Exhibit 10.18

 

STOCK PURCHASE AGREEMENT

 

                THIS STOCK PURCHASE AGREEMENT (the “Agreement”), is made and
entered into as of February 3, 2006, by and among Inverness Medical Innovations,
Inc. a Delaware corporation (the “Company”), and the undersigned prospective
investor (the “Investor”).

 

1.                                      PURCHASE AND SALE OF SHARES; CLOSING.

1.1.          PURCHASE AND SALE OF SHARES.

(A)   SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THE INVESTOR AGREES
TO PURCHASE FROM THE COMPANY THE NUMBER OF SHARES OF COMMON STOCK OF THE
COMPANY, PAR VALUE $0.001 PER SHARE (THE “COMMON STOCK”), INDICATED ON THE
INVESTOR’S SIGNATURE PAGE TO THIS AGREEMENT (THE “SUBSCRIPTION AMOUNT”) AT A
PURCHASE PRICE OF $24.41 PER SHARE (THE “SHARE PRICE”) FOR AN AGGREGATE PURCHASE
PRICE INDICATED ON THE SIGNATURE PAGE HERETO (THE “AGGREGATE PURCHASE PRICE”).

(B)   THE INVESTOR SHALL PAY THE AGGREGATE PURCHASE PRICE BY DELIVERING
IMMEDIATELY AVAILABLE GOOD FUNDS IN UNITED STATES DOLLARS BY WIRE TRANSFER NO
LATER THAN THE CLOSING DATE, AS DEFINED IN SECTION 1.4(A) BELOW, TO THE COMPANY
IN ACCORDANCE WITH THE WIRE TRANSFER INSTRUCTIONS ATTACHED HERETO AS EXHIBIT A.

1.2.          AGGREGATE NUMBER OF SHARES OFFERED. THE COMPANY IS SIMULTANEOUSLY
ENTERING INTO MULTIPLE AGREEMENTS IN SUBSTANTIALLY THE SAME FORM AS THIS
AGREEMENT WITH CERTAIN OTHER INVESTORS (THE “OTHER INVESTORS”).  PURSUANT TO
THIS AGREEMENT AND THE AGREEMENTS WITH THE OTHER INVESTORS, THE COMPANY IS
SELLING AN AGGREGATE OF UP TO 3,400,000 SHARES OF COMMON STOCK (THE “SHARES”) AT
THE SHARE PRICE (THE “OFFERING”).

1.3.          BINDING EFFECT OF THIS AGREEMENT. THE INVESTOR ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT SHALL BE BINDING UPON THE INVESTOR UPON THE
SUBMISSION TO THE COMPANY OF THE INVESTOR’S SIGNED COUNTERPART SIGNATURE PAGE TO
THIS AGREEMENT (THE “SUBSCRIPTION”); PROVIDED THAT, IN THE EVENT THE CLOSING
DATE, AS DEFINED IN SECTION 1.4(A) BELOW, SHALL NOT HAVE OCCURRED ON OR PRIOR TO
FEBRUARY 13, 2006 (SUCH DATE SUBJECT TO EXTENSION BY UP TO 15 DAYS BY THE
COMPANY BY WRITTEN NOTICE THEREOF TO THE INVESTOR) (THE “TERMINATION DATE”),
THIS AGREEMENT SHALL BE TERMINATED AND BE OF NO FORCE AND EFFECT.  THE COMPANY,
IN ITS SOLE DISCRETION, MAY TERMINATE THE OFFERING AT ANY TIME PRIOR TO THE
CLOSING DATE WITHOUT PENALTY.  THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR
OR SOLICITATION OF THE INVESTMENT CONTEMPLATED HEREBY SHALL CREATE NO OBLIGATION
ON THE PART OF THE COMPANY TO ACCEPT ANY SUBSCRIPTION, IN PART OR IN FULL, OR
COMPLETE THE OFFERING.  THE INVESTOR HEREBY ACKNOWLEDGES AND AGREES THAT THE
SUBSCRIPTION HEREUNDER IS IRREVOCABLE BY THE INVESTOR, AND THAT, EXCEPT AS
REQUIRED BY LAW, THE INVESTOR IS NOT ENTITLED TO CANCEL, TERMINATE OR REVOKE
THIS AGREEMENT OR ANY AGREEMENTS OF THE INVESTOR HEREUNDER AND THAT IF THE
INVESTOR IS AN INDIVIDUAL THIS AGREEMENT SHALL SURVIVE THE DEATH OR DISABILITY
OF THE INVESTOR AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE
PARTIES AND THEIR HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS, LEGAL
REPRESENTATIVES AND PERMITTED ASSIGNS.

 

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1.4.          DELIVERY OF SHARES AT CLOSING.

(A)   THE COMPLETION OF THE PURCHASE AND SALE OF THE SHARES (THE “CLOSING”)
SHALL OCCUR, SUBJECT TO THE SATISFACTION OR WAIVER OF THE CONDITIONS SET FORTH
IN SECTION 1.5 AND SECTION 1.6 (OTHER THAN THOSE INTENDED TO BE SATISFIED AT
CLOSING), AT THE OFFICES OF FOLEY HOAG LLP, WORLD TRADE CENTER WEST, 155 SEAPORT
BOULEVARD, BOSTON, MASSACHUSETTS 02210.  THE DATE UPON WHICH THE CLOSING
ACTUALLY OCCURS IS HEREIN REFERRED TO AS THE “CLOSING DATE”.

(B)   PRIOR TO THE CLOSING, THE COMPANY SHALL AUTHORIZE ITS TRANSFER AGENT TO
ISSUE AND THE TRANSFER AGENT SHALL ISSUE TO THE INVESTOR ONE OR MORE STOCK
CERTIFICATES REGISTERED IN THE NAME OF THE INVESTOR, OR IN SUCH NAME OF
NOMINEE(S) DESIGNATED BY THE INVESTOR IN WRITING, REPRESENTING IN THE AGGREGATE
A NUMBER OF SHARES OF COMMON STOCK EQUAL TO THE SUBSCRIPTION AMOUNT DIVIDED BY
THE SHARE PRICE.

1.5.          CONDITIONS TO THE COMPANY’S OBLIGATION TO COMPLETE PURCHASE AND
SALE.  UPON ACCEPTANCE OF THE SUBSCRIPTION, THE COMPANY’S OBLIGATION TO ISSUE
AND SELL THE SHARES TO THE INVESTOR AT CLOSING IS SUBJECT TO THE SATISFACTION,
ON OR BEFORE THE CLOSING DATE, OF EACH OF THE FOLLOWING CONDITIONS, PROVIDED
THAT THESE CONDITIONS ARE FOR THE COMPANY’S SOLE BENEFIT AND MAY BE WAIVED BY
THE COMPANY AT ANY TIME IN ITS SOLE DISCRETION BY PROVIDING THE INVESTOR WITH
PRIOR WRITTEN NOTICE THEREOF:

(A)   PAYMENT OF AGGREGATE PURCHASE PRICE. THE INVESTOR SHALL MAKE PAYMENT TO
THE COMPANY BY WIRE TRANSFER OF THE AGGREGATE PURCHASE PRICE IN ACCORDANCE WITH
SECTION 1.1(B); AND

(B)   REPRESENTATIONS AND WARRANTIES; COVENANTS. THE REPRESENTATIONS AND
WARRANTIES OF THE INVESTOR SET FORTH IN ARTICLE 3 HEREOF SHALL BE TRUE AND
CORRECT AS OF THE DATE HEREOF AND AS OF THE CLOSING DATE AS THOUGH MADE AT THAT
TIME (EXCEPT FOR REPRESENTATIONS AND WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE
(WHICH SHALL BE TRUE AND CORRECT AS OF SUCH DATE)), AND THE INVESTOR SHALL HAVE
PERFORMED, SATISFIED AND COMPLIED WITH IN ALL MATERIAL RESPECTS THE COVENANTS,
AGREEMENTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED, SATISFIED
OR COMPLIED WITH BY THE INVESTOR ON OR PRIOR TO THE CLOSING DATE.

1.6.          CONDITIONS TO THE INVESTOR’S OBLIGATION TO COMPLETE PURCHASE AND
SALE. THE OBLIGATION OF THE INVESTOR HEREUNDER TO PURCHASE THE SHARES FROM THE
COMPANY AT THE CLOSING IS SUBJECT TO THE SATISFACTION, ON OR BEFORE THE CLOSING
DATE, OF EACH OF THE FOLLOWING CONDITIONS, PROVIDED THAT THESE CONDITIONS ARE
FOR THE INVESTOR’S SOLE BENEFIT AND MAY BE WAIVED BY THE INVESTOR AT ANY TIME IN
ITS SOLE DISCRETION BY PROVIDING THE COMPANY WITH PRIOR WRITTEN NOTICE THEREOF:

(A)   OPINION OF COUNSEL. RECEIPT BY THE INVESTORS OF AN OPINION LETTER OF FOLEY
HOAG LLP, COUNSEL TO THE COMPANY, DATED THE CLOSING DATE, IN SUBSTANTIALLY THE
FORM ATTACHED HERETO AS EXHIBIT B;

(B)   REPRESENTATIONS AND WARRANTIES; COVENANTS. THE REPRESENTATIONS AND
WARRANTIES OF THE COMPANY SET FORTH IN ARTICLE 2 HEREOF SHALL BE TRUE AND
CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE HEREOF AND AS OF THE CLOSING
DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND WARRANTIES THAT
SPEAK AS OF A SPECIFIC DATE (WHICH SHALL BE TRUE AND CORRECT IN

 

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ALL MATERIAL RESPECTS AS OF SUCH DATE)), AND THE COMPANY SHALL HAVE PERFORMED,
SATISFIED AND COMPLIED WITH IN ALL MATERIAL RESPECTS THE COVENANTS, AGREEMENTS
AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED, SATISFIED OR COMPLIED
WITH BY THE COMPANY ON OR PRIOR TO THE CLOSING DATE;

(C)   OFFICER’S CERTIFICATE.  THE COMPANY SHALL HAVE DELIVERED A CERTIFICATE,
DATED THE CLOSING DATE, DULY EXECUTED ON BEHALF OF THE COMPANY BY ITS CHIEF
EXECUTIVE OFFICER TO THE EFFECT SET FORTH IN CLAUSE (B) ABOVE;

(D)   SECRETARY’S CERTIFICATE.  THE COMPANY SHALL HAVE DELIVERED A CERTIFICATE,
DATED THE CLOSING DATE, DULY EXECUTED BY ITS SECRETARY OR ASSISTANT SECRETARY OR
OTHER APPROPRIATE OFFICER, CERTIFYING THAT THE ATTACHED COPIES OF THE COMPANY’S
CERTIFICATE OF INCORPORATION, CERTIFICATE OF DESIGNATIONS (AS DEFINED BELOW),
BY-LAWS AND THE RESOLUTIONS OF THE BOARD OF DIRECTORS OR EXECUTIVE COMMITTEE OF
THE BOARD OF DIRECTORS APPROVING THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY, ARE ALL TRUE, COMPLETE AND CORRECT AND REMAIN UNAMENDED AND
IN FULL FORCE AND EFFECT;

(E)   NO LITIGATION.  ON THE CLOSING DATE, NO LEGAL ACTION, SUIT OR PROCEEDING
SHALL BE PENDING OR OVERTLY THREATENED WHICH SEEKS TO RESTRAIN OR PROHIBIT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

2.                                      REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.

                Except as set forth on the Schedule of Exceptions attached
hereto as Schedule A or as set forth in the SEC Documents (as defined below),
the Company hereby represents and warrants to the Investor as follows:

 

2.1.          SUBSIDIARIES.  THE COMPANY HAS NO DIRECT OR INDIRECT SUBSIDIARIES
(AS DEFINED BY RULE 405 UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OTHER THAN AS SPECIFIED IN THE SEC DOCUMENTS (THE
“SUBSIDIARIES”).

2.2.          ORGANIZATION AND QUALIFICATION.  THE COMPANY AND EACH OF ITS
SUBSIDIARIES IS DULY ORGANIZED AND VALIDLY EXISTING AND IS IN GOOD STANDING
UNDER THE LAWS OF THE JURISDICTION OF ITS INCORPORATION OR ORGANIZATION (AS
APPLICABLE), EXCEPT WHERE THE FAILURE TO BE IN GOOD STANDING WOULD NOT HAVE A
MATERIAL ADVERSE EFFECT UPON THE BUSINESS, ASSETS, FINANCIAL CONDITION OR
RESULTS OF OPERATION OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE (A
“MATERIAL ADVERSE EFFECT”).  THE COMPANY AND EACH OF ITS SUBSIDIARIES HAS FULL
CORPORATE POWER AND AUTHORITY TO OWN, OPERATE AND OCCUPY ITS PROPERTIES AND TO
CONDUCT ITS BUSINESS AS PRESENTLY CONDUCTED AND IS REGISTERED OR QUALIFIED TO DO
BUSINESS AND IN GOOD STANDING IN EACH JURISDICTION IN WHICH IT OWNS OR LEASES
PROPERTY OR TRANSACTS BUSINESS AND WHERE THE FAILURE TO BE SO QUALIFIED WOULD
HAVE A MATERIAL ADVERSE EFFECT, AND TO THE COMPANY’S KNOWLEDGE, NO PROCEEDING
HAS BEEN INSTITUTED IN ANY SUCH JURISDICTION REVOKING, LIMITING OR CURTAILING,
OR SEEKING TO REVOKE, LIMIT OR CURTAIL, SUCH POWER AND AUTHORITY OR
QUALIFICATION.

2.3.          DUE AUTHORIZATION. THE COMPANY HAS ALL REQUISITE CORPORATE POWER
AND AUTHORITY TO EXECUTE, DELIVER AND PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT.  THIS AGREEMENT HAS BEEN DULY AUTHORIZED AND VALIDLY EXECUTED AND
DELIVERED BY THE COMPANY AND, ASSUMING DUE

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AUTHORIZATION, EXECUTION AND DELIVERY BY THE OTHER PARTY HERETO, CONSTITUTES A
VALID AND LEGALLY BINDING OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST THE
COMPANY IN ACCORDANCE WITH ITS TERMS, EXCEPT (I) TO THE EXTENT RIGHTS TO
INDEMNITY AND CONTRIBUTION MAY BE LIMITED BY STATE OR FEDERAL SECURITIES LAWS OR
THE PUBLIC POLICY UNDERLYING SUCH LAWS, (II) ENFORCEABILITY MAY BE LIMITED BY
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, FRAUDULENT CONVEYANCE,
MORATORIUM OR SIMILAR LAWS AFFECTING CREDITORS’ AND CONTRACTING PARTIES’ RIGHTS
GENERALLY AND (III) ENFORCEABILITY MAY BE LIMITED BY GENERAL PRINCIPLES OF
EQUITY (REGARDLESS OF WHETHER SUCH ENFORCEABILITY IS CONSIDERED IN A PROCEEDING
IN EQUITY OR AT LAW).

