Exhibit 10.23

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE
STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED UNLESS (A)
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR  (B)
EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS ARE AVAILABLE.
AS A CONDITION TO PERMITTING ANY TRANSFER OF THESE SECURITIES, THE COMPANY MAY
REQUIRE THAT IT BE FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY TO THE EFFECT THAT NO REGISTRATION OR QUALIFICATION IS LEGALLY REQUIRED
FOR SUCH TRANSFER.

 

WARRANT TO PURCHASE

SHARES OF COMMON STOCK

OF

INVERNESS MEDICAL INNOVATIONS, INC.

Issuance Date: March 31, 2005

Void after 5:00 p.m.., Eastern Standard Time, on March 31, 2015

This Warrant is executed and delivered by Inverness Medical Innovations, Inc., a
Delaware corporation (the “Company”), pursuant to that certain Employment
Agreement of even date herewith (the “Employment Agreement”) between the Company
and Roger Piasio (“Piasio”), pursuant to which the Company has agreed to issue
to Piasio a warrant to purchase up to 75,000 shares of Common Stock (as defined
herein).  Capitalized terms used herein, and not otherwise defined herein, shall
have the respective meanings given to such terms in the Employment Agreement.

                In consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Warrant and the
Employment Agreement, the Company and Piasio agree as follows:

1.             THE WARRANT.  THE COMPANY HEREBY CERTIFIES THAT ROGER PIASIO, OR
HIS SUCCESSORS AND PERMITTED ASSIGNS (THE “REGISTERED HOLDER”), IS ENTITLED TO
PURCHASE FROM THE COMPANY, SUBJECT TO THE TERMS AND CONDITIONS OF THIS WARRANT,
UP TO 75,000 SHARES (AS SUCH SHARES MAY BE ADJUSTED PURSUANT TO THE PROVISIONS
OF SECTION 6 HEREOF, THE “WARRANT SHARES”) OF COMMON STOCK, PAR VALUE $0.001 PER
SHARE, OF THE COMPANY (THE “COMMON STOCK”), AT AN EXERCISE PRICE OF $24.00 PER
SHARE (AS SUCH PRICE MAY BE ADJUSTED PURSUANT TO THE PROVISIONS OF SECTION 6
HEREOF, THE “EXERCISE PRICE”), BUT ONLY TO THE EXTENT THAT SUCH WARRANT SHARES
HAVE BECOME VESTED SHARES (AS DEFINED IN SECTION 2(B) HEREOF) AND ONLY PRIOR TO
THE EXPIRATION DATE (AS DEFINED BELOW) APPLICABLE TO SUCH VESTED SHARES.  WHEN
USED HEREIN, THE TERM “EXPIRATION DATE”

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MEANS, WITH RESPECT TO EACH VESTED SHARE, THE EARLIER OF (A) THE FIFTH
ANNIVERSARY OF THE DATE SUCH SHARE BECAME A VESTED SHARE AND (B) MARCH 31, 2015.

2.             VESTING OF WARRANT SHARES.

(A)           THE PROVISIONS OF SECTIONS 2.4.1, 2.4.2 AND 2.4.6 OF THE MERGER
AGREEMENT (AS DEFINED BELOW) (INCLUDING, WITHOUT LIMITATION, ANY REFERENCES
THEREIN TO EXHIBITS TO THE MERGER AGREEMENT) ARE HEREBY INCORPORATED BY
REFERENCE TO THIS WARRANT AND MADE AND INTEGRAL PART HEREOF.  ANY BREACH BY THE
COMPANY OF THE PROVISIONS OF SECTION 2.4.2 OF THE MERGER AGREEMENT (AS
INCORPORATED BY REFERENCE TO THIS WARRANT), SHALL BE DEEMED AND CONSTITUTE A
BREACH BY THE COMPANY OF THE PROVISIONS OF THIS WARRANT.  WHEN USED HEREIN
“MERGER AGREEMENT” MEANS THAT CERTAIN AGREEMENT AND PLAN OF MERGER DATED
FEBRUARY 8, 2005, BY AND AMONG THE COMPANY, BNX ACQUISITION CORP., A DELAWARE
CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF THE COMPANY, BINAX, INC., A
DELAWARE CORPORATION (“BINAX”), CERTAIN PRINCIPAL STOCKHOLDERS OF BINAX, AND
PIASIO IN HIS CAPACITY AS STOCKHOLDER REPRESENTATIVE, WHICH PROVIDES FOR THE
MERGER OF BINAX WITH AND INTO MERGER SUB, THE RESULTING ENTITY TO BE A
WHOLLY-OWNED SUBSIDIARY OF THE COMPANY.

