowledge and agree that any breach of the
obligations set forth in Sections 4.6, 5.1, and 5.2 shall result in irreparable
injury to the affected party for which a remedy at law would be inadequate and
that, in addition to any other relief at law which may be


                                       10

<PAGE>   11


available for such breach, the affected party shall be entitled to injunctive
and other equitable relief as a court may grant.

     9. Notice. All notices, requests, demands, and other communications
permitted or required under this Agreement shall be given in writing and shall
be (a) delivered personally, (b) sent by registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by a private courier service
that provides written confirmations of receipt. If delivered personally, such
communication shall be deemed given upon actual receipt. If sent by registered
or certified mail, such communication shall be deemed given as of the date of
delivery indicated on the return receipt. If sent by a private courier service,
such communication shall be deemed given as of the date of delivery indicated on
the written confirmation of receipt issued by the courier service. If the
intended recipient fails or refuses to accept delivery, such communication shall
be deemed given as of the date of such failure or refusal. Unless a party
furnishes in writing to the other party a new address, the respective addresses
of the parties to be used for any such communication are set forth at the
beginning of this Agreement.

     10. Miscellaneous.

          10.1. Announcements. Both the timing and the content of all
disclosures to third parties and all public announcements by any party hereto
concerning this Agreement, the terms and conditions set forth herein, and the
transactions contemplated hereby shall be subject to the prior written consent
of the other parties hereto (which consent shall not be unreasonably withheld or
delayed) in all essential respects, provided (I) that MonoGen's prior written
consent shall not be required as to any statements and other information which
AccuMed is required to submit to the Securities and Exchange Commission ("SEC")
or to NASDAQ, and (II) that the prior written consent of the other parties shall
not be required as to any statements and other information which the disclosing
party is required by law to disclose. Notwithstanding anything else to the
contrary in this Section 10.1, AccuMed shall use reasonable efforts, consistent
with applicable law, to avoid disclosing to the SEC, to NASDAQ, or otherwise as
required by law the name of Licensee, the license fee required hereby, the
specific scope of the license granted hereby (such as the definition of Field of
Use), and the patents and patent applications included within the definition of
Licensed Patents; and AccuMed shall provide MonoGen with prior written notice
before disclosing any of the foregoing information.

          10.2. Entire Agreement. This Agreement and the exhibits hereto
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede any prior understandings and agreements
between the parties with respect to such subject matter, including the document
entitled "Term Sheet: Patent and Technology License" signed by the parties.

          10.3. Waiver. The failure of any party hereto at any time to require
performance by any other party hereto of any provision of this Agreement shall
not affect the right of such party to require in the future performance of that
or any other provision. To be effective, any


                                       11

<PAGE>   12


waiver of any provision of this Agreement must be in writing, signed by the
party to be bound thereby. Unless otherwise provided expressly in writing, a
waiver by any party hereto of any breach of any provision of this Agreement
shall not be construed as a waiver of any continuing or succeeding breach of
such provision, waiver of the provision itself, or a waiver of any right under
this Agreement.

          10.4. Severability. Should any part of provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part of provision shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.

          10.5. Assignment. Without the prior written consent of the other party
(which consent shall not be withheld or delayed unreasonably), no party to this
Agreement may assign, transfer, or encumber its rights hereunder or delegate its
obligations hereunder to any other party, whether by act or deed, voluntarily or
involuntarily, or by operation of law. Notwithstanding the foregoing, upon prior
written notice to the other party, each party hereto may assign this Agreement
to any Affiliate thereof or to any business entity purchasing all or
substantially all of its assets, any business entity surviving in a merger
involving such party hereto as a party thereto, or itself upon a change in
control, provided that such Affiliate or other assignee becomes bound by the
terms and conditions of this Agreement to the same extent as if it were named
originally as a party hereto.

               The parties acknowledge that, as of the date hereof, AccuMed and
Ampersand and its wholly owned acquisition subsidiary are contemplating the
Proposed Transaction. MonoGen consents to the foregoing transaction, provided
that it is consummated on or before June 30, 2001. Ampersand agrees that, if the
Proposed Transaction is consummated, Ampersand and its wholly owned acquisition
subsidiary shall become bound also by the obligations of AccuMed hereunder.

          10.6. Binding Effect. This Agreement shall inure to the benefit of,
and shall be binding upon, each party to this Agreement, its Affiliates, and
their respective permitted assigns and successors.

          10.7. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois other than its choice of
law principles, except that any question arising out of this Agreement as to the
validity, construction, or effect of any AccuMed Patent Rights shall be decided
in accordance with the patent laws of the applicable jurisdiction.

          10.8. Venue. Subject to Section 8 hereof, any action or controversy by
and between the parties with respect to or relating to this Agreement shall be
brought in Federal District Court in Chicago, Illinois or in the Illinois state
courts of general jurisdiction in Chicago,


                                       12

<PAGE>   13

Illinois. The parties hereby submit to the jurisdiction of such courts.

          10.9. Expenses. Each party shall bear its own legal costs and expenses
arising out of the negotiation, execution and delivery of this Agreement and the
agreements contemplated hereby.

          10.10. Relationship of Parties. Nothing in this Agreement is intended
or shall be deemed to constitute a partnership, agency, distributorship,
employer-employee, or joint venture relationship between the parties. No party
shall incur any debts or make any commitments for any other party hereto except
to the extent, if at all, specifically provided herein.

          10.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          10.12. Authority to Sign. Each individual signing this Agreement on
behalf of a party to this Agreement represents and warrants to the parties that
he or she is duly authorized to sign this Agreement on behalf of such party.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers.

ACCUMED                                     MONOGEN, INC.
INTERNATIONAL, INC.


By: /s/ PAUL F. LAVALLEE                      By: /s/ ANDRE DENIS
  ----------------------------                    ---------------------
        Paul F. Lavallee                      Andre Denis
        Chairman & CEO                        Chairman


AMPERSAND MEDICAL CORP.


By: /s/ PETER P. GOMBRICH
   ---------------------------
       Peter P. Gombrich
       Chairman & CEO





                                       13
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.34
<SEQUENCE>6
<FILENAME>v70395ex10-34.txt
<DESCRIPTION>EXHIBIT 10.34
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.34

--------------------------------------------------------------------------------

                          AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG
--------------------------------------------------------------------------------

                          ACCUMED INTERNATIONAL, INC.,

                            ACCUMED ACQUISITION CORP.

                                       AND

                          AMPERSAND MEDICAL CORPORATION


                          DATED AS OF FEBRUARY 7, 2001


<PAGE>   2

                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                       <C>
ARTICLE I THE MERGER AND RELATED MATTERS...................................................2
        1.1       Merger...................................................................2
        1.2       Merger Effective Time....................................................2
        1.3       Conversion of Shares.....................................................2
        1.4       Surviving Corporation in the Merger......................................4
        1.5       Authorization for Issuance of Ampersand Common Stock; Exchange of
                  Certificates.............................................................5
        1.6       No Fractional Shares.....................................................6
        1.7       Stockholder Approvals....................................................7
        1.8       AccuMed Stock Options....................................................7
        1.9       Registration Statement; Prospectus/Proxy Statement.......................7
        1.10      Cooperation; Regulatory Approvals........................................8
        1.11      Closing..................................................................9
        1.12      Ampersand Loan to AccuMed................................................9

ARTICLE II REPRESENTATIONS AND WARRANTIES.................................................11
        2.1       Organization, Good Standing, Authority, Insurance, Etc..................11
        2.2       Capitalization..........................................................11
        2.3       Ownership of Subsidiaries...............................................12
        2.4       Financial Statements and Reports........................................12
        2.5       Absence of Changes......................................................13
        2.6       Prospectus/Proxy Statement..............................................14
        2.7       No Broker's or Finder's Fees............................................14
        2.8       Litigation and Other Proceedings........................................14
        2.9       Compliance with Law.....................................................14
        2.10      Corporate Actions.......................................................15
        2.11      Authority...............................................................15
        2.12      Employment Arrangements.................................................16
        2.13      Employee Benefits.......................................................16
        2.14      Information Furnished...................................................17
        2.15      Property and Assets.....................................................17
        2.16      Agreements and Instruments..............................................18
        2.17      Material Contract Default; Contingent Liabilities.......................18
        2.18      Tax Matters.............................................................19
        2.19      Environmental Matters...................................................19
        2.20      Exceptions to Representations and Warranties............................20

ARTICLE III COVENANTS.....................................................................20
</TABLE>


                                       i
<PAGE>   3

<TABLE>
<S>                                                                                       <C>
        3.1       Investigations; Access and Copies.......................................20
        3.2       Conduct of Business.....................................................21
        3.3       No Solicitation.........................................................23
        3.4       Stockholder Approvals...................................................23
        3.5       Accounting and Tax Treatment............................................23
        3.6       Publicity...............................................................24
        3.7       Cooperation Generally...................................................24
        3.8       Additional Financial Statements and Reports.............................24
        3.9       Employee Benefits and Agreements........................................24
        3.10      Ampersand Lock-Up Agreements............................................25

ARTICLE IV CONDITIONS OF THE MERGER; TERMINATION OF AGREEMENT.............................25
        4.1       Conditions to the Obligations of Each Party.............................25
        4.2       Conditions to Obligations of AccuMed....................................28
        4.3       Conditions to Obligations of Ampersand and Acquisition Sub..............28
        4.4       Termination of Agreement................................................30

ARTICLE V TERMINATION OBLIGATIONS.........................................................32
        5.1       Breach by AccuMed.......................................................32
        5.2       Breach by Ampersand.....................................................32
        5.3       Tender or Exchange Offer................................................32
        5.4       Non-Fulfillment of AccuMed Obligations..................................32
        5.5       Payment of Replacement Note.............................................33

ARTICLE VI CERTAIN POST-MERGER AGREEMENTS.................................................33
        6.1       Indemnification.........................................................33

ARTICLE VII GENERAL.......................................................................34
        7.1       Amendments..............................................................34
        7.2       Confidentiality.........................................................35
        7.3       Governing Law...........................................................35
        7.4       Notices.................................................................35
        7.5       No Assignment...........................................................36
        7.6       Headings................................................................36
        7.7       Counterparts............................................................36
        7.8       Construction and Interpretation.........................................37
        7.9       Binding Effect..........................................................37
        7.10      Expenses................................................................37
        7.11      Third Parties...........................................................37
        7.12      Entire Agreement........................................................37
        7.13      Waivers.................................................................37
        7.14      Partial Invalidity......................................................37
</TABLE>


                                       ii
<PAGE>   4

Schedules:
    Schedule I  Disclosure Schedules for AccuMed
    Schedule II Disclosure Schedules for Ampersand and Acquisition Sub

Exhibits:
    Exhibit A   Form of AccuMed Voting Agreement
    Exhibit B   Form of Replacement Note
    Exhibit C   Budget Statement
    Exhibit D   List of Employees Whose Employment Agreements Will Be Terminated
    Exhibit E   Certificate of Designation, Preferences and Rights
                of Series A Convertible Preferred Stock of Ampersand
    Exhibit F   Revised Budget Statement


                                      iii
<PAGE>   5

                          AGREEMENT AND PLAN OF MERGER


       THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into
as of February 7, 2001 (the "Execution Date"), by and among AccuMed
International, Inc., a Delaware corporation ("AccuMed"), AccuMed Acquisition
Corp., a Delaware corporation ("Acquisition Sub"), and Ampersand Medical
Corporation, a Delaware corporation ("Ampersand").

                                    RECITALS

       WHEREAS, as of the execution hereof, AccuMed has (i) 50,000,000
authorized shares of common stock, $.01 par value (the "AccuMed Common Stock"),
of which 5,733,935 shares are currently issued and outstanding, and (ii)
5,000,000 authorized shares of preferred stock, of which 581,339 shares of
Series A Convertible Preferred Stock, $.01 par value (the "AccuMed Preferred
Stock"), are currently issued and outstanding and convertible into 387,562
shares of AccuMed Common Stock; and

       WHEREAS, as of the execution hereof, Ampersand has (i) 50,000,000
authorized shares of common stock, $.001 par value (the "Ampersand Common
Stock"), of which 30,056,468 shares are currently issued and outstanding, and
(ii) 5,000,000 authorized shares of preferred stock, none of which are currently
issued and outstanding; and

       WHEREAS, as of the execution hereof, Acquisition Sub has 3,000 authorized
shares of common stock, without par value (the "Acquisition Sub Common Stock"),
of which 100 shares are currently issued and outstanding and owned by Ampersand;
and

       WHEREAS, the parties hereto desire that AccuMed be merged with and into
Acquisition Sub in accordance with the terms and provisions of this Agreement,
with Acquisition Sub as the surviving corporation (such merger being referred to
hereinafter as the "Merger," and Acquisition Sub, after the Merger, being
sometimes referred to hereinafter as the "Surviving Corporation"); and

       WHEREAS, it is intended that for federal income tax purposes the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and
this Agreement shall constitute a plan of reorganization pursuant to Section 368
of the Internal Revenue Code; and

       WHEREAS, concurrently with the execution and delivery of this Agreement,
and as an inducement to and condition of the willingness of Ampersand and
Acquisition Sub to enter into this Agreement, each of the persons who are
currently officers and/or directors of AccuMed have entered into voting
agreements in the form attached hereto as Exhibit A; and


                                       1
<PAGE>   6

       WHEREAS, the Board of Directors of each of the parties hereto, at
meetings duly called and held, or pursuant to informal actions taken in
accordance with applicable law, have determined that this Agreement and the
transactions contemplated thereby are in the best interests of the respective
parties, and the Board of Directors of each of AccuMed and Acquisition Sub have
determined to recommend to their respective stockholders that they approve this
Agreement and the transactions contemplated thereby;

       NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements hereinafter set forth, the parties hereto
hereby agree as follows:

                                    ARTICLE I
                         THE MERGER AND RELATED MATTERS

       I.1 Merger. Subject to the terms and conditions of this Agreement and
pursuant to applicable law, at the Merger Effective Time (as such term is
hereinafter defined), (i) AccuMed shall be merged with and into Acquisition Sub,
(ii) the separate corporate existence of AccuMed shall cease, and (iii)
Acquisition Sub, which shall immediately change its name to "AccuMed
International, Inc.", as the Surviving Corporation, shall continue to be
governed by the laws of the State of Delaware.

       I.2 Merger Effective Time. As soon as practicable after each of the
conditions set forth in Article IV hereof has been satisfied or waived, the
parties hereto will file, or cause to be filed, a certificate of merger with the
appropriate authorities of the State of Delaware for the Merger, which
certificate of merger shall be in the form required by and executed in
accordance with the applicable provisions of law. The Merger shall become
effective at the time and date that the Delaware certificate of merger is filed
with the appropriate authorities of the State of Delaware (the "Merger Effective
Time"), which shall be immediately following the Closing (as such term is
hereinafter defined) and on the same day as the Closing, if practicable, or at
such other date and time as may be agreed to by the parties and specified in the
certificate of merger in accordance with applicable law.

       I.3 Conversion of Shares. At the Merger Effective Time, by virtue of the
Merger and without any action on the part of the parties hereto or the holders
of shares of AccuMed Common Stock, AccuMed Preferred Stock, Ampersand Common
Stock or Acquisition Sub Common Stock:

              (a) Each share of AccuMed Common Stock issued and outstanding at
the Merger Effective Time (except for Dissenting Shares, if applicable, as
defined in Section 1.3(b) hereof), subject to Sections 1.3 (e) and 1.6 hereof,
shall cease to be outstanding, shall cease to exist and shall be converted into
and become six thousand five hundred fifty-two ten thousandths (.6552) of one
(1) share of Ampersand Common Stock, which ratio (the "Exchange Ratio") shall be
reduced if any AccuMed Derivative Securities (as defined in Section 1.3(c)


                                       2
<PAGE>   7

hereof) are exchanged for or converted into shares of AccuMed Common Stock
between the Execution Date and the Merger Effective Time such that four million
(4,000,000) shares of Ampersand Common Stock will be, in the aggregate, (i)
exchanged for the AccuMed Common Stock, and/or (ii) reserved for issuance upon
future conversion of shares of Ampersand Preferred Stock (as such term is
hereinafter defined) into shares of Ampersand Common Stock.

              (b) Each share of AccuMed Preferred Stock issued and outstanding
at the Merger Effective Time (except for Dissenting Shares, if applicable),
subject to Sections 1.3(e) and 1.6 hereof shall also cease to be outstanding,
shall also cease to exist and shall be converted into and become one (1) share
of Ampersand Series A Convertible Preferred Stock (the "Ampersand Preferred
Stock"), which shall have the rights and preferences set forth in the
Certificate of Designation, Preferences and Rights of Series A Convertible
Preferred Stock attached hereto as Exhibit E, including, but not limited to, the
right to be converted into shares of Ampersand Common Stock in accordance with
the Exchange Ratio.

              (c) Any shares of AccuMed capital stock held by a holder who
dissents from the Merger in accordance with Section 262 of the Delaware General
Corporation Law (the "DGCL") shall be referred to herein as "Dissenting Shares."
Notwithstanding any other provision of this Agreement, any Dissenting Shares
shall not, after the Merger Effective Time, be entitled to vote for any purpose
or receive any dividends or other distributions and shall be entitled only to
such rights as are afforded with respect to Dissenting Shares pursuant to the
DGCL.

              (4) Every AccuMed security, except shares of AccuMed Preferred
Stock, issued and outstanding at the Execution Date that is convertible into,
exchangeable for or exerciseable with respect to, shares of AccuMed Common
Stock, including all stock options, warrants and convertible debt instruments
(collectively, the "AccuMed Derivative Securities"), if not converted, exchanged
or exercised prior to the Merger Effective Time, shall, from and after the
Merger Effective Time, be instead convertible into, exchangeable for or
exerciseable with respect to Ampersand Common Stock at the Exchange Ratio upon
payment of the applicable consideration required in connection with such
conversion, exercise or exchange. The foregoing substitutions shall be
undertaken consistent with, and not in a manner that will constitute a
"modification" under, Section 424 of the Internal Revenue Code with respect to
any such stock option that is an "incentive stock option." Furthermore,
Ampersand shall make all filings required under federal and state securities
laws promptly after the Merger Effective Time so as to permit the conversion,
exchange or exercise of any such AccuMed Derivative Securities, and the sale of
the shares of Ampersand Common Stock received by the security holder upon such
conversion, exchange or exercise at and after the Merger Effective Time, and
Ampersand shall continue to make such filings thereafter as may be necessary to
permit the continued conversion, exchange or exercise of such securities and
sale of such shares.

                  (d) Any AccuMed securities that are owned or held by any party
hereto (other than in a fiduciary capacity) at the Merger Effective Time shall
cease to exist, the certificates for such securities shall as promptly as
practicable be cancelled, such securities shall not be converted


                                       3
<PAGE>   8

into or evidence any securities of Ampersand Common Stock, and no shares of
capital stock of Ampersand shall be issued or exchanged therefor.

              (e) Each share of Ampersand Common Stock issued and outstanding
immediately before the Merger Effective Time shall remain an outstanding share
of Ampersand Common Stock after the Merger Effective Time, and each share of
Acquisition Sub Common Stock issued and outstanding immediately before the
Merger Effective Time shall remain an outstanding share of Acquisition Sub
Common Stock after the Merger Effective Time.