2.4.          NON-CONTRAVENTION. THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE ISSUANCE AND SALE OF THE SHARES TO BE SOLD BY THE COMPANY UNDER THIS
AGREEMENT, THE PERFORMANCE BY THE COMPANY OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL NOT
(A) CONFLICT WITH OR CONSTITUTE A VIOLATION OF, OR DEFAULT (WITH OR WITHOUT THE
GIVING OF NOTICE OR THE PASSAGE OF TIME OR BOTH) UNDER, (I) ANY MATERIAL BOND,
DEBENTURE, NOTE OR OTHER EVIDENCE OF INDEBTEDNESS, OR UNDER ANY MATERIAL LEASE,
INDENTURE, MORTGAGE, DEED OF TRUST, LOAN AGREEMENT, JOINT VENTURE OR OTHER
AGREEMENT OR INSTRUMENT TO WHICH THE COMPANY IS A PARTY OR BY WHICH IT OR ITS
PROPERTIES ARE BOUND, (II) THE CERTIFICATE OF INCORPORATION OR BY-LAWS OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES, OR (III) ANY LAW, ADMINISTRATIVE REGULATION,
ORDINANCE OR ORDER OF ANY COURT OF COMPETENT JURISDICTION OR GOVERNMENTAL
AGENCY, ARBITRATION PANEL OR AUTHORITY APPLICABLE TO THE COMPANY, ANY OF ITS
SUBSIDIARIES OR THEIR RESPECTIVE PROPERTIES, WHICH CONFLICT, VIOLATION OR
DEFAULT WOULD BE LIKELY TO RESULT IN A MATERIAL ADVERSE EFFECT, OR (B) RESULT IN
THE CREATION OR IMPOSITION OF ANY LIEN, ENCUMBRANCE, CLAIM, SECURITY INTEREST OR
RESTRICTION WHATSOEVER UPON ANY OF THE MATERIAL PROPERTIES OR ASSETS OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES OR AN ACCELERATION OF INDEBTEDNESS PURSUANT
TO ANY OBLIGATION, AGREEMENT OR CONDITION CONTAINED IN ANY MATERIAL BOND,
DEBENTURE, NOTE OR ANY OTHER EVIDENCE OF INDEBTEDNESS OR ANY MATERIAL INDENTURE,
MORTGAGE, DEED OF TRUST OR ANY OTHER AGREEMENT OR INSTRUMENT TO WHICH THE
COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY OR BY WHICH THE COMPANY OR ANY OF
ITS SUBSIDIARIES IS BOUND OR TO WHICH ANY OF THE PROPERTY OR ASSETS OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES IS SUBJECT.  NO CONSENT, APPROVAL,
AUTHORIZATION OR OTHER ORDER OF, OR REGISTRATION, QUALIFICATION OR FILING WITH,
ANY REGULATORY BODY, ADMINISTRATIVE AGENCY, SELF-REGULATORY ORGANIZATION, STOCK
EXCHANGE OR MARKET, OR OTHER GOVERNMENTAL BODY IN THE UNITED STATES IS REQUIRED
FOR THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE VALID ISSUANCE AND SALE OF
THE SHARES TO BE SOLD PURSUANT TO THIS AGREEMENT OTHER THAN SUCH AS HAVE BEEN
MADE OR OBTAINED, ARE DISCLOSED IN SCHEDULE 2.4 OR FOR ANY SECURITIES FILINGS
REQUIRED TO BE MADE UNDER FEDERAL OR STATE SECURITIES LAWS.

2.5.          REPORTING STATUS.  THE COMPANY HAS FILED IN A TIMELY MANNER ALL
DOCUMENTS THAT THE COMPANY WAS REQUIRED TO FILE UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”), SINCE JANUARY 1, 2003 (THE “SEC
DOCUMENTS”).  THE SEC DOCUMENTS COMPLIED AS TO FORM IN ALL MATERIAL RESPECTS
WITH THE SECURITIES AND EXCHANGE COMMISSION’S (THE “SEC”) REQUIREMENTS AS OF
THEIR RESPECTIVE FILING DATES, AND THE INFORMATION CONTAINED THEREIN AS OF THE
DATE THEREOF DID NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO
STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE
STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE,
NOT MISLEADING, EXCEPT TO THE EXTENT THAT INFORMATION CONTAINED IN ANY SUCH
DOCUMENT HAS BEEN REVISED OR SUPERSEDED BY A LATER FILED SEC DOCUMENT.

 

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2.6.          CAPITALIZATION. IMMEDIATELY PRIOR TO THE CLOSING, THE AUTHORIZED
CAPITAL STOCK OF THE COMPANY CONSISTS OF:

i.                                          50,000,000 shares of Common Stock,
$0.001 par value per share of which 27,652,889 shares are issued and outstanding
at the close of business on January 31, 2006; and

ii.                                       5,000,000 shares of Preferred Stock,
$0.001 par value per share.  Each series of Preferred Stock designated by the
Board of Directors is listed on Schedule 2.6 hereto.

ALL SUBSCRIPTIONS, WARRANTS, OPTIONS, CONVERTIBLE SECURITIES, AND OTHER RIGHTS
(CONTINGENT OR OTHER) TO PURCHASE OR OTHERWISE ACQUIRE EQUITY SECURITIES OF THE
COMPANY ISSUED AND OUTSTANDING AS OF JANUARY 31, 2006, OR CONTRACTS,
COMMITMENTS, UNDERSTANDINGS, OR ARRANGEMENTS BY WHICH THE COMPANY OR ANY OF ITS
SUBSIDIARIES IS OR MAY BE OBLIGATED TO ISSUE SHARES OF COMMON STOCK, OR
SECURITIES OR RIGHTS CONVERTIBLE OR EXCHANGEABLE FOR SHARES OF COMMON STOCK, ARE
AS SET FORTH ON SCHEDULE 2.6 HERETO.  EXCEPT AS SET FORTH ON SCHEDULE 2.6, OR AS
A RESULT OF EXERCISES OF STOCK OPTIONS PURSUANT TO THE COMPANY’S STOCK OPTION
AND INCENTIVE PLAN, NO COMMON STOCK NOR ANY SUBSCRIPTION, WARRANT, OPTION,
CONVERTIBLE SECURITY, OR OTHER RIGHT (CONTINGENT OR OTHER) TO PURCHASE OR
OTHERWISE ACQUIRE EQUITY SECURITIES OF THE COMPANY IS OUTSTANDING ON THE CLOSING
DATE.  THE ISSUED AND OUTSTANDING SHARES OF THE COMPANY’S CAPITAL STOCK HAVE
BEEN DULY AUTHORIZED AND VALIDLY ISSUED, ARE FULLY PAID AND NONASSESSABLE, HAVE
BEEN ISSUED IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS,
AND WERE NOT ISSUED IN VIOLATION OF OR SUBJECT TO ANY PREEMPTIVE RIGHTS OR OTHER
RIGHTS TO SUBSCRIBE FOR OR PURCHASE SECURITIES.  NO HOLDER OF COMMON STOCK IS
ENTITLED TO PREEMPTIVE OR SIMILAR RIGHTS.

2.7.          LEGAL PROCEEDINGS.  EXCEPT AS DISCLOSED IN THE SEC DOCUMENTS,
THERE IS NO ACTION, SUIT OR PROCEEDING BEFORE ANY COURT, GOVERNMENTAL AGENCY OR
BODY, DOMESTIC OR FOREIGN, NOW PENDING OR, TO THE ACTUAL KNOWLEDGE OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES, THREATENED AGAINST THE COMPANY OR ITS
SUBSIDIARIES WHEREIN AN UNFAVORABLE DECISION, RULING OR FINDING WOULD REASONABLY
BE EXPECTED TO MATERIALLY ADVERSELY AFFECT THE VALIDITY OR ENFORCEABILITY OF, OR
THE AUTHORITY OR ABILITY OF THE COMPANY TO PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT.

2.8.          NO VIOLATIONS.  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS
IN VIOLATION OF ITS CERTIFICATE OF INCORPORATION OR BY-LAWS, OR IS IN VIOLATION
OF ANY LAW, ADMINISTRATIVE REGULATION, ORDINANCE OR ORDER OF ANY COURT OR
GOVERNMENTAL AGENCY, ARBITRATION PANEL OR AUTHORITY APPLICABLE TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES, WHICH VIOLATION, INDIVIDUALLY OR IN THE AGGREGATE,
WOULD BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT, OR IS IN DEFAULT
(AND THERE EXISTS NO CONDITION WHICH, WITH OR WITHOUT THE PASSAGE OF TIME OR
GIVING OF NOTICE OR BOTH, WOULD CONSTITUTE A DEFAULT) IN ANY MATERIAL RESPECT IN
THE PERFORMANCE OF ANY BOND, DEBENTURE, NOTE OR ANY OTHER EVIDENCE OF
INDEBTEDNESS IN ANY INDENTURE, MORTGAGE, DEED OF TRUST OR ANY OTHER MATERIAL
AGREEMENT OR INSTRUMENT TO WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A
PARTY OR BY WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS BOUND OR BY WHICH
THE PROPERTIES OF THE COMPANY ARE BOUND, WHICH WOULD BE REASONABLY LIKELY TO
HAVE A MATERIAL ADVERSE EFFECT.

2.9.          GOVERNMENTAL PERMITS, ETC. THE COMPANY AND ITS SUBSIDIARIES
POSSESS ALL NECESSARY FRANCHISES, LICENSES, CERTIFICATES AND OTHER
AUTHORIZATIONS FROM ANY FOREIGN, FEDERAL,

 

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STATE OR LOCAL GOVERNMENT OR GOVERNMENTAL AGENCY, DEPARTMENT OR BODY THAT ARE
CURRENTLY NECESSARY FOR THE OPERATION OF THEIR RESPECTIVE BUSINESS AS CURRENTLY
CONDUCTED, EXCEPT WHERE SUCH FAILURE TO POSSESS COULD NOT REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT.

2.10.        INTELLECTUAL PROPERTY. THE COMPANY AND ITS SUBSIDIARIES OWN OR
POSSESS SUFFICIENT RIGHTS TO USE ALL PATENTS, PATENT RIGHTS, TRADEMARKS,
COPYRIGHTS, LICENSES, INVENTIONS, TRADE SECRETS, TRADE NAMES AND KNOW-HOW THAT
ARE CURRENTLY NECESSARY FOR THE CONDUCT OF THEIR RESPECTIVE BUSINESSES AS NOW
CONDUCTED (THE “COMPANY INTELLECTUAL PROPERTY”), EXCEPT WHERE THE FAILURE TO OWN
OR POSSESS WOULD NOT HAVE A MATERIAL ADVERSE EFFECT.  EXCEPT AS SET FORTH IN
SCHEDULE 2.10, (I) NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS RECEIVED
ANY WRITTEN NOTICE OF, OR HAS ANY ACTUAL KNOWLEDGE OF, ANY INFRINGEMENT BY THE
COMPANY OR ITS SUBSIDIARIES OF INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY
THAT, INDIVIDUALLY OR IN THE AGGREGATE, WOULD HAVE A MATERIAL ADVERSE EFFECT AND
(II) NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS RECEIVED ANY WRITTEN
NOTICE OF ANY INFRINGEMENT BY A THIRD PARTY OF ANY COMPANY INTELLECTUAL PROPERTY
THAT, INDIVIDUALLY OR IN THE AGGREGATE, WOULD HAVE A MATERIAL ADVERSE EFFECT.

2.11.        FINANCIAL STATEMENTS. THE CONSOLIDATED FINANCIAL STATEMENTS OF THE
COMPANY AND ITS SUBSIDIARIES AND THE RELATED NOTES THERETO INCLUDED IN THE SEC
DOCUMENTS PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF
THE COMPANY AS OF THE DATES INDICATED AND THE RESULTS OF ITS OPERATIONS AND CASH
FLOWS FOR THE PERIODS THEREIN SPECIFIED SUBJECT, IN THE CASE OF UNAUDITED
STATEMENTS, TO NORMAL YEAR-END AUDIT ADJUSTMENTS.  EXCEPT AS SET FORTH IN SUCH
FINANCIAL STATEMENTS (OR THE NOTES THERETO), SUCH FINANCIAL STATEMENTS
(INCLUDING THE RELATED NOTES) HAVE BEEN PREPARED IN ACCORDANCE WITH UNITED
STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT BASIS
THROUGHOUT THE PERIODS THEREIN SPECIFIED.  THE FINANCIAL STATEMENTS REFERRED TO
IN THIS SECTION 2.11 CONTAIN ALL CERTIFICATIONS AND STATEMENTS REQUIRED BY RULE
13A-14 OR 15D-14 UNDER THE EXCHANGE ACT, OR 18 U.S.C. SECTION 1350 (SECTIONS 302
AND 906 OF THE SARBANES-OXLEY ACT OF 2002) WITH RESPECT TO THE REPORT RELATING
THERETO.  THE FORMAL INVESTIGATION COMMENCED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE “SEC”) PURSUANT TO ITS SUBPOENA DATED DECEMBER 14, 2005 AND
PUBLICLY DISCLOSED BY THE COMPANY IN ITS CURRENT REPORT ON FORM 8-K FILED ON
DECEMBER 14, 2005 (THE “SEC INVESTIGATION”) REMAINS ONGOING.

2.12.        NO MATERIAL ADVERSE CHANGE.. EXCEPT AS SET FORTH IN SCHEDULE 2.12
OR AS THE COMPANY MAY HAVE PUBLICLY DISCLOSED (AND THEN SOLELY TO THE EXTENT SO
DISCLOSED) IN THE SEC DOCUMENTS, PRESS RELEASES OR IN OTHER “PUBLIC DISCLOSURES”
AS SUCH TERM IS DEFINED IN SECTION 101(E) OF REGULATION FD OF THE EXCHANGE ACT,
IN EACH CASE, FILED OR MADE THROUGH AND INCLUDING THE DATE HEREOF, SINCE OCTOBER
1, 2005 THERE HAS NOT BEEN (I) ANY MATERIAL ADVERSE CHANGE IN THE BUSINESS,
ASSETS, FINANCIAL CONDITION OR RESULTS OF OPERATION OF THE COMPANY AND ITS
SUBSIDIARIES, TAKEN AS WHOLE OR ANY MATERIAL ADVERSE DEVELOPMENT IN THE SEC
INVESTIGATION, (II) ANY OBLIGATION, DIRECT OR CONTINGENT, THAT IS MATERIAL TO
THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE, INCURRED BY THE COMPANY OR
ANY OF ITS SUBSIDIARIES, EXCEPT OBLIGATIONS INCURRED IN THE ORDINARY COURSE OF
BUSINESS, (III) ANY DIVIDEND OR DISTRIBUTION OF ANY KIND DECLARED, PAID OR MADE
ON THE CAPITAL STOCK OF THE COMPANY; OR (IV) ANY LOSS OR DAMAGE (WHETHER OR NOT
INSURED) TO THE PHYSICAL PROPERTY OF THE COMPANY OR ANY OF ITS SUBSIDIARIES
WHICH HAS BEEN SUSTAINED WHICH HAS HAD A MATERIAL ADVERSE EFFECT.

2.13.        AMERICAN STOCK EXCHANGE LISTING. THE COMPANY’S COMMON STOCK IS
REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT AND IS LISTED ON THE
AMERICAN STOCK EXCHANGE

 

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(“AMEX”), AND THE COMPANY HAS TAKEN NO ACTION DESIGNED TO, OR LIKELY TO HAVE THE
EFFECT OF, TERMINATING THE REGISTRATION OF THE COMMON STOCK UNDER THE EXCHANGE
ACT OR TERMINATING THE LISTING OF THE COMMON STOCK FROM THE AMEX, NOR TO THE
COMPANY’S KNOWLEDGE IS THE AMEX CURRENTLY CONTEMPLATING TERMINATING SUCH
LISTING.  THE COMPANY AND THE COMMON STOCK MEET THE CRITERIA FOR CONTINUED
LISTING ON THE AMEX.

2.14.        NO MANIPULATION OF STOCK. THE COMPANY HAS NOT TAKEN AND WILL NOT,
IN VIOLATION OF APPLICABLE LAW, TAKE, ANY ACTION DESIGNED TO OR THAT MIGHT
REASONABLY BE EXPECTED TO CAUSE OR RESULT IN STABILIZATION OR MANIPULATION OF
THE PRICE OF THE COMMON STOCK TO FACILITATE THE SALE OR RESALE OF THE SHARES.