(B)           UPON ITS ISSUANCE, THIS WARRANT SHALL NOT BE EXERCISABLE OR VESTED
WITH RESPECT TO ANY WARRANT SHARES.  THIS WARRANT SHALL VEST AND BECOME
EXERCISABLE WITH RESPECT TO 25,000 WARRANT SHARES (UP TO AN AGGREGATE OF 75,000
WARRANT SHARES) UPON EACH OCCURRENCE OF A VESTING EVENT (AS SUCH SHARES MAY BE
ADJUSTED PURSUANT TO THE PROVISIONS OF SECTION 6 HEREOF).  A “VESTING EVENT”
SHALL OCCUR UPON THE COMPLETION OF A FIRST COMMERCIAL SALE WITH RESPECT TO A
PRODUCT (WHICH FIRST COMMERCIAL SALE MUST OCCUR PRIOR TO THE EXPIRATION OF THE
COMMERCIALIZATION PERIOD).  FOR PURPOSES OF CLARITY, A VESTING EVENT SHALL OCCUR
ONLY ONCE FOR A PARTICULAR PRODUCT, REGARDLESS OF HOW MANY TIMES THAT PRODUCT
MAY BE ALTERED, IMPROVED, REDESIGNED, REPACKAGED OR REINTRODUCED.  WARRANT
SHARES WITH RESPECT TO WHICH THIS WARRANT BECOMES VESTED AND EXERCISABLE IN
ACCORDANCE WITH THE TERMS HEREOF ARE REFERRED TO HEREIN AS “VESTED SHARES.”

For example, in the event that a First Commercial Sale is completed with respect
to two Products during the Commercialization Product, and no First Commercial
Sale is completed with respect to a third Product during the Commercialization
Period, then, (i) 25,000 Warrant Shares shall vest and become Vested Shares on
the date of the completion of the First Commercial Sale with respect to the
first Product, (ii) 25,000 additional Warrant Shares shall become exercisable on
the date of the completion of the First Commercial Sale with respect to the
second Product, and (iii) with respect to the remaining 25,000 Warrant Shares,
this Warrant shall expire and be of no further force and effect upon expiration
of the Commercialization Period.

(C)           NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
WARRANT, THE COMPANY SHALL HAVE THE RIGHT, IN ITS SOLE AND ABSOLUTE DISCRETION,
TO TERMINATE THE R&D ACTIVITIES (AND, CONSEQUENTLY, THE APPLICABILITY OF THE
PROVISIONS OF SECTION 2.4.2 OF THE MERGER AGREEMENT) WITH RESPECT TO ANY ONE OR
MORE PRODUCTS DURING THE COMMERCIALIZATION PERIOD; PROVIDED, HOWEVER, THAT FOR
PURPOSES OF THE VESTING OF THE WARRANT SHARES HEREUNDER, ANY SUCH TERMINATION
SHALL BE DEEMED A VESTING EVENT FOR SUCH PRODUCT OR PRODUCTS.

3.             EFFECT OF TERMINATION OF EMPLOYMENT.

 

 

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(A)           IN THE EVENT THAT DURING THE INITIAL TERM (AS DEFINED IN THE
EMPLOYMENT AGREEMENT), THE EMPLOYMENT AGREEMENT AND THE EMPLOYMENT RELATIONSHIP
CREATED THEREBY ARE TERMINATED (I) BY THE COMPANY WITHOUT CAUSE (AS DEFINED IN
THE EMPLOYMENT AGREEMENT), OR (II) BY PIASIO IN ACCORDANCE WITH SECTION
4(C)(III) BECAUSE OF A MATERIAL BREACH BY THE COMPANY, THE VESTING UNDER THIS
WARRANT SHALL ACCELERATE SUCH THAT ALL WARRANT SHARES THAT AS OF THE DATE OF
SUCH TERMINATION HAVE NOT BECOME VESTED SHARES, SHALL IMMEDIATELY VEST AND
BECOME VESTED SHARES FOR ALL PURPOSES HEREUNDER.

(B)           IN THE EVENT THAT DURING THE INITIAL TERM, THE EMPLOYMENT OF ROGER
PIASIO WITH THE COMPANY IS TERMINATED BECAUSE OF HIS DEATH OR IS TERMINATED BY
THE COMPANY BECAUSE OF HIS DISABILITY (AS DEFINED IN THE EMPLOYMENT AGREEMENT),
THIS WARRANT SHALL REMAIN IN FULL FORCE AND EFFECT AND SHALL CONTINUE TO VEST
SUBJECT TO THE TERMS AND CONDITIONS THEREOF.

(C)           IN THE EVENT THAT DURING THE INITIAL TERM, THE EMPLOYMENT OF ROGER
PIASIO WITH THE COMPANY IS TERMINATED UNDER ANY CIRCUMSTANCES NOT DESCRIBED IN
SECTIONS 3(A) OR 3(B) HEREOF, THIS WARRANT SHALL TERMINATE AND BE OF NO FURTHER
FORCE OR EFFECT WITH RESPECT TO ANY WARRANT SHARES WHICH HAVE NOT BECOME VESTED
SHARES PRIOR TO THE DATE OF SUCH TERMINATION.

4.             EXERCISE.

(A)           THIS WARRANT MAY BE EXERCISED BY THE REGISTERED HOLDER WITH
RESPECT TO ALL OR ANY PART OF THE VESTED SHARES, AT ANY TIME PRIOR TO THE
EXPIRATION DATE APPLICABLE TO SUCH VESTED SHARES, BY SURRENDERING THIS WARRANT
WITH THE PURCHASE FORM ATTACHED AS EXHIBIT A HERETO DULY EXECUTED BY THE
REGISTERED HOLDER, AT THE PRINCIPAL OFFICE OF THE COMPANY, OR AT SUCH OTHER
OFFICE OR AGENCY AS THE COMPANY MAY DESIGNATE, ACCOMPANIED BY PAYMENT IN FULL,
AS PROVIDED IN SECTION 4(B) HEREOF, OF THE AGGREGATE EXERCISE PRICE PAYABLE IN
RESPECT OF THE NUMBER OF VESTED SHARES PURCHASED UPON SUCH EXERCISE.