              (f) The holders of certificates evidencing shares of AccuMed
Common Stock, AccuMed Preferred Stock or any other securities of AccuMed shall
thereafter have no rights as stockholders of AccuMed (or Acquisition Sub),
except such rights, if any, as they may have pursuant to the DGCL.

       I.4 Surviving Corporation in the Merger.

              (a) The name of the Surviving Corporation in the Merger shall be
changed from "AccuMed Acquisition Corp." to "AccuMed International, Inc."

              (b) At the Merger Effective Time, subject to an amendment to
change the name of the Surviving Corporation in accordance with the provisions
of Section 1.4(a) hereof, the Certificate of Incorporation of Acquisition Sub as
then in effect shall be the Certificate of Incorporation of the Surviving
Corporation until further amended as provided therein or as otherwise permitted
by the DGCL.

              (c) At the Merger Effective Time, the Bylaws of Acquisition Sub as
then in effect shall be the Bylaws of the Surviving Corporation until amended as
provided therein or as otherwise permitted by the DGCL.

              (d) The directors and executive officers of Acquisition Sub as of
the Merger Effective Time shall remain as the directors and officers of the
Surviving Corporation following the Merger until such directors or officers are
replaced or additional directors or officers are elected or appointed in
accordance with the provisions of the Certificate of Incorporation and Bylaws of
the Surviving Corporation.

              (e) From and after the Merger Effective Time:

                     (i) Acquisition Sub as the Surviving Corporation shall
possess all assets and property of every description, and every interest in the
assets and property, wherever located, and the rights, privileges, immunities,
powers, franchises and authority, of a public as well as of a private nature, of
each of AccuMed and Acquisition Sub, and all obligations belonging or due to
each of AccuMed and Acquisition Sub, all of which shall vest in the Surviving
Corporation without further act or deed. Title to any real estate or any
interest in real estate vested in AccuMed or Acquisition Sub shall not revert
nor in any way be impaired by reason of the Merger.


                                       4
<PAGE>   9

                     (ii) The Surviving Corporation will be liable for all of
the obligations of each of AccuMed and Acquisition Sub. Any claim existing, or
action or proceeding pending, by or against AccuMed or Acquisition Sub, may be
prosecuted to judgment, with right of appeal, as if the Merger had not taken
place, and the Surviving Corporation may be substituted in its place.

                     (iii) All of the rights of creditors of each of AccuMed and
Acquisition Sub will be preserved unimpaired, and all of the liens upon the
property of AccuMed and Acquisition Sub will be preserved unimpaired only on the
property affected by such liens immediately before the Merger Effective Time.

       I.5 Authorization for Issuance of Ampersand Common Stock; Exchange of
Certificates.

              (a) Ampersand shall reserve for issuance a sufficient number of
shares of Ampersand Common Stock for the purpose of issuing such shares to (i)
the former holders of AccuMed Common Stock and AccuMed Preferred Stock, and (ii)
the holders of AccuMed Derivative Securities, all in accordance with this
Article I.

              (b) After the Merger Effective Time, holders of certificates
theretofore evidencing outstanding AccuMed securities (other than as provided in
Section 1.3 hereof), upon surrender of such certificates to an exchange agent
appointed by Ampersand (the "Exchange Agent"), shall be entitled to receive
certificates for the Ampersand securities to be substituted for the aforesaid
AccuMed securities in accordance with the provisions of Section 1.3 hereof, and
cash payments in lieu of fractional shares, if any, as provided in Section 1.6
hereof. As soon as practicable after the Merger Effective Time, the Exchange
Agent will send a notice and transmittal form to each record holder of AccuMed
securities at the Merger Effective Time whose securities are being exchanged in
the manner provided herein, advising such holder of the effectiveness of the
Merger and the procedure for surrendering to the Exchange Agent outstanding
certificates formerly evidencing AccuMed securities in exchange for new
certificates evidencing the substituted Ampersand securities. Upon surrender,
each certificate formerly evidencing AccuMed securities shall be cancelled.

              (c) Until surrendered as provided in this Section 1.5, all
outstanding certificates of a holder which, before the Merger Effective Time,
evidenced AccuMed securities (other than those evidencing Dissenting Shares and
shares cancelled at the Merger Effective Time pursuant to Section 1.3 hereof)
will be deemed for all corporate purposes to evidence the securities of
Ampersand exchanged for the AccuMed securities formerly evidenced thereby and
the right to receive cash in lieu of any fractional Ampersand Common Stock
interests the holder might otherwise have been entitled to receive hereunder.
However, until such outstanding certificates formerly evidencing AccuMed
securities are so surrendered, no dividend or distribution payable to holders of
record of Ampersand Common Stock shall be paid to any holder of such outstanding
certificates, but upon surrender of such outstanding certificates by such holder
there shall be paid to such holder the amount of any dividends or distribution,
without interest, theretofore paid with respect to such shares of Ampersand
Common Stock, but not paid to such holder, and which dividends or distribution
had a record date occurring on or after the Merger Effective Time and the


                                       5
<PAGE>   10

amount of any cash, without interest, payable to such holder in lieu of a
fractional share interest pursuant to Section 1.6 hereof. After the Merger
Effective Time, there shall be no further registration of transfers on the
records of AccuMed of outstanding certificates formerly evidencing AccuMed
securities and, if a certificate formerly evidencing such securities is
presented to any party hereto, it shall be forwarded to the Exchange Agent for
cancellation and exchanged for a certificate evidencing Ampersand securities and
cash for any Ampersand Common Stock interests the holder might otherwise have
been entitled to receive hereunder as herein provided. Following six (6) months
after the Merger Effective Time, the Exchange Agent shall return to Ampersand
any certificates for Ampersand securities and cash remaining in the possession
of the Exchange Agent (together with any dividends in respect thereof) and
thereafter the former holders of AccuMed securities shall look exclusively to
Ampersand for Ampersand securities and cash to which they may be entitled
hereunder.

              (d) All securities and cash in lieu of any fractional shares
issued or paid upon the exchange of AccuMed securities in accordance with the
above terms and conditions shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to such AccuMed securities.

              (e) If any new certificate for Ampersand securities is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
therefor that the certificate surrendered in exchange shall be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
transfer pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of a new certificate evidencing Ampersand securities in
any name other than that of the registered holder of the certificate
surrendered, or establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.

              (f) In the event that any certificate evidencing AccuMed
securities shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed certificate, upon the
making of an affidavit of that fact by the holder thereof, such Ampersand
securities and cash for any fractional share interest as may be required
pursuant hereto; provided, however, that Ampersand, the Surviving Corporation or
the Exchange Agent may, in the discretion of any of them, and as a condition
precedent to the issuance or payment thereof, require the owner of such lost,
stolen or destroyed certificate to deliver a bond in such sum as the requesting
party may direct as indemnity against any claim that may be made against
Ampersand, the Surviving Corporation, AccuMed, the Exchange Agent or any other
person with respect to the certificate alleged to have been lost, stolen or
destroyed.

       I.6 No Fractional Shares. Notwithstanding any term or provision hereof,
no fractional shares of Ampersand Common Stock, and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued upon the
conversion of or in exchange for any AccuMed securities; no dividend or
distribution with respect to Ampersand Common Stock shall be payable on or with
respect to any fractional share interest; and no such fractional share interest
shall entitle the owner thereof to vote or to any other rights of a stockholder
of Ampersand or the Surviving Corporation. In lieu of such fractional share
interest, any holder of AccuMed securities


                                       6
<PAGE>   11

who would otherwise be entitled to a fractional share of Ampersand Common Stock
will, upon surrender of such holder's certificate or certificates evidencing
AccuMed Common securities outstanding immediately before the Merger Effective
Time, be paid the applicable cash value of such fractional share interest, which
shall be equal to the product of the fraction of the share to which such holder
would otherwise have been entitled and the closing price of Ampersand Common
Stock on the trading day immediately prior to the date of the Merger Effective
Time. For the purpose of determining any such fractional share interest, all
AccuMed securities owned by a holder of AccuMed Common Stock shall be considered
in the aggregate so as to calculate the maximum number of whole shares of
Ampersand Common Stock issuable to such person.

       I.7 Stockholder Approvals.

              (a) AccuMed shall, at the earliest practicable date, but in no
event later than forty-five (45) days after the effective date of the
Registration Statement (as such term is defined in Section 1.9(a) hereof), hold
a meeting of its stockholders (the "AccuMed Stockholders' Meeting") to submit
this Agreement for adoption by its stockholders. The affirmative vote of that
number of holders of outstanding shares of AccuMed capital stock entitled to
vote on such matter pursuant to the provisions of AccuMed's Certificate of
Incorporation and the DGCL shall be required for such adoption.

              (b) Ampersand, as the sole shareholder of Acquisition Sub, shall,
at the earliest practicable date, but in no event later than the date on which
the AccuMed Stockholders' Meeting is held, by informal action in accordance with
the provisions of the DGCL, cause this Agreement to be adopted on behalf of
Acquisition Sub.

       I.8 AccuMed Stock Options.

              At the Merger Effective Time, by virtue of the Merger and without
any action on the part of any holder of an option, each outstanding option under
the stock option plans of AccuMed, in existence at the Execution Date, whether
vested or unvested, shall continue outstanding as an option to purchase, in
place of the purchase of each share of AccuMed Common Stock, the number of
shares of Ampersand Common Stock as shall be determined by the Exchange Ratio.

       I.9 Registration Statement; Prospectus/Proxy Statement.

              (a) For the purposes (i) of holding the AccuMed Stockholders'
Meeting, and (ii) of registering with the Securities and Exchange Commission
("SEC") and with applicable state securities authorities the Ampersand Common
Stock to be issued to holders of AccuMed securities in connection with the
Merger, the parties shall cooperate in the preparation of an appropriate
registration statement (such registration statement, together with all and any
amendments and supplements thereto, is referred to herein as the "Registration
Statement"), including the Prospectus /Proxy Statement satisfying all applicable
requirements of applicable state laws, and of the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations thereunder (such


                                       7
<PAGE>   12

Prospectus/Proxy Statement, together with any and all amendments or supplements
thereto, is referred to herein as the "Prospectus/Proxy Statement").

              (b) AccuMed shall furnish such information concerning AccuMed as
is necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to AccuMed, to comply with Section 1.9(a) hereof. AccuMed agrees
promptly to advise Ampersand if at any time before the AccuMed Stockholders'
Meeting any information provided by AccuMed in the Prospectus/Proxy Statement
becomes incorrect or incomplete in any material respect and to provide the
information needed to correct such inaccuracy or omission. AccuMed shall also
furnish Ampersand with such supplemental information as may be necessary in
order to cause such Prospectus/Proxy Statement, insofar as it relates to
AccuMed, to comply with Section 1.9(a) hereof.

              (c) Ampersand and Acquisition Sub shall furnish AccuMed with such
information concerning Ampersand as is necessary in order to cause the
Prospectus/Proxy Statement, insofar as it relates to Ampersand and Acquisition
Sub, to comply with Section 1.9(a) hereof. Ampersand and Acquisition Sub agree
promptly to advise AccuMed if at any time before the AccuMed Stockholders'
Meeting any information provided by Ampersand in the Prospectus/Proxy Statement
becomes incorrect or incomplete in any material respect and to provide AccuMed
with the information needed to correct such inaccuracy or omission. Ampersand
and Acquisition Sub shall furnish AccuMed with such supplemental information as
may be necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to Ampersand and Acquisition Sub, to comply with Section 1.9(a).

              (d) Ampersand shall promptly file with the SEC and applicable
state securities agencies the Registration Statement and all supplements or
amendments thereto that shall become necessary as a result of information
covered by the provisions of Sections 1.9(b) and (c) coming to the attention of
Ampersand. The parties hereto shall use all reasonable efforts to cause the
Registration Statement to become effective under the Securities Act and
applicable state securities laws at the earliest practicable date. AccuMed
authorizes Ampersand to utilize in the Registration Statement the information
provided by AccuMed in regard to itself for the purpose of inclusion in the
Prospectus/Proxy Statement. Ampersand shall advise AccuMed promptly when the
Registration Statement has become effective and of any supplements or amendments
thereto, and Ampersand shall furnish AccuMed with copies of all such documents.
Before the Merger Effective Time or the termination of this Agreement, each
party shall consult with the other with respect to any material (other than the
Prospectus/Proxy Statement) that might constitute a "prospectus" relating to the
Merger within the meaning of the Securities Act.

       I.10 Cooperation; Regulatory Approvals. The parties shall cooperate, and
shall cause each of their respective affiliates to cooperate, in the preparation
and submission by them, as promptly as reasonably practicable, of such
applications, petitions and other filings as either of them may reasonably deem
necessary or desirable to or with (i) all regulatory or governmental authorities
having jurisdiction in regard to the Merger, (ii) the holders of shares of
AccuMed securities, and (iii) any other persons, for the purpose of obtaining
any approvals or consents necessary to consummate the Merger and the
transactions contemplated hereby. Each party will


                                       8
<PAGE>   13

have the right to review and comment on such applications, petitions and filings
in advance and shall furnish to the other copies thereof promptly after
submission thereof. Any such materials must be acceptable to each of the parties
hereto prior to submission to any regulatory or governmental authority or to any
security holders or other third parties, except to the extent that the parties
hereto may be legally required to proceed prior to obtaining such acceptance of
the other parties hereto. Each party agrees to consult with the others with
respect to obtaining all necessary consents and approvals, and each will keep
the others apprised of the status of matters relating to such approvals and
consents and the consummation of the transactions contemplated hereby. At the
date hereof, none of the parties is aware of any reason that any regulatory
approval required to be obtained by it would not be obtained or would be
obtained subject to conditions that would have or result in a material adverse
effect on any of the parties hereto.

       I.11 Closing. If (i) this Agreement has been duly approved by the
respective stockholders of AccuMed and Acquisition Sub, and (ii) all relevant
conditions of this Agreement have been satisfied or waived, a closing (the
"Closing") shall take place as promptly as practicable thereafter at the
principal office of Schwartz, Cooper, Greenberger & Krauss, Chartered, Chicago,
Illinois, or at such other place as the parties agree upon, at which the parties
will exchange certificates, opinions, letters and other documents as required
hereby and will make the filings described in Section 1.2 hereof. Such Closing
will take place within five (5) business days after the satisfaction or waiver
of all conditions and/or obligations precedent to Closing contained in Article
IV hereof, or at such other time as the parties agree upon. The parties shall
use their respective best efforts to cause the Closing to occur on or prior to
May 31, 2001 (the date of such Closing being hereinafter sometimes referred to
as the "Closing Date").

       I.12 Ampersand Loan to AccuMed. (a) The parties acknowledge and agree
that upon execution of this Agreement by the parties, and as an additional
inducement to AccuMed's acceptance of this Agreement and its covenant to enter
into and consummate the Merger, Ampersand shall make a loan to AccuMed in the
aggregate principal amount of Eight Hundred Thousand Dollars ($800,000) (the
"Full Loan"), in immediately available funds, of which Three Hundred Thousand
Dollars ($300,000) (the "Interim Loan") was previously advanced by Ampersand to
AccuMed on September 22, 2000, as evidenced by a certain promissory note of said
date issued by AccuMed to Ampersand (the "Initial Note"). The Full Loan shall be
evidenced by AccuMed's delivery to Ampersand, at the Execution Date, of a new
promissory note (the "Replacement Note") substantially in the form of Exhibit B
attached hereto, which instrument shall replace the Initial Note and provide,
among other things, for repayment of the full Eight Hundred Thousand Dollars
($800,000) of principal, with interest at the Prime Rate from time to time
announced by LaSalle Bank National Association, plus two and one-half percent
(22 %). The Replacement Note shall be secured by the grant of a first perfected
security interest in, and lien against, the applicable collateral described in
that certain Security Agreement, dated contemporaneously herewith, by and
between AccuMed, as debtor thereunder, and Ampersand, as secured party
thereunder (the "Security Agreement"). In addition to the foregoing, Ampersand
and AccuMed agreed that the making of the Full Loan to AccuMed would be
specifically conditioned upon the delivery by AccuMed to Ampersand of (i) a
budget and projected cash flow statement (the "Budget Statement") for the six
(6) month period commencing on September 22, 2000, which Budget Statement would
be satisfactory to Ampersand in all respects, in Ampersand's


                                       9
<PAGE>   14

sole discretion, and the parties hereto acknowledge and agree that such Budget
Statement has heretofore been delivered by AccuMed to Ampersand, and that such
Budget Statement (a copy of which is attached hereto as Exhibit C) has been
determined by Ampersand to be satisfactory, and (ii) a revised budget (the
"Revised Budget Statement") for the period from and after the Execution Date and
until the anticipated date of closing hereunder which sets forth the use of
proceeds from the Full Loan and any Additional Loans (as such term is
hereinafter defined) by AccuMed during such period and within which AccuMed will
operate and not deviate from without the prior written consent of Ampersand, not
to be unreasonably withheld (a copy of which Revised Budget Statement is
attached hereto as Exhibit F).

              (b) Ampersand and AccuMed also hereby agree that (i) if by
February 28, 2001 the Merger and the transactions contemplated hereby have not
been consummated, then on the first day of each month thereafter, through May
31, 2001, Ampersand shall loan to AccuMed an additional Two Hundred Twenty-Five
Thousand Dollars ($225,000) (the "Additional Loans") on the same terms and
conditions as the Full Loan, provided that, simultaneously with the making of
each Additional Loan, (1) the collateral securing the Full Loan under the
Security Agreement shall be increased in accordance with the terms of the
Security Agreement in order to secure such Additional Loan as well, and (2)
AccuMed shall issue and deliver to Ampersand a new promissory note,
substantially in the form of the Replacement Note, evidencing such Additional
Loan; and (ii) if by May 31, 2001, the Merger and the transactions contemplated
hereby have not been consummated, but the parties hereto have mutually agreed to
extend the May 31, 2001 deadline contained in Section 4.4 hereof for effecting
the Merger and consummating such transactions, then the time period in which
Ampersand shall be obligated to make such monthly Additional Loans (in the same
amount and on the same terms and conditions) shall be automatically extended
until the Merger and the transactions contemplated hereby are consummated, or
this Agreement is terminated, whichever comes first; provided, however, that
prior to the making of each Additional Loan during such extended period, AccuMed
and Ampersand shall identify on a schedule or schedules to be attached to the
Security Agreement sufficient additional collateral to secure such Additional
Loans in accordance with the terms and conditions of the Security Agreement.
Each Additional Loan shall be made by wire transfer in immediately available
funds to a bank account specified in writing by AccuMed for such purpose. If the
first day of a month on which an Additional Loan is required to be made
hereunder occurs on a Saturday, Sunday or bank holiday in the State of Illinois,
such Additional Loan shall be made on the immediately preceding date which is
not a Saturday, Sunday or bank holiday. The parties hereto specifically
acknowledge and agree that the failure of Ampersand to make any Additional Loan
within five (5) banking days after the date on which such Additional Loan is
required to be made hereunder shall be an event of default hereunder, entitling
AccuMed to terminate this Agreement immediately upon delivery of written notice
thereof in accordance with the notice provisions of this Agreement.