2.15.        INSURANCE. THE COMPANY MAINTAINS AND WILL CONTINUE TO MAINTAIN
INSURANCE AGAINST LOSS OR DAMAGE BY FIRE OR OTHER CASUALTY AND SUCH OTHER
INSURANCE, INCLUDING, BUT NOT LIMITED TO, PRODUCT LIABILITY INSURANCE, IN SUCH
AMOUNTS AND COVERING SUCH RISKS AS IS BELIEVED TO BE PRUDENT AND CUSTOMARY,
CONSISTENT WITH INDUSTRY PRACTICE FOR THE CONDUCT OF ITS AND ITS SUBSIDIARIES’
RESPECTIVE BUSINESSES AND THE VALUE OF THEIR RESPECTIVE PROPERTIES.

2.16.        TAX MATTERS. THE COMPANY AND EACH OF ITS SUBSIDIARIES HAS TIMELY
FILED ALL MATERIAL FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND FRANCHISE AND
OTHER TAX RETURNS REQUIRED TO BE FILED BY ANY JURISDICTION TO WHICH IT IS
SUBJECT AND HAS PAID ALL TAXES DUE IN ACCORDANCE THEREWITH, EXCEPT WHERE THE
FAILURE TO SO TIMELY FILE OR PAY WOULD NOT BE LIKELY TO RESULT IN A MATERIAL
ADVERSE EFFECT, AND NO TAX DEFICIENCY HAS BEEN DETERMINED ADVERSELY TO THE
COMPANY OR ANY OF ITS SUBSIDIARIES WHICH HAS HAD, NOR DOES THE COMPANY OR ANY OF
ITS SUBSIDIARIES HAVE ANY KNOWLEDGE OF ANY TAX DEFICIENCY WHICH, IF DETERMINED
ADVERSELY TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, WOULD REASONABLY BE
EXPECTED TO HAVE, A MATERIAL ADVERSE EFFECT.

2.17.        INVESTMENT COMPANY. THE COMPANY IS NOT AN “INVESTMENT COMPANY”
WITHIN THE MEANING OF SUCH TERM UNDER THE INVESTMENT COMPANY ACT OF 1940 AND THE
RULES AND REGULATIONS OF THE SEC THEREUNDER.

2.18.        NO REGISTRATION, INTEGRATION, ETC. ASSUMING (I) THE ACCURACY OF THE
REPRESENTATIONS AND WARRANTIES MADE BY, AND COMPLIANCE WITH THE COVENANTS OF,
THE INVESTOR IN ARTICLE 3 HEREOF AND OF ALL OTHER INVESTORS IN THEIR RESPECTIVE
STOCK PURCHASE AGREEMENTS, AND (II) THAT THE PLACEMENT AGENTS (AS DEFINED IN
SECTION 3.9), HAVE CONDUCTED ALL OF THEIR ACTIVITIES IN RELATION TO THE OFFERING
IN A MANNER PERMITTED BY ALL APPLICABLE FEDERAL AND STATE SECURITIES OR OTHER
APPLICABLE LAWS AND IN A MANNER CONSISTENT WITH THE COMPANY’S ABILITY TO RELY
UPON THE EXEMPTION FROM REGISTRATION PROVIDED BY REGULATION D AND SECTION 4(2)
OF THE SECURITIES ACT, NO REGISTRATION OF THE SHARES UNDER THE SECURITIES ACT IS
REQUIRED IN CONNECTION WITH THE OFFER AND SALE OF THE SHARES BY THE COMPANY TO
THE INVESTORS AS CONTEMPLATED BY THIS AGREEMENT.  THE COMPANY IS CURRENTLY
ELIGIBLE TO REGISTER THE RESALE OF COMMON STOCK BY THE INVESTOR PURSUANT TO A
REGISTRATION STATEMENT ON FORM S-3 UNDER THE SECURITIES ACT.

2.19.        TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. EXCEPT AS DISCLOSED IN
THE SEC DOCUMENTS, NONE OF THE OFFICERS OR DIRECTORS OF THE COMPANY AND, TO THE
KNOWLEDGE OF THE COMPANY, NONE OF THE EMPLOYEES OF THE COMPANY IS PRESENTLY A
PARTY TO ANY TRANSACTION WITH THE COMPANY OR ANY SUBSIDIARY (OTHER THAN FOR
SERVICES AS EMPLOYEES, OFFICERS AND DIRECTORS), INCLUDING ANY CONTRACT,
AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR THE FURNISHING OF SERVICES

 

7

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TO OR BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL PROPERTY TO OR FROM, OR
OTHERWISE REQUIRING PAYMENTS TO OR FROM ANY OFFICER, DIRECTOR OR SUCH EMPLOYEE
OR, TO THE KNOWLEDGE OF THE COMPANY, ANY ENTITY IN WHICH ANY OFFICER, DIRECTOR,
OR ANY SUCH EMPLOYEE HAS A SUBSTANTIAL INTEREST OR IS AN OFFICER, DIRECTOR,
TRUSTEE OR PARTNER.

2.20.        DISCLOSURE. THE COMPANY UNDERSTANDS AND CONFIRMS THAT THE INVESTOR
WILL RELY ON THE FOREGOING REPRESENTATIONS AND COVENANTS IN EFFECTING
TRANSACTIONS IN THE SECURITIES OF THE COMPANY.  ALL DISCLOSURE PROVIDED TO THE
INVESTOR REGARDING THE COMPANY, ITS BUSINESS AND THE TRANSACTIONS CONTEMPLATED
HEREBY FURNISHED BY OR ON BEHALF OF THE COMPANY ARE TRUE AND CORRECT AND DO NOT
CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY MATERIAL
FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.

3.                                      REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE INVESTOR.

The Investor represents, warrants and covenants to the Company as follows:

 

3.1.          SECURITIES LAW REPRESENTATIONS AND WARRANTIES.

(A)   THE INVESTOR (I) IS AN “ACCREDITED INVESTOR” AS DEFINED IN REGULATION D
UNDER THE SECURITIES ACT, (II) HAS THE KNOWLEDGE, SOPHISTICATION AND EXPERIENCE
NECESSARY TO MAKE, AND IS QUALIFIED TO MAKE DECISIONS WITH RESPECT TO,
INVESTMENTS IN SECURITIES PRESENTING AN INVESTMENT DECISION LIKE THAT INVOLVED
IN THE PURCHASE OF INVESTMENTS IN SECURITIES ISSUED BY THE COMPANY AND
INVESTMENTS IN COMPARABLE COMPANIES, (III) CAN BEAR THE ECONOMIC RISK OF A TOTAL
LOSS OF ITS INVESTMENT IN THE SHARES AND (IV) HAS REQUESTED, RECEIVED, REVIEWED
AND CONSIDERED ALL INFORMATION IT DEEMED RELEVANT IN MAKING AN INFORMED DECISION
TO PURCHASE THE SHARES;

(B)   THE INVESTOR IS ACQUIRING THE SHARES FOR ITS OWN ACCOUNT FOR INVESTMENT
ONLY AND NOT WITH A VIEW TOWARDS, OR FOR RESALE IN CONNECTION WITH, THE PUBLIC
SALE OR DISTRIBUTION THEREOF;

(C)   THE INVESTOR WAS NOT ORGANIZED FOR THE SPECIFIC PURPOSE OF ACQUIRING THE
SHARES;

(D)   THE INVESTOR WILL NOT, DIRECTLY OR INDIRECTLY, OFFER, SELL, PLEDGE,
TRANSFER OR OTHERWISE DISPOSE OF (OR SOLICIT ANY OFFERS TO BUY, PURCHASE OR
OTHERWISE ACQUIRE OR TAKE A PLEDGE OF) ANY OF THE SHARES EXCEPT IN COMPLIANCE
WITH THE SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS AND THE RESPECTIVE
RULES AND REGULATIONS PROMULGATED THEREUNDER;

(E)   THE INVESTOR UNDERSTANDS THAT THE SHARES ARE BEING OFFERED AND SOLD TO IT
IN RELIANCE ON SPECIFIC EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
UNITED STATES FEDERAL AND STATE SECURITIES LAWS AND THAT THE COMPANY IS RELYING
UPON THE TRUTH AND ACCURACY OF, AND THE INVESTOR’S COMPLIANCE WITH,
REPRESENTATIONS, WARRANTIES, AGREEMENTS, ACKNOWLEDGEMENTS AND UNDERSTANDINGS OF
THE INVESTOR SET FORTH HEREIN IN ORDER TO DETERMINE THE AVAILABILITY OF SUCH
EXEMPTIONS AND THE ELIGIBILITY OF THE INVESTOR TO ACQUIRE THE SHARES;

(F)    THE INVESTOR UNDERSTANDS THAT NO UNITED STATES FEDERAL OR STATE AGENCY OR
ANY OTHER GOVERNMENT OR GOVERNMENTAL AGENCY HAS PASSED ON OR MADE ANY
RECOMMENDATION OR

 

8

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ENDORSEMENT OF THE SHARES OR THE FAIRNESS OR SUITABILITY OF AN INVESTMENT IN THE
SHARES NOR HAVE SUCH AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE
OFFERING; AND

(G)   THE INVESTOR ACKNOWLEDGES THAT THE COMPANY HAS REPRESENTED THAT NO ACTION
HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES BY THE
COMPANY THAT WOULD PERMIT AN OFFERING OF THE SHARES, OR POSSESSION OR
DISTRIBUTION OF OFFERING MATERIALS IN CONNECTION WITH THE ISSUE OF THE SHARES,
IN ANY JURISDICTION OUTSIDE THE UNITED STATES WHERE ACTION FOR THAT PURPOSE IS
REQUIRED.  IF THE INVESTOR IS LOCATED OR DOMICILED OUTSIDE THE UNITED STATES IT
AGREES TO COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN EACH FOREIGN
JURISDICTION IN WHICH IT PURCHASES, OFFERS, SELLS OR DELIVERS SHARES OR HAS IN
ITS POSSESSION OR DISTRIBUTES ANY OFFERING MATERIAL, IN ALL CASES AT ITS OWN
EXPENSE.

(H)   THE INVESTOR HAS BEEN FURNISHED WITH ALL MATERIALS RELATING TO THE
BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS, PROPERTIES, MANAGEMENT,
OPERATIONS AND PROSPECTS OF THE COMPANY AND ITS SUBSIDIARIES, INCLUDING MATTERS
REFERRED TO IN THE RESTATEMENT DISCLOSURE AND MATERIALS RELATING TO THE TERMS
AND CONDITIONS OF THE OFFER AND SALE OF THE SHARES WHICH HAVE BEEN REQUESTED BY
THE INVESTOR.  THE INVESTOR HAS BEEN AFFORDED THE OPPORTUNITY TO ASK QUESTIONS
OF THE COMPANY AND HAS RECEIVED ANSWERS FROM AN AUTHORIZED REPRESENTATIVE OF THE
COMPANY WHICH ARE SATISFACTORY TO THE INVESTOR.  NOTWITHSTANDING THE FOREGOING,
IN ENTERING INTO THIS AGREEMENT, THE INVESTOR REPRESENTS THAT IT IS RELYING
SOLELY ON THE REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS SET FORTH IN
THIS AGREEMENT, WHICH DOCUMENT SUPERSEDES AND REPLACES ANY OTHER WRITTEN OR ORAL
INFORMATION COMMUNICATED TO THE INVESTOR.  INVESTOR ACKNOWLEDGES THAT THE SEC
INVESTIGATION REMAINS ONGOING.

(I)    THE INVESTOR HAS INDEPENDENTLY EVALUATED THE MERITS OF ITS DECISION TO
PURCHASE SHARES PURSUANT TO THIS AGREEMENT.

3.2.          LEGENDS.

(A)   THE INVESTOR UNDERSTANDS THAT, UNTIL THE END OF THE APPLICABLE HOLDING
PERIOD UNDER RULE 144(K) OF THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) WITH
RESPECT TO THE SHARES, ANY STOCK CERTIFICATE REPRESENTING THE SHARES SHALL BEAR
A LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN EXEMPTION THEREFROM.

The legend set forth above shall be removed (i) if the Shares have been resold
or transferred pursuant to the Registration Statement contemplated by Section 5
and the Registration Statement was effective at the time of such transfer, (ii)
if, in connection with a sale transaction, such

 

9

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holder provides the Company with an opinion of counsel reasonably acceptable to
the Company to the effect that a public sale, assignment or transfer of the
Shares may be made without registration under the Securities Act, or (iii) upon
expiration of the applicable two-year holding period under Rule 144(k) of the
Securities Act (or any successor rule); provided that the Investor is not and
has not been within three months prior to such date, an “affiliate” of the
Company (as such term is defined in Rule 144 of the Securities Act).  The
Company may make a notation on its records and/or provide instruction to its
transfer agent regarding the Company’s stock transfer records, consistent with
the provisions of this Section 3.2.

 

(B)   THE INVESTOR UNDERSTANDS THAT, IN THE EVENT RULE 144(K) AS PROMULGATED
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR RULE) IS AMENDED TO CHANGE THE
TWO-YEAR PERIOD UNDER RULE 144(K) (OR THE CORRESPONDING PERIOD UNDER ANY
SUCCESSOR RULE), (I) EACH REFERENCE IN THIS SECTIONS 3.2 OF THIS AGREEMENT TO
“TWO YEARS” OR THE “TWO-YEAR PERIOD” SHALL BE DEEMED FOR ALL PURPOSES OF THIS
AGREEMENT TO BE REFERENCES TO SUCH CHANGED PERIOD, AND (II) ALL CORRESPONDING
REFERENCES IN THE SHARES SHALL BE DEEMED FOR ALL PURPOSES TO BE REFERENCES TO
THE CHANGED PERIOD, PROVIDED THAT SUCH CHANGES SHALL NOT BECOME EFFECTIVE IF
THEY ARE OTHERWISE PROHIBITED BY, OR WOULD OTHERWISE CAUSE A VIOLATION OF, THE
THEN-APPLICABLE FEDERAL SECURITIES LAWS.

3.3.          AUTHORIZATION; ENFORCEMENT; VALIDITY. THE INVESTOR HAS FULL RIGHT,
POWER, AUTHORITY AND CAPACITY (CORPORATE, STATUTORY OR OTHERWISE) TO ENTER INTO
THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND HAS
TAKEN ALL NECESSARY ACTION TO AUTHORIZE THE EXECUTION, DELIVERY AND PERFORMANCE
OF THIS AGREEMENT. THIS AGREEMENT CONSTITUTES A VALID AND BINDING OBLIGATION OF
THE INVESTOR ENFORCEABLE AGAINST THE INVESTOR IN ACCORDANCE WITH ITS TERMS,
EXCEPT (I) TO THE EXTENT RIGHTS TO INDEMNITY AND CONTRIBUTION MAY BE LIMITED BY
STATE OR FEDERAL SECURITIES LAWS OR THE PUBLIC POLICY UNDERLYING SUCH LAWS, (II)
ENFORCEABILITY MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, FRAUDULENT CONVEYANCE, MORATORIUM OR SIMILAR LAWS AFFECTING
CREDITORS’ AND CONTRACTING PARTIES’ RIGHTS GENERALLY AND (III) ENFORCEABILITY
MAY BE LIMITED BY GENERAL PRINCIPLES OF EQUITY (REGARDLESS OF WHETHER SUCH
ENFORCEABILITY IS CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW).