(B)           THE AGGREGATE EXERCISE PRICE MAY BE PAID, AT THE ELECTION OF THE
REGISTERED HOLDER (I) BY CASH (INCLUDING BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS TO AN ACCOUNT DESIGNATED BY THE COMPANY) OR CERTIFIED OR BANK
CHECK IN LAWFUL MONEY OF THE UNITED STATES, OR (II) BY EXERCISE OF THE “NET
ISSUANCE” RIGHT DESCRIBED BELOW IN THIS SECTION 4(B) (“NET ISSUANCE”).  IF THE
REGISTERED HOLDER ELECTS THE NET ISSUANCE METHOD, THE COMPANY WILL ISSUE WARRANT
SHARES TO THE REGISTERED HOLDER UPON EXERCISE OF THIS WARRANT IN ACCORDANCE WITH
THE FOLLOWING FORMULA:

X =  Y(A-B)

A

Where:                                                         X = the number of
Warrant Shares that shall be issued to the Registered Holder.

                                                                                               
Y = the number of Vested Shares requested to be purchased under this Warrant.

                                                                                               
A = the current fair market value of one (1) share of Common Stock at the time
of issuance of such Warrant Shares.

 

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B = the Exercise Price in effect at the time of exercise.

For purposes of the above calculation, current fair market value of each share
of Common Stock shall be determined as follows: (i) if the Common Stock is
traded on the American Stock Exchange or another national securities exchange,
the fair market value shall be deemed to be the average of the closing prices of
the Common Stock over the 10 trading day period ending immediately prior to the
day as of which the current fair market value of the Common Stock is being
determined; or (ii) if the Common Stock is traded over-the-counter, the fair
market value shall be deemed to be the average of the closing bid and asked
prices of the Common Stock quoted on the NASDAQ System (or similar system) over
the 10 trading day period ending immediately prior to the day as of which the
current fair market value of the securities is being determined; or (iii) if at
any time the Common Stock is not listed on any national securities exchange or
quoted in the NASDAQ System (or similar system) or the over-the-counter market,
the current fair market value of the Common Stock shall be as determined in good
faith by the Board of Directors of the Company.  The Net Issuance method may
only be used with respect to exercise of this Warrant if the current fair market
value of one share of the Common Stock at the time of issuance of the Warrant
Shares is greater than the Exercise Price then in effect.

(C)           EACH EXERCISE OF THIS WARRANT SHALL BE DEEMED TO HAVE BEEN
EFFECTED IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON THE DAY ON WHICH THIS
WARRANT AND THE PURCHASE FORM SHALL HAVE BEEN SURRENDERED TO THE COMPANY AS
PROVIDED IN SECTION 4(B) HEREOF.  AT SUCH TIME, THE PERSON OR PERSONS IN WHOSE
NAME OR NAMES ANY CERTIFICATE(S) FOR WARRANT SHARES SHALL BE ISSUABLE UPON SUCH
EXERCISE AS PROVIDED IN SECTION 4(D) HEREOF, SHALL BE DEEMED TO HAVE BECOME THE
HOLDER OR HOLDERS OF RECORD OF THE WARRANT SHARES REPRESENTED BY SUCH
CERTIFICATES.

(D)           AS SOON AS PRACTICABLE AFTER EACH EXERCISE OF THIS WARRANT, AND IN
ANY EVENT WITHIN 30 DAYS THEREAFTER, THE COMPANY, AT ITS EXPENSE, WILL CAUSE TO
BE ISSUED IN THE NAME OF, AND DELIVERED TO, THE REGISTERED HOLDER, OR, SUBJECT
TO THE TERMS AND CONDITIONS HEREOF, AS SUCH REGISTERED HOLDER (UPON PAYMENT BY
SUCH REGISTERED HOLDER OF ANY APPLICABLE TRANSFER TAXES) MAY DIRECT: (I) A
CERTIFICATE OR CERTIFICATES FOR THE NUMBER OF FULL WARRANT SHARES TO WHICH SUCH
REGISTERED HOLDER SHALL BE ENTITLED UPON SUCH EXERCISE, AND (II) IN CASE SUCH
EXERCISE IS IN PART ONLY (WHETHER BECAUSE NOT ALL WARRANT SHARES HAVE BECOME
VESTED SHARES, OR BECAUSE THIS WARRANT IS EXERCISED ONLY WITH RESPECT TO A
PORTION OF THE VESTED SHARES, OR OTHERWISE), A NEW WARRANT EVIDENCING THE NUMBER
OF WARRANT SHARES REMAINING UNEXERCISED.