                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

       AccuMed hereby represents and warrants to Ampersand and Acquisition Sub,
and Ampersand and Acquisition Sub hereby jointly and severally represent and
warrant to AccuMed,


                                       10
<PAGE>   15

except as disclosed in the Disclosure Schedules delivered by each of the parties
to the others pursuant to Section 2.20 hereof, as follows:

       II.1 Organization, Good Standing, Authority, Insurance, Etc. It is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Section 2.1 of its Disclosure
Schedules lists each "subsidiary" (the term "subsidiary" when used with respect
to any party means any entity (including, without limitation, any corporation,
partnership, joint venture or other organization, whether incorporated or
unincorporated) which is consolidated with such party for financial reporting
purposes (individually a "Subsidiary" and collectively the "Subsidiaries"). Each
of its Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction under which it is organized, as set forth in
Section 2.1 of its Disclosure Schedules. It and each of its Subsidiaries has all
requisite power and authority, and to the extent required by applicable law, is
licensed to own, lease and operate its own properties and conduct its business
as now being conducted. It has delivered or made available to the other parties
a true, complete and correct copy of the articles of incorporation, certificate
of incorporation or other organizing document and of the bylaws, as in effect on
the date of this Agreement, of it and each of its Subsidiaries. Except as set
forth in Section 2.1 of its Disclosure Schedules, it and each of its
Subsidiaries is qualified to do business as a foreign corporation or entity and
is in good standing in each jurisdiction in which qualification is necessary
under applicable law, except to the extent that any failures to so qualify would
not, in the aggregate, have a material adverse effect on it. Its minute books
and those of each of its Subsidiaries contain complete and accurate records of
all meetings and other corporate actions taken by its stockholders and Boards of
Directors (including the committees of such Boards).

       II.2 Capitalization.


                                       11
<PAGE>   16

              (a) Its authorized capital stock and the number of issued and
outstanding shares of its capital stock as of the date hereof are accurately set
forth in the recitals to this Agreement. All outstanding shares of its common
stock are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. Except as set forth in Section 2.2 of its Disclosure
Schedules, as of the date of this Agreement, there are no options, convertible
securities, warrants or other rights (preemptive or otherwise) to purchase or
acquire any of its capital stock from it and no oral or written agreement,
contract, arrangement, understanding, plan or instrument of any kind to which it
or any of its Subsidiaries is subject with respect to the issuance, voting or
sale of issued or unissued shares of its capital stock, and, with respect to any
such securities or rights disclosed by Ampersand, Ampersand represents and
warrants that there are no agreements with respect to such securities or rights,
and no terms or provisions of or relating to such securities or rights, the
effect of which would be to reduce the exercise price at which such securities
or rights may be converted into shares of Ampersand Common Stock as a
consequence of consummating the Merger or the transactions contemplated hereby.
A true and complete copy of each plan and agreement pursuant to which such
options, convertible securities, warrants or other rights have been granted or
issued, as in effect on the date of this Agreement, is included in Section 2.2
of its Disclosure Schedules. Only the holders of its common stock have the right
to vote at meetings of its stockholders on matters to be voted on thereat,
except that the holders of shares of AccuMed Preferred Stock possess the right
to vote on certain matters affecting the rights of such holders. The securities
of AccuMed held in AccuMed's corporate treasury are identified in Section 2.2 of
AccuMed's Disclosure Schedules.

              (b) With respect to the shares of Ampersand Common Stock to be
issued in the Merger, Ampersand represents and warrants that such shares when so
issued in accordance with this Agreement will be duly authorized, validly
issued, fully paid and nonassessable and not subject to any preemptive rights.

       II.3 Ownership of Subsidiaries. All outstanding shares or ownership
interests of its Subsidiaries are validly issued, fully paid, nonassessable and
owned beneficially and of record by it or one of its Subsidiaries, free and
clear of any lien, claim, charge, restriction, rights of third parties or
encumbrance (collectively, "Encumbrance"), except as set forth in Section 2.3 of
its Disclosure Schedules. There are no options, convertible securities, warrants
or other rights (preemptive or otherwise) to purchase or acquire any capital
stock or ownership interests of any of its Subsidiaries and no contracts to
which it or any of its Subsidiaries is subject with respect to the issuance,
voting or sale of issued or unissued shares of the capital stock or ownership
interests of any of its Subsidiaries. Neither it nor any of its Subsidiaries
owns more than two percent (2%) of the capital stock or other equity securities
(including securities convertible or exchangeable into such securities) of, or
more than two percent (2%) of the aggregate profit participations in, any entity
other than a Subsidiary or as otherwise set forth in Section 2.3 of its
Disclosure Schedules.

       II.4 Financial Statements and Reports. With respect to Ampersand and
AccuMed:

              (a) No registration statement, offering circular, proxy statement,
schedule or report filed by it or any of its Subsidiaries under various
securities laws and regulations ("Regulatory Reports"), on the date of its
effectiveness in the case of such registration statements,


                                       12
<PAGE>   17

or on the date of filing in the case of such reports or schedules, or on the
date of mailing in the case of such proxy statements, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. For the past five
years, it and its Subsidiaries have timely filed all Regulatory Reports required
to be filed by them under various securities laws and regulations, except to the
extent that all failures to so file, in the aggregate, would not have a material
adverse effect on it; and all such documents, as finally amended, complied in
all material respects with applicable requirements of law and, as of their
respective dates or the dates as amended, did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
stated therein, all financial statements and schedules included in the
Regulatory Reports (or to be included in Regulatory Reports to be filed after
the date hereof) (i) are or will be (with respect to financial statements with
respect to periods ending after September 30, 2000), in accordance with its
books and records and those of its consolidated Subsidiaries, and (ii) present
(and in the case of financial statements with respect to periods ending after
September 30, 2000, will present) fairly the consolidated financial position and
consolidated results of operations or income, changes in the consolidated
stockholders' equity and cash flows of it and its Subsidiaries as of the dates
and for the periods indicated in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods (except for the
omission of notes to unaudited statements and in the case of unaudited
statements to normal recurring year-end adjustments normal in nature and
amounts). Its audited consolidated financial statements at December 31, 1999 and
for the year then ended and the consolidated financial statements for all
periods thereafter up to the Closing reflect or will reflect, as the case may
be, all liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due and regardless of when asserted) as of
such date of it and its Subsidiaries required to be reflected in such financial
statements in accordance with generally accepted accounting principles and
contain or will contain (as the case may be) adequate reserves for losses on
loans and properties acquired in settlement of loans, taxes and all other
material accrued liabilities and for all reasonably anticipated material losses,
if any, as of such date in accordance with generally accepted accounting
principles. There exists no set of circumstances that could reasonably be
expected to result in any liability or obligation material to it or its
Subsidiaries, taken as a whole, except as disclosed in such consolidated
financial statements at December 31, 1999 or for transactions effected or
actions occurring or omitted to be taken after December 31, 1999 (i) in the
ordinary course of business, (ii) as permitted by this Agreement, or (iii) as
disclosed in its Regulatory Reports filed after December 31, 1999 and before the
date of this Agreement. A true and complete copy of such December 31, 1999
financial statements has been delivered by it to the other parties.

              (b) To the extent permitted under applicable law, it has delivered
or made available to the other parties each Regulatory Report filed, used or
circulated by it with respect to periods since February 1, 1996 through the date
of this Agreement and will promptly deliver to the other parties each such
Regulatory Report filed, used or circulated after the date hereof, each in the
form (including exhibits and any amendments thereto) filed with the applicable
regulatory or governmental entity (or, if not so filed, in the form used or
circulated).


                                       13
<PAGE>   18

       II.5 Absence of Changes. With respect to Ampersand and AccuMed:

              (a) Since the date on which a Report on Form 10-Q was most
recently filed by or on its behalf with the SEC, there has been no material
adverse change affecting it. There is no occurrence, event or development of any
nature existing or, to its best knowledge, threatened which may reasonably be
expected to have a material adverse effect upon it.

              (b) Except as set forth in Section 2.5 of its Disclosure Schedules
or in its Regulatory Reports filed after December 31, 1999 and before the date
of this Agreement, since December 31, 1999, each of it and its Subsidiaries has
owned and operated its respective assets, properties and businesses in the
ordinary course and consistent with past practice.

       II.6 Prospectus/Proxy Statement. At the time the Prospectus/Proxy
Statement is mailed to the AccuMed stockholders for the solicitation of proxies
for the approval referred to in Section 1.7(a) hereof and at all times after
such mailings up to and including the time of such approval, such
Prospectus/Proxy Statement (including any supplements thereto), with respect to
all information set forth therein relating to it (including its Subsidiaries)
and its stockholders, its securities, this Agreement, the Merger and the other
transactions contemplated hereby, will:

              (a) Comply in all material respects with applicable provisions of
the Securities Act, the Exchange Act and the rules and regulations under such
Acts; and

              (b) With respect to itself, and with respect to any information
supplied by it, not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements contained therein, in light of the circumstances under which
it is made, not misleading.

       II.7 No Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf or under authority of it or any of its
Subsidiaries is or will be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly in connection with the Merger
or any other transaction contemplated hereby, except as set forth in Section 2.7
of its Disclosure Schedules.

       II.8 Litigation and Other Proceedings. Except for matters which would not
have a material adverse effect on it, or except as set forth in Section 2.8 of
its Disclosure Schedules, neither it nor any of its Subsidiaries is a defendant
in, nor is any of its property subject to, any pending or, to its best
knowledge, threatened claim, action, suit, investigation or proceeding or
subject to any judicial order, judgment or decree.

       II.9 Compliance with Law. Except as set forth in Section 2.9 of its
Disclosure Schedules:

              (a) It and each of its Subsidiaries are in compliance in all
material respects with all laws, regulations, ordinances, rules, judgments,
orders and decrees applicable to their respective operations and businesses, and
neither it nor any of its Subsidiaries has received notice from any


                                       14
<PAGE>   19

federal, state or local government or governmental agency of any material
violation of, and does not know of any material violations of, any of the above;

              (b) It and each of its Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and have made all filings,
applications and registrations with, all federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit them to
carry on their respective businesses as they are presently being conducted;

              (c) Other than with respect to those matters that have been cured
or corrected, neither it nor any of its Subsidiaries has received since February
1, 1996 any notification or communication from any governmental or regulatory
entity or the staff thereof (A) asserting that it or any of its Subsidiaries is
not in material compliance with any of the statutes, regulations or ordinances
that such governmental or regulatory entity administers or enforces; (B)
threatening to revoke any material license, franchise, permit or authorization;
or (C) threatening or contemplating any enforcement action by or supervisory or
other written agreement with a state or federal regulator (nor, to the knowledge
of its executive officers, do any grounds for any of the foregoing exist); and

              (d) Neither it nor any of its Subsidiaries is required to give
prior notice to any regulatory agency of the proposed addition of an individual
to their respective Board of Directors or the employment of an individual as a
senior executive officer.

       II.10 Corporate Actions.

              (a) Its Board of Directors has (i) duly approved the Merger and
this Agreement, and authorized its officers to execute and deliver this
Agreement, and to take all action necessary to consummate the Merger and the
other transactions contemplated hereby, and (ii) authorized and directed the
submission for approval or adoption of this Agreement by all persons whose
consent or approval may be necessary or required in regard thereto.

              (b) Its Board of Directors has taken all necessary action to
exempt this Agreement and the transactions contemplated hereby from, and this
Agreement and the transactions contemplated hereby are exempt from, (i) any
applicable state takeover laws, (ii) any state laws limiting or restricting the
voting rights of stockholders, (iii) any state laws requiring a stockholder
approval vote in excess of the vote normally required in transactions of a
similar type not involving a "related person," "interested stockholder" or
person or entity of a similar type, and (iv) any provision in its or any of its
Subsidiaries' articles of incorporation, certificate of incorporation, charter
or bylaws, (A) restricting or limiting stock ownership or the voting rights of
stockholders (other than the provisions of AccuMed's Certificate of
Incorporation that limit the voting rights of the holders of the AccuMed
Preferred Stock), or (B) requiring a stockholder approval vote in excess of the
vote normally required in transactions of a similar type not involving a
"related person," interested stockholder" or person or entity of a similar type.

       II.11 Authority. Except as set forth in Section 2.11 of its Disclosure
Schedules, neither the execution nor delivery of, nor performance of any
obligations under, this Agreement


                                       15
<PAGE>   20

by it, nor the consummation of the Merger, will violate any of the provisions
of, or constitute a breach or default under, or give any person the right to
terminate or accelerate payment or performance under, (i) its articles of
incorporation, certificate of incorporation or bylaws, or the articles of
incorporation, certificate of incorporation, charter or bylaws of any of its
Subsidiaries, (ii) any regulatory restraint on the acquisition of it or control
thereof, (iii) any law, rule, ordinance, regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it or any
of its Subsidiaries is subject, or (iv) any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation or instrument ("Contract")
to which it or any of its Subsidiaries is a party or is subject or by which any
of its or their properties or assets is bound and which provides for payments
by, on behalf of, or to it and/or any of its Subsidiaries in excess of either
$25,000 per annum or $100,000 over the term of such Contract. The parties
acknowledge that the consummation of the Merger and the other transactions
contemplated hereby is subject to various regulatory approvals. It has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and thereunder, subject in the case of the
Merger to the approval or adoption of this Agreement by its stockholders under
applicable law. Other than (i) the receipt of Governmental Approvals (as defined
in Section 4.1(c)), (ii) the approval or adoption of this Agreement by its
stockholders, and (iii) except as set forth in Section 2.11 of its Disclosure
Schedules with respect to any Contract, no consents or approvals are required on
its behalf or on behalf of any of its Subsidiaries in connection with the
consummation of the transactions contemplated by this Agreement. This Agreement
constitutes the valid and binding obligations of it, enforceable in accordance
with their terms, except as enforceability may be limited by applicable laws
relating to bankruptcy, insolvency or creditors' rights generally and general
principles of equity.

       II.12 Employment Arrangements. Except as set forth in Section 2.12 of its
Disclosure Schedules, there are no agreements, plans or other arrangements with
respect to employment, severance or other benefits with any current or former
directors, officers or employees of it or any of its Subsidiaries which may not
be terminated without penalty or expense (including any augmentation or
acceleration of benefits) on thirty (30) days' or less notice to any such
person. Except as set forth in Section 2.12 of its Disclosure Schedules, no
payments or benefits (including any augmentation or acceleration thereof) to
current or former directors, officers or employees of it or any of its
Subsidiaries resulting from the transactions contemplated hereby or the
termination of such person's service or employment within two (2) years after
completion of the Merger will cause the imposition of excise taxes under Section
4999 of the Internal Revenue Code or the disallowance of a deduction to it, the
Surviving Corporation, or any of their respective Subsidiaries pursuant to
Sections 162 or 280G, or any other section of the Internal Revenue Code.

       II.13 Employee Benefits.


                                       16
<PAGE>   21

              (a) Neither it nor any of its Subsidiaries maintains any funded
deferred compensation plans (including profit sharing, pension, retirement
savings or stock bonus plans), unfunded deferred compensation arrangements or
employee benefit plans as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), other than any plans
("Employee Plans") set forth in Section 2.13 of its Disclosure Schedules (true
and correct copies of which it has delivered to the other parties). Neither it
nor any of its Subsidiaries has incurred or reasonably expects to incur any
liability to the Pension Benefit Guaranty Corporation, except for required
premium payments which, to the extent due and payable, have been paid. The
Employee Plans intended to be qualified under Section 401(a) of the Internal
Revenue Code are so qualified, and it is not aware of any fact which would
adversely affect the qualified status of such plans. Except as set forth in
Section 2.13 of its Disclosure Schedules, neither it nor any of its Subsidiaries
(a) provides health, medical, death or survivor benefits to any former employee
or beneficiary thereof, or (b) maintains any form of current (exclusive of base
salary and base wages) or deferred compensation, bonus, stock option, stock
appreciation right, benefit, severance pay, retirement, employee stock
ownership, incentive, group or individual health insurance, welfare or similar
plan or arrangement for the benefit of any single or class of directors,
officers or employees, whether active or retired (collectively "Benefit
Arrangements").

              (b) Except as disclosed in Section 2.13 of its Disclosure
Schedules, all Employee Plans and Benefit Arrangements that are currently in
effect were in effect for substantially all of calendar year 1999 and there has
been no material amendment thereof (other than amendments required to comply
with applicable law) or increase in the cost thereof or benefits payable
thereunder on or after February 1, 1999.

              (c) To its best knowledge, with respect to all Employee Plans and
Benefit Arrangements, it and each of its Subsidiaries are in substantial
compliance with the requirements prescribed by any and all statutes,
governmental or court orders or rules or regulations currently in effect,
including but not limited to ERISA and the Internal Revenue Code, applicable to
such Employee Plans or Benefit Arrangements. To its best knowledge, no condition
exists that could constitute grounds for the termination of any Employee Plan
under Section 4042 of ERISA; no "prohibited transaction," as defined in Section
406 of ERISA and Section 4975 of the Internal Revenue Code, has occurred with
respect to any Employee Plan, or any other employee benefit plan maintained by
it or any of its Subsidiaries which is covered by Title I of ERISA, which could
subject any person to liability under Title I of ERISA or to the imposition of
any tax under Section 4975 of the Internal Revenue Code; to its best knowledge,
no Employee Plan subject to Part III of Subtitle B of Title I of ERISA or
Section 412 of the Internal Revenue Code, or both, has incurred any "accumulated
funding deficiency," as defined in Section 412 of the Internal Revenue Code,
whether or not waived; neither it nor any of its Subsidiaries has failed to make
any contribution or pay any amount due and owing as required by the terms of any
Employee Plan or Benefit Arrangement. To its best knowledge, neither it nor any
of its Subsidiaries has incurred or expects to incur, directly or indirectly,
any liability under Title IV of ERISA arising in connection with the termination
of, or a complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA which could constitute a liability of the Surviving
Corporation or any of its Subsidiaries at or after the Merger Effective Time.


                                       17
<PAGE>   22

       II.14 Information Furnished. No statement contained in any schedule,
certificate or other document furnished (whether before, on or after the
Execution Date) or to be furnished in writing by or on behalf of it to the other
parties pursuant to this Agreement contains or will contain any untrue statement
of a material fact or any material omission. To its best knowledge, no
information that is material to the Merger and necessary to make the
representations and warranties herein not misleading has been withheld from the
other parties hereto.

       II.15 Property and Assets. It and its Subsidiaries have good and
marketable title to all of their real property reflected in their financial
statements at December 31, 1999, referred to in Section 2.4 hereof or acquired
subsequent thereto, free and clear of all Encumbrances, except for (a) such
items shown in such financial statements or in the notes thereto, (b) liens for
current real estate taxes not yet delinquent, (c) customary easements,
restrictions of record and title exceptions that are not material to the value
or use of such property, (d) property sold or transferred in the ordinary course
of business since the date of such financial statements, (e) as otherwise
specifically indicated in its Regulatory Reports filed after December 31, 1999
and before the Execution Date or in Section 2.15 of its Disclosure Schedules. It
and its Subsidiaries enjoy peaceful and undisturbed possession under all
material leases for the use of real property under which they are the lessee;
all of such leases are valid and binding and in full force and effect, and
neither it nor any of its Subsidiaries is in default in any material respect
under any such lease. No default will arise under any material real property,
material personal property lease or material intellectual property license by
reason of the consummation of the Merger without the lessor's or licensor's
consent except as set forth in Section 2.15 of its Disclosure Schedules. There
has been no material physical loss, damage or destruction, whether or not
covered by insurance, affecting any of the real property or material personal
property of it or its Subsidiaries since December 31, 1999. All fixed assets
material to its or any of its Subsidiaries) respective businesses and currently
used by it or any of its Subsidiaries are, in all material respects, in good
operating condition and repair.