3.4.          CERTAIN TRADING LIMITATIONS.  THE INVESTOR (I) REPRESENTS THAT ON
AND FROM THE DATE THE INVESTOR FIRST BECAME AWARE OF THE OFFERING UNTIL THE DATE
HEREOF HE, SHE OR IT HAS NOT AND (II) COVENANTS THAT FOR THE PERIOD COMMENCING
ON THE DATE HEREOF AND ENDING ON THE PUBLIC ANNOUNCEMENT OF THE OFFERING HE, SHE
OR IT WILL NOT, ENGAGE IN ANY HEDGING OR OTHER TRANSACTION WHICH IS DESIGNED TO
OR COULD REASONABLY BE EXPECTED TO LEAD TO OR RESULT IN, OR BE CHARACTERIZED AS,
A SALE, AN OFFER TO SELL, A SOLICITATION OF OFFERS TO BUY, DISPOSITION OF, LOAN,
PLEDGE OR GRANT OF ANY RIGHT WITH RESPECT TO (COLLECTIVELY, A “DISPOSITION”) THE
COMMON STOCK OF THE COMPANY BY THE INVESTOR OR ANY OTHER PERSON OR ENTITY IN
VIOLATION OF THE SECURITIES ACT.  SUCH PROHIBITED HEDGING OR OTHER TRANSACTIONS
WOULD INCLUDE WITHOUT LIMITATION EFFECTING ANY SHORT SALE OR HAVING IN EFFECT
ANY SHORT POSITION (WHETHER OR NOT SUCH SALE OR POSITION IS AGAINST THE BOX AND
REGARDLESS OF WHEN SUCH POSITION WAS ENTERED INTO) OR ANY PURCHASE, SALE OR
GRANT OF ANY RIGHT (INCLUDING WITHOUT LIMITATION ANY PUT OR CALL OPTION) WITH
RESPECT TO THE COMMON STOCK OF THE COMPANY OR WITH RESPECT TO ANY SECURITY
(OTHER THAN A BROAD-BASED MARKET BASKET OR INDEX) THAT INCLUDES, RELATES TO OR
DERIVES ANY SIGNIFICANT PART OF ITS VALUE FROM THE COMMON STOCK OF THE COMPANY.

3.5.          NO SALE OF SECURITIES. THE INVESTOR HEREBY COVENANTS WITH THE
COMPANY NOT TO MAKE ANY SALE OF THE SHARES WITHOUT (I) COMPLYING WITH THE
PROVISIONS OF THIS AGREEMENT,

 

10

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INCLUDING SECTION 5.3 HEREOF OR (II) SATISFYING THE REQUIREMENTS OF THE
SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, INCLUDING,
WITHOUT LIMITATION, CAUSING THE PROSPECTUS DELIVERY REQUIREMENT UNDER THE
SECURITIES ACT TO BE SATISFIED, IF APPLICABLE. THE INVESTOR ACKNOWLEDGES THAT
THERE MAY OCCASIONALLY BE TIMES WHEN THE COMPANY, BASED ON THE ADVICE OF ITS
COUNSEL, DETERMINES THAT, SUBJECT TO THE LIMITATIONS OF SECTION 5.3, IT MUST
SUSPEND THE USE OF THE PROSPECTUS FORMING A PART OF THE REGISTRATION STATEMENT
UNTIL SUCH TIME AS AN AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN FILED BY
THE COMPANY AND DECLARED EFFECTIVE BY THE SEC OR UNTIL THE COMPANY HAS AMENDED
OR SUPPLEMENTED SUCH PROSPECTUS.

3.6.          REGISTRATION QUESTIONNAIRE. THE INVESTOR HAS COMPLETED OR CAUSED
TO BE COMPLETED THE REGISTRATION QUESTIONNAIRE ATTACHED HERETO AS EXHIBIT C (OR
HAS OTHERWISE PROVIDED IN A WRITTEN FORM THE INFORMATION REQUESTED IN SUCH
REGISTRATION QUESTIONNAIRE) AND THE SIGNATURE PAGE HERETO, EACH FOR USE IN
PREPARATION OF THE REGISTRATION STATEMENT, AND THE INFORMATION CONTAINED IN SUCH
COMPLETED REGISTRATION QUESTIONNAIRE (OR SUCH OTHER FORM PROVIDED BY THE
INVESTOR) AND ON SUCH SIGNATURE PAGE ARE TRUE AND CORRECT IN ALL MATERIAL
RESPECTS AS OF THE DATE OF THIS AGREEMENT AND WILL BE TRUE AND CORRECT AS OF THE
EFFECTIVE DATE OF THE REGISTRATION STATEMENT; PROVIDED THAT THE INVESTOR SHALL
BE ENTITLED TO UPDATE SUCH INFORMATION BY PROVIDING WRITTEN NOTICE THEREOF TO
THE COMPANY PRIOR TO THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.

3.7.          NO ADVICE. THE INVESTOR UNDERSTANDS THAT NOTHING IN THIS AGREEMENT
OR ANY OTHER MATERIALS PRESENTED TO THE INVESTOR IN CONNECTION WITH THE PURCHASE
AND SALE OF THE SHARES CONSTITUTES LEGAL, TAX OR INVESTMENT ADVICE. THE INVESTOR
HAS CONSULTED SUCH LEGAL, TAX AND INVESTMENT ADVISORS AS IT, IN ITS SOLE
DISCRETION, HAS DEEMED NECESSARY OR APPROPRIATE IN CONNECTION WITH ITS PURCHASE
OF THE SHARES.

3.8.          NASD COMPLIANCE. THE INVESTOR ACKNOWLEDGES THAT IF IT IS A
REGISTERED REPRESENTATIVE (AS DEFINED BY THE NASD) OF A NATIONAL ASSOCIATION OF
SECURITIES DEALERS (“NASD”) MEMBER FIRM, THE INVESTOR MUST GIVE SUCH FIRM THE
NOTICE REQUIRED BY THE NASD’S RULES OF FAIR PRACTICE, RECEIPT OF WHICH MUST BE
ACKNOWLEDGED BY SUCH FIRM ON THE SIGNATURE PAGE HEREOF.

3.9.          PLACEMENT AGENT FEES. THE INVESTOR ACKNOWLEDGES THAT (I) THE
COMPANY HAS ENGAGED AND AUTHORIZED JEFFERIES & COMPANY, INC. AND UBS SECURITIES
LLC (JEFFERIES & CO. INC. AND UBS SECURITIES LLC COLLECTIVELY REFERRED TO HEREIN
AS THE “PLACEMENT AGENTS”) IN CONNECTION WITH THE OFFERING AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, (II) THE COMPANY SHALL PAY THE PLACEMENT AGENTS
A COMMISSION AND REIMBURSE THE PLACEMENT AGENTS’ EXPENSES AND THE COMPANY SHALL
INDEMNIFY AND HOLD HARMLESS THE INVESTOR FROM AND AGAINST ALL FEES, COMMISSIONS
OR OTHER PAYMENTS OWING BY THE COMPANY TO THE PLACEMENT AGENTS OR ANY OTHER
PERSON OR FIRM ACTING ON BEHALF OF THE COMPANY HEREUNDER AND (III) REGISTERED
REPRESENTATIVES OF THE PLACEMENT AGENTS AND/OR THEIR DESIGNEES (INCLUDING,
WITHOUT LIMITATION, REGISTERED REPRESENTATIVES OF THE PLACEMENT AGENTS AND/OR
THEIR DESIGNEES WHO MAY PARTICIPATE IN THE OFFERING AND SALE OF THE SECURITIES
SOLD IN THE OFFERING) MAY BE PAID A PORTION OF THE COMMISSIONS PAID TO THE
PLACEMENT AGENTS.

3.10.        TREATMENT OF NON-PUBLIC INFORMATION. THE INVESTOR AGREES TO HOLD
THE EXISTENCE, TERMS AND CONDITIONS OF THE OFFERING IN CONFIDENCE AND NOT TO
DISCLOSE THE SAME TO ANY OTHER

 

11

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PERSON UNTIL SUCH TIME AS THE COMPANY FILES WITH THE SEC A CURRENT REPORT ON
FORM 8-K DISCLOSING THE OFFERING OR PUBLICLY ANNOUNCES THE OFFERING.

3.11.        SEC REPORTS.  THE INVESTOR HAS REVIEWED COPIES OF THE COMPANY’S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004 (AND ANY
AMENDMENTS THERETO), THE COMPANY’S PROXY STATEMENT FOR ITS 2005 ANNUAL MEETING
OF SHAREHOLDERS, THE COMPANY’S QUARTERLY REPORTS ON FORM 10-Q FOR THE QUARTERS
ENDED MARCH 31, 2005, JUNE 30, 2005 AND SEPTEMBER 30, 2005 (AND ANY AMENDMENTS
THERETO) AND EACH OF THE COMPANY’S CURRENT REPORTS ON FORM 8-K FILED SINCE
JANUARY 1, 2003 (AND ANY AMENDMENTS THERETO).

4.                                      COVENANTS.

4.1.          TRADING MARKET. THE COMPANY SHALL USE COMMERCIALLY REASONABLE
EFFORTS TO COMPLY WITH ALL REQUIREMENTS OF THE AMEX WITH RESPECT TO THE ISSUANCE
AND LISTING OF THE SHARES AND THE CONTINUED LISTING OF ITS COMMON STOCK
(INCLUDING THE SHARES).  THE COMPANY AGREES THAT IF THE COMPANY APPLIES TO HAVE
ITS COMMON STOCK TRADED ON ANY OTHER TRADING MARKET, IT WILL USE COMMERCIALLY
REASONABLE EFFORTS TO CAUSE THE SHARES TO BE LISTED OR QUOTED ON SUCH OTHER
TRADING MARKET.

4.2.          CERTAIN FUTURE FINANCINGS AND RELATED ACTIONS. WITHOUT THE PRIOR
CONSENT OF THE INVESTOR, THE COMPANY SHALL NOT CAUSE THE OFFERING TO BE
INTEGRATED WITH PRIOR OFFERINGS BY THE COMPANY IN A MANNER THAT WOULD REQUIRE
THE REGISTRATION UNDER THE SECURITIES ACT OF THE SALE OF THE SHARES TO THE
INVESTOR OR IN A MANNER THAT WOULD REQUIRE STOCKHOLDER APPROVAL OF THE SALE OF
THE SHARES TO THE INVESTOR.

4.3.          PUBLIC DISCLOSURE. THE COMPANY SHALL PUBLICLY ANNOUNCE THE
OFFERING PROMPTLY AFTER THE EXECUTION OF THIS AGREEMENT AND MAKE SUCH OTHER
FILINGS AND NOTICES IN THE MANNER AND WITHIN THE TIME REQUIRED BY THE SEC.

4.4.          USE OF PROCEEDS.  THE COMPANY WILL USE THE NET PROCEEDS FROM THE
SALE OF THE SHARES PURSUANT TO THIS AGREEMENT FOR GENERAL CORPORATE PURPOSES
AND/OR ACQUISITIONS.

4.5.          PROSPECTUS DELIVERY REQUIREMENTS.  INVESTOR COVENANTS AND AGREES
THAT IT WILL COMPLY WITH THE PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES
ACT AS APPLICABLE TO IT IN CONNECTION WITH THE SALES OF REGISTRABLE SECURITIES,
AS DEFINED IN SECTION 5.1.

5.                                      REGISTRATION OF SHARES AND COMPLIANCE
WITH THE SECURITIES ACT.

5.1.          REGISTRATION PROCEDURES AND EXPENSES. THE COMPANY SHALL:

(A)   SUBJECT TO RECEIPT OF NECESSARY INFORMATION FROM THE INVESTORS, INCLUDING
THE INFORMATION REQUESTED IN THE REGISTRATION STATEMENT QUESTIONNAIRE, USE ITS
COMMERCIALLY REASONABLE EFFORTS TO PREPARE AND FILE WITH THE SEC ON OR PRIOR TO
THE 30TH CALENDAR DAY FOLLOWING THE CLOSING DATE HEREOF A REGISTRATION STATEMENT
(THE “REGISTRATION STATEMENT”) ON FORM S-3 (OR SUCH OTHER FORM AS MAY BE
REQUIRED) TO ENABLE THE RESALE BY THE INVESTOR ON A DELAYED OR CONTINUOUS BASIS
UNDER RULE 415 OF THE SECURITIES ACT OF THE SHARES OF COMMON STOCK ISSUED
PURSUANT TO THIS AGREEMENT AND ANY SHARES OF COMMON STOCK ISSUED OR ISSUABLE IN
RESPECT OF THE

 

12

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SHARES BY VIRTUE OF ANY STOCK SPLIT, STOCK DIVIDEND, RECAPITALIZATION OR SIMILAR
EVENT; PROVIDED, HOWEVER, THAT IF, DURING THE PERIOD FROM THE DATE HEREOF
THROUGH THE 30TH CALENDAR DAY FOLLOWING THE CLOSING DATE, THE ACQUISITION OF A
BUSINESS BY THE COMPANY IS CONSUMMATED OR BECOMES PROBABLE WITH RESPECT TO WHICH
THE COMPANY SHALL BE REQUIRED TO FILE WITH THE SEC A CURRENT REPORT ON FORM 8-K
(OR AN AMENDMENT TO A CURRENT REPORT ON FORM 8-K) CONTAINING AUDITED AND
UNAUDITED HISTORICAL FINANCIAL STATEMENTS OF THE ACQUIRED BUSINESS AND PRO FORMA
FINANCIAL INFORMATION FOR THE COMPANY GIVING EFFECT TO THE ACQUISITION, THE
COMPANY SHALL NOT BE REQUIRED TO FILE THE REGISTRATION STATEMENT UNTIL THE
SECOND BUSINESS DAY FOLLOWING THE DATE BY WHICH SUCH HISTORICAL FINANCIAL
STATEMENTS AND PRO FORMA FINANCIAL INFORMATION SHALL BE REQUIRED TO BE FILED;

(B)   USE COMMERCIALLY REASONABLE EFFORTS, SUBJECT TO RECEIPT OF NECESSARY
INFORMATION FROM THE INVESTOR, INCLUDING THE INFORMATION REQUESTED IN THE
REGISTRATION STATEMENT QUESTIONNAIRE, TO CAUSE THE REGISTRATION STATEMENT TO
BECOME EFFECTIVE WITHIN 120 CALENDAR DAYS AFTER THE CLOSING DATE;

(C)   AS EXPEDITIOUSLY AS PRACTICABLE, PREPARE AND FILE WITH THE SEC SUCH
AMENDMENTS AND SUPPLEMENTS TO THE REGISTRATION STATEMENT AND THE PROSPECTUS (AS
DEFINED IN SECTION 5.4 BELOW) USED IN CONNECTION THEREWITH AND TAKE ALL SUCH
OTHER ACTIONS AS MAY BE NECESSARY TO KEEP THE REGISTRATION STATEMENT CURRENT AND
EFFECTIVE FOR A PERIOD (THE “REGISTRATION PERIOD”) NOT EXCEEDING, WITH RESPECT
TO THE REGISTRABLE SECURITIES, THE EARLIER OF (I) THE DATE ON WHICH ALL
REGISTRABLE SECURITIES THEN HELD BY THE INVESTOR MAY BE SOLD OR TRANSFERRED IN
COMPLIANCE WITH RULE 144 UNDER THE SECURITIES ACT (OR ANY OTHER SIMILAR
PROVISIONS THEN IN FORCE) WITHOUT ANY VOLUME OR MANNER OF SALE RESTRICTIONS
THEREUNDER, OR (II) SUCH TIME AS ALL REGISTRABLE SECURITIES HELD BY THE INVESTOR
HAVE BEEN SOLD (A) PURSUANT TO A REGISTRATION STATEMENT, (B) TO OR THROUGH A
BROKER OR DEALER OR UNDERWRITER IN A PUBLIC DISTRIBUTION OR A PUBLIC SECURITIES
TRANSACTION, OR (C) IN A TRANSACTION EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE SECURITIES ACT UNDER SECTION 4(1) THEREOF SO THAT
ALL TRANSFER RESTRICTIONS AND RESTRICTIVE LEGENDS WITH RESPECT THERETO, IF ANY,
ARE REMOVED UPON THE CONSUMMATION OF SUCH SALE;