(E)           TO THE EXTENT NOT ALL VESTED SHARES ARE EXERCISED PRIOR TO THE
EXPIRATION DATE APPLICABLE TO SUCH VESTED SHARES, AND IF THE THEN FAIR MARKET
VALUE OF ONE SHARE OF THE COMMON STOCK IS GREATER THAN THE EXERCISE PRICE THEN
IN EFFECT, THIS WARRANT SHALL BE DEEMED AUTOMATICALLY EXERCISED WITH RESPECT TO
ALL SUCH VESTED SHARES PURSUANT TO THE NET ISSUANCE METHOD AS PROVIDED IN
SECTION 4(B) HEREOF (EVEN IF NOT SURRENDERED) IMMEDIATELY BEFORE THE EXPIRATION
DATE APPLICABLE TO SUCH VESTED SHARES.  FOR PURPOSES OF SUCH AUTOMATIC NET
ISSUANCE EXERCISE, THE FAIR MARKET VALUE OF ONE SHARE OF COMMON STOCK SHALL BE
DETERMINED PURSUANT TO THE NET ISSUANCE PROVISIONS OF SECTION 4(B) HEREOF.  TO
THE EXTENT THIS WARRANT IS DEEMED AUTOMATICALLY EXERCISED PURSUANT TO THIS
SECTION 4(E), THE COMPANY SHALL PROMPTLY NOTIFY THE REGISTERED HOLDER OF THE
NUMBER OF WARRANT SHARES THAT THE REGISTERED HOLDER IS TO RECEIVE BY REASON OF
SUCH AUTOMATIC EXERCISE.

 

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5.             RULE 144.  WITH A VIEW TO MAKING AVAILABLE THE BENEFITS OF
CERTAIN RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE
“SEC”) WHICH MAY AT ANY TIME PERMIT THE SALE OF THE WARRANT SHARES TO THE PUBLIC
WITHOUT REGISTRATION, THE COMPANY AGREES TO USE ITS COMMERCIALLY REASONABLE BEST
EFFORTS TO:

(A)           MAKE AND KEEP PUBLIC INFORMATION AVAILABLE, AS THOSE TERMS ARE
UNDERSTOOD AND DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”);

(B)           FILE WITH THE SEC IN A TIMELY MANNER ALL REPORTS AND OTHER
DOCUMENTS REQUIRED OF THE COMPANY UNDER THE SECURITIES ACT AND THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”); AND

(C)           FURNISH TO THE REGISTERED HOLDER FORTHWITH UPON REQUEST A WRITTEN
STATEMENT BY THE COMPANY AS TO ITS COMPLIANCE WITH THE REPORTING REQUIREMENTS OF
SUCH RULE 144 AND OF THE SECURITIES ACT AND THE EXCHANGE ACT, A COPY OF THE MOST
RECENT ANNUAL OR QUARTERLY REPORT OF THE COMPANY, AND SUCH OTHER REPORTS AND
DOCUMENTS SO FILED BY THE COMPANY AS THE REGISTERED HOLDER MAY REASONABLY
REQUEST IN AVAILING ITSELF OF ANY RULE OR REGULATION OF THE SEC ALLOWING THE
REGISTERED HOLDER TO SELL ANY WARRANT SHARES WITHOUT REGISTRATION.

6.             ADJUSTMENTS.

(A)           IF OUTSTANDING SHARES OF COMMON STOCK SHALL BE SUBDIVIDED INTO A
GREATER NUMBER OF SHARES OR A DIVIDEND IN COMMON STOCK SHALL BE PAID IN RESPECT
OF COMMON STOCK, THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH
SUBDIVISION OR AT THE RECORD DATE OF SUCH DIVIDEND SHALL SIMULTANEOUSLY WITH THE
EFFECTIVENESS OF SUCH SUBDIVISION OR IMMEDIATELY AFTER THE RECORD DATE OF SUCH
DIVIDEND BE PROPORTIONATELY REDUCED.  IF OUTSTANDING SHARES OF THE COMMON STOCK
SHALL BE COMBINED INTO A SMALLER NUMBER OF SHARES, THE EXERCISE PRICE IN EFFECT
IMMEDIATELY PRIOR TO SUCH COMBINATION SHALL, SIMULTANEOUSLY WITH THE
EFFECTIVENESS OF SUCH COMBINATION, BE PROPORTIONATELY INCREASED.  WHEN ANY
ADJUSTMENT IS REQUIRED TO BE MADE IN THE EXERCISE PRICE PURSUANT TO THIS SECTION
6(A), THE NUMBER OF WARRANT SHARES PURCHASABLE UPON THE EXERCISE OF THIS WARRANT
SHALL BE CHANGED TO THE NUMBER DETERMINED BY DIVIDING (I) AN AMOUNT EQUAL TO THE
NUMBER OF WARRANT SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT IMMEDIATELY
PRIOR TO SUCH ADJUSTMENT, MULTIPLIED BY THE EXERCISE PRICE IN EFFECT IMMEDIATELY
PRIOR TO SUCH ADJUSTMENT, BY (II) THE EXERCISE PRICE IN EFFECT IMMEDIATELY AFTER
SUCH ADJUSTMENT.