       II.16 Agreements and Instruments. Except as set forth in its Regulatory
Reports filed after December 31, 1999 and before the Execution Date or in
Section 2.16 of its Disclosure Schedules, neither it nor any of its Subsidiaries
is a party to (a) any material agreement, arrangement or commitment not made in
the ordinary course of business, (b) any agreement, indenture or other
instrument relating to the borrowing of money by it or any of its Subsidiaries
or the guarantee by it or of its Subsidiaries of any such obligation, (c) any
agreements to make loans or for the provision, purchase or sale of goods,
services or property between it or any of its Subsidiaries and any director or
officer of it or any of its Subsidiaries or any affiliate or member of the
immediate family of any of the foregoing, (d) any agreements with or concerning
any labor or employee organization to which it or any of its Subsidiaries is a
party, (e) any agreements between it or any of its Subsidiaries and any five
percent (5%) or more stockholder of it, and (f) any agreements, directives,
orders or similar arrangements between or involving it or any of its
Subsidiaries and any state or regulatory authority.

       II.17 Material Contract Default; Contingent Liabilities. Neither it nor
any of its Subsidiaries, nor any counterparty thereto, is in default in any
respect under any contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it or


                                       18
<PAGE>   23

any Subsidiary of it is a party or by which its respective assets, business or
operations may be bound or affected or under which it or its respective assets,
business or operations receives benefits, which default is reasonably expected
to have, either individually or in the aggregate, a material adverse effect on
it, and, except as set forth in Section 2.17 of its Disclosure Schedules, there
has not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default, and neither it nor any of its
Subsidiaries has been given notice or is aware of any material, actual or
contingent liability of any kind or nature that has not been disclosed to the
other party hereunder, whether or not such type of liability is specifically
mentioned in any provision of this Agreement. Furthermore, without limiting the
generality of the foregoing, each party and its Subsidiaries has received all
payments due to it under any and all existing contracts or other business
arrangements in a timely fashion as of the Execution Date, and no payments under
any such contracts or arrangements are, or are reasonably expected to become, in
arrears from and after the date hereof and through and including the Merger
Effective Time.

       II.18 Tax Matters.

              (a It and each of its Subsidiaries has duly and properly filed all
federal, state, local and other tax returns and reports required to be filed by
it or them and has made timely payments of all taxes due and payable, whether
disputed or not; the current status of audits of such returns or reports by the
Internal Revenue Service and other applicable tax authorities is as set forth in
Section 2.18 of its Disclosure Schedules; and, except as set forth in Section
2.18 of its Disclosure Schedules, there is no agreement by it or any of its
Subsidiaries for the extension of time for the assessment or payment of any
taxes payable. Except as set forth in Section 2.18 of its Disclosure Schedules,
neither the Internal Revenue Service nor any other taxing authority is now
asserting or, to its best knowledge, threatening to assert any deficiency or
claim for additional taxes (or interest thereon or penalties in connection
therewith), nor is it aware of any basis for any such assertion or claim,
including, but not limited to, any notification from its independent auditors,
whether formal or informal, that any position taken by it or its Subsidiaries on
any return or information report is inconsistent with established precedent and
more likely than not to be challenged upon audit by the relevant taxing
authority. It and each of its Subsidiaries has complied in all material respects
with all applicable Internal Revenue Service backup withholding requirements. It
and each of its Subsidiaries has complied with all applicable state law tax
collection and reporting requirements.

              (b Adequate provision for any unpaid federal, state, local or
foreign taxes due or to become due from it or any of its Subsidiaries for all
periods through and including September 30, 2000 has been made and is reflected
in its September 30, 2000 financial statements referred to in Section 2.4, and
has been or will be made with respect to periods ending after September 30,
2000.

       II.19 Environmental Matters. To its best knowledge, neither it nor any of
its Subsidiaries owns, leases, or otherwise controls any property affected by
toxic waste, radon gas or other hazardous conditions or constructed in part with
the use of asbestos which requires removal or encapsulation. Neither it nor any
of its Subsidiaries is aware of, nor has it or any of its Subsidiaries received
written notice from any governmental or regulatory body of, any past, present or
future conditions, activities, practices or incidents which may interfere with
or prevent


                                       19
<PAGE>   24

compliance or continued compliance with hazardous substance or other
environmental laws or any regulation, order, decree, judgment or injunction,
issued, entered, promulgated or approved thereunder or which may give rise to
any common law or legal liability or otherwise form the basis of any claim,
action, suit, proceeding, hearing or investigation based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical or industrial,
toxic or hazardous substance or waste. There is no civil, criminal or
administrative claim, action, suit, proceeding, hearing or investigation pending
or, to its knowledge, threatened against it or any of its Subsidiaries relating
in any way to such hazardous substance laws or any regulation, order, decree,
judgment or injunction issued, entered, promulgated or approved thereunder.

       II.20 Exceptions to Representations and Warranties.

              (a On or before the date hereof, AccuMed has delivered to
Ampersand and Acquisition Sub, and Ampersand and Acquisition Sub have delivered
to AccuMed, their respective Disclosure Schedules, setting forth, among other
things, exceptions to any and all of their respective representations and
warranties contained in this Article II, provided that each exception set forth
in a Disclosure Schedule shall be deemed disclosed for purposes of all
representations and warranties if such exception is contained in a section of a
Disclosure Schedule corresponding to a Section in Article II, and provided
further that (i) no such exception is required to be set forth in a Disclosure
Schedule if its absence would not result in the related representation or
warranty being deemed untrue or incorrect under the standard established by
Section 2.20(b) hereof, and (ii) the mere inclusion of an exception in a
Disclosure Schedule shall not be deemed an admission by a party that such
exception represents a material fact, event or circumstance or would result in a
material adverse effect or material adverse change.

              (b None of the representations or warranties of the parties hereto
contained in this Article II shall be deemed untrue or incorrect, and no party
shall be deemed to have breached its representations or warranties contained
herein, as a consequence of the existence of any fact, circumstance or event if
such fact, circumstance or event, individually or taken together with all other
facts, circumstances or events, would not have a material adverse effect or
material adverse change on such party. As used in this Agreement, the term
"material adverse effect" or "material adverse change" means an effect or change
which (i) is materially adverse to the financial condition of a party and its
respective Subsidiaries taken as a whole, (ii) significantly and adversely
affects the ability of AccuMed, Ampersand or Acquisition Sub to consummate the
transactions contemplated hereby or to perform its material obligations
hereunder, or (iii) enables any person to prevent the consummation of the
transactions contemplated hereby; provided, however, that any effect or change
resulting from (A) actions or omissions of the parties hereto contemplated by
this Agreement or taken with the prior consent of the other parties in
contemplation of the transactions provided for herein (including, without
limitation, conforming accounting adjustments), or (B) circumstances generally
affecting the industry or industries within which the parties operate (including
changes in laws or regulations, accounting principles or general levels of
interest rates) which do not adversely affect a party and its Subsidiaries,
taken as a whole, in a manner


                                       20
<PAGE>   25

significantly different than the other parties hereto, shall be deemed not to be
or have a material adverse effect or result in a material adverse change.

                                   ARTICLE III
                                    COVENANTS

       III.1 Investigations; Access and Copies. From and after the date of this
Agreement, and through and including the Merger Effective Time, each party
agrees to give to the other parties and their respective representatives and
agents full access (to the extent lawful) to all of the premises, books, records
and employees of it and its Subsidiaries at all reasonable times and to furnish
and cause its Subsidiaries to furnish to the other party and its respective
agents or representatives access to and true and complete copies of such
financial and operating data, all documents with respect to matters to which
reference is made in Article II hereof or on any list, schedule or certificate
delivered or to be delivered in connection herewith and such other documents,
records or information with respect to the businesses and properties of it and
its Subsidiaries as the other party or its respective agents or representatives
shall from time to time reasonably request; provided however, that any such
inspection (a) shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of the entity inspected, and (b)
shall not affect any of the representations or warranties hereunder. Each party
will also give prompt written notice to the other parties of any event or
development which, (x) had it existed or been known on the date of this
Agreement, would have been required to be disclosed under this Agreement, (y)
would cause any of its representations and warranties contained herein to be
inaccurate or otherwise materially misleading, or (z) materially relates to the
satisfaction of the conditions set forth in Article IV hereof. Notwithstanding
anything to the contrary contained herein, none of the parties hereto nor any of
their respective Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would jeopardize the
attorney-client privilege of the entity in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement or, in the event of any litigation or threatened litigation among the
parties over the terms of this Agreement, where access to information may be
adverse to the interests of such party. To the extent reasonably practicable,
the parties hereto will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence apply.

       III.2 Conduct of Business. From and after the date of this Agreement, and
through and including the Merger Effective Time or the termination of this
Agreement, each party agrees, on behalf of itself and each of its respective
Subsidiaries, except insofar as the Chief Executive Officer of each of the
parties shall otherwise consent in writing (which consent shall not be
unreasonably withheld):

              (a That it and its Subsidiaries shall (i) except as contemplated
in this Agreement conduct their business only in the ordinary course consistent
with past practices, (ii) maintain their books and records in accordance with
past practices, and (iii) use all reasonable efforts to preserve intact their
business organizations and assets, to maintain their rights, franchises and
existing relations with customers, suppliers, employees and business associates
and to take no


                                       21
<PAGE>   26

action that would (A) adversely affect the ability of any of them to obtain the
Governmental Approvals (as defined in Section 4.1(c) hereof) or which would
reasonably be expected to hinder or delay receipt of the Governmental Approvals,
or (B) adversely affect their ability to perform their obligations under this
Agreement;

              (b That, except as specifically otherwise permitted herein,
neither it nor its Subsidiaries shall: (i) declare, set aside or pay any
dividend or make any other distribution with respect to its capital stock,
except for dividends or distributions by a wholly-owned Subsidiary of such party
to such party; (ii) reacquire or buy any of its outstanding shares; (iii) issue
or sell any shares of capital stock of it or any of its Subsidiaries, except
shares of its common stock issued pursuant to exercise or conversion of stock
options, warrants, convertible preferred stock or convertible notes outstanding
on the Execution Date, if any, and which have been identified in its Disclosure
Schedules; (iv) effect any stock split, stock dividend, reverse stock split or
other reclassification or recapitalization of its common stock; or (v) grant any
stock appreciation or other rights with respect to shares of capital stock of it
or of any of its Subsidiaries; or (vi) enter into any agreement, or make any
modification to any authorized or issued security, the effect of which is to
cause the exercise price of any security convertible into shares of Ampersand
Common Stock to be reduced upon consummation of the Merger or the transactions
contemplated hereby;

              (c That, except as specifically otherwise permitted herein,
neither it nor its Subsidiaries shall: (i) sell, dispose of or pledge any
significant assets of it or of any of its Subsidiaries other than in the
ordinary course of business consistent with past practices or to borrow funds
consistent with the provisions hereinafter contained except as contemplated in
Schedule 3.2 of its Disclosure Schedules; (ii) merge or consolidate it or any of
its Subsidiaries into another entity or acquire any other entity or, except in
accordance with its written business plan in effect on the date hereof, acquire
any significant assets; (iii) sell or pledge or agree to sell or pledge or
permit any lien to exist on any stock of any of its Subsidiaries owned by it;
(iv) change the articles of incorporation or certificate of incorporation,
charter, bylaws or other governing instruments of it or any of its Subsidiaries,
except, in the case of Ampersand, with respect to the authorization of
additional shares of Ampersand Common Stock, or otherwise as contemplated by
this Agreement; (v) engage in any lending activities other than in the ordinary
course of business consistent with past practices; (vi) form any new subsidiary
or cause or permit a material change in the activities presently conducted by
any Subsidiary or make additional investments in subsidiaries in excess of
$100,000, except as contemplated in Schedule 3.2 of its Disclosure Schedules;
(vii) engage in any off balance sheet interest rate swap arrangement, (viii)
engage in any activity not contemplated by its written business plan in effect
on the Execution Date; (ix) purchase any equity securities or incur or assume
any indebtedness except in the ordinary and usual course of business; (x)
authorize capital expenditures other than in the ordinary and usual course of
business; or (xi) implement or adopt any change in its accounting principles,
practices or methods other than as may be required by generally accepted
accounting principles (the limitations contained in this Section 3.2 (c) shall
also be deemed to constitute limitations as to the making of any commitment with
respect to any of the matters set forth in this Section 3.2 (c)); and

              (d That, except (i) for the Seventy-Five Thousand Dollar ($75,000)
aggregate bonus allocation to officers, directors and key employees heretofore
approved by the Board of


                                       22
<PAGE>   27

Directors of AccuMed for the fiscal year ending on December 31, 2000, (ii) the
severance agreement heretofore entered into by AccuMed with Norman Pressman, and
(iii) as specifically otherwise permitted herein, neither it nor its
Subsidiaries shall: (w) grant any general increase in compensation or benefits
to its employees or officers or pay any bonuses to its employees or officers
except in accordance with policies in effect on the Execution Date; (x) enter
into, extend, renew, modify, amend or otherwise change any employment or
severance agreements with any of its directors, officers or employees; (y) grant
any increase in fees or other increases in compensation or other benefits to any
of its present or former directors in such capacity; or (z) establish or sponsor
any new Employee Plan or Benefit Arrangement or effect any change in its
Employee Plans or Benefit Arrangements.

       III.3 No Solicitation. Each party agrees, on behalf of itself and each of
its Subsidiaries, that, from and after the date hereof, it will not authorize or
permit any officer, director, employee, investment banker, financial consultant,
attorney, accountant or other representative of it or any of its Subsidiaries,
directly or indirectly, to initiate contact with any person or entity in an
effort to solicit, initiate or encourage any Takeover Proposal (as such term is
defined below). Except as the fiduciary duties of its Board of Directors may
otherwise require (as determined in good faith after consultation with legal
counsel), each party agrees that it will not authorize or permit any officer,
director, employee, investment banker, financial consultant, attorney,
accountant or other representative of it or any of its Subsidiaries, directly or
indirectly, (i) to cooperate with, or furnish or cause to be furnished any
non-public information concerning its business, properties or assets to, any
person or entity in connection with any Takeover Proposal; (ii) to negotiate any
Takeover Proposal with any person or entity; or (iii) to enter into any
agreement, letter of intent or agreement in principle as to any Takeover
Proposal. Each party agrees that it shall promptly give written notice to the
other upon becoming aware of any Takeover Proposal, such notice to contain, at a
minimum, the identity of the persons submitting the Takeover Proposal, a copy of
any written inquiry or other communication, the terms of any Takeover Proposal,
any information requested or discussions sought to be initiated and the status
of any requests, negotiations or expressions of interest. As used in this
Agreement, "Takeover Proposal" shall mean any proposal, other than as
contemplated by this Agreement, for a merger or other business combination
involving any of the parties hereto or any of their respective Subsidiaries, or
for the acquisition of an equity interest in any of the parties hereto that
would give rise to a filing requirement with the SEC (as mandated by federal
securities law), or for the acquisition of an equity interest greater than five
percent (5%) in any of their respective Subsidiaries, or for the acquisition of
a substantial portion of the assets of any party hereto or any of their
respective Subsidiaries.

       III.4 Stockholder Approvals. AccuMed shall call the AccuMed Stockholders'
Meeting, and Ampersand, as the sole shareholder of Acquisition Sub, shall, by
informal action, approve this Agreement and the transactions contemplated
hereby, in accordance with the provisions of Section 1.7 hereof. In connection
with the AccuMed Stockholders' Meeting, the Board of Directors of AccuMed shall
recommend approval of this Agreement and, the transactions contemplated hereby
(and such recommendation shall be contained in the Prospectus/Proxy Statement),
unless as a result of an unsolicited Takeover Proposal received by a party after
the date hereof the Board of Directors of AccuMed determines in good faith,
after consultation with its legal counsel, that to approve or to recommend
approval by the stockholders of this Agreement and


                                       23
<PAGE>   28

the transactions contemplated hereby would constitute a breach of the fiduciary
duties of such Board of Directors to the stockholders of AccuMed. AccuMed shall
use its best efforts to solicit from its stockholders proxies in favor of
approval and to take all other action necessary or helpful to secure a vote of
the AccuMed stockholders in favor of this Agreement and the transactions
contemplated hereby, except as the fiduciary duties of its Board of Directors
may otherwise require.

       III.5 Accounting and Tax Treatment. After execution of this Agreement,
none of the parties hereto shall take any action which would prevent the Merger
and the other transactions contemplated hereby from qualifying as a
reorganization within the meaning of Section 368 of the Internal Revenue Code.

       III.6 Publicity. From and after the Execution Date, and through and
including the Merger Effective Time, none of the parties hereto nor any of their
respective Subsidiaries shall, without the prior approval of the other parties
hereto, issue or make, or permit any of its directors, employees, officers or
agents to issue or make, any press release, disclosure or statement to the press
or any third party with respect to the Merger or the other transactions
contemplated hereby, except as required by law. The parties hereto shall
cooperate when issuing or making any press release, disclosure or statement with
respect to the Merger or the other transactions contemplated hereby.

       III.7 Cooperation Generally. From and after the Execution Date, and
through and including the Merger Effective Time, the parties hereto and their
respective Subsidiaries shall, in conformance with the provisions of this
Agreement, use their best efforts, and take all actions necessary or
appropriate, to consummate the Merger and the other transactions contemplated
hereby at the earliest practicable date.

       III.8 Additional Financial Statements and Reports. As soon as reasonably
practicable after they become publicly available, Ampersand and AccuMed shall
furnish to each other their respective statements of financial condition,
statements of operations or statements of income, statements of cash flows and
statements of changes in stockholders' equity at all dates and for all periods
before the Closing. Such financial statements will be prepared in conformity
with generally accepted accounting principles applied on a consistent basis and
fairly present the financial condition, results of operations and cash flows of
the respective parties (subject, in the case of unaudited financial statements,
to (i) normal year-end audit adjustments, (ii) any other adjustments described
therein, and (iii) the absence of notes which, if presented, would not differ
materially from those included with its most recent audited consolidated
financial statements), and all of such financial statements will be prepared in
conformity with the requirements of Form 10-Q or Form 10-K, as and if
applicable, under the Exchange Act. As soon as reasonably practicable after they
are filed, each of Ampersand and AccuMed shall, to the extent permitted under
applicable law, furnish to the other its own Regulatory Reports.


                                       24
<PAGE>   29

       III.9 Employee Benefits and Agreements.

              (a Following the Merger Effective Time, Ampersand or the Surviving
Corporation shall honor, in accordance with their respective terms, all Benefit
Arrangements and all provisions for vested benefits or other vested amounts
theretofore earned or accrued under the Employee Plans of each of the parties
hereto.

              (b The aforesaid Employee Plans shall not be terminated by reason
of the Merger but shall continue thereafter as plans of Ampersand or the
Surviving Corporation until such time as the Employee Plans are integrated,
subject to the terms and conditions specified in such plans and to such changes
therein as may be necessary to reflect the consummation of the Merger. Ampersand
or the Surviving Corporation shall take such steps as are necessary as soon as
practicable following the Merger Effective Time to integrate the Employee Plans,
with (i) full credit for prior service with AccuMed or Ampersand or any of the
AccuMed or Ampersand Subsidiaries for purposes of vesting and eligibility for
participation (but not benefit accruals under any Employee Plan) and co-payments
and deductibles, and (ii) waiver of all waiting periods and pre-existing
condition exclusions or penalties.