(D)   PROMPTLY FURNISH TO THE INVESTOR WITH RESPECT TO THE REGISTRABLE
SECURITIES REGISTERED UNDER THE REGISTRATION STATEMENT SUCH REASONABLE NUMBER OF
COPIES OF THE PROSPECTUS AS THE INVESTOR MAY REQUEST, INCLUDING ANY SUPPLEMENTS
TO OR AMENDMENTS TO THE PROSPECTUS, IN ORDER TO FACILITATE THE PUBLIC SALE OR
OTHER DISPOSITION OF ALL OR ANY OF THE REGISTRABLE SECURITIES BY THE INVESTOR;

(E)   PROMPTLY TAKE SUCH ACTION AS MAY BE NECESSARY TO QUALIFY, OR OBTAIN, AN
EXEMPTION FOR THE REGISTRABLE SECURITIES UNDER SUCH OF THE STATE SECURITIES LAWS
OF UNITED STATES JURISDICTIONS AS SHALL BE NECESSARY TO QUALIFY, OR OBTAIN AN
EXEMPTION FOR, THE SALE OF THE REGISTRABLE SECURITIES IN STATES SPECIFIED IN
WRITING BY THE INVESTOR; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE
REQUIRED TO QUALIFY TO DO BUSINESS OR CONSENT TO SERVICE OF PROCESS IN ANY
JURISDICTION IN WHICH IT IS NOT NOW SO QUALIFIED OR HAS NOT SO CONSENTED,
SUBJECT ITSELF TO GENERAL TAXATION IN ANY SUCH JURISDICTION OR PROVIDE ANY
UNDERTAKINGS THAT CAUSE THE COMPANY UNDUE EXPENSE OR BURDEN;

(F)    BEAR ALL EXPENSES IN CONNECTION WITH THE PROCEDURES IN PARAGRAPHS (A)
THROUGH (E) AND (G) OF THIS SECTION 5.1 AND THE REGISTRATION OF THE REGISTRABLE
SECURITIES PURSUANT TO THE

 

13

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REGISTRATION STATEMENT, REGARDLESS OF WHETHER A REGISTRATION STATEMENT BECOMES
EFFECTIVE, INCLUDING WITHOUT LIMITATION: (I) ALL REGISTRATION AND FILING FEES
AND EXPENSES (INCLUDING FILINGS MADE WITH AMEX); (II) FEES AND EXPENSES OF
COMPLIANCE WITH FEDERAL SECURITIES AND STATE “BLUE SKY” OR SECURITIES LAWS;
(III) EXPENSES OF PRINTING (INCLUDING PRINTING CERTIFICATES FOR THE REGISTRABLE
SECURITIES AND PROSPECTUSES); (IV) ALL APPLICATION AND FILING FEES, IF ANY, IN
CONNECTION WITH LISTING OF THE REGISTRABLE SECURITIES WITH AMEX; (V) ALL FEES
AND DISBURSEMENTS OF COUNSEL OF THE COMPANY AND INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS OF THE COMPANY; AND (VI) UP TO $5,000 IN FEES AND DISBURSEMENTS OF
ONE COUNSEL REPRESENTING ALL INVESTORS IN THE OFFERING; PROVIDED, HOWEVER, THAT
THE INVESTOR SHALL BE RESPONSIBLE FOR PAYING THE UNDERWRITING COMMISSIONS OR
BROKERAGE FEES, AND TAXES OF ANY KIND (INCLUDING, WITHOUT LIMITATION, TRANSFER
TAXES) APPLICABLE TO ANY DISPOSITION, SALE OR TRANSFER OF THE INVESTOR’S
REGISTRABLE SECURITIES. THE COMPANY SHALL, IN ANY EVENT, BEAR ITS INTERNAL
EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL SALARIES AND EXPENSES OF ITS
OFFICERS AND EMPLOYEES PERFORMING LEGAL OR ACCOUNTING DUTIES);

(G)   ADVISE THE INVESTOR PROMPTLY, BUT IN ANY EVENT WITHIN TWO BUSINESS DAYS BY
E-MAIL, FAX OR OTHER TYPE OF COMMUNICATION, AND, IF REQUESTED BY SUCH PERSON,
CONFIRM SUCH ADVICE IN WRITING: (I) AFTER IT SHALL RECEIVE NOTICE OR OBTAIN
KNOWLEDGE OF THE ISSUANCE OF ANY STOP ORDER BY THE SEC DELAYING OR SUSPENDING
THE EFFECTIVENESS OF THE REGISTRATION STATEMENT OR OF THE INITIATION OR THREAT
OF ANY PROCEEDING FOR THAT PURPOSE, OR ANY OTHER ORDER ISSUED BY ANY STATE
SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY SUSPENDING THE QUALIFICATION
OR EXEMPTION FROM QUALIFICATION OF SUCH REGISTRABLE SECURITIES UNDER STATE
SECURITIES OR “BLUE SKY” LAWS; AND IT WILL PROMPTLY USE ITS COMMERCIALLY
REASONABLE EFFORTS TO PREVENT THE ISSUANCE OF ANY STOP ORDER OR OTHER ORDER OR
TO OBTAIN ITS WITHDRAWAL AT THE EARLIEST POSSIBLE MOMENT IF SUCH STOP ORDER OR
OTHER ORDER SHOULD BE ISSUED; (II) WHEN THE PROSPECTUS OR ANY SUPPLEMENTS TO OR
AMENDMENTS OF THE PROSPECTUS HAVE BEEN FILED, AND, WITH RESPECT TO THE
REGISTRATION STATEMENT OR ANY POST-EFFECTIVE AMENDMENT THERETO, WHEN THE SAME
HAS BECOME EFFECTIVE; AND (III) WHEN THE SEC NOTIFIES THE COMPANY WHETHER THERE
WILL BE A “REVIEW” OF SUCH REGISTRATION STATEMENT AND WHENEVER THE SEC COMMENTS
IN WRITING ON SUCH REGISTRATION STATEMENT (THE COMPANY SHALL PROVIDE TRUE AND
COMPLETE COPIES THEREOF AND ALL WRITTEN RESPONSES THERETO TO THE INVESTOR THAT
PERTAIN TO THE INVESTOR AS A SELLING STOCKHOLDER OR TO THE PLAN OF DISTRIBUTION,
BUT NOT INFORMATION WHICH THE COMPANY BELIEVES WOULD CONSTITUTE MATERIAL AND
NON-PUBLIC INFORMATION);

(H)   EXCEPT IF OTHERWISE REQUIRED PURSUANT TO WRITTEN COMMENTS RECEIVED FROM
THE SEC UPON A REVIEW OF SUCH REGISTRATION STATEMENT, INCLUDE IN THE
REGISTRATION STATEMENT THE “PLAN OF DISTRIBUTION” ATTACHED HERETO AS EXHIBIT D;

(I)    UNLESS OTHERWISE AGREED TO BY HOLDERS OF A MAJORITY OF THE REGISTRABLE
SECURITIES HELD BY THE INVESTOR AND ALL OTHER INVESTORS, NEITHER THE COMPANY NOR
ANY OF ITS SECURITIES HOLDERS MAY INCLUDE SECURITIES OF THE COMPANY (OTHER THAN
THE SHARES) IN ANY REGISTRATION STATEMENT FILED PURSUANT TO THIS AGREEMENT AND
THE COMPANY SHALL NOT AFTER THE DATE HEREOF ENTER INTO ANY AGREEMENT IN
CONTRAVENTION OF THE FOREGOING;

(J)    IF AT ANY TIME DURING THE REGISTRATION PERIOD, THERE IS NOT ONE OR MORE
EFFECTIVE REGISTRATION STATEMENTS COVERING THE RESALE OF ALL REGISTRABLE
SECURITIES AND THE COMPANY SHALL DETERMINE TO PREPARE AND FILE WITH THE SEC A
REGISTRATION STATEMENT RELATING TO AN OFFERING FOR ITS OWN ACCOUNT OR THE
ACCOUNT OF OTHERS UNDER THE SECURITIES ACT OF ANY OF ITS EQUITY SECURITIES,
OTHER THAN OF FORM S-4 OR FORM S-8 (EACH AS PROMULGATED UNDER THE SECURITIES
ACT) OR THEIR THEN

 

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EQUIVALENTS RELATING TO EQUITY SECURITIES TO BE ISSUED SOLELY IN CONNECTION WITH
ANY ACQUISITION OF ANY ENTITY OR BUSINESS OR EQUITY SECURITIES ISSUABLE IN
CONNECTION WITH STOCK OPTION OR OTHER EMPLOYEE BENEFIT PLANS, THEN THE COMPANY
SHALL SEND TO THE INVESTOR WRITTEN NOTICE OF SUCH DETERMINATION AND IF, WITHIN
20 DAYS AFTER RECEIPT OF SUCH NOTICE THE INVESTOR SHALL SO REQUEST IN WRITING,
THE COMPANY SHALL INCLUDE IN SUCH REGISTRATION STATEMENT THOSE REGISTRABLE
SECURITIES REQUESTED BY THE INVESTOR TO BE SO INCLUDED AND WHICH ARE NOT
OTHERWISE COVERED BY ONE OR MORE EFFECTIVE REGISTRATION STATEMENTS;

(K)   NOT LESS THAN THREE BUSINESS DAYS PRIOR TO THE FILING OF THE REGISTRATION
STATEMENT OR ANY RELATED PROSPECTUS OR ANY AMENDMENT OR SUPPLEMENT THERETO, THE
COMPANY SHALL FURNISH TO THE INVESTOR COPIES OF THE “SELLING STOCKHOLDERS”
SECTION OF SUCH DOCUMENT, THE “PLAN OF DISTRIBUTION,” ANY RISK FACTOR CONTAINED
IN SUCH DOCUMENT THAT ADDRESSES SPECIFICALLY THIS TRANSACTION OR THE SELLING
STOCKHOLDERS, AS PROPOSED TO BE FILED, WHICH DOCUMENTS WILL BE SUBJECT TO THE
REVIEW AND COMMENT OF THE INVESTOR AND ITS COUNSEL; PROVIDED THAT, THE FAILURE
OF ANY INVESTOR OR HIS, HER OR ITS COUNSEL TO RESPOND TO SUCH PROPOSED DOCUMENTS
WITHIN TWO BUSINESS DAYS AFTER RECEIPT THEREOF SHALL BE DEEMED APPROVAL OF SAME;
AND PROVIDED, FURTHER, THAT NO SUCH REVIEW AND COMMENT SHALL INHIBIT THE COMPANY
FROM FILING THE REGISTRATION STATEMENT WITHIN 15 DAYS AFTER THE RESTATEMENT DATE
OR OTHERWISE FROM COMPLYING WITH ITS OBLIGATIONS HEREUNDER;

(L)    RESPOND AS PROMPTLY AS PRACTICABLE TO ANY COMMENTS RECEIVED FROM THE SEC
WITH RESPECT TO EACH REGISTRATION STATEMENT OR ANY AMENDMENT THERETO AND, AS
PROMPTLY AS PRACTICABLE PROVIDE THE INVESTOR TRUE AND COMPLETE COPIES OF ALL
CORRESPONDENCE FROM AND TO THE SEC RELATING TO SUCH REGISTRATION STATEMENT THAT
WOULD NOT RESULT IN THE DISCLOSURE TO THE INVESTOR OF MATERIAL AND NON-PUBLIC
INFORMATION CONCERNING THE COMPANY;

(M)  COMPLY IN ALL MATERIAL RESPECTS WITH THE PROVISIONS OF THE SECURITIES ACT,
THE EXCHANGE ACT AND ALL RULES OF THE SEC PROMULGATED THEREUNDER WITH RESPECT TO
THE REGISTRATION STATEMENTS AND THE DISPOSITION OF ALL REGISTRABLE SECURITIES
COVERED BY EACH REGISTRATION STATEMENT;

(N)   TAKE ALL OTHER STEPS NECESSARY TO EFFECT THE REGISTRATION OF THE
REGISTRABLE SECURITIES; AND

(O)   COOPERATE WITH THE INVESTOR TO FACILITATE THE TIMELY PREPARATION AND
DELIVERY OF CERTIFICATES REPRESENTING REGISTRABLE SECURITIES TO BE DELIVERED TO
A TRANSFEREE PURSUANT TO THE REGISTRATION STATEMENTS, WHICH CERTIFICATES SHALL
BE FREE OF ALL RESTRICTIVE LEGENDS, AND TO ENABLE SUCH REGISTRABLE SECURITIES TO
BE IN SUCH DENOMINATIONS AND REGISTERED IN SUCH NAMES AS THE INVESTOR MAY
REQUEST; PROVIDED, THAT, THE DELIVERY OF SUCH CERTIFICATES SHALL BE SUBJECT TO
THE PAYMENT BY THE INVESTOR OF ANY TRANSFER TAXES, IF APPLICABLE.

5.2.          DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT. IN THE EVENT THE
REGISTRATION STATEMENT IS NOT DECLARED EFFECTIVE BY THE SEC WITHIN 120 CALENDAR
DAYS AFTER THE CLOSING DATE  IN ACCORDANCE WITH SECTION 5.1(B), THE COMPANY
SHALL PAY IN CASH TO THE INVESTOR LIQUIDATED DAMAGES IN THE AMOUNT OF 1.0% OF
THE AGGREGATE PURCHASE PRICE PER MONTH THEREAFTER (PRO RATA FOR ANY PORTION
THEREOF) UNTIL THE EARLIER OF (I) THE DATE ON WHICH THE REGISTRATION STATEMENT
IS FIRST DECLARED EFFECTIVE BY THE SEC OR (II) THE SECOND ANNIVERSARY OF THE
CLOSING DATE, ANY SUCH PAYMENTS TO BE MADE MONTHLY IN ARREARS.

 

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5.3.          TRANSFER OF SHARES; SUSPENSION.

(A)   THE INVESTOR AGREES THAT IT WILL NOT EFFECT ANY DISPOSITION OF THE
REGISTRABLE SECURITIES OR ITS RIGHT TO PURCHASE THE REGISTRABLE SECURITIES THAT
WOULD CONSTITUTE A SALE WITHIN THE MEANING OF THE SECURITIES ACT, EXCEPT AS
CONTEMPLATED IN THE REGISTRATION STATEMENT REFERRED TO IN SECTION 5.1 OR IN
ACCORDANCE WITH THE SECURITIES ACT, AND THAT IT WILL PROMPTLY NOTIFY THE COMPANY
OF ANY CHANGES IN THE INFORMATION SET FORTH IN THE REGISTRATION STATEMENT OR THE
REGISTRATION STATEMENT QUESTIONNAIRE REGARDING THE INVESTOR OR ITS PLAN OF
DISTRIBUTION.  THE COMPANY SHALL NOT BE REQUIRED TO INCLUDE ANY SHARES HELD BY
THE INVESTOR IN THE REGISTRATION STATEMENT IF THE INVESTOR FAILS TO COMPLETE, OR
UPDATE AS NEEDED, THE REGISTRATION STATEMENT QUESTIONNAIRE OR PROVIDE THE
INFORMATION REQUESTED IN SUCH REGISTRATION STATEMENT QUESTIONNAIRE IN ACCORDANCE
WITH THIS SECTION 5.3.