(B)           IF THERE SHALL OCCUR ANY CAPITAL REORGANIZATION OR
RECLASSIFICATION OF THE COMMON STOCK (OTHER THAN A CHANGE IN PAR VALUE OR A
SUBDIVISION OR COMBINATION AS PROVIDED FOR IN SECTION 6(A) ABOVE), THEN, AS PART
OF ANY SUCH REORGANIZATION OR RECLASSIFICATION, LAWFUL PROVISION SHALL BE MADE
SO THAT THE REGISTERED HOLDER SHALL HAVE THE RIGHT THEREAFTER TO RECEIVE UPON
THE EXERCISE HEREOF THE KIND AND AMOUNT OF SHARES OF STOCK OR OTHER SECURITIES
OR PROPERTY WHICH THE REGISTERED HOLDER WOULD HAVE BEEN ENTITLED TO RECEIVE IF,
IMMEDIATELY PRIOR TO ANY SUCH REORGANIZATION OR RECLASSIFICATION, THE REGISTERED
HOLDER HAD HELD THE NUMBER OF SHARES OF COMMON STOCK WHICH WERE THEN PURCHASABLE
UPON THE EXERCISE OF THIS WARRANT.  IN ANY SUCH CASE, APPROPRIATE ADJUSTMENT (AS
REASONABLY DETERMINED BY THE BOARD OF DIRECTORS OF THE COMPANY) SHALL BE MADE IN
THE APPLICATION OF THE PROVISIONS SET FORTH HEREIN WITH RESPECT TO THE RIGHTS
AND INTERESTS THEREAFTER OF THE REGISTERED HOLDERS SUCH THAT THE PROVISIONS SET
FORTH IN THIS SECTION 6 (INCLUDING PROVISIONS WITH RESPECT TO ADJUSTMENT OF THE
EXERCISE PRICE) SHALL THEREAFTER

 

5

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BE APPLICABLE, IN AS NEARLY EQUIVALENT A MANNER AS MAY BE PRACTICABLE, IN
RELATION TO ANY SHARES OF STOCK OR OTHER SECURITIES OR PROPERTY THEREAFTER
DELIVERABLE UPON THE EXERCISE THIS WARRANT.

(C)           IF THERE SHALL BE A MERGER OR CONSOLIDATION OF THE COMPANY WITH OR
INTO ANOTHER CORPORATION (OTHER THAN A MERGER OR REORGANIZATION INVOLVING ONLY A
CHANGE IN THE STATE OF INCORPORATION OF THE COMPANY OR THE ACQUISITION BY THE
COMPANY OF OTHER BUSINESSES WHERE THE COMPANY SURVIVES AS A GOING CONCERN), OR
THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S CAPITAL STOCK OR ASSETS TO
ANY OTHER PERSON, THEN AS A PART OF SUCH TRANSACTION, PROVISION SHALL BE MADE SO
THAT THE REGISTERED HOLDER SHALL THEREAFTER BE ENTITLED TO RECEIVE THE NUMBER OF
SHARES OF STOCK OR OTHER SECURITIES OR PROPERTY OF THE COMPANY, OR OF THE
SUCCESSOR CORPORATION OR THE PARENT OF SUCH SUCCESSOR CORPORATION, AS THE CASE
MAY BE, RESULTING FROM THE MERGER, CONSOLIDATION OR SALE, TO WHICH THE
REGISTERED HOLDER WOULD HAVE BEEN ENTITLED IF THE REGISTERED HOLDER HAD
EXERCISED ITS RIGHTS PURSUANT TO THIS WARRANT IMMEDIATELY PRIOR THERETO.  IN ANY
SUCH CASE, APPROPRIATE ADJUSTMENT SHALL BE MADE IN THE APPLICATION OF THE
PROVISIONS OF THIS SECTION 6 TO THE END THAT THE PROVISIONS OF THIS WARRANT
SHALL BE APPLICABLE AFTER THAT EVENT IN AS NEARLY EQUIVALENT A MANNER AS MAY BE
PRACTICABLE.

(D)           WHEN ANY ADJUSTMENT IS REQUIRED TO BE MADE IN THE EXERCISE PRICE,
THE COMPANY SHALL PROMPTLY MAIL TO THE REGISTERED HOLDER A CERTIFICATE SETTING
FORTH THE EXERCISE PRICE AFTER SUCH ADJUSTMENT AND SETTING FORTH A BRIEF
STATEMENT OF THE FACTS REQUIRING SUCH ADJUSTMENT.  SUCH CERTIFICATE SHALL ALSO
SET FORTH THE KIND AND AMOUNT OF STOCK OR OTHER SECURITIES OR PROPERTY INTO
WHICH THIS WARRANT SHALL BE EXERCISABLE FOLLOWING THE OCCURRENCE OF ANY OF THE
EVENTS SPECIFIED IN THIS SECTION 6.

(E)           NOTWITHSTANDING ANYTHING IN THIS WARRANT TO THE CONTRARY, IN NO
EVENT SHALL THE EXERCISE PRICE BE DECREASED TO BE LESS THAN $0.001.

7.             NO FRACTIONAL SHARES.  THE COMPANY SHALL NOT BE REQUIRED UPON THE
EXERCISE OF THIS WARRANT TO ISSUE ANY FRACTIONAL SHARES, BUT SHALL MAKE AN
ADJUSTMENT THEREFOR IN CASH ON THE BASIS OF THE FAIR MARKET VALUE OF THE COMMON
STOCK DETERMINED IN ACCORDANCE WITH SECTION 4(B) HEREOF.