       III.10 Ampersand Lock-Up Agreements. Ampersand shall cause each officer
and director of Ampersand, and Acquisition Sub shall cause each officer and
director of Acquisition Sub, to furnish to AccuMed, on or prior to the Closing
Date, a letter, in form and substance satisfactory to counsel for AccuMed,
pursuant to which each such person shall agree not to offer for sale, sell,
distribute or otherwise dispose of any shares of Ampersand Common Stock during
the sixty (60) days following the Closing Date.


                                   ARTICLE IV
               CONDITIONS OF THE MERGER; TERMINATION OF AGREEMENT

       IV.1 Conditions to the Obligations of Each Party. The obligations of each
party to effect the Merger shall be subject to the satisfaction (or written
waiver by such party, to the extent such condition is waivable) of the following
conditions before the Merger Effective Time:

              (a Stockholder Approval. The respective stockholders of AccuMed
and Acquisition Sub shall have approved or adopted this Agreement as specified
in Section 1.7 hereof or as otherwise required by applicable law.

              (b No Proceedings. No order shall have been entered and remain in
force restraining or prohibiting the Merger in any legal, administrative,
arbitration, investigatory or other proceedings by any governmental or judicial
or other authority.

              (c Governmental Approvals. To the extent required by applicable
law or regulation, all approvals of or filings with any governmental or
regulatory authority (collectively, "Governmental Approvals") shall have been
obtained or made, and any waiting periods shall have expired in connection with
the consummation of the Merger; provided, however, that none of the


                                       25
<PAGE>   30

preceding shall be deemed obtained or made if it shall be conditioned or
restricted in a manner that would have or result in a material adverse effect on
the Surviving Corporation as the parties hereto shall reasonably and in good
faith agree. All other statutory or regulatory requirements for the valid
consummation of the Merger shall have been satisfied.

              (d Registration Statement. The Registration Statement shall have
been declared effective and shall not be subject to a stop order of the SEC (and
no proceedings for that purpose shall have been initiated or threatened by the
SEC) and, if the offer and sale of the Ampersand Common Stock in the Merger
pursuant to this Agreement is subject to the securities laws of any state, shall
not be subject to a stop order of any state securities authority.

              (e Legal Opinions. AccuMed shall have received the opinion letter
of Schwartz, Cooper, Greenberger & Krauss, Chartered, counsel to Ampersand and
Acquisition Sub, and Ampersand and Acquisition Sub shall have received the
opinion letter of Joyce L. Wallach, Esq., counsel to AccuMed, in each case in
form and substance satisfactory to the party or parties to whom addressed and to
counsel for such party or parties, with respect to those matters customarily the
subject of such opinion letters in transactions of the nature and magnitude of
the transactions contemplated by this Agreement.

              (f Federal Tax Opinion. Ampersand and Acquisition Sub shall have
received an opinion of tax counsel, dated as of the Closing Date, to the effect
that for federal income tax purposes:

                     (i The Merger will qualify as a "reorganization" under
       Section 368(a) of the Internal Revenue Code;

                     (ii No gain or loss will be recognized by any party hereto
       by reason of the Merger;

                     (iii The basis of the Ampersand Common Stock received by
       each holder of AccuMed Common Stock who exchanges AccuMed Common Stock
       for Ampersand Common Stock, and the basis of the Ampersand Preferred
       Stock received by each holder of AccuMed Preferred Stock who exchanges
       AccuMed Preferred Stock for Ampersand Preferred Stock, in the Merger will
       be the same as the basis of the AccuMed security surrendered in exchange
       therefor (subject, in the case of the AccuMed Common Stock, to any
       adjustments required as the result of receipt of cash in lieu of a
       fractional share of Ampersand Common Stock);

                     (iv The holding period of the Ampersand Common Stock
       received by a holder of AccuMed Common Stock, and the holding period of
       the Ampersand Preferred Stock received by a holder of AccuMed Preferred
       Stock, in the Merger will include the holding period of the AccuMed
       Common Stock surrendered in exchange therefor, provided that such shares
       of AccuMed Common Stock or AccuMed Preferred Stock, as the case may be,
       were held as a capital asset by such stockholder at the Merger Effective
       Time; and


                                       26
<PAGE>   31

                     (v Cash received by an AccuMed stockholder in lieu of a
       fractional share interest of Ampersand Common Stock as part of the Merger
       will be treated as having been received as a distribution in full payment
       in exchange for the fractional share interest of Ampersand Common Stock
       which such stockholder would otherwise be entitled to receive and will
       qualify as capital gain or loss (assuming the AccuMed Common Stock was a
       capital asset in such stockholder's hands at the Merger Effective Time).

              (g Third Party Consents. All consents or approvals of all persons
required for the execution, delivery and performance of this Agreement and the
consummation of the Merger, including, but not limited to, the consents or
approvals of all counterparties to existing material business contracts that
contain provisions requiring that such consent or approval be given, and the
Governmental Approvals referenced in Section 4.1(c) hereof shall have been
obtained and shall be in full force and effect, unless the failure to obtain any
such consent or approval is not reasonably likely to have, individually or in
the aggregate, a material adverse effect on the Surviving Corporation as the
parties shall reasonably and in good faith agree.

              (h Material Business Contracts. In its Disclosure Schedules, each
party hereto shall have delivered to the others a list of all material business
contracts to which the listing party is a party or by which it is bound or from
which it benefits, which list shall be true and complete as of the Closing.

              (i Due Diligence Reviews.

                     (i) During the period from the Execution Date through the
       Closing Date, Ampersand and Acquisition Sub shall be given the
       opportunity by AccuMed, at all reasonable times during normal business
       hours, to conduct a due diligence review of AccuMed and its business
       operations, which shall include but not be limited to, a review of all
       books and records and the opportunity to talk to such employees and
       contract counterparties as the parties shall reasonably agree upon, and,
       at the same time, AccuMed will be given the opportunity by Ampersand and
       Acquisition Sub to conduct a similar due diligence review of Ampersand
       and Acquisition Sub and their respective business operations.

                     (ii) In the event that Ampersand or Acquisition Sub, on the
       one hand, or AccuMed, on the other hand, should identify during the
       course of the due diligence review being conducted by it hereunder, any
       matter or matters that, alone or in the aggregate, may have a material
       adverse effect on the party that is the subject of such due diligence
       review, or such party's business, or such party's ability to satisfy its
       representations, warranties or covenants under this Agreement, or that
       would impair the ability of such party to consummate this Agreement or
       the transactions contemplated hereby, then the parties hereto shall
       discuss such matter in good faith and use their respective best efforts
       to negotiate a mutually satisfactory solution to any differences of
       opinion with respect to the materiality of such matter or matters and/or
       the effect that such matter or matters is likely to have with respect to
       the ability of the reviewed party or parties to consummate this Agreement
       and the transactions contemplated hereby in the manner anticipated by the
       parties hereto, provided that if the parties hereto are, after all such
       discussions and


                                       27
<PAGE>   32

       negotiations have ended, unable to resolve their differences concerning
       such matter or matters, then the reviewing party shall have the right,
       exerciseable in its sole discretion, for a period of five (5) business
       days after such discussions and negotiations have concluded, to terminate
       this Agreement without penalty therefor, but without prejudice to the
       right of the other party or parties, among other things, to seek judicial
       review of, or other remedies in regard to, the reasonableness of the
       terminating party or parties in regard to terminating this Agreement;
       provided, however, that in the case of Ampersand and Acquisition Sub, the
       right to terminate this Agreement pursuant to this subsection shall
       extend only until February 28, 2001, and in the case of AccuMed, the
       right to terminate this Agreement pursuant to this subsection shall
       extend only until the twenty-eighth (28th) day after the date on which
       Ampersand and Acquisition Sub have completed the delivery to AccuMed of a
       true and correct copy of each document responsive to the due diligence
       request submitted by AccuMed to Ampersand in a written memorandum dated
       September 29, 2000, a copy of which Ampersand acknowledges having
       received on or about such date.

                     (iii) In the event that any matter as described in the
       immediately preceding subparagraph shall be discovered by a party after
       its respective cut-off date, as set forth in said subparagraph, such
       party shall thereafter have such rights with respect thereto and to the
       breach or anticipatory breach of this Agreement as shall be otherwise
       provided hereunder or by law.

       IV.2 Conditions to Obligations of AccuMed. The obligations of AccuMed to
effect the Merger and the other transactions contemplated hereby shall be
subject to the satisfaction or written waiver by AccuMed of the following
additional conditions before the Merger Effective Time:

              (a No Material Adverse Effect. From and after the Execution Date,
and through and including the Merger Effective Time, neither Ampersand nor
Acquisition Sub shall have been affected by any event or change which has had or
caused a material adverse effect or material adverse change on it.

              (b Representations and Warranties to be True; Fulfillment of
Covenants and Conditions. (i) The representations and warranties of Ampersand
and Acquisition Sub shall be true and correct (subject to Section 2.20 hereof)
as of the Execution Date and at the Merger Effective Time with the same effect
as though made at the Merger Effective Time (or on the date when made in the
case of any representation or warranty which specifically relates to an earlier
date) except where the failure to be true and correct would not have, or would
not reasonably be expected to have, a material adverse effect, on Ampersand or
Acquisition Sub; (ii) each of Ampersand and its Subsidiaries, including
Acquisition Sub, shall have performed all obligations and complied with each
covenant, in all material respects, and satisfied all conditions under this
Agreement on its part to be satisfied at or before the Merger Effective Time;
and (iii) each of Ampersand and Acquisition Sub shall have delivered to AccuMed
a certificate, dated the Merger Effective Time and signed by its Chief Executive
Officer and President, certifying as to the satisfaction of clauses (i) and (ii)
hereof.


                                       28
<PAGE>   33

              (c No Litigation. Other than as set forth in its Disclosure
Schedules, neither Ampersand or Acquisition Sub, nor any other Ampersand
Subsidiary, shall be subject to any pending litigation which, if determined
adversely to Ampersand or any Ampersand Subsidiary, would have a material
adverse effect on Ampersand or such Subsidiary.

       IV.3 Conditions to Obligations of Ampersand and Acquisition Sub. The
obligations of Ampersand and Acquisition Sub to effect the Merger and the other
transactions contemplated hereby shall be subject to the satisfaction or written
waiver by Ampersand and Acquisition Sub of the following additional conditions
before the Merger Effective Time:

              (a No Material Adverse Effect. From and after the Execution Date,
and through and including the Merger Effective Time, AccuMed shall not have been
affected by any event or change which has had or caused a material adverse
effect or material adverse change on AccuMed.

              (b Representations and Warranties to be True; Fulfillment of
Covenants and Conditions. (i) The representations and warranties of AccuMed
shall be true and correct (subject to Section 2.20 hereof) as of the Execution
Date and at the Merger Effective Time with the same effect as though made at the
Merger Effective Time (or on the date when made in the case of any
representation or warranty which specifically relates to an earlier date) except
where the failure to be true and correct would not have, or would not reasonably
be expected to have, a material adverse effect on AccuMed; (ii) AccuMed and its
Subsidiaries shall have performed all obligations and complied with each
covenant, in all material respects, and satisfied all conditions under this
Agreement on its part to be satisfied at or before the Merger Effective Time;
and (iii) AccuMed shall have delivered to Ampersand a certificate, dated the
Merger Effective Time and signed by its Chief Executive Officer and President,
certifying as to the satisfaction of clauses (i) and (ii) hereof.

              (c No Litigation. Other than as disclosed in its Disclosure
Schedules, neither AccuMed nor any AccuMed Subsidiary shall be subject to any
pending litigation which, if determined adversely to AccuMed or any AccuMed
Subsidiary, would have a material adverse effect on AccuMed.

              (d Voting Agreements. Ampersand and Acquisition Sub shall have
received from AccuMed, substantially in the form of Exhibit A attached hereto,
the voting agreements of all officers and directors of AccuMed, as contemplated
by this Agreement.

              (e Employment Agreements. Prior to Closing, AccuMed shall have
terminated the employment agreements of those employees of AccuMed and/or its
Subsidiaries identified and listed by Ampersand on Exhibit D attached hereto, in
accordance with the applicable termination provisions contained in such
agreements as of the Execution Date, or, in the absence of such provisions, upon
such terms and conditions as shall be reasonably acceptable to Ampersand and
Acquisition Sub.


                                       29
<PAGE>   34

              (f Dissenting Shares. No more than five percent (5%) of the issued
and outstanding shares of each class of AccuMed capital stock shall be
Dissenting Shares as of the final date on which such shares may become
Dissenting Shares under the DGCL.

              (g Compliance with Budget Statement. A certificate shall have been
delivered by AccuMed to Ampersand, signed by AccuMed's Chief Executive Officer,
certifying that, without the prior written approval of Ampersand and Acquisition
Sub, no material expenditures of cash, other than the items set forth in the
Budget Statement, have been made or committed to by AccuMed or its Subsidiaries
during that portion of the time period covered by the Budget Statement that has
preceded the Closing.

       IV.4 Termination of Agreement.

              (a Methods of Termination. This Agreement may be terminated at any
time prior to the Merger Effective Time, whether before or after approval of
this Agreement by the stockholders of AccuMed or Acquisition Sub, in the
following manner:

                     (i) by the mutual consent, in writing, of all of the
parties hereto; or

                     (ii) by AccuMed, by giving written notice of such
termination to the other parties hereto if, upon the taking of the vote of
AccuMed's stockholders required by the provisions of Section 1.7(a) hereof, the
required approval of the AccuMed stockholders shall not be obtained, provided
that the Board of Directors of AccuMed recommended, and used its best efforts to
obtain, the adoption of this Agreement and approved of the transaction
contemplated hereby prior to the taking of such vote; or

                     (iii) by AccuMed, by giving written notice of such
termination to Ampersand and Acquisition Sub, (A) if there has been (I) a
material breach of any agreement herein on the part of Ampersand or Acquisition
Sub which has not been cured or adequate assurance of cure given, in either case
within twenty (20) calendar days following notice of such breach from AccuMed
(subject, however, to the provisions of Section 1.12(b) hereof), or (II) a
breach of a representation or warranty of Ampersand or Acquisition Sub herein
which (individually or, together with such other breaches, in the aggregate)
would reasonably be expected to materially impair the ability of Ampersand or
Acquisition Sub to perform its obligations under this Agreement and which, in
the reasonable opinion of AccuMed, by its nature cannot be cured prior to May
31, 2001, or (B) if there shall have occurred or been proposed after the date of
this Agreement (I) any change in any law, rule or regulation, or (II) there
shall have been any decision or action by any court, government or governmental
agency, that could reasonably be expected to prevent consummation of the Merger
or delay such consummation beyond May 31, 2001, or that would have a material
adverse effect on Ampersand or Acquisition Sub; or

                     (iv) by Ampersand or Acquisition Sub, by giving written
notice of such termination to AccuMed, (A) if there has been (I) a material
breach of any agreement herein on the part of AccuMed which has not been cured
or adequate assurance of cure given, in either case within twenty (20) calendar
days following notice of such breach from Ampersand or Acquisition


                                       30
<PAGE>   35

Sub, or (II) a breach of a representation or warranty of AccuMed herein which
(individually or, together with other such breaches, in the aggregate) would
reasonably be expected to materially impair the ability of AccuMed to perform
its obligations under this Agreement and which, in the reasonable opinion of
Ampersand or Acquisition Sub, by its nature cannot be cured prior to May 31,
2001, (B) if any Takeover Proposal (as defined in Section 3.3 hereof) with
respect to AccuMed, other than as contemplated by this Agreement, shall have
been proposed by any third party (and such proposal is not opposed in writing by
AccuMed within twenty (20) calendar days after AccuMed shall have first received
or become aware of such proposal, or AccuMed or its Board of Directors at any
time shall cease to oppose such proposal or shall take, or permit any of its
Subsidiaries to take, any action which is not consistent with opposition to such
proposal), or shall have been agreed to or consummated, or (C) if there shall
have occurred or been proposed after the Execution Date (I) any change in any
law, rule or regulation, or (II) there shall have been any decision or action by
any court, government or governmental agency, that could reasonably be expected
to prevent consummation of the Merger or delay such consummation beyond May 31,
2001, or that would have a material adverse effect on AccuMed; or

                     (v) by any party, by giving written notice of such
termination to the other parties, if the Merger shall not have been consummated
on or before May 31, 2001 (or such later date as the parties hereto may, from
time to time, establish as the termination date hereof by Amendment hereto),
unless the failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein; or

                     (vi) by the reviewing party or parties pursuant to the
terms and provisions of Section 4.1(i) hereof, provided that said party or
parties shall have given timely notice of such termination to the other parties
hereto in writing in accordance with the provisions of Section 7.4 hereof.

              (b Further Liability. If this Agreement is terminated for any
reason, none of the parties hereto shall have any further liability hereunder of
any nature whatsoever to the other parties; provided, however, that,
notwithstanding the foregoing, (i) this Section 4.4(b) shall not preclude
liability from attaching to a party who has caused the termination hereof by a
willful act or a willful failure to act in violation of the terms and provisions
hereof, and (ii) termination of this Agreement shall not terminate or affect the
agreements of the parties contained in Section 2.7 (No Broker's or Finder's
Fees), Section 3.6 (Publicity), Article V (Termination Obligations) and Section
7.2 (Confidentiality) hereof, the provisions of all of which shall survive any
termination of this Agreement; provided, however, that any aggrieved party,
without terminating this Agreement, shall be entitled to specifically enforce
the terms hereof against the breaching party or parties in order to cause the
Merger to be consummated. Each party hereto acknowledges that there is not an
adequate remedy at law to compensate the other parties with respect to relating
to the non-consummation of the Merger. To this end, each party, to the extent
permitted by law, irrevocably waives any defense it might have based on the
adequacy of a remedy at law that might be asserted as a bar to specific
performance, injunctive relief or other equitable relief.


                                       31
<PAGE>   36

              (c) No Survival of Representations, Warranties or Agreements. The
representations, warranties and agreements set forth in this Agreement shall not
survive the Merger Effective Time and shall be terminated and extinguished at
the Merger Effective Time, and from and after the Merger Effective Time no party
hereto shall have any liability to the other parties on account of any breach or
failure of any of those representations, warranties or agreements; provided,
however, that the foregoing clause (i) shall not apply to agreements of the
parties which by their terms are intended to be performed after the Merger
Effective Time by the Surviving Corporation or otherwise, and (ii) shall not
relieve any party or person for liability for fraud, deception or intentional
misrepresentation.


                                    ARTICLE V
                             TERMINATION OBLIGATIONS

       V.1 Breach by AccuMed. If this Agreement is terminated by Ampersand or
Acquisition Sub pursuant to Section 4.4(a)(iv)(B) hereof, AccuMed shall pay to
Ampersand and Acquisition Sub, jointly, the aggregate amount of $500,000
immediately upon such termination.

       V.2 Breach by Ampersand. If this Agreement is terminated by AccuMed
pursuant to Section 4.4(a)(iii)(A) hereof, Ampersand and Acquisition Sub,
jointly, shall pay to AccuMed the aggregate amount of $500,000 immediately upon
such termination.