(B)   EXCEPT IN THE EVENT THAT PARAGRAPH (C) BELOW APPLIES, THE COMPANY SHALL
USE COMMERCIALLY REASONABLE EFFORTS TO, AT ALL TIMES DURING THE REGISTRATION
PERIOD, PROMPTLY (I) PREPARE AND FILE FROM TIME TO TIME WITH THE SEC A
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OR A SUPPLEMENT TO THE
RELATED PROSPECTUS OR A SUPPLEMENT OR AMENDMENT TO ANY DOCUMENT INCORPORATED
THEREIN BY REFERENCE OR FILE ANY OTHER REQUIRED DOCUMENT SO THAT SUCH
REGISTRATION STATEMENT WILL NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT
OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS THEREIN NOT
MISLEADING, AND SO THAT, AS THEREAFTER DELIVERED TO PURCHASERS OF THE
REGISTRABLE SECURITIES BEING SOLD THEREUNDER, SUCH PROSPECTUS WILL NOT CONTAIN
AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT REQUIRED
TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF
THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING; (II) PROVIDE THE
INVESTOR COPIES OF ANY DOCUMENTS FILED PURSUANT TO SECTION 5.3(B)(I); AND
(III)INFORM THE INVESTOR THAT THE COMPANY HAS COMPLIED WITH ITS OBLIGATIONS IN
SECTION 5.3(B)(I) (OR THAT, IF THE COMPANY HAS FILED A POST-EFFECTIVE AMENDMENT
TO THE REGISTRATION STATEMENT WHICH HAS NOT YET BEEN DECLARED EFFECTIVE, THE
COMPANY WILL NOTIFY THE INVESTOR TO THAT EFFECT, WILL USE ITS COMMERCIALLY
REASONABLE EFFORTS TO SECURE THE EFFECTIVENESS OF SUCH POST-EFFECTIVE AMENDMENT
AS PROMPTLY AS POSSIBLE AND WILL PROMPTLY NOTIFY THE INVESTOR PURSUANT TO
SECTION 5.3(B)(III) HEREOF WHEN THE AMENDMENT HAS BECOME EFFECTIVE).

(C)   SUBJECT TO PARAGRAPH (D) BELOW, IN THE EVENT OF (I) ANY REQUEST BY THE SEC
OR ANY OTHER FEDERAL OR STATE GOVERNMENTAL AUTHORITY DURING THE PERIOD OF
EFFECTIVENESS OF THE REGISTRATION STATEMENT FOR AMENDMENTS OR SUPPLEMENTS TO A
REGISTRATION STATEMENT OR RELATED PROSPECTUS OR FOR ADDITIONAL INFORMATION; (II)
THE ISSUANCE BY THE SEC OR ANY OTHER FEDERAL OR STATE GOVERNMENTAL AUTHORITY OF
ANY STOP ORDER SUSPENDING THE EFFECTIVENESS OF A REGISTRATION STATEMENT OR THE
INITIATION OF ANY PROCEEDINGS FOR THAT PURPOSE; (III) THE RECEIPT BY THE COMPANY
OF ANY NOTIFICATION WITH RESPECT TO THE SUSPENSION OF THE QUALIFICATION OR
EXEMPTION FROM QUALIFICATION OF ANY OF THE REGISTRABLE SECURITIES FOR SALE IN
ANY JURISDICTION OR THE INITIATION OR THREATENING OF ANY PROCEEDING FOR SUCH
PURPOSE; OR (IV) ANY EVENT OR CIRCUMSTANCE WHICH NECESSITATES THE MAKING OF ANY
CHANGES IN THE REGISTRATION STATEMENT OR PROSPECTUS, OR ANY DOCUMENT
INCORPORATED OR DEEMED TO BE INCORPORATED THEREIN BY REFERENCE, SO THAT, IN THE
CASE OF THE REGISTRATION STATEMENT, IT WILL NOT CONTAIN ANY UNTRUE STATEMENT OF
A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN
OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING, AND THAT IN THE CASE
OF THE PROSPECTUS, IT WILL NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT
OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS THEREIN, IN
THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, THEN
THE COMPANY SHALL

 

16

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DELIVER A NOTICE IN WRITING TO THE INVESTOR (THE “SUSPENSION NOTICE”) TO THE
EFFECT OF THE FOREGOING AND, UPON RECEIPT OF SUCH SUSPENSION NOTICE, THE
INVESTOR WILL REFRAIN FROM SELLING ANY REGISTRABLE SECURITIES PURSUANT TO THE
REGISTRATION STATEMENT (A “SUSPENSION”) UNTIL THE INVESTOR’S RECEIPT OF COPIES
OF A SUPPLEMENTED OR AMENDED PROSPECTUS PREPARED AND FILED BY THE COMPANY, OR
UNTIL IT IS ADVISED IN WRITING BY THE COMPANY THAT THE CURRENT PROSPECTUS MAY BE
USED. IN THE EVENT OF ANY SUSPENSION, THE COMPANY WILL USE ITS COMMERCIALLY
REASONABLE EFFORTS, CONSISTENT WITH THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS, TO CAUSE THE USE OF THE PROSPECTUS SO SUSPENDED TO BE RESUMED AS
SOON AS REASONABLY PRACTICABLE AFTER THE DELIVERY OF A SUSPENSION NOTICE TO THE
INVESTOR.  IN THE EVENT ONE OR MORE SUSPENSIONS HAVING AN AGGREGATE DURATION IN
EXCESS OF 90 DAYS OCCUR DURING ANY 12-MONTH PERIOD (AN “EVENT”), THE COMPANY
SHALL PAY IN CASH TO THE INVESTOR LIQUIDATED DAMAGES IN THE AMOUNT OF 1.0% OF
THE AGGREGATE PURCHASE PRICE PER MONTH THEREAFTER (PRO RATA FOR ANY PORTION
THEREOF) UNTIL THE EARLIER OF (I) THE FIRST DATE AFTER SUCH EVENT ON WHICH THE
INVESTOR EITHER RECEIVES COPIES OF A SUPPLEMENTED OR AMENDED PROSPECTUS PREPARED
AND FILED BY THE COMPANY OR IS ADVISED IN WRITING BY THE COMPANY THAT THE
CURRENT PROSPECTUS MAY BE USED, OR (II) THE SECOND ANNIVERSARY OF THE CLOSING
DATE, ANY SUCH PAYMENTS TO BE MADE MONTHLY IN ARREARS.

5.4.          INDEMNIFICATION. FOR THE PURPOSE OF THIS SECTION 5.4, THE TERM
“REGISTRATION STATEMENT” SHALL INCLUDE ANY PRELIMINARY OR FINAL PROSPECTUS,
EXHIBIT, SUPPLEMENT OR AMENDMENT INCLUDED IN OR RELATING TO THE REGISTRATION
STATEMENT REFERRED TO IN SECTION 5.1 AND THE TERM “RULES AND REGULATIONS” MEANS
THE RULES AND REGULATIONS PROMULGATED UNDER THE SECURITIES ACT.

(A)   INDEMNIFICATION BY THE COMPANY. THE COMPANY AGREES TO INDEMNIFY, DEFEND
AND HOLD HARMLESS THE INVESTOR, ITS OFFICERS, DIRECTORS, AGENTS, INVESTMENT
ADVISORS, PARTNERS, MEMBERS, MANAGERS, STOCKHOLDERS, TRUSTEES AND EMPLOYEES, AND
EACH PERSON, IF ANY, WHO CONTROLS THE INVESTOR (OR ANY OF SUCH OTHER PERSONS)
WITHIN THE MEANING OF THE SECURITIES ACT, AGAINST ANY LOSSES, CLAIMS, DAMAGES,
LIABILITIES, COSTS OR EXPENSES TO WHICH THE INVESTOR OR OTHER PERSON MAY BECOME
SUBJECT (INCLUDING, WITHOUT LIMITATION, REASONABLE LEGAL AND OTHER COSTS AND
EXPENSES OF PREPARING, INVESTIGATING, DEFENDING, SETTLING, COMPROMISING OR
PAYING SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES, COSTS OR EXPENSES)
(COLLECTIVELY, “LOSSES”), AS INCURRED, UNDER THE SECURITIES ACT, THE EXCHANGE
ACT, OR ANY OTHER FEDERAL OR STATE STATUTORY LAW OR REGULATION INSOFAR AS SUCH
LOSSES ARISE OUT OF OR ARE BASED UPON (I) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OF ANY MATERIAL FACT CONTAINED IN THE REGISTRATION STATEMENT,
INCLUDING THE PROSPECTUS, FINANCIAL STATEMENTS AND SCHEDULES, AND ALL OTHER
DOCUMENTS FILED AS A PART THEREOF, AS AMENDED AT THE TIME OF EFFECTIVENESS OF
THE REGISTRATION STATEMENT, INCLUDING ANY INFORMATION DEEMED TO BE A PART
THEREOF AS OF THE TIME OF EFFECTIVENESS PURSUANT TO PARAGRAPH (B) OF RULE 430A,
OR PURSUANT TO RULE 434 OF THE RULES AND REGULATIONS, OR THE PROSPECTUS, IN THE
FORM FIRST FILED WITH THE COMMISSION PURSUANT TO RULE 424(B) OF THE REGULATIONS,
OR FILED AS PART OF THE REGISTRATION STATEMENT AT THE TIME OF EFFECTIVENESS IF
NO RULE 424(B) FILING IS REQUIRED (THE “PROSPECTUS”), OR ANY AMENDMENT OR
SUPPLEMENT THERETO, (II) THE OMISSION OR ALLEGED OMISSION TO STATE IN ANY OF
THEM A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE
STATEMENTS IN ANY OF THEM, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE
MADE, NOT MISLEADING, (III) ANY INACCURACY IN THE REPRESENTATIONS AND WARRANTIES
OF THE COMPANY CONTAINED IN THIS AGREEMENT, OR ANY FAILURE OF THE COMPANY TO
PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT, OR (IV) ANY VIOLATION OR ALLEGED
VIOLATION BY THE COMPANY OF THE SECURITIES ACT, THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, STATE (“BLUE SKY”) SECURITIES LAWS OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER; PROVIDED, HOWEVER, THAT THE COMPANY WILL NOT BE LIABLE
IN ANY SUCH CASE TO THE EXTENT THAT ANY

 

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SUCH LOSS ARISES OUT OF OR IS BASED UPON (I) AN UNTRUE STATEMENT OR ALLEGED
UNTRUE STATEMENT OR OMISSION OR ALLEGED OMISSION MADE IN THE REGISTRATION
STATEMENT, THE PROSPECTUS OR ANY AMENDMENT OR SUPPLEMENT OF THE REGISTRATION
STATEMENT OR PROSPECTUS IN RELIANCE UPON AND IN CONFORMITY WITH WRITTEN
INFORMATION FURNISHED TO THE COMPANY BY OR ON BEHALF OF THE INVESTOR EXPRESSLY
FOR USE IN THE REGISTRATION STATEMENT OR THE PROSPECTUS, OR TO THE EXTENT THAT
SUCH INFORMATION RELATES TO SUCH INVESTOR OR SUCH INVESTOR’S PROPOSED METHOD OF
DISTRIBUTION, OR (II) THE FAILURE OF THE INVESTOR TO COMPLY WITH THE COVENANTS
AND AGREEMENTS CONTAINED IN SECTIONS 3.5 OR 5.3 OF THIS AGREEMENT RESPECTING
RESALE OF REGISTRABLE SECURITIES, OR (III) THE INACCURACY OF ANY REPRESENTATIONS
MADE BY THE INVESTOR IN THIS AGREEMENT OR (IV) ANY UNTRUE STATEMENT OR OMISSION
OF A MATERIAL FACT IN ANY PROSPECTUS THAT IS CORRECTED IN ANY SUBSEQUENT
PROSPECTUS THAT WAS DELIVERED TO THE INVESTOR BEFORE THE PERTINENT SALE OR SALES
BY THE INVESTOR.

(B)   INDEMNIFICATION BY THE INVESTOR. THE INVESTOR WILL INDEMNIFY, DEFEND AND
HOLD HARMLESS THE COMPANY, EACH OF ITS DIRECTORS, EACH OF ITS OFFICERS WHO SIGN
THE REGISTRATION STATEMENT AND EACH PERSON, IF ANY, WHO CONTROLS THE COMPANY
WITHIN THE MEANING OF THE SECURITIES ACT, AGAINST ANY LOSSES TO WHICH THE
COMPANY, EACH OF ITS DIRECTORS, EACH OF ITS OFFICERS WHO SIGN THE REGISTRATION
STATEMENT OR SUCH CONTROLLING PERSON MAY BECOME SUBJECT, AS INCURRED, UNDER THE
SECURITIES ACT, THE EXCHANGE ACT, OR ANY OTHER FEDERAL OR STATE STATUTORY LAW OR
REGULATION INSOFAR AS SUCH LOSSES ARISE OUT OF OR ARE BASED UPON (I) ANY FAILURE
ON THE PART OF THE INVESTOR TO COMPLY WITH THE COVENANTS AND AGREEMENTS
CONTAINED IN SECTIONS 3.5 OR 5.3 OF THIS AGREEMENT RESPECTING THE SALE OF THE
REGISTRABLE SECURITIES OR (II) THE INACCURACY OF ANY REPRESENTATION OR WARRANTY
MADE BY THE INVESTOR IN THIS AGREEMENT OR (III) ANY UNTRUE STATEMENT OF ANY
MATERIAL FACT CONTAINED IN THE REGISTRATION STATEMENT, THE PROSPECTUS, OR ANY
AMENDMENT OR SUPPLEMENT TO THE REGISTRATION STATEMENT OR PROSPECTUS, OR THE
OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING, IN EACH CASE TO THE
EXTENT, BUT ONLY TO THE EXTENT, THAT SUCH UNTRUE STATEMENT OR OMISSION WAS MADE
IN THE REGISTRATION STATEMENT, THE PROSPECTUS, OR ANY AMENDMENT OR SUPPLEMENT
THERETO, IN RELIANCE UPON AND IN CONFORMITY WITH WRITTEN INFORMATION FURNISHED
TO THE COMPANY BY OR ON BEHALF OF THE INVESTOR EXPRESSLY FOR USE THEREIN;
PROVIDED, HOWEVER, THAT THE INVESTOR SHALL NOT BE LIABLE FOR ANY SUCH UNTRUE
STATEMENT OR OMISSION OF WHICH THE INVESTOR HAS DELIVERED TO THE COMPANY IN
WRITING A CORRECTION AT LEAST TWO BUSINESS DAYS BEFORE THE OCCURRENCE OF THE
TRANSACTION FROM WHICH SUCH LOSS WAS INCURRED.  NOTWITHSTANDING THE PROVISIONS
OF THIS SECTION 5.4, THE INVESTOR SHALL NOT BE LIABLE FOR ANY INDEMNIFICATION
OBLIGATION UNDER THIS AGREEMENT IN EXCESS OF THE AMOUNT OF NET PROCEEDS RECEIVED
BY THE INVESTOR FROM THE SALE OF THE REGISTRABLE SECURITIES, UNLESS SUCH
OBLIGATION HAS RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
INVESTOR.