8.             RESERVATION OF WARRANT SHARES.  THE COMPANY WILL AT ALL TIMES
RESERVE AND KEEP AVAILABLE, SOLELY FOR ISSUANCE AND DELIVERY UPON THE EXERCISE
OF THIS WARRANT, SUCH WARRANT SHARES AND OTHER STOCK, SECURITIES AND PROPERTY,
AS FROM TIME TO TIME SHALL BE ISSUABLE UPON THE EXERCISE OF THIS WARRANT.

9.             REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE REGISTERED
HOLDER.  BY ACCEPTANCE HEREOF, EACH REGISTERED HOLDER REPRESENTS, WARRANTS,
ACKNOWLEDGES AND COVENANTS  THAT:

(A)           THIS WARRANT AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT, OR ANY SUCCESSOR LEGISLATION, AND AGREES NOT TO SELL,
PLEDGE, DISTRIBUTE, OFFER FOR SALE, TRANSFER OR OTHERWISE DISPOSE OF THIS
WARRANT OR ANY WARRANT SHARES ISSUED UPON ITS EXERCISE UNLESS (I) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AS TO THIS WARRANT OR
SUCH WARRANT SHARES AND THIS WARRANT OR SUCH WARRANT SHARES HAVE BEEN REGISTERED
OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS THEN IN
EFFECT, (II) THE COMPANY RECEIVES

 

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AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED, OR (III) UPON THE DEATH OF THE REGISTERED
HOLDER, A TRANSFER PURSUANT TO SUCH REGISTERED HOLDER’S WILL OR ESTATE PLAN. 
THE RELIANCE BY THE COMPANY ON EXEMPTIONS UNDER THE SECURITIES ACT IS PREDICATED
IN PART UPON THE TRUTH AND ACCURACY OF THE REPRESENTATION, WARRANTIES,
ACKNOWLEDGEMENTS AND COVENANTS OF THE REGISTERED HOLDER.

(B)           SUCH REGISTERED HOLDER (I) HAS BEEN FURNISHED WITH ALL INFORMATION
WHICH SUCH REGISTERED HOLDER DEEMS NECESSARY TO EVALUATE THE MERITS AND RISKS OF
THE PURCHASE OF THIS WARRANT; (II) HAS HAD THE OPPORTUNITY TO ASK QUESTIONS
CONCERNING THE COMMON STOCK AND THE COMPANY AND ALL QUESTIONS POSED HAVE BEEN
ANSWERED TO SUCH REGISTERED HOLDER’S SATISFACTION; (III) HAS BEEN GIVEN THE
OPPORTUNITY TO OBTAIN ANY ADDITIONAL INFORMATION SUCH REGISTERED HOLDER DEEMS
NECESSARY TO VERIFY THE ACCURACY OF ANY INFORMATION OBTAINED CONCERNING THE
COMMON STOCK AND THE COMPANY; AND (IV) HAS SUCH KNOWLEDGE AND EXPERIENCE IN
FINANCIAL AND BUSINESS MATTERS THAT SUCH REGISTERED HOLDER IS ABLE TO EVALUATE
THE MERITS AND RISKS OF PURCHASING THIS WARRANT AND, UPON EXERCISE OF THIS
WARRANT THE WARRANT SHARES, AND TO MAKE AN INFORMED INVESTMENT DECISION RELATING
THERETO.

(C)           SUCH REGISTERED HOLDER IS AN “ACCREDITED INVESTOR,” AS SUCH TERM
IS DEFINED IN RULE 501 PROMULGATED BY THE SEC UNDER THE SECURITIES ACT.

(D)           SUCH REGISTERED HOLDER IS ACQUIRING THIS WARRANT, AND UPON
EXERCISE OF THIS WARRANT WILL ACQUIRE THE WARRANT SHARES (UNLESS THE OFFERING
AND SALE OF THE WARRANT SHARES TO BE ISSUED UPON THE PARTICULAR EXERCISE OF THIS
WARRANT SHALL HAVE BEEN EFFECTIVELY REGISTERED UNDER THE SECURITIES ACT), FOR
ITS OWN ACCOUNT FOR INVESTMENT AND NOT FOR, WITH A VIEW TO, OR IN CONNECTION
WITH, THE DISTRIBUTION OR RESALE OF ALL OR ANY PART OF THE COMMON STOCK IN
VIOLATION OF APPLICABLE FEDERAL OR STATE SECURITIES LAWS.