       V.3 Tender or Exchange Offer. If any person or group of persons, other
than Ampersand or Acquisition Sub, or any of their respective affiliates, shall
commence a tender or exchange offer for ten percent (10%) or more of any class
of securities of AccuMed, or if there shall be commenced by any person or group
of persons, other than Ampersand or Acquisition Sub, or any of their respective
affiliates, of a proxy contest with respect to AccuMed, or solicitation by any
person or group of persons, other than Ampersand, Acquisition Sub, or any of
their respective affiliates, of proxies with respect to securities of AccuMed
prior to the Closing, and, as a consequence, the Merger is not approved by the
AccuMed stockholders as and in the manner contemplated by this Agreement, and if
thereafter (i) any agreement is entered into by AccuMed to effect a merger, sale
of assets or other transaction intended to cause a change of control of AccuMed,
or a tender or exchange offer is made to the AccuMed stockholders for the same
purpose, and (ii) neither Ampersand, Acquisition Sub, nor any of their
respective affiliates is a party thereto, and (iii) the making of such agreement
or the initiation of such tender or exchange offer occurs within twelve (12)
months after the latest date on which the AccuMed Stockholders Meeting should
have been held in accordance with the provisions of Section 1.7(a) of this
Agreement, AccuMed shall pay to Ampersand and Acquisition Sub, jointly, the
aggregate amount of $500,000. Such amount shall be due at the closing of the
transaction contemplated by such agreement or tender or exchange offer. If,
however, Ampersand or Acquisition Sub, or any of their respective affiliates, is
a party to such transaction, then the $500,000 provided for in this Section 5.3
will not be payable to Ampersand and Acquisition Sub hereunder.

       V.4 Non-Fulfillment of AccuMed Obligations. If AccuMed shall have
withdrawn, or not included in the Prospectus/Proxy Statement, the recommendation
of its Board of Directors


                                       32
<PAGE>   37

with respect to the Merger as provided for in this Agreement, or shall not have
held the AccuMed Stockholders Meeting on, or by, the latest date provided for in
Section 1.7(a) of this Agreement and, as a consequence, the Merger is not
approved by the AccuMed stockholders as and in the manner contemplated by this
Agreement, or the Merger does not close notwithstanding the fulfillment of all
of the conditions of Section 4.2 hereof, and if thereafter any agreement is
entered into by AccuMed to effect a merger, sale of assets or other transaction
intended to cause a change of control of AccuMed, or a tender or exchange offer
for ten percent (10%) or more of any class of securities of AccuMed is made to
the AccuMed stockholders for the same purpose, and neither Ampersand nor
Acquisition Sub, nor any of their respective affiliates, is a party thereto, and
the making of such agreement or the initiation of such tender or exchange offer
occurs within twelve (12) months after the latest date on which the AccuMed
Stockholders Meeting should have been held in accordance with the provisions of
Section 1.7(a) of this Agreement, AccuMed shall pay to Ampersand and Acquisition
Sub, jointly, the aggregate amount of $500,000. Such amount shall be due at the
closing of the transaction contemplated by such agreement, tender or exchange
offer. If, however, Ampersand or Acquisition Sub or any of their respective
affiliates, is a party to such transaction, then the $500,000 provided for in
this Section 5.4 will not be payable to Ampersand and Acquisition Sub hereunder.

       V.5 Payment of Replacement Note. The full principal amount of the
Replacement Note, together with all accrued but unpaid interest thereon, shall
become due and payable to the holder thereof immediately upon the earlier to
occur of (i) termination, for any reason, of this Agreement and the transactions
contemplated hereby, and (ii) May 31, 2001, or such later date as the parties
hereto may, from time to time, establish as the termination date hereof and
thereof by amendment hereto; provided, however, that if this Agreement is
terminated by AccuMed pursuant to the provisions of Section 4.4(a)(iii)(A)
hereof, and AccuMed becomes entitled to payment of the $500,000 amount provided
for in Section 5.2 hereof, then AccuMed shall have the right to offset such
$500,000 amount against any payments due to the holder of the Replacement Note
under this Section 5.5, and the payment of any balance thereafter remaining due
and payable under the Replacement Note shall instead become due and payable on
the sixtieth (60th) day following the date on which the termination of this
Agreement became effective.


                                   ARTICLE VI
                         CERTAIN POST-MERGER AGREEMENTS

       VI.1 Indemnification.


                                       33
<PAGE>   38

              (a) From and after the Merger Effective Time, Ampersand and the
Surviving Corporation shall indemnify, defend and hold harmless each person who
is now, or who has been at any time before the Execution Date or who becomes
before the Merger Effective Time, an officer or director of any of the parties
hereto or any of their respective Subsidiaries (the "Indemnified Parties")
against all losses, claims, damages, costs, expenses (including reasonable
attorney's fees), liabilities, judgments or amounts that are paid in settlement
(which settlement shall require the prior written consent of Ampersand and the
Surviving Corporation, which consent shall not be unreasonably withheld) of or
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal or administrative (each a "Claim"), in which an Indemnified
Party is, or is threatened to be made, a party based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director or officer of any of the parties hereto or any of their respective
Subsidiaries if such Claim pertains to any matter or fact arising, existing at
or occurring before the Merger Effective Time (including, without, limitation,
the Merger and the other transactions contemplated hereby), regardless of
whether such Claim is asserted or claimed before, or at or after, the Merger
Effective Time (the "Indemnified Liabilities"), to the fullest extent permitted
under applicable state or federal law in effect as of the Execution Date or as
amended applicable to a time before the Merger Effective Time, and Ampersand or
the Surviving Corporation shall pay expenses in advance of the final disposition
of any such action or proceeding to each Indemnified Party to the fullest extent
permitted by applicable state or federal law in effect as of the Execution Date
or as amended applicable to a time before the Merger Effective Time upon receipt
of any undertaking required by applicable law. Any Indemnified Party wishing to
claim indemnification under this Section 6.1(a), upon learning of any Claim,
shall notify Ampersand and the Surviving Corporation (but the failure so to
notify Ampersand and the Surviving Corporation shall not relieve either of them
from any liability which it may have under this Section 6.1(a), except to the
extent such failure materially prejudices Ampersand or the Surviving
Corporation) and shall deliver to Ampersand and the Surviving Corporation the
undertaking, if any, required by applicable law. Ampersand and the Surviving
Corporation shall ensure, to the extent permitted under applicable law, that all
limitations of liability existing in favor of the Indemnified Parties as
provided in their respective governing entity documents, as in effect as of the
Execution Date, or allowed under applicable state or federal law as in effect as
of the Execution Date or as amended applicable to a time before the Merger
Effective Time, with respect to claims or liabilities arising from facts or
events existing or occurring before the Merger Effective Time (including,
without limitation, the transactions contemplated hereby), shall survive the
Merger.

              (b) For a period of six (6) years from and after the Merger
Effective Time, Ampersand and the Surviving Corporation shall cause to be
maintained in effect the current policies of directors' and officers' liability
insurance (if any) maintained by AccuMed and its Subsidiaries (provided that
they may substitute therefor policies from financially capable insurers of at
least the same coverage and amounts and containing terms and conditions that are
carried by Ampersand and its Subsidiaries in the ordinary course of business)
with respect to claims arising from facts or events which occurred before the
Merger Effective Time.

              (c) The obligations of Ampersand and the Surviving Corporation
provided under paragraphs (a) and (b) of this Section 6.1 are intended to be
enforceable against Ampersand


                                       34
<PAGE>   39

and the Surviving Corporation directly by the Indemnified Parties and shall be
binding on all respective successors and permitted assigns of Ampersand and the
Surviving Corporation.


                                   ARTICLE VII
                                     GENERAL

       VII.1 Amendments. Subject to applicable law, this Agreement may be
amended, whether before or after any stockholder approval hereof, by an
agreement in writing executed in the same manner as this Agreement and
authorized or ratified by the Boards of Directors of the parties hereto,
provided that after the approval of this Agreement by the stockholders of either
AccuMed or Acquisition Sub, no such amendment may change the amount or form of
the consideration to be delivered hereunder pursuant to Section 1.3 hereof
without the further approval of such stockholders.

       VII.2 Confidentiality. All information disclosed by any party hereunder
or in connection herewith, whether prior or subsequent to the date of this
Agreement, including, without limitation, any information obtained pursuant to
Section 3.1 hereof, shall be kept confidential by the person receiving such
information and shall not be used by such person otherwise than as herein
contemplated, all in accordance with the terms of Paragraph 13 of that certain
Confidential Term Sheet (the "Term Sheet") between Ampersand and AccuMed, dated
September 22, 2000, which confidentiality terms the parties hereto acknowledge
and agree shall have a continuing, binding effect notwithstanding the
termination of all other provisions of said Term Sheet. In the event of the
termination of this Agreement, each party hereto shall use all reasonable
efforts to return, upon request, to the other parties hereto all documents (and
reproductions thereof) received from such other parties (and, in the case of
reproductions, all such reproductions) that include information subject to the
confidentiality requirements set forth above in this Section 7.2 and the Term
Sheet.

       VII.3 Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Illinois, without taking into account any provisions regarding
choice of law, except to the extent certain matters may be governed by federal
law by reason of preemption.

       VII.4 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if it is in writing and either personally
served, sent by confirmed facsimile transmission, air courier guaranteeing next
business day delivery or certified or registered United States mail, postage
prepaid, and shall be deemed delivered upon receipt if personally served, or
upon confirmation of receipt if sent by facsimile transmission, or the next
business day, if sent by air courier guaranteeing next business day delivery,
or, if sent by mail, there (3) business days after deposit in the United States
mail with postage prepaid and properly addressed. For purposes hereof, the
addresses of the parties hereto shall be as follows:


                                       35
<PAGE>   40

            If to AccuMed, to

                AccuMed International, Inc.
                920 North Franklin Street
                Suite 402
                Chicago, Illinois 60610
                Attention:  Paul F. Lavallee,
                            Chairman of the Board and Chief Executive Officer
                Telecopier: (312) 642-8684
                Confirmation: (312) 642-9200

         with a copy to:

                Joyce L. Wallach, Esq.
                1500 7th Avenue
                Sacramento, California 95818
                Telecopier: (916) 341-0256
                Confirmation: (916) 341-0255

         If to Ampersand or Acquisition Sub, to

                Ampersand Medical Corporation
                (or AccuMed Acquisition Corp., as the case may be)
                414 North Orleans
                Suite 510
                Chicago, Illinois 60610
                Attention:  Peter P. Gombrich,
                            Chairman of the Board and Chief Executive Officer
                Telecopier: (312) 222-9580
                Confirmation: (312-222-9550

         with a copy to:

                Schwartz, Cooper, Greenberger & Krauss, Chartered
                180 North LaSalle Street
                Suite 2700
                Chicago, Illinois  60601
                Attention:  Richard J. Firfer, Esq. or
                            Robert A. Smoller, Esq.,
                Telecopier: (312) 782-8416
                Confirmation: (312) 346-1300

or to such other address as shall be furnished in writing by any party to the
others in accordance with the provisions of this Section 7.4.


                                       36
<PAGE>   41

       VII.5 No Assignment. This Agreement may not be assigned by any party
hereto, by operation of law or otherwise, except as contemplated hereby.

       VII.6 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

       VII.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties hereto and delivered
to the others.

       VII.8 Construction and Interpretation. Except as the context otherwise
requires, all references herein to any state or federal regulatory agency shall
also be deemed to refer to any predecessor or successor agency, and all
references to state and federal statutes or regulations shall also be deemed to
refer to any successor statute or regulation, as amended.

       VII.9 Binding Effect. This Agreement and every representation, warranty,
covenant, agreement and provision hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
beneficiaries, officers, directors, stockholders, employees, agents, successors
and permitted assigns.

       VII.10 Expenses. In the event that the Merger and the transactions
contemplated hereby are not consummated, each of the parties hereto shall be
responsible for its own expenses incident thereto.

       VII.11 Third Parties. The parties hereto acknowledge and agree that by
entering into this Agreement they do not intend to confer any benefits, rights,
privileges, actions or remedies on any person or entity under any third party
beneficiary theory or otherwise, except that after the Merger Effective Time,
the beneficiaries of any representations, warranties or covenants of any of the
parties hereto that survive the Merger may enforce such representations,
warranties and covenants,

       VII.12 Entire Agreement. This Agreement, including the schedules,
exhibits, certificates and other writings delivered in connection herewith,
contains the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof, and supercedes all prior and
contemporaneous agreements, understandings, proposals, letters of intent, term
sheets, representations, warranties and covenants in regard thereto, except as
otherwise stated herein.

       VII.13 Waivers. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended by the party or parties entitled to
the benefit thereof. Any such waiver shall be validly and sufficiently given for
the purposes of this Agreement if, as to any party, it is in writing and signed
by an authorized representative of such party. The failure of any party hereto
to enforce at any time any provision of this Agreement shall not be construed to
be a waiver of such provision, nor in any way to affect the validity of such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.


                                       37
<PAGE>   42

       VII.14 Partial Invalidity. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such provision or provisions or any other provisions hereof, unless such a
construction would be unreasonable.


                            [Signature Page Follows]


                                       38
<PAGE>   43

       IN WITNESS WHEREOF, each party has caused this Agreement to be executed
on its behalf by its duly authorized officer as of the date first hereinabove
set forth.


ACCUMED INTERNATIONAL, INC.             AMPERSAND CORPORATION


By: /s/ PAUL F. LAVALLEE                By: /s/ PETER P. GOMBRICH
   ---------------------------------       -------------------------------------
      Paul F. Lavallee,                        Peter P. Gombrich,
      Chairman of the Board                    Chairman of the Board
      and Chief Executive Officer              and Chief Executive Officer


                                        ACCUMED ACQUISITION CORP.


                                        By: /s/ PETER P. GOMBRICH
                                           -------------------------------------
                                               Peter P. Gombrich,
                                               President


                                       39
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.35
<SEQUENCE>7
<FILENAME>v70395ex10-35.txt
<DESCRIPTION>EXHIBIT 10.35
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.35

                                     SECURED
                                 PROMISSORY NOTE

$800,000.00                                                     February 7, 2001
                                                               Chicago, Illinois

       1. FOR VALUE RECEIVED, AccuMed International, Inc. ("Maker"), whose
principal place of business is located at 920 North Franklin Street, Suite 402,
Chicago, Illinois 60610, hereby promises to pay to the order of Ampersand
Medical Corporation ("Payee"), whose principal place of business is located at
414 North Orleans, Suite 510, Chicago, Illinois 60610, the principal sum of
EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($800,000.00), at the place and in the
manner hereinafter provided, together with interest thereon at the rates
described below.

       2. Interest shall accrue on the balance of principal from time to time
unpaid under this Note prior to the Maturity Date (as hereinafter defined) at an
annual rate equal to Prime plus two and one-half percent (22%). For purposes
hereof, "Prime" shall mean the rate of interest from time to time announced by
LaSalle Bank, National Association ("Bank"), as its Prime Rate, which is not
necessarily the Bank=s lowest or most favorable rate of interest at any given
time. Interest shall be computed on the basis of a year consisting of 360 days
and shall be based on the actual number of days during the period for which
interest is being charged.

       3. Principal and interest under this Note shall be due and payable on the
earlier to occur of the following: (i) termination of the contemplated merger
transaction as outlined in the Merger Agreement (as such term is defined in
paragraph 4 hereof); and (ii) May 31, 2001 or such later date as the parties to
the Merger Agreement may, from time to time, establish as the termination date
of the Merger Agreement by amendment thereto (such payment due date being
hereinafter referred to as the "Maturity Date"); provided, however, the Maturity
Date shall be automatically extended (without requiring a written amendment
hereto) to such later date, if any, as Maker and Payee agree by amendment of the
date specified in Section 4.4(a)(v) of the Merger Agreement (as such term is
hereinafter defined).

       4. This Note is executed simultaneously and in conjunction with the
execution and delivery by Maker and Payee of that certain Agreement and Plan of
Merger, dated as of February 7, 2001 (the "Merger Agreement"), pursuant to which
the parties thereto have agreed to enter into the merger described therein. This
Note evidences the loan from Payee to Maker referred to in paragraph 1.12 of the
Merger Agreement.

       5. From and after the Maturity Date, or during any period in which an
Event of Default (as hereinafter defined) exists under this Note, Maker shall
pay interest on the balance of principal then remaining unpaid at an annual rate
(the "Default Rate") equal to Prime plus five percent (5%). The interest
accruing under this paragraph 5 shall be immediately due and payable by Maker to
the holder of this Note on demand and shall be additional indebtedness evidenced
by this Note.


<PAGE>   2

       6. Maker reserves the privilege, without penalty or premium therefor, to
prepay all or any part of the principal balance of this Note at any time and
from time to time upon two (2) business days prior written notice to Payee of
its intention to do so.

       7. All payments and prepayments on account of the indebtedness evidenced
by this Note shall be first applied to accrued and unpaid interest on the unpaid
principal balance of this Note, and second to all other sums then due Payee
hereunder.

       8. All payments of principal and interest hereunder shall be paid by
check or in coin or currency and shall be made at Payee=s principal place of
business, as hereinabove set forth. Payment made by check shall be deemed paid
on the date Payee receives such check; provided, however, that if such check is
subsequently returned to Payee unpaid due to insufficient funds or otherwise,
the payment shall not be deemed to have been made and shall continue to bear
interest until collected. If payment hereunder becomes due and payable on a
Saturday, Sunday or legal holiday under the laws of the State of Illinois, the
due date thereof shall be extended to the next succeeding business day, and
interest shall be payable thereon at the then applicable interest rate during
such extension.

       9. An Event of Default shall occur hereunder if: (1) any amount payable
hereunder is not paid when due; or (2) Maker shall otherwise fail to perform any
of the promises to be performed by Maker hereunder or under any security
agreement with Payee relating thereto; or (3) Maker or any person who is or
shall become primarily or secondarily liable for any payment hereunder, who is a
natural person, dies; or (4) Maker or any other party liable with respect to any
payment hereunder, or any guarantor or accommodation endorser or third party
pledgor, shall make any assignment for the benefit of creditors, or there shall
be commenced by or against Maker or any such party any bankruptcy, receivership,
insolvency, reorganization, dissolution or liquidation proceedings, or there
shall be the entry of any judgment, levy, attachment, garnishment or other
process, or the filing of any lien, against any of the Collateral (as such term
is defined in the Security Agreement referred to in paragraph 12 hereof); or (5)
in the opinion of Payee, acting in good faith, there is any deterioration or
impairment of any of the Collateral, or any actual decline or depreciation in
the value or market price thereof that causes the Collateral to become
unsatisfactory as to value, and the Payee has provided Maker with written notice
describing the basis of such opinion, and if Maker has failed, within five (5)
business days after receiving such notice to (x) provide documents effectively
refuting such opinion to Payee=s satisfaction, or (y) provide additional
Collateral to eliminate the deficit or pay down the indebtedness in an amount
sufficient to erase such deficit; or (6) there is a determination by Payee that
a material adverse change has occurred in the financial condition of the Maker
from the condition set forth in the most recent financial statement of Maker
furnished to Payee, or from the financial condition of the Maker most recently
disclosed to Payee in any manner; or (7) Maker shall fail to do any commercially
reasonable act necessary to preserve or maintain the value and collectability of
the Collateral; or (8) Maker shall fail, within five (5) business days after
receiving a written request by Payee, to permit inspection by Payee (during
normal business hours) of Maker=s books and records pertaining to the
Collateral; or (9) any guarantor of this Note shall discontinue or contest the
validity of such guaranty; or (10) there shall occur any material adverse event
that causes a change in the financial condition of Maker, or that would have a
material adverse effect on the business of Maker.