5.5.          INDEMNIFICATION PROCEDURE.

(A)   PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PARTY UNDER THIS SECTION 5.5 OF
NOTICE OF THE THREAT OR COMMENCEMENT OF ANY ACTION, SUCH INDEMNIFIED PARTY WILL,
IF A CLAIM IN RESPECT THEREOF IS TO BE MADE AGAINST AN INDEMNIFYING PARTY UNDER
THIS SECTION 5.5, PROMPTLY NOTIFY THE INDEMNIFYING PARTY IN WRITING OF THE
CLAIM; BUT THE OMISSION SO TO NOTIFY THE INDEMNIFYING PARTY WILL NOT RELIEVE IT
FROM ANY LIABILITY WHICH IT MAY HAVE TO ANY INDEMNIFIED PARTY FOR CONTRIBUTION
OR OTHERWISE UNDER THE OBLIGATIONS TO INDEMNIFY CONTAINED IN SECTION 5.4 TO THE
EXTENT IT IS NOT MATERIALLY PREJUDICED AS A RESULT OF SUCH FAILURE.

 

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(B)   IN CASE ANY SUCH ACTION IS BROUGHT AGAINST ANY INDEMNIFIED PARTY AND SUCH
INDEMNIFIED PARTY SEEKS OR INTENDS TO SEEK INDEMNITY FROM AN INDEMNIFYING PARTY,
THE INDEMNIFYING PARTY WILL BE ENTITLED TO PARTICIPATE IN, AND, TO THE EXTENT
THAT IT MAY WISH, JOINTLY WITH ALL OTHER INDEMNIFYING PARTIES SIMILARLY
NOTIFIED, TO ASSUME THE DEFENSE THEREOF; PROVIDED, HOWEVER, IF THE DEFENDANTS IN
ANY SUCH ACTION INCLUDE BOTH THE INDEMNIFIED PARTY AND THE INDEMNIFYING PARTY
AND THE INDEMNIFIED PARTY SHALL HAVE REASONABLY CONCLUDED THAT THERE IS A
CONFLICT BETWEEN THE POSITIONS OF THE INDEMNIFYING PARTY AND THE INDEMNIFIED
PARTY IN CONDUCTING THE DEFENSE OF ANY SUCH ACTION THE INDEMNIFIED PARTY OR
PARTIES SHALL HAVE THE RIGHT TO SELECT SEPARATE COUNSEL TO ASSUME SUCH LEGAL
DEFENSES AND TO OTHERWISE PARTICIPATE IN THE DEFENSE OF SUCH ACTION ON BEHALF OF
SUCH INDEMNIFIED PARTY OR PARTIES. UPON RECEIPT OF NOTICE FROM THE INDEMNIFYING
PARTY TO SUCH INDEMNIFIED PARTY OF ITS ELECTION TO ASSUME THE DEFENSE OF SUCH
ACTION, THE INDEMNIFYING PARTY WILL NOT BE LIABLE TO SUCH INDEMNIFIED PARTY
UNDER THIS SECTION 5.5 FOR ANY LEGAL OR OTHER EXPENSES SUBSEQUENTLY INCURRED BY
SUCH INDEMNIFIED PARTY IN CONNECTION WITH THE DEFENSE THEREOF UNLESS:

(I)                                     THE INDEMNIFIED PARTY SHALL HAVE
EMPLOYED SUCH COUNSEL IN CONNECTION WITH THE ASSUMPTION OF LEGAL DEFENSES IN
ACCORDANCE WITH THE PROVISO TO THE PRECEDING SENTENCE IN SECTION 5.5(B) ABOVE
(IT BEING UNDERSTOOD, HOWEVER, THAT THE INDEMNIFYING PARTY SHALL NOT BE LIABLE
FOR THE EXPENSES OF MORE THAN ONE SEPARATE COUNSEL IN EACH JURISDICTION WHERE
COUNSEL IS REASONABLY NECESSARY, APPROVED BY SUCH INDEMNIFYING PARTY (SUCH
APPROVAL NOT TO BE UNREASONABLY WITHHELD) REPRESENTING ALL OF THE INDEMNIFIED
PARTIES WHO ARE PARTIES TO SUCH ACTION), OR

(II)                                  THE INDEMNIFYING PARTY SHALL NOT HAVE
COUNSEL REASONABLY SATISFACTORY TO THE INDEMNIFIED PARTY TO REPRESENT THE
INDEMNIFIED PARTY WITHIN A REASONABLE TIME AFTER NOTICE OF COMMENCEMENT OF
ACTION, IN EACH OF WHICH CASES THE REASONABLE FEES AND EXPENSES OF COUNSEL SHALL
BE AT THE EXPENSE OF THE INDEMNIFYING PARTY.

(C)   SETTLEMENT.  THE INDEMNIFYING PARTY SHALL NOT BE LIABLE FOR ANY SETTLEMENT
OF ANY ACTION, CLAIM, SUIT, INVESTIGATION, INQUIRY OR PROCEEDING (INCLUDING,
WITHOUT LIMITATION, ANY SHAREHOLDER OR DERIVATIVE ACTION OR ARBITRATION
PROCEEDING, WHETHER COMMENCED OR THREATENED (COLLECTIVELY, A “PROCEEDING”)
EFFECTED WITHOUT ITS WRITTEN CONSENT, WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD.  NO INDEMNIFYING PARTY SHALL, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
INDEMNIFIED PARTY, EFFECT ANY SETTLEMENT OF ANY PENDING PROCEEDING IN RESPECT OF
WHICH ANY INDEMNIFIED PARTY IS A PARTY, UNLESS SUCH SETTLEMENT INCLUDES AN
UNCONDITIONAL RELEASE OF SUCH INDEMNIFIED PARTY FROM ALL LIABILITY ON CLAIMS
THAT ARE THE SUBJECT MATTER OF SUCH PROCEEDING.

(D)   CONTRIBUTION. IF A CLAIM FOR INDEMNIFICATION UNDER THIS SECTION 5.5 IS
UNAVAILABLE TO AN INDEMNIFIED PARTY (BY REASON OF PUBLIC POLICY OR OTHERWISE),
THEN EACH INDEMNIFYING PARTY, IN LIEU OF INDEMNIFYING SUCH INDEMNIFIED PARTY,
SHALL CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH INDEMNIFIED PARTY AS A
RESULT OF ANY LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES REFERRED TO IN
THIS AGREEMENT, IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT THE RELATIVE
FAULT OF THE INDEMNIFYING PARTY AND INDEMNIFIED PARTY IN CONNECTION WITH THE
ACTIONS, STATEMENTS OR OMISSIONS THAT RESULTED IN SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR EXPENSES AS

 

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WELL AS ANY OTHER RELEVANT EQUITABLE CONSIDERATIONS. THE RELATIVE FAULT OF SUCH
INDEMNIFYING PARTY AND INDEMNIFIED PARTY SHALL BE DETERMINED BY REFERENCE TO,
AMONG OTHER THINGS, WHETHER ANY ACTION IN QUESTION, INCLUDING ANY UNTRUE OR
ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT OR OMISSION OR ALLEGED OMISSION OF A
MATERIAL FACT, HAS BEEN TAKEN OR MADE BY, OR RELATES TO INFORMATION SUPPLIED BY,
SUCH INDEMNIFYING PARTY OR INDEMNIFIED PARTY, AND THE PARTIES’ RELATIVE INTENT,
KNOWLEDGE, ACCESS TO INFORMATION AND OPPORTUNITY TO CORRECT OR PREVENT SUCH
ACTION, STATEMENT OR OMISSION. THE AMOUNT PAID OR PAYABLE BY A PARTY AS A RESULT
OF ANY LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES SHALL BE DEEMED TO
INCLUDE, SUBJECT TO THE LIMITATIONS SET FORTH IN THIS SECTION 5.5, ANY
REASONABLE ATTORNEYS’ OR OTHER REASONABLE FEES OR EXPENSES INCURRED BY SUCH
PARTY IN CONNECTION WITH ANY PROCEEDING TO THE EXTENT SUCH PARTY WOULD HAVE BEEN
INDEMNIFIED FOR SUCH FEES OR EXPENSES IF THE INDEMNIFICATION PROVIDED FOR IN
THIS SECTION WAS AVAILABLE TO SUCH PARTY IN ACCORDANCE WITH ITS TERMS.

(E)   THE PARTIES HERETO AGREE THAT IT WOULD NOT BE JUST AND EQUITABLE IF
CONTRIBUTION PURSUANT TO THIS SECTION 5.5 WERE DETERMINED BY PRO RATA ALLOCATION
OR BY ANY OTHER METHOD OF ALLOCATION THAT DOES NOT TAKE INTO ACCOUNT THE
EQUITABLE CONSIDERATIONS REFERRED TO IN THE IMMEDIATELY PRECEDING PARAGRAPH.
NOTWITHSTANDING THE PROVISIONS OF THIS SECTION 5.5, NO INVESTOR SHALL BE
REQUIRED TO CONTRIBUTE, IN THE AGGREGATE, ANY AMOUNT IN EXCESS OF THE AMOUNT BY
WHICH THE NET PROCEEDS FROM THE SALE OF REGISTRABLE SECURITIES BY THE INVESTOR
EXCEEDS THE AMOUNT OF ANY DAMAGES THAT THE INVESTOR HAS OTHERWISE BEEN REQUIRED
TO PAY BY REASON OF SUCH UNTRUE OR ALLEGED UNTRUE STATEMENT OR OMISSION OR
ALLEGED OMISSION. NO PARTY TO THIS AGREEMENT GUILTY OF FRAUDULENT
MISREPRESENTATION (WITHIN THE MEANING OF SECTION 11(F) OF THE SECURITIES ACT)
SHALL BE ENTITLED TO CONTRIBUTION FROM ANY OTHER PARTY TO THIS AGREEMENT WHO WAS
NOT GUILTY OF SUCH FRAUDULENT MISREPRESENTATION.

5.6.          TERMINATION OF CONDITIONS AND OBLIGATIONS. THE RESTRICTIONS
IMPOSED BY ARTICLE 3 OR ARTICLE 5 UPON THE TRANSFERABILITY OF THE REGISTRABLE
SECURITIES SHALL CEASE AND TERMINATE AS TO ANY PARTICULAR NUMBER OF THE
REGISTRABLE SECURITIES UPON THE TERMINATION OF THE REGISTRATION PERIOD WITH
RESPECT TO SUCH REGISTRABLE SECURITIES.

5.7.          RULE 144. AT ALL TIMES DURING WHICH THERE ARE REGISTRABLE
SECURITIES OUTSTANDING WHICH HAVE NOT BEEN PREVIOUSLY (A) SOLD TO OR THROUGH A
BROKER OR DEALER OR UNDERWRITER IN A PUBLIC DISTRIBUTION, OR (B) SOLD IN A
TRANSACTION EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE SECURITIES ACT UNDER SECTION 4(L) THEREOF, IN THE CASE OF EITHER CLAUSE (A)
OR CLAUSE (B) IN SUCH A MANNER THAT, UPON THE CONSUMMATION OF SUCH SALE, ALL
TRANSFER RESTRICTIONS AND RESTRICTIVE LEGENDS WITH RESPECT TO SUCH SHARES ARE
REMOVED UPON THE CONSUMMATION OF SUCH SALE, THE COMPANY SHALL USE COMMERCIALLY
REASONABLE EFFORTS TO:

(A)   COMPLY WITH THE REQUIREMENTS OF RULE 144(C) UNDER THE SECURITIES ACT WITH
RESPECT TO CURRENT PUBLIC INFORMATION ABOUT THE COMPANY;

(B)   FILE WITH THE SEC IN A TIMELY MANNER ALL REPORTS AND OTHER DOCUMENTS
REQUIRED OF THE COMPANY UNDER THE SECURITIES ACT AND THE EXCHANGE ACT (AT ANY
TIME IT IS SUBJECT TO SUCH REPORTING REQUIREMENTS); AND

(C)   FURNISH TO ANY HOLDER OF REGISTRABLE SECURITIES PROMPTLY AFTER RECEIPT OF
A WRITTEN REQUEST THEREFOR (I) A WRITTEN STATEMENT BY THE COMPANY AS TO ITS
COMPLIANCE WITH THE

 

20

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REQUIREMENTS OF SAID RULE 144(C), AND THE REPORTING REQUIREMENTS OF THE
SECURITIES ACT AND THE EXCHANGE ACT, (II) A COPY OF THE MOST RECENT ANNUAL OR
QUARTERLY REPORT OF THE COMPANY, AND (III) SUCH OTHER REPORTS AND DOCUMENTS OF
THE COMPANY AS SUCH HOLDER MAY REASONABLY REQUEST TO AVAIL ITSELF OF ANY SIMILAR
RULE OR REGULATION OF THE SEC ALLOWING IT TO SELL ANY SUCH SECURITIES WITHOUT
REGISTRATION.

5.8.          REGISTRATION OF OTHER SECURITIES. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY AND FOR THE AVOIDANCE OF DOUBT, THE PARTIES
HERETO ACKNOWLEDGE THAT (A) THE COMPANY HAS GRANTED REGISTRATION RIGHTS TO OTHER
INVESTORS WITH RESPECT TO REGISTRABLE SECURITIES, AND (B) ANY REGISTRATION
STATEMENT PREPARED, FILED AND MADE EFFECTIVE UNDER THIS ARTICLE 5 MAY ALSO COVER
THE RESALE OF SUCH OTHER SECURITIES.

6.                                      MISCELLANEOUS.

6.1.          NOTICES. EXCEPT AS SPECIFICALLY PERMITTED BY SECTION 5.1(G), ALL
NOTICES, REQUESTS, CONSENTS AND OTHER COMMUNICATIONS HEREUNDER SHALL BE IN
WRITING, SHALL BE MAILED (B) IF WITHIN THE UNITED STATES BY FIRST-CLASS
REGISTERED OR CERTIFIED AIRMAIL, OR NATIONALLY RECOGNIZED OVERNIGHT EXPRESS
COURIER, POSTAGE PREPAID, OR BY FACSIMILE, OR (B) IF DELIVERED FROM OUTSIDE THE
UNITED STATES, BY INTERNATIONAL FEDERAL EXPRESS OR FACSIMILE, AND SHALL BE
DEEMED GIVEN (I) IF DELIVERED BY FIRST-CLASS REGISTERED OR CERTIFIED MAIL
DOMESTIC, THREE BUSINESS DAYS AFTER SO MAILED, (II) IF DELIVERED BY NATIONALLY
RECOGNIZED OVERNIGHT CARRIER, ONE BUSINESS DAY AFTER SO MAILED, (III) IF
DELIVERED BY INTERNATIONAL FEDERAL EXPRESS, TWO BUSINESS DAYS AFTER SO MAILED,
AND (IV) IF DELIVERED BY FACSIMILE, UPON ELECTRIC CONFIRMATION OF RECEIPT IF
SENT DURING THE NORMAL BUSINESS HOURS OF THE RECIPIENT AND, IF NOT, ON THE NEXT
BUSINESS DAY, AND SHALL BE DELIVERED AS ADDRESSED AS FOLLOWS:

if to the Company, to:

 

Jay McNamara, Esq.

Inverness Medical Innovations, Inc.

51 Sawyer Road

Suite 200

Waltham, Massachusetts

Tel: 781.647.3900

Fax: 781.647.3939

Email: jay.mcnamara@usa.invernessmedical.com

 

with a copy to:

 

John D. Patterson Jr., Esq.

Foley Hoag LLP

World Trade Center West

155 Seaport Boulevard

Boston, Massachusetts 02210

Tel: 617.832.1000

Fax: 617.832.7000

Email: jdp@foleyhoag.com

 

21

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if to the Investor, at its address on the signature page hereto, or at such
other address or addresses as may have been furnished to the Company in writing.

 

6.2.          CHANGES.  THIS AGREEMENT MAY NOT BE MODIFIED OR AMENDED EXCEPT
PURSUANT TO AN INSTRUMENT IN WRITING SIGNED BY THE COMPANY AND THE INVESTOR.