(E)           BECAUSE THIS WARRANT AND THE WARRANT SHARES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, SUCH REGISTERED HOLDER MUST CONTINUE TO
BEAR THE ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE TIME AND THIS WARRANT
AND THE WARRANT SHARES CAN NOT BE SOLD UNLESS THIS WARRANT AND THE WARRANT
SHARES ARE SUBSEQUENTLY REGISTERED UNDER APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

(F)            WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, UNLESS THE
OFFERING AND SALE OF THE WARRANT SHARES TO BE ISSUED UPON THE PARTICULAR
EXERCISE OF THIS WARRANT SHALL HAVE BEEN EFFECTIVELY REGISTERED UNDER THE
SECURITIES ACT, THE COMPANY SHALL BE UNDER NO OBLIGATION TO ISSUE THE WARRANT
SHARES COVERED BY SUCH EXERCISE UNLESS AND UNTIL THE REGISTERED HOLDER SHALL
HAVE EXECUTED AN INVESTMENT LETTER IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY, INCLUDING A WARRANTY AT THE TIME OF SUCH EXERCISE THAT SUCH REGISTERED
HOLDER IS ACQUIRING SUCH SHARES FOR SUCH REGISTERED HOLDER’S OWN ACCOUNT, FOR
INVESTMENT AND NOT FOR, WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION
OR RESALE OF ANY SUCH SHARES, AND A LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM
SHALL BE ENDORSED UPON THE CERTIFICATE(S) EVIDENCING THE WARRANT SHARES ISSUED
PURSUANT TO SUCH EXERCISE:

                                                                                               
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE
STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED UNLESS (A)
COVERED BY AN EFFECTIVE REGISTRATION

 

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STATEMENT UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE
STATE SECURITIES LAWS OR  (B) EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION
REQUIREMENTS ARE AVAILABLE. AS A CONDITION TO PERMITTING ANY TRANSFER OF THESE
SECURITIES, THE COMPANY MAY REQUIRE THAT IT BE FURNISHED WITH AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT NO REGISTRATION OR
QUALIFICATION IS LEGALLY REQUIRED FOR SUCH TRANSFER.”

(G)           WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY MAY
DELAY ISSUANCE OF THE WARRANT SHARES UNTIL COMPLETION OF ANY ACTION OR OBTAINING
OF ANY CONSENT, WHICH THE COMPANY DEEMS NECESSARY UNDER ANY APPLICABLE LAW
(INCLUDING, WITHOUT LIMITATION, STATE SECURITIES OR “BLUE SKY” LAWS).

10.           REPLACEMENT OF WARRANT.  UPON RECEIPT OF EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY OF THE LOSS, THEFT, DESTRUCTION OR MUTILATION OF
THIS WARRANT AND (IN THE CASE OF LOSS, THEFT OR DESTRUCTION) UPON DELIVERY OF AN
INDEMNITY AGREEMENT IN AN AMOUNT REASONABLY SATISFACTORY TO THE COMPANY, OR (IN
THE CASE OF MUTILATION) UPON SURRENDER AND CANCELLATION OF THIS WARRANT, THE
COMPANY WILL ISSUE, IN LIEU THEREOF, A NEW WARRANT OF LIKE TENOR.

11.           WARRANT REGISTER; TRANSFERS; ETC.

(A)           THE COMPANY WILL MAINTAIN A REGISTER CONTAINING THE NAMES AND
ADDRESSES OF THE REGISTERED HOLDERS.  ANY REGISTERED HOLDER MAY CHANGE ITS, HIS
OR HER ADDRESS AS SHOWN ON THE WARRANT REGISTER BY WRITTEN NOTICE TO THE COMPANY
REQUESTING SUCH CHANGE.

(B)           IN CONNECTION WITH ANY TRANSFER OF THIS WARRANT, THE COMPANY MAY,
AS CONDITION TO SUCH TRANSFER, REQUIRE THAT THE TRANSFEROR REIMBURSE THE COMPANY
FOR ALL EXPENSES INCURRED IN CONNECTION WITH THE TRANSFER.  ANY ATTEMPTED
TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT
OR OF ANY RIGHTS GRANTED THEREUNDER CONTRARY TO THE PROVISIONS OF SECTION 9 OR
THIS SECTION 11, OR THE LEVY OF ANY ATTACHMENT OR SIMILAR PROCESS UPON THIS
WARRANT OR SUCH RIGHTS, SHALL BE NULL AND VOID.

(C)           THE COMPANY MAY DEEM AND TREAT THE REGISTERED HOLDER OF THIS
WARRANT AS THE ABSOLUTE OWNER(S) HEREOF (NOTWITHSTANDING ANY NOTATION OF
OWNERSHIP OR OTHER WRITING THEREON MADE BY ANYONE), FOR ALL PURPOSES, AND SHALL
NOT BE AFFECTED BY ANY NOTICE TO THE CONTRARY.

12.           PAYMENT OF TAXES.  THE COMPANY WILL PAY ALL DOCUMENTARY STAMP
TAXES ATTRIBUTABLE TO THE INITIAL ISSUANCE OF THE WARRANT SHARES UPON THE
EXERCISE OF  THIS WARRANT; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE
REQUIRED TO PAY ANY TAX OR TAXES WHICH MAY BE PAYABLE IN RESPECT OF ANY TRANSFER
INVOLVED IN THE ISSUANCE OF ANY REPLACEMENT WARRANT OR ANY CERTIFICATES FOR
WARRANT SHARES IN A NAME OTHER THAN THAT OF THE REGISTERED HOLDER OF THIS
WARRANT SURRENDERED FOR REGISTRATION OF TRANSFER OR UPON THE EXERCISE OF THIS
WARRANT, AND THE COMPANY SHALL NOT BE REQUIRED TO ISSUE OR DELIVER A NEW WARRANT
OR SUCH CERTIFICATE EVIDENCING WARRANT SHARES UNLESS OR UNTIL THE PERSON OR
PERSONS REQUESTING THE ISSUANCE THEREOF SHALL HAVE PAID TO THE COMPANY THE
AMOUNT OF SUCH TAX OR SHALL HAVE ESTABLISHED TO THE REASONABLE SATISFACTION OF
THE COMPANY THAT SUCH TAX HAS BEEN PAID.