<PAGE>   3

       10. At the election of the holder hereof, whenever Maker shall be in
default as aforesaid (an "Event of Default"), and all applicable cure periods
have expired without a cure having been effected, then without demand or notice
of any kind, the entire unpaid principal amount hereof, and all interest accrued
thereon, shall become immediately due and payable. Failure of the holder to
exercise such election shall not constitute a waiver of the right to exercise
the same in the event of any subsequent Event of Default. No holder hereof
shall, by any act of omission or commission, be deemed to waive any of its
rights, remedies or powers hereunder or otherwise unless such waiver is in
writing and signed by the holder hereof, and then only to the extent
specifically set forth therein. The rights, remedies and powers of the holder
hereof, as provided in this Note, are cumulative and concurrent, and may be
pursued singly, successively or together against Maker and any security given at
any time to secure the repayment hereof, all at the sole discretion of the
holder hereof. If any suit or action is instituted or attorneys are employed to
collect this Note or any part thereof, Maker promises and agrees to pay all
costs of collection, including reasonable attorneys= fees and court costs.

       11. Maker hereby (i) waives presentment and demand for payment, notice of
nonpayment and of dishonor, protest of dishonor, and notice of protest; and (ii)
waives any and all lack of diligence and delays in the enforcement of the
payment hereof.

       12. This Note is secured by that certain Security Agreement, dated as of
the date hereof, pursuant to which Maker has pledged certain of its assets and
property, as described therein, as security for the payment hereof.

       13. This Note evidences a business loan that comes within the purview of
Section 205/4, paragraph (1)(c) of Chapter 815 of the Illinois Compiled
Statutes, as amended. Maker agrees that the obligation evidenced by this Note is
an exempted transaction under the Truth In Lending Act, 15 U.S.C., Section 1601,
et seq.

       14. Time is of the essence hereof.

       15. This Note is governed and controlled as to validity, enforcement,
interpretation, construction, effect and in all other respects by the statutes,
laws and decisions of the State of Illinois, without regard to conflicts of laws
principles. This Note may not be changed or amended orally but only by an
instrument in writing signed by the party against whom enforcement of the change
or amendment is sought.

       16. This Note has been made and delivered at Chicago, Illinois and all
funds disbursed to or for the benefit of Maker will be disbursed in Chicago,
Illinois.

       17. The obligations and liabilities of Maker under this Note shall be
binding upon and enforceable against Maker and its successors and assigns. This
Note shall inure to the benefit of and may be enforced by Payee and its
successors and assigns.

       18. In the event one or more of the provisions contained in this Note
shall for any reason be held to be invalid, illegal or unenforceable in any
respect by a court of competent


<PAGE>   4

jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Note, and this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
Payee shall not collect a rate of interest on the principal balance under this
Note in excess of the maximum contract rate of interest permitted by applicable
law. All interest found in excess of that rate of interest allowed and collected
by Payee shall be applied to the principal balance in such manner as to prevent
the payment and collection of interest in excess of the rate permitted by
applicable law.

       IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.

                                   ACCUMED INTERNATIONAL, INC.

                                   By: /s/ PAUL F. LAVALLEE
                                       ----------------------------------------
                                         Paul F. Lavallee, Chairman of the Board
                                         and Chief Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.36
<SEQUENCE>8
<FILENAME>v70395ex10-36.txt
<DESCRIPTION>EXHIBIT 10.36
<TEXT>

<PAGE>   1

                                                                  EXHIBIT 10.36

                               SECURITY AGREEMENT

     This Security Agreement (this "Agreement") is made and entered into as of
the 7th day of February, 2001, by and between ACCUMED INTERNATIONAL, INC., a
Delaware corporation with its principal place of business at 920 North Franklin
Street, Suite 402, Chicago, Illinois 60610 ("Debtor"), and AMPERSAND MEDICAL
CORPORATION, a Delaware corporation with its principal place of business at 414
N. Orleans, Suite 510, Chicago, Illinois 60610 ("Secured Party").

                                   WITNESSETH:

     WHEREAS, Debtor and Secured Party have entered into an Agreement and Plan
of Merger (the "Merger Agreement") dated as of the date hereof; and

     WHEREAS, in connection with the Merger Agreement Debtor has executed a
certain Secured Promissory Note of even date herewith, made payable to Secured
Party (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Note"), providing for the making of a term loan to
Debtor in the principal amount of Eight Hundred Thousand and No/100 Dollars
($800,000.00), and as a condition to the making of such loan Debtor is required
to grant the security interest contemplated by this Agreement;

     NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and in the Note, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

     1. DEFINITIONS

     1.1 General Definitions. When used herein, the following terms shall have
the following meanings:

          (a) "Code" shall mean the Uniform Commercial Code as in effect in the
     State of Illinois from time to time.

          (b) "Collateral" shall mean the Initial Collateral and the Additional
     Collateral, collectively, as specified in Section 2.1(a) and 2.1(b) hereof,
     respectively.

          (c) "Default" shall mean the occurrence or existence of any "Event of
     Default" under (and as defined in) the Note.

          (d) "Financing Agreements" shall mean the Note and all other
     agreements, instruments and documents executed by or on behalf of Debtor
     and delivered to Secured Party in connection therewith, including, without
     limitation, this Agreement.

          (e) "Liabilities" shall mean all liabilities, obligations and
     indebtedness of any and every kind and nature that arise under the Note,
     this Agreement or any other Financing Agreement, whether heretofore, now or
     hereafter owing, arising, due or payable from


<PAGE>   2

     Debtor to Secured Party.

          (f) "Lien" shall mean any mortgage, deed of trust, pledge,
     hypothecation, assignment, conditional sale agreement, deposit arrangement,
     security interest, encumbrance, lien (statutory or otherwise), preference,
     priority or other security agreement or preferential arrangement of any
     kind or nature whatsoever with respect to any property of a Person, whether
     granted voluntarily or imposed by law, and includes the interest of a
     lessor under a capitalized lease or under any financing lease having
     substantially the same economic effect as any of the foregoing and the
     filing of any financing statement or similar notice, under the Code or
     other comparable law of any jurisdiction.

          (g) "Person" shall mean any individual, sole proprietorship,
     partnership, joint venture, trust, unincorporated organization,
     association, limited liability company, corporation, institution, entity,
     party or government (whether national, federal, state, provincial, county,
     city, municipal or otherwise, including, without limitation, any
     instrumentality, division, agency, body or department thereof).

     1.2 Other Terms. All other terms contained in this Agreement, where the
context so indicates (unless otherwise specifically defined herein), shall have
the meanings provided by the Code to the extent the same are used or defined
therein.

     2. COLLATERAL

     2.1 Security Interest.

          (a) To secure payment and performance of Debtor's Liabilities, Debtor
     hereby grants to Secured Party a continuing security interest in and to all
     of Debtor's right, title and interest in and to all assets and property of
     Debtor listed on SCHEDULE A attached hereto, as such schedule may be
     amended, restated, supplemented or otherwise modified from time to time,
     whether such assets and property are owned on the date hereof or hereafter
     acquired, and all sale proceeds of such assets and property, and any and
     all insurance proceeds pertaining to such assets and property, together
     with all of Debtor's books and records pertaining to such assets and
     property (collectively, the "Initial Collateral").

          (b) To secure payment and performance of the Additional Loans provided
     for in Section 1.12(b) of the Merger Agreement, Debtor also hereby grants
     to Secured Party a continuing security interest in and to all of Debtor's
     right, title and interest in and to the assets and property listed on
     SCHEDULES B, C and D attached hereto (collectively, the "Additional
     Collateral"), as such schedules may be amended, restated, supplemented or
     otherwise modified from time to time, together with all of Debtor's books
     and records pertaining to such Additional Collateral, but such continuing
     security interest shall only become effective as to the Additional
     Collateral as and when the Additional Loans (as defined in the Merger
     Agreement) are actually made by Secured Party, in the following


<PAGE>   3

     manner:

          (i) to the Additional Collateral listed on SCHEDULE B when the first
     Additional Loan is made;

          (ii) to the Additional Collateral listed on SCHEDULE C when the second
     Additional Loan is made;

          (iii) to the Additional Collateral listed on SCHEDULE D when the third
     Additional Loan is made.

     2.2 Financing Statements. Debtor will execute and deliver to Secured Party
such financing statements or amendments thereof or supplements thereto, and such
other instruments as Secured Party may from time to time require in order to
preserve, protect and maintain the security interest granted hereby. Debtor
further agrees that a carbon, photographic, photostatic or other reproduction of
this Agreement or of a financing statement shall be sufficient as a financing
statement.

     2.3 Attachment. Subject to the provisions of Section 2.1(b) hereof, Debtor
confirms that value has been given and that Debtor and Secured Party have not
agreed to postpone the time for attachment of the security interest created by
this Agreement to any of the Collateral.

     3. REPRESENTATIONS, WARRANTIES AND COVENANTS

     3.1 Representations and Warranties. Debtor hereby represents and warrants
to Secured Party that:

          (a) Debtor (i) is a corporation duly organized, validly existing and
     in good standing under the laws of the State of Delaware, (ii) is duly
     qualified to do business as a foreign corporation and is in good standing
     under the laws of each jurisdiction in which the nature of Debtor's
     business or the ownership of its property requires such qualification, and
     (iii) has all requisite corporate power and authority to own, operate and
     encumber its property and to conduct its business as presently conducted.

          (b) Debtor has the requisite corporate power and authority to execute,
     deliver and perform each of the Note, this Agreement and each document that
     is to be executed by it in connection with either of them. The execution,
     delivery, performance and filing, as the case may be, of each such document
     have been duly approved by the Board of Directors of Debtor and such
     approval has not been rescinded. No other corporate actions or proceedings
     on the part of Debtor are necessary to consummate such transactions. Each
     of the Note, this Agreement and each document that is to be executed by
     Debtor in connection with either of them has been duly executed and
     delivered by Debtor and constitutes its legal, valid and binding
     obligation, enforceable against it in accordance with its terms, and is in
     full force and effect.

          (c) The execution, delivery and performance of each of the Note, this


<PAGE>   4



     Agreement and each document that is to be executed by Debtor in
     connection with either of them do not and will not (i) conflict with
     Debtor's certificate of incorporation or by- laws, (ii) conflict with any
     law known to Debtor to be applicable to, or binding on, its business or the
     Collateral or any contractual restriction binding on or affecting the
     Debtor, or (iii) result in or require the creation or imposition of any
     Lien not contemplated by the Note or this Agreement.

          (d) Debtor is and will be the owner of, and has and will have good and
     marketable title to, the Collateral. Debtor is the legal and beneficial
     owner of the Collateral, free and clear of any and all Liens and other
     interests of third parties, except for the security interest created by
     this Agreement. No financing statement or other instrument similar in
     effect covering all or any part of the Collateral is on file in any
     recording office on the date hereof.

          (e) The respective locations where Debtor keeps the Collateral and
     Debtor's principal place of business and chief executive office are and
     will be located at the address first set forth hereinabove.

          (f) The correct corporate name of Debtor on the date hereof is AccuMed
     International, Inc., and Debtor will not use any other corporate or
     fictitious name without notifying Secured Party. Debtor will not change its
     name, identity or structure in any manner without the prior written consent
     of Secured Party, which shall not be unreasonably withheld, provided that,
     as a condition to the effectiveness of any such consent, Debtor shall
     execute and deliver to the Secured Party, at Debtor's expense, any
     financing statements or other documents requested by Secured Party
     reasonably necessary or desirable to maintain the validity, perfection and
     priority of the Lien intended to be created hereby.

          (g) This Agreement, together with the filing of a financing statement
     with the Secretary of State of Illinois, upon the giving of value to Debtor
     by Secured Party, creates a valid and perfected security interest in the
     Collateral (other than Collateral in which a security interest may not be
     perfected by filing a financing statement under the Code) in accordance
     with the terms of this Agreement.

          (h) No consent of any other Person and no authorization, approval or
     other action by, and no notice to or filing with, any governmental
     authority is required (i) for the grant by Debtor of the security interest
     granted hereby or for the execution, delivery or performance of this
     Agreement by Debtor, (ii) for the perfection or, except for the filing of
     the appropriate continuation statements with respect to the financing
     statements described in clause (g) above, maintenance of the security
     interest created hereby (including the maintenance of the relative priority
     of such security interest), or (iii) for the exercise by Secured Party of
     its rights and remedies hereunder.

          (i) There are no conditions precedent to the effectiveness of this
     Agreement that have not been satisfied or waived in writing.


<PAGE>   5

     3.2 Covenants. Until performance, payment and/or satisfaction, in full, of
the Liabilities, Debtor covenants and agrees as follows:

          (a) Debtor will furnish to Secured Party such information relevant to
     the Collateral as Secured Party may from time to time reasonably request,
     including, without limitation, documents pertaining to the original
     delivery of the Collateral to Debtor or other receipts for such Collateral.

          (b) Debtor will maintain adequate insurance against loss or damage to
     the Collateral and shall cause Secured Party to be named as an additional
     insured and loss payee with respect thereto during the term of this
     Agreement. Debtor shall promptly and from time to time, upon request,
     provide Secured Party with written certification of such insurance
     coverage.

     4. SALES, COLLECTIONS AND REPORTS

     4.1 Sales. Debtor may not sell or otherwise dispose of the Collateral
(other than within the ordinary course of its business, consistent with past
practice) without the prior written consent of Secured Party. At such time, upon
or after the occurrence of a Default, if any, as Secured Party shall notify
Debtor of such Default, Debtor shall take such action with respect to the
disposition of the Collateral and of the proceeds thereof, as Secured Party may
request.

     4.2 Endorsement by Secured Party. Debtor hereby authorizes Secured Party to
endorse, in the name of Debtor, any item, howsoever received by Secured Party,
representing proceeds of any of the Collateral.

     4.3 Other Collateral Issues. Debtor will deliver to Secured Party, at such
times and in such form as shall reasonably be designated by Secured Party,
assignments, schedules and reports relating to the Collateral. Upon request by
Secured Party, Debtor will mark its books and records to reflect the security
interest of Secured Party in the Collateral.

     5. DEFAULT; REMEDIES

     5.1 Remedies. In the event a Default shall occur and while it is
continuing:

          (a) All Liabilities may (notwithstanding any provisions thereof), at
     the option of Secured Party, and without demand, notice or legal process of
     any kind, be declared, and immediately shall become, due and payable, and
     Secured Party may exercise from time to time any rights or remedies
     available to it under applicable laws or in equity, including, without
     limitation, the Code, in addition to, and not in lieu of, any rights and
     remedies expressly granted in this Agreement, in any of the other Financing
     Agreements, or otherwise, all of which remedies shall be cumulative.

          (b) At Secured Party's request, Debtor will promptly, at Debtor's
     expense,


<PAGE>   6

     assemble the Collateral at one or more places, reasonably convenient
     to both parties, where the Collateral may, at Secured Party's option,
     remain, at Debtor's expense, pending sale or other disposition thereof.

          (c) Debtor acknowledges that any breach by Debtor of any of the
     provisions of this Section 5.1 will cause irreparable injury to Secured
     Party, and that there is no adequate remedy at law for a breach of the
     provisions of such Section. Debtor agrees that Secured Party will have the
     immediate right, upon such breach, to seek to obtain injunctive and other
     equitable relief in any court of competent jurisdiction without any
     requirement of notice, and that the granting of any such relief shall not
     preclude Secured Party from pursuing any other available relief or remedies
     for such breach.

     5.2 Sale of Collateral. Any notification required by law of intended sale,
lease or other disposition by or on behalf of Secured Party of any of the
Collateral shall be deemed reasonably and properly given if mailed, postage
prepaid, to Debtor at Debtor's address set forth at the beginning of this
Agreement, at least twenty (20) business days before such sale, lease or other
disposition. Notice sent in such manner shall be deemed received on the fifth
business day following the day of deposit in the mails. Any proceeds of any
sale, lease or other disposition by Secured Party of any of the Collateral may
be applied by Secured Party to the payment of expenses in connection with the
Collateral, including, without limitation, reasonable "Attorneys' Fees" (as
defined in Section 5.3 hereof) and legal expenses. Any balance of such proceeds
may be applied by Secured Party toward the payment of the Liabilities in the
manner set forth in Section 7.5 hereof. Debtor shall remain liable for any
deficiency, and Secured Party shall account for any surplus.

     5.3 Attorneys' Fees; Costs and Expenses. "Attorneys' Fees" shall mean the
reasonable value of the services of the attorneys and legal agents employed by
Secured Party, from time to time, to commence, defend or intervene in any court
proceeding, or to file a petition, complaint, answer, motion or other pleadings,
or to take any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise) relating to the Collateral, this Agreement, the Note,
or any of the other Financing Agreements, or to protect, collect, lease, sell,
take possession of, or liquidate any of the Collateral or to attempt to enforce
any security interest in any of the Collateral, or to enforce the rights of
Secured Party to collect any of the Liabilities. Such attorneys' fees, and any
expenses, costs and charges relating thereto, including, without limitation, all
fees of all paralegals and other staff employed by such attorneys, and all other
costs and expenses incurred by Secured Party with respect to the enforcement,
collection or protection of its interests in the Collateral shall be repayable
by Debtor to Secured Party on demand, shall be additional Liabilities and shall
be secured by the Collateral.

     5.4 Waiver of Bonds. IN THE EVENT THAT SECURED PARTY SEEKS TO TAKE
POSSESSION OF ANY OR ALL OF THE COLLATERAL BY COURT PROCESS, TO OBTAIN ANY
INJUNCTION OR OTHER EQUITABLE RELIEF REQUIRING DEBTOR TO COMPLY WITH ANY OR ALL
OF THE TERMS AND PROVISIONS OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION,
SECTION 5.1 HEREOF, OR OTHERWISE TO COMPLY WITH APPLICABLE LAW, DEBTOR HEREBY
IRREVOCABLY


<PAGE>   7

WAIVES ANY BONDS AND ANY SURETY THEREON OR SECURITY RELATING THERETO THAT IS
REQUIRED OR ALLOWED BY ANY STATUTE, COURT RULE OR OTHERWISE AS AN INCIDENT TO
SUCH POSSESSION OR INJUNCTION, AND WAIVES ANY DEMAND FOR POSSESSION PRIOR TO THE
COMMENCEMENT OF ANY SUIT OR ACTION TO RECOVER WITH RESPECT THERETO.

     5.5 Waiver of Demand. Except as otherwise provided in the Note, demand,
presentment, protest and notice of nonpayment is hereby waived by Debtor. Debtor
also waives the benefit of all valuation, appraisal and exemption laws.

     5.6 Waiver of Notice. IN THE EVENT OF A DEFAULT (PURSUANT TO AUTHORITY
GRANTED BY ITS BOARD OF DIRECTORS), DEBTOR HEREBY WAIVES ALL RIGHTS TO NOTICE
AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY SECURED PARTY OF ITS RIGHTS TO
REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY
UPON SUCH COLLATERAL WITHOUT PRIOR NOTICE OR HEARING, AND DEBTOR ACKNOWLEDGES
THAT IN EXECUTING THIS AGREEMENT IT HAS BEEN ADVISED BY COUNSEL WITH RESPECT TO
THIS TRANSACTION AND THIS AGREEMENT.

     5.7 Grant of License. Secured Party is hereby granted a license and right
to use, following the occurrence and during the continuance of a Default,
without payment of royalty or other compensation, Debtor's labels, patents,
copyrights, trade names, trademarks, service marks, and advertising material, as
it pertains to the Collateral, in connection with, advertising for sale and
selling of any Collateral.