6.3.          HEADINGS.  THE HEADINGS OF THE VARIOUS SECTIONS OF THIS AGREEMENT
HAVE BEEN INSERTED FOR CONVENIENCE OF REFERENCE ONLY AND SHALL NOT BE DEEMED TO
BE PART OF THIS AGREEMENT.

6.4.          SEVERABILITY.  IN CASE ANY PROVISION CONTAINED IN THIS AGREEMENT
SHOULD BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT, THE VALIDITY,
LEGALITY AND ENFORCEABILITY OF THE REMAINING PROVISIONS CONTAINED HEREIN SHALL
NOT IN ANY WAY BE AFFECTED OR IMPAIRED THEREBY.

6.5.          SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. 
NOTWITHSTANDING ANY INVESTIGATION MADE BY ANY PARTY TO THIS AGREEMENT, ALL
COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY AND
THE INVESTOR HEREIN SHALL SURVIVE THE EXECUTION OF THIS AGREEMENT, THE DELIVERY
TO THE INVESTOR OF THE SHARES BEING PURCHASED AND THE PAYMENT THEREFOR UNLESS
OTHERWISE STATED HEREIN.

6.6.          GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW.

6.7.          ENTIRE AGREEMENT.  THIS AGREEMENT AND THE DOCUMENTS REFERENCED
HEREIN CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND THEREOF. THERE ARE NO RESTRICTIONS, PROMISES,
WARRANTIES OR UNDERTAKINGS, OTHER THAN THOSE SET FORTH OR REFERRED TO HEREIN.
THIS AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS AMONG THE
PARTIES.

6.8.          FINDERS FEES.  NEITHER THE COMPANY NOR THE INVESTOR NOR ANY
AFFILIATE THEREOF HAS INCURRED ANY OBLIGATION WHICH WILL RESULT IN THE
OBLIGATION OF THE OTHER PARTY TO PAY ANY FINDER’S FEE OR COMMISSION IN
CONNECTION WITH THIS TRANSACTION, EXCEPT FOR FEES PAYABLE BY THE COMPANY TO THE
PLACEMENT AGENT.

6.9.          COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, EACH OF WHICH SHALL CONSTITUTE AN ORIGINAL, BUT ALL OF WHICH, WHEN
TAKEN TOGETHER, SHALL CONSTITUTE BUT ONE INSTRUMENT, AND SHALL BECOME EFFECTIVE
WHEN ONE OR MORE COUNTERPARTS HAVE BEEN SIGNED BY EACH PARTY HERETO AND
DELIVERED TO THE OTHER PARTY. FACSIMILE SIGNATURES SHALL BE DEEMED ORIGINALS FOR
ALL PURPOSES HEREUNDER.

6.10.        SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL INURE TO THE BENEFIT
OF AND BE BINDING UPON THE SUCCESSORS, HEIRS, EXECUTORS AND ADMINISTRATORS AND
PERMITTED ASSIGNS OF THE PARTIES HERETO. WITH RESPECT TO TRANSFERS THAT ARE NOT
MADE PURSUANT TO THE REGISTRATION STATEMENT (OR RULE 144 BUT ARE OTHERWISE MADE
IN ACCORDANCE WITH ALL APPLICABLE LAWS AND THE TERMS OF THIS AGREEMENT), THE
RIGHTS AND OBLIGATIONS OF THE INVESTOR UNDER THIS AGREEMENT SHALL BE
AUTOMATICALLY ASSIGNED BY THE INVESTOR TO ANY TRANSFEREE OF ALL OR ANY PORTION
OF THE INVESTOR’S SHARES WHO IS A PERMITTED TRANSFEREE (AS DEFINED BELOW);
PROVIDED, HOWEVER, THAT WITHIN TWO

 

22

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

 

BUSINESS DAYS PRIOR TO THE TRANSFER, (I) THE COMPANY IS PROVIDED WRITTEN NOTICE
OF THE TRANSFER INCLUDING THE NAME AND ADDRESS OF THE TRANSFEREE AND THE NUMBER
OF SHARES AS APPLICABLE TO BE TRANSFERRED; AND (II) THAT SUCH TRANSFEREE AGREES
IN WRITING TO BE BOUND BY THE TERMS OF THIS AGREEMENT AS IF SUCH TRANSFEREE WERE
THE INVESTOR. (FOR PURPOSES OF THIS AGREEMENT, A “PERMITTED TRANSFEREE” SHALL
MEAN ANY PERSON WHO (A) IS AN “ACCREDITED INVESTOR,” AS THAT TERM IS DEFINED IN
RULE 501(A) OF REGULATION D UNDER THE SECURITIES ACT, (B) RECEIVES THE SHARES IN
A TRANSACTION WHICH IS IN COMPLIANCE WITH THE FEDERAL AND APPLICABLE STATE
SECURITIES LAW. UPON ANY TRANSFER PERMITTED BY THIS SECTION 6.10, THE COMPANY
SHALL BE OBLIGATED TO SUCH TRANSFEREE TO PERFORM ALL OF ITS COVENANTS UNDER THIS
AGREEMENT AS IF SUCH TRANSFEREE WAS THE INVESTOR.

6.11.        EXPENSES.  THE COMPANY AND THE INVESTOR SHALL BEAR ITS OR HIS OWN
EXPENSES IN CONNECTION WITH THE PREPARATION AND NEGOTIATION OF THE AGREEMENT.

6.12.        THIRD PARTY RIGHTS.  EXCEPT AS EXPLICITLY SET FORTH IN THIS
AGREEMENT, NOTHING IN THIS AGREEMENT SHALL CREATE OR BE DEEMED TO CREATE ANY
RIGHTS IN ANY PERSON OR ENTITY NOT A PARTY TO THIS AGREEMENT.  NOTWITHSTANDING
THE FOREGOING, THE PLACEMENT AGENTS SHALL BE DEEMED TO BE THIRD-PARTY
BENEFICIARIES OF THE REPRESENTATIONS, WARRANTIES AND COVENANTS MADE BY THE
INVESTOR HEREIN.

6.13.        NO WAIVER.  IT IS AGREED THAT A WAIVER BY EITHER PARTY OF A BREACH
OF ANY PROVISION OF THIS AGREEMENT SHALL NOT OPERATE, OR BE CONSTRUED, AS A
WAIVER OF ANY SUBSEQUENT BREACH BY THAT SAME PARTY.

6.14.        FURTHER ASSURANCES.  THE PARTIES AGREE TO EXECUTE AND DELIVER ALL
SUCH FURTHER DOCUMENTS, AGREEMENTS AND INSTRUMENTS AND TAKE SUCH OTHER AND
FURTHER ACTION AS MAY BE NECESSARY OR APPROPRIATE TO CARRY OUT THE PURPOSES AND
INTENT OF THIS AGREEMENT.

6.15.        INDEPENDENT NATURE OF INVESTORS’ OBLIGATIONS AND RIGHTS.  THE
OBLIGATIONS OF EACH OF THE INVESTOR AND THE OTHER INVESTORS THAT IS
PARTICIPATING IN THE OFFERING ARE SEVERAL AND NOT JOINT.  THE DECISION OF EACH
OF THE INVESTOR AND THE OTHER INVESTORS TO PURCHASE SHARES PURSUANT TO THIS
AGREEMENT HAS BEEN MADE BY SUCH INVESTOR INDEPENDENTLY OF ANY OTHER INVESTOR. 
NOTHING CONTAINED HEREIN AND NO ACTION TAKEN BY INVESTOR SHALL BE DEEMED TO
CONSTITUTE THE INVESTOR AND THE OTHER INVESTORS AS A PARTNERSHIP, AN
ASSOCIATION, A JOINT VENTURE OR ANY OTHER KIND OF ENTITY, OR CREATE A
PRESUMPTION THAT THE INVESTOR AND THE OTHER INVESTORS ARE IN ANY WAY ACTING IN
CONCERT OR AS A GROUP WITH RESPECT TO SUCH OBLIGATIONS OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.  INVESTOR ACKNOWLEDGES THAT NO OTHER INVESTOR
HAS ACTED AS AGENT FOR SUCH INVESTOR IN CONNECTION WITH MAKING ITS INVESTMENT
HEREUNDER AND THAT NO OTHER INVESTOR WILL BE ACTING AS AGENT OF SUCH INVESTOR IN
CONNECTION WITH MONITORING ITS INVESTMENT IN THE SHARES OR ENFORCING ITS RIGHTS
UNDER THIS AGREEMENT.  INVESTOR SHALL BE ENTITLED TO INDEPENDENTLY PROTECT AND
ENFORCE ITS RIGHTS, INCLUDING WITHOUT LIMITATION THE RIGHTS ARISING OUT OF THIS
AGREEMENT AND IT SHALL NOT BE NECESSARY FOR ANY OTHER INVESTOR TO BE JOINED AS
AN ADDITIONAL PARTY IN ANY PROCEEDING FOR SUCH PURPOSE.  THE COMPANY
ACKNOWLEDGES THAT EACH OF THE INVESTOR AND THE OTHER INVESTORS HAS BEEN PROVIDED
WITH THE AGREEMENT FOR THE PURPOSE OF CLOSING A TRANSACTION WITH MULTIPLE
INVESTORS AND NOT BECAUSE IT WAS REQUIRED OR REQUESTED TO DO SO BY THE INVESTOR
OR THE OTHER INVESTORS.

6.16.        LIMITATION ON LIABILITY.  A COPY OF THE AGREEMENT AND DECLARATION
OF TRUST OF THE INVESTOR IS ON FILE WITH THE SECRETARY OF THE COMMONWEALTH OF
MASSACHUSETTS AND NOTICE IS

 

23

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HEREBY GIVEN THAT THIS AGREEMENT IS EXECUTED ON BEHALF OF THE TRUSTEES OF THE
INVESTOR AS TRUSTEES AND NOT INDIVIDUALLY AND THAT THE OBLIGATIONS OF THIS
AGREEMENT ARE NOT BINDING UPON ANY OF THE TRUSTEES, OFFICERS OR STOCKHOLDERS OF
THE INVESTOR INDIVIDUALLY BUT ARE BINDING ONLY UPON THE ASSETS AND PROPERTY OF
THE INVESTOR.  THE COMPANY IS EXPRESSLY PUT ON NOTICE THAT THE RIGHTS AND
OBLIGATIONS OF EACH SERIES OF SHARES OF THE INVESTOR UNDER ITS DECLARATION OF
TRUST ARE SEPARATE AND DISTINCT FROM THOSE OF ANY AND ALL OTHER SERIES.

6.17         Publicity.  The Company agrees that it will not use in advertising
or publicity the names of the Investor, Fidelity Management & Research Company,
any of its partners or employees, any of the funds or accounts managed by it or
any of its affiliates, or any trade name, trademark, trade device, service mark,
symbol or any abbreviation, contraction or simulation thereof (collectively, the
“Fidelity Investor Name”), in any case without the prior written consent of
Fidelity Management & Research Company Investor; provided, however, that the
Company shall be permitted to use the Fidelity Investor Name in the press
release and/or other public disclosure contemplated in Section 4.3.

 

[SIGNATURE PAGES FOLLOW]

 

 

 

24

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COMPANY SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT

 

 

                IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be duly executed as of the date first written above.

 

 

 

 

INVERNESS MEDICAL INNOVATIONS, INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

Amount of Subscription

 

Accepted

$

 

 

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

 

INVESTOR SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT

 

 

 

 

 

* SEE SCHEDULE OF INVESTORS BELOW

 

 

 

 

 

 

 

 

(print full legal name of Investor)

 

 

 

 

 

 

 

 

By:

 

 

 

(signature of authorized representative)

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone:

 

 

 

 

 

 

 

 

 

 

 

Email:

 

 

 

 

 

 

 

 

 

 

 

Tax I.D. or SSN:

 

 

 

 

 

 

 

 

 

 

Address where Shares should be sent (if different from above):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NUMBER OF SHARES SUBSCRIBED FOR:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AGGREGATE PURCHASE PRICE:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

INVESTOR SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT (CONT.)

 

 

 

If Investor is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:

 

The undersigned NASD member firm acknowledges receipt of the notice required by
Rule 3040 of the NASD Conduct Rules.

 

 

 

 

Name of NASD Member

 

 

 

By:

 

 

Name:

Title:

 

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

 

Schedule of Investors

 

 

Investor

 

Number of Shares
of Common Stock

 

Aggregate Purchase Price in US $

 

AG MM, LP

 

13,600

 

331,976

 

PHS Bay Colony Fund, LP

 

10,300

 

251,423

 

GAM Arbitrage Investments, Inc.

 

74,300

 

1,813,663

 

AG Super Fund International Partners, LP

 

52,700

 

1,286,407

 

Nutmeg Partners, LP

 

32,700

 

798,207

 

PHS Patriot Fund, LP

 

5,100

 

124,491

 

AG Princess, LP

 

10,300

 

251,423

 

AG Super Fund, LP

 

217,900

 

5,318,939

 

AG CNG Fund, LP

 

23,400

 

571,194

 

Commonfund Event-Driven Company

 

9,700

 

236,777

 

Fidelity Select Portfolios: Parmaceutical Portfolio

 

2,497

 

60,951.77

 

Fidelity Select Portfolios: Health Care Portfolio

 

42,205

 

1,030,224.05

 

Fidelity Advisor Series VII: Fidelity Advisor Health Care Fund

 

14,543

 

354,994.63

 

Variable Insurance Products Fund IV: Healthcare Portfolio

 

2,231

 

54,458.71

 

Fidelity Select Portfolios: Medical Equipment and Systems Portfolio

 

20,683

 

504,872.03

 

Fidelity Devonshire Trust: Fidelity Balanced Fund

 

324,908

 

7,931,004.28

 

Fidelity Focus Health Care Fund

 

3,440

 

83,970.40

 

Fidelity Investments International for and on behalf of Fidelity Funds SICAV
Health Care Pool

 

7,994

 

195,133.54

 

Variable Insurance Products Fund III: Balanced Portfolio

 

6,471

 

157,957.11

 

Fidelity Advisor Series I: Fidelity Advisor Balanced Fund

 

25,028

 

610,933.48

 

Polygon

 

450,000

 

10,984,500

 

UBS O’Connor

 

75,000

 

1,830,750

 

Balyasny Asset Mgmt Atlas Master Fund, Ltd

 

15,678

 

382,700

 

 

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

 

Visium Long Bias Offshore Fund, Ltd

 

22,783

 

556,133

 

Visium Long Bias Fund, LP

 

4,699

 

114,703

 

Visium Balanced Offshore Fund, Ltd

 

27,888

 

680,746

 

Visium Balanced Fund, LP

 

28,952

 

706,718

 

Ramius Capital Group

 

100,000

 

2,441,000

 

Heights Capital Mgmt (Susquehanna)

 

100,000

 

2,441,000

 

Healthcor

 

 

 

 

 

Healthcor, LP

 

238,000

 

5,809,580

 

Healthcor Offshore, Ltd

 

462,000

 

11,277,420

 

Federated Kauffman

 

400,000

 

9,764,000

 

Manning & Napier

 

150,000

 

3,661,500

 

Chartwell

 

200,000

 

4,882,000

 

Amaranth

 

 

 

 

 

Amaranth, LLC

 

90,000

 

2,196,900

 

Amaranth Global Equieits Master Fund Limited

 

10,000

 

244,100

 

Apogee / Paradigm

 

100,000

 

2,441,000

 

Precept

 

25,000

 

610,250

 

 

 

 

 

 

 

TOTAL

 

3,400,000

 

$82,994,000

 

 

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