 

8

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13.           NO RIGHTS AS STOCKHOLDER.  PRIOR TO THE EXERCISE OF THIS WARRANT
(I) NO REGISTERED HOLDER, AS SUCH, SHALL BE ENTITLED TO ANY OF THE RIGHTS OF A
HOLDER OF COMMON STOCK, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO VOTE AT OR
TO RECEIVE ANY NOTICE OF ANY MEETINGS OF STOCKHOLDERS; (II) THE CONSENT OF ANY
SUCH REGISTERED HOLDER SHALL NOT BE REQUIRED WITH RESPECT TO ANY ACTION OR
PROCEEDING OF THE COMPANY; (III) NO SUCH REGISTERED HOLDER, BY REASON OF THE
OWNERSHIP OR POSSESSION OF THIS WARRANT, SHALL HAVE ANY RIGHT TO RECEIVE ANY
CASH DIVIDENDS, STOCK DIVIDENDS, ALLOTMENTS OR RIGHTS OR OTHER DISTRIBUTIONS
PAID, ALLOTTED OR DISTRIBUTED OR DISTRIBUTABLE TO THE STOCKHOLDERS OF THE
COMPANY PRIOR TO, OR FOR WHICH THE RELEVANT RECORD DATE PRECEDED, THE DATE OF
THE EXERCISE OF THIS WARRANT; AND (IV) NO SUCH REGISTERED HOLDER SHALL HAVE ANY
RIGHT NOT EXPRESSLY CONFERRED BY THIS WARRANT.

14.           DISPUTE RESOLUTION.

(A)           THE COMPANY AND THE REGISTERED HOLDER RECOGNIZE THAT FROM TIME TO
TIME A DISPUTE MAY ARISE RELATING TO A PARTY’S RIGHTS OR OBLIGATIONS UNDER THIS
WARRANT, INCLUDING WHETHER A VESTING EVENT HAS OCCURRED.  THE PARTIES AGREE
THAT, SUBJECT TO SECTION 14(O), ANY SUCH DISPUTE SHALL BE RESOLVED BY THE
ALTERNATIVE DISPUTE RESOLUTION (“ADR”) PROVISIONS SET FORTH IN THIS SECTION 14,
WHICH SHALL BE THE SOLE AND EXCLUSIVE PROCEDURES FOR THE RESOLUTION OF ANY SUCH
DISPUTES, AND THE RESULT OF WHICH SHALL BE BINDING UPON THE PARTIES.

(B)           TO BEGIN THE ADR PROCESS, EITHER THE COMPANY OR THE REGISTERED
HOLDER, AS THE CASE MAY BE, FIRST MUST SEND WRITTEN NOTICE OF THE DISPUTE TO THE
OTHER FOR ATTEMPTED RESOLUTION BY GOOD FAITH NEGOTIATIONS BETWEEN THE REGISTERED
HOLDER AND THE COMPANY (REPRESENTED BY AN OFFICER) WITHIN 30 DAYS AFTER SUCH
NOTICE IS RECEIVED.  IF THE MATTER HAS NOT BEEN RESOLVED WITHIN 30 DAYS OF THE
NOTICE OF DISPUTE, OR IF THE COMPANY AND THE REGISTERED HOLDER FAIL TO MEET
WITHIN SUCH 30 DAYS, EITHER THE COMPANY OR THE REGISTERED HOLDER MAY INITIATE AN
ADR PROCEEDING AS PROVIDED IN THIS SECTION 14.  THE COMPANY AND THE REGISTERED
HOLDER SHALL HAVE THE RIGHT TO BE REPRESENTED BY COUNSEL IN SUCH A PROCEEDING.

(C)           TO BEGIN AN ADR PROCEEDING, THE COMPANY OR THE REGISTERED HOLDER,
AS APPLICABLE, SHALL PROVIDE WRITTEN NOTICE TO THE OTHER PARTY OF THE ISSUES TO
BE RESOLVED BY ADR.  WITHIN 14 DAYS AFTER ITS RECEIPT OF SUCH NOTICE, THE
NON-INITIATING PARTY MAY, BY WRITTEN NOTICE TO THE PARTY INITIATING THE ADR, ADD
ADDITIONAL ISSUES TO BE RESOLVED WITHIN THE SAME ADR.

(D)           WITHIN 21 DAYS FOLLOWING RECEIPT OF THE ORIGINAL ADR NOTICE, THE
COMPANY AND THE REGISTERED HOLDER SHALL SELECT A MUTUALLY ACCEPTABLE NEUTRAL TO
PRESIDE IN THE RESOLUTION OF ANY DISPUTES IN THIS ADR PROCEEDING.  IF THE
COMPANY AND