     6. TERM

     6.1 Term of Agreement. This Agreement shall continue in full force and
effect so long as any Liabilities are owing by Debtor to Secured Party.

     6.2 Termination. No termination of this Agreement shall in any way affect
or impair the rights or liabilities of the parties hereto with respect to any
transactions or events that occurred prior to such termination date or to any
Collateral in which Secured Party has a security interest. All agreements,
warranties and representations of Debtor shall survive such termination.

7. MISCELLANEOUS

     7.1 Receipt of Payments. For purposes of determining the amount of the
Liabilities, including, without limitation, the computations of interest that
may from time to time be owing by Debtor to Secured Party, the receipt of any
check or any other item of payment by Secured Party shall not be treated as a
payment on account of the Liabilities until such check or other item of payment
is actually paid in collected funds. Any statement of account rendered by
Secured Party to Debtor relating to the Liabilities, including, without
limitation, all statements of balances owing, accrued interest, expenses and
costs, shall be presumed to be correct and accurate and constitute an account
stated unless, within thirty (30) days after receipt thereof by Debtor, Debtor
shall deliver to Secured Party written objection thereto specifying the error or
errors, if any,


<PAGE>   8

contained in any such statement.

     7.2 Successors and Assigns. Whenever in this Agreement there is reference
made to any of the parties hereto, such reference shall be deemed to include,
wherever applicable, a reference to the successors and assigns of such party.
The provisions of this Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of Debtor and Secured Party.

     7.3 Survival of Representations. All representations and warranties of
Debtor, and all terms, provisions, conditions and agreements to be performed by
Debtor contained herein, or in any of the other Financing Agreements, shall be
true and satisfied at the time of the execution of this Agreement, and shall
survive the execution and delivery of this Agreement.

     7.4 Governing Law; Severability. This Agreement shall be construed in all
respects in accordance with, and governed by, the laws and decisions of the
State of Illinois, without regard to conflicts of laws principles. Wherever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

     7.5 Application of Payment. Debtor irrevocably waives the right to direct
the application of any and all payments at any time or times hereafter received
by Secured Party from Debtor, and Debtor does hereby irrevocably agree that
Secured Party shall have the continuing exclusive right to apply and reapply any
and all payments received at any time or times hereafter against the Liabilities
hereunder in such manner as Secured Party may deem advisable, notwithstanding
any entry by Secured Party upon any of its books and records.

     7.6 Invalidated Payment. Debtor agrees that to the extent that Debtor makes
a payment or payments to Secured Party, which payment or payments, or any part
thereof, are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to Debtor, its estate,
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such payment or
repayment, the Liability or part thereof which has been paid, reduced or
satisfied by the amount so repaid shall be reinstated and included within the
Liabilities as of the date of such initial payment, reduction or satisfaction
occurred.

     7.7 Submission to Jurisdiction. DEBTOR CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF ILLINOIS, AND DEBTOR HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON DEBTOR AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO
DEBTOR AT ITS ADDRESS STATED AT THE BEGINNING OF THIS AGREEMENT.

     7.8 Notice. Except as otherwise provided for herein, any statement, notice
or other


<PAGE>   9

communication required or permitted hereunder shall be in writing and may be
personally served, sent by facsimile transmission, air courier guaranteeing next
business day delivery or certified or registered United States mail, postage
prepaid, and shall be deemed delivered upon receipt if personally served, upon
confirmation of receipt if sent by facsimile transmission, the next business
day, if sent by air courier guaranteeing next business day delivery, and, if
sent by mail, three (3) business days after deposit in the United States mail
with postage prepaid and properly addressed. For purposes of this Section 7.8,
the addresses of the parties hereto shall be as follows:

<TABLE>

<S>                                    <C>
         If to Debtor, at:             AccuMed International, Inc.
                                       920 N. Franklin St., Suite 402
                                       Chicago, IL  60610
                                       Attention: Paul F. Lavallee, Chairman of the
                                                  Board and Chief Executive Officer
                                       Telecopier: (312) 642-8684; Confirmation:(312) 642-9200

         With a copy to:               Joyce L. Wallach, Esq.
                                       1500 7th Avenue
                                       Sacramento, CA  95818
                                       Telecopier: (916) 341-0256; Confirmation: (916) 341-0255

         If to Secured Party, at:      Ampersand Medical Corporation
                                       414 N. Orleans, Suite 510
                                       Chicago, IL  60610
                                       Attention: Peter P. Gombrich, Chairman of the
                                                  Board and Chief Executive Officer
                                       Telecopier: (312) 222-9580; Confirmation: (312) 222-9550

         With a copy to:               Schwartz, Cooper, Greenberger & Krauss, Chartered
                                       180 N. LaSalle Street, Suite 2700
                                       Chicago, IL 60601
                                       Attention: Richard J. Firfer, Esq. or
                                                  Robert A. Smoller, Esq.
                                       Telecopier:  (312) 728-8416; Confirmation: (312) 346-1300
</TABLE>

or, as to each party, at such other address as may be designated by such party
in a written notice to the other party to this Agreement in accordance with this
Section 7.8.

     7.9 Conflict With Note. In the event of any conflict between the terms and
provisions of the Note, on the one hand, and the terms and provisions of this
Agreement, or the terms and provisions of any other Financing Agreement, on the
other hand, the terms and provisions of the Note shall prevail.



<PAGE>   10

     IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first hereinabove written.


                                      ACCUMED INTERNATIONAL, INC.




                                      By:/s/ PAUL F. LAVALLEE
                                         ---------------------------------
                                           Paul F. Lavallee,
                                           Chairman of the Board and Chief
                                           Executive Officer


                                      AMPERSAND MEDICAL CORPORATION


                                      By:/s/ PETER P. GOMBRICH
                                         ---------------------------------
                                           Peter P. Gombrich,
                                           Chairman of the Board and Chief
                                           Executive Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.37
<SEQUENCE>9
<FILENAME>v70395ex10-37.txt
<DESCRIPTION>EXHIBIT 10.37
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.37

                                     SECURED
                                 PROMISSORY NOTE

$225,000.00                                                        March 1, 2001
                                                               Chicago, Illinois

       1. FOR VALUE RECEIVED, AccuMed International, Inc. ("Maker"), whose
principal place of business is located at 920 North Franklin Street, Suite 402,
Chicago, Illinois 60610, hereby promises to pay to the order of Ampersand
Medical Corporation ("Payee"), whose principal place of business is located at
414 North Orleans, Suite 510, Chicago, Illinois 60610, the principal sum of TWO
HUNDRED TWENTY FIVE THOUSAND AND NO/100 DOLLARS ($225,000.00), at the place and
in the manner hereinafter provided, together with interest thereon at the rates
described below.

       2. Interest shall accrue on the balance of principal from time to time
unpaid under this Note prior to the Maturity Date (as hereinafter defined) at an
annual rate equal to Prime plus two and one-half percent (22%). For purposes
hereof, "Prime" shall mean the rate of interest from time to time announced by
LaSalle Bank, National Association ("Bank"), as its Prime Rate, which is not
necessarily the Bank=s lowest or most favorable rate of interest at any given
time. Interest shall be computed on the basis of a year consisting of 360 days
and shall be based on the actual number of days during the period for which
interest is being charged.

       3. Principal and interest under this Note shall be due and payable on the
earlier to occur of the following: (i) termination of the contemplated merger
transaction as outlined in the Merger Agreement (as such term is defined in
paragraph 4 hereof); and (ii) May 31, 2001 or such later date as the parties to
the Merger Agreement may, from time to time, establish as the termination date
of the Merger Agreement by amendment thereto (such payment due date being
hereinafter referred to as the "Maturity Date"); provided, however, the Maturity
Date shall be automatically extended (without requiring a written amendment
hereto) to such later date, if any, as Maker and Payee agree by amendment of the
date specified in Section 4.4(a)(v) of the Merger Agreement (as such term is
hereinafter defined).

       4. This Note is executed and delivered in connection with that certain
Agreement and Plan of Merger, dated as of February 7, 2001 by and between Payee
and Maker (the "Merger Agreement"), pursuant to which the parties thereto have
agreed to enter into the merger described therein. This Note evidences an
Additional Loan (as such term is defined in the Merger Agreement) from Payee to
Maker referred to in paragraph 1.12 of the Merger Agreement.

       5. From and after the Maturity Date, or during any period in which an
Event of Default (as hereinafter defined) exists under this Note, Maker shall
pay interest on the balance of principal then remaining unpaid at an annual rate
(the "Default Rate") equal to Prime plus five percent (5%). The interest
accruing under this paragraph 5 shall be immediately due and payable by Maker to
the holder of this Note on demand and shall be additional indebtedness evidenced
by this Note.


<PAGE>   2

       6. Maker reserves the privilege, without penalty or premium therefor, to
prepay all or any part of the principal balance of this Note at any time and
from time to time upon two (2) business days prior written notice to Payee of
its intention to do so.

       7. All payments and prepayments on account of the indebtedness evidenced
by this Note shall be first applied to accrued and unpaid interest on the unpaid
principal balance of this Note, and second to all other sums then due Payee
hereunder.

       8. All payments of principal and interest hereunder shall be paid by
check or in coin or currency and shall be made at Payee=s principal place of
business, as hereinabove set forth. Payment made by check shall be deemed paid
on the date Payee receives such check; provided, however, that if such check is
subsequently returned to Payee unpaid due to insufficient funds or otherwise,
the payment shall not be deemed to have been made and shall continue to bear
interest until collected. If payment hereunder becomes due and payable on a
Saturday, Sunday or legal holiday under the laws of the State of Illinois, the
due date thereof shall be extended to the next succeeding business day, and
interest shall be payable thereon at the then applicable interest rate during
such extension.

       9. An Event of Default shall occur hereunder if: (1) any amount payable
hereunder is not paid when due; or (2) Maker shall otherwise fail to perform any
of the promises to be performed by Maker hereunder or under any security
agreement with Payee relating thereto; or (3) Maker or any person who is or
shall become primarily or secondarily liable for any payment hereunder, who is a
natural person, dies; or (4) Maker or any other party liable with respect to any
payment hereunder, or any guarantor or accommodation endorser or third party
pledgor, shall make any assignment for the benefit of creditors, or there shall
be commenced by or against Maker or any such party any bankruptcy, receivership,
insolvency, reorganization, dissolution or liquidation proceedings, or there
shall be the entry of any judgment, levy, attachment, garnishment or other
process, or the filing of any lien, against any of the Collateral (as such term
is defined in the Security Agreement referred to in paragraph 12 hereof); or (5)
in the opinion of Payee, acting in good faith, there is any deterioration or
impairment of any of the Collateral, or any actual decline or depreciation in
the value or market price thereof that causes the Collateral to become
unsatisfactory as to value, and the Payee has provided Maker with written notice
describing the basis of such opinion, and if Maker has failed, within five (5)
business days after receiving such notice to (x) provide documents effectively
refuting such opinion to Payee=s satisfaction, or (y) provide additional
Collateral to eliminate the deficit or pay down the indebtedness in an amount
sufficient to erase such deficit; or (6) there is a determination by Payee that
a material adverse change has occurred in the financial condition of the Maker
from the condition set forth in the most recent financial statement of Maker
furnished to Payee, or from the financial condition of the Maker most recently
disclosed to Payee in any manner; or (7) Maker shall fail to do any commercially
reasonable act necessary to preserve or maintain the value and collectability of
the Collateral; or (8) Maker shall fail, within five (5) business days after
receiving a written request by Payee, to permit inspection by Payee (during
normal business hours) of Maker=s books and records pertaining to the
Collateral; or (9) any guarantor of this Note shall discontinue or contest the
validity of such guaranty; or (10) there shall occur any material adverse event
that causes a change in the financial condition of Maker, or that would have a
material adverse effect on the business of Maker.


<PAGE>   3

       10. At the election of the holder hereof, whenever Maker shall be in
default as aforesaid (an "Event of Default"), and all applicable cure periods
have expired without a cure having been effected, then without demand or notice
of any kind, the entire unpaid principal amount hereof, and all interest accrued
thereon, shall become immediately due and payable. Failure of the holder to
exercise such election shall not constitute a waiver of the right to exercise
the same in the event of any subsequent Event of Default. No holder hereof
shall, by any act of omission or commission, be deemed to waive any of its
rights, remedies or powers hereunder or otherwise unless such waiver is in
writing and signed by the holder hereof, and then only to the extent
specifically set forth therein. The rights, remedies and powers of the holder
hereof, as provided in this Note, are cumulative and concurrent, and may be
pursued singly, successively or together against Maker and any security given at
any time to secure the repayment hereof, all at the sole discretion of the
holder hereof. If any suit or action is instituted or attorneys are employed to
collect this Note or any part thereof, Maker promises and agrees to pay all
costs of collection, including reasonable attorneys= fees and court costs.

       11. Maker hereby (i) waives presentment and demand for payment, notice of
nonpayment and of dishonor, protest of dishonor, and notice of protest; and (ii)
waives any and all lack of diligence and delays in the enforcement of the
payment hereof.

       12. This Note is secured by that certain Security Agreement, dated as of
the date hereof, pursuant to which Maker has pledged certain of its assets and
property, as described therein, as security for the payment hereof.

       13. This Note evidences a business loan that comes within the purview of
Section 205/4, paragraph (1)(c) of Chapter 815 of the Illinois Compiled
Statutes, as amended. Maker agrees that the obligation evidenced by this Note is
an exempted transaction under the Truth In Lending Act, 15 U.S.C., Section 1601,
et seq.

       14. Time is of the essence hereof.

       15. This Note is governed and controlled as to validity, enforcement,
interpretation, construction, effect and in all other respects by the statutes,
laws and decisions of the State of Illinois, without regard to conflicts of laws
principles. This Note may not be changed or amended orally but only by an
instrument in writing signed by the party against whom enforcement of the change
or amendment is sought.

       16. This Note has been made and delivered at Chicago, Illinois and all
funds disbursed to or for the benefit of Maker will be disbursed in Chicago,
Illinois.

       17. The obligations and liabilities of Maker under this Note shall be
binding upon and enforceable against Maker and its successors and assigns. This
Note shall inure to the benefit of and may be enforced by Payee and its
successors and assigns.

       18. In the event one or more of the provisions contained in this Note
shall for any reason be held to be invalid, illegal or unenforceable in any
respect by a court of competent


<PAGE>   4

jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Note, and this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
Payee shall not collect a rate of interest on the principal balance under this
Note in excess of the maximum contract rate of interest permitted by applicable
law. All interest found in excess of that rate of interest allowed and collected
by Payee shall be applied to the principal balance in such manner as to prevent
the payment and collection of interest in excess of the rate permitted by
applicable law.

       IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.

                                   ACCUMED INTERNATIONAL, INC.

                                   By:   /s/ PAUL F. LAVALLEE
                                      ------------------------------------------
                                         Paul F. Lavallee, Chairman of the Board
                                         and Chief Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.38
<SEQUENCE>10
<FILENAME>v70395ex10-38.txt
<DESCRIPTION>EXHIBIT 10.38
<TEXT>

<PAGE>   1

                                                                   EXHIBIT 10.38

                                PROMISSORY NOTE
                                ---------------

U.S. $320,000.00                                             December 29, 2000

     FOR VALUE RECEIVED, the undersigned, MONOGEN, INC., a Nevada corporation
("Maker"), hereby promises to pay ACCUMED INTERNATIONAL, INC., an Illinois
corporation ("Payee"), at 920 North Franklin Street, Suite 402, Chicago,
Illinois 60610, or at such other place as the holder of this Note may from time
to time designate in writing, the principal sum of Three Hundred Twenty Thousand
U.S. Dollars (U.S. $320,000.00), payable in lawful money of the United States of
America in installments as follows:

     Eighty Thousand U.S. Dollars (U.S. $80,000.00) shall be due and payable on
     or before January 31, 2001;

     Eighty Thousand U.S. Dollars (U.S. $80,000.00) shall be due and payable on
     or before February 28, 2001; and

     The remaining principal balance of the Note shall be due and payable on or
     before March 31, 2001.

     This Note may be prepaid in full or in part at any time without premium or
penalty. All prepayments shall be applied against installments of principal due
hereunder in the inverse order of their maturity.

     Without affecting the liability of any maker, indorser, surety or
guarantor, the holder may, from time to time and without notice, renew or extend
the time for payment, accept partial payment of any or all installments due
hereunder, release or impair any collateral security for payment of this Note,
or agree not to sue any party liable hereunder.

     An Event of Default shall be deemed to have occurred under this Note if
Maker (a) fails to make any payment of principal within five (5) business days
of such payment's due date; (b) makes any assignment for the benefit of
creditors; (c) has a receiver, liquidator or trustee appointed for all or
substantially all of Maker's assets; (d) is adjudicated insolvent; or (e) files
a petition for bankruptcy or reorganization.

     Upon the occurrence of an Event of Default, Payee may, upon five (5)
business days' prior written notice to Maker, declare the entire unpaid balance
of this Note immediately due and payable (the "Default Payment Date"). In the
event that Payee so declares the entire unpaid balance of the Note due and
payable, interest thereon shall accrue from the Default Payment Date until paid
in full at a rate per annum equal to the prime rate as published in The Wall
Street Journal on the issue date nearest the Default Payment Date.

     This Note shall be governed by, and shall be construed and interpreted in
accordance with, the internal laws of the State of Illinois, without reference
or regard to the conflicts of law rules thereof. The parties hereto agree that
exclusive jurisdiction and venue in any action relating to this Note shall be in
the Federal District Court located in



<PAGE>   2

Chicago, Illinois, or in Illinois state courts of general jurisdiction located
in Chicago, Illinois.

     If any provision in this Note is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Note will remain in full
force and effect. Any provision of this Note held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.

     All words used in this Note will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
words "hereof" and "hereunder" and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof.

     IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.



                                  MONOGEN, INC.



                                  By:      /s/ PETER J.N. KILNER
                                     -----------------------------------------
                                     Peter J.N. Kilner, Vice President



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>11
<FILENAME>v70395ex21-1.txt
<DESCRIPTION>EXHIBIT 21.1
<TEXT>

<PAGE>   1




                                                                    EXHIBIT 21.1




                    SUBSIDIARY OF ACCUMED INTERNATIONAL, INC.


Oncometrics Imaging Corp., a corporation continuing under the laws of the Yukon
Territory, Canada.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>12
<FILENAME>v70395ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>

<PAGE>   1


                                                                    EXHIBIT 23.1







                               CONSENT OF KPMG LLP


The Board of Directors
AccuMed International, Inc.:

We consent to incorporation by reference in the registration statements on Form
S-3 (Nos. 333-04715 and 333-56393) and on Form S-8 (No.333-11219) of AccuMed
International, Inc. of our reports dated March 8, 2001 relating to the
consolidated balance sheets of AccuMed International, Inc. and subsidiary as of
December 31, 2000 and 1999, and the related consolidated statements of
operations, stockholders' equity and comprehensive income (loss)and cash flows
for each of the years in the three-year period ended December 31, 2000 and
related schedule, which reports appear in the December 31, 2000 annual report
on Form 10-K of AccuMed International, Inc.

Our reports dated March 8, 2001 contain an explanatory paragraph that states
that the Company has suffered recurring losses from operations and has a working
capital deficiency, which raise substantial doubt about its ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty.



                                            /s/ KPMG LLP


Chicago, Illinois
March 27, 2001
</TEXT>
</DOCUMENT>
</SUBMISSION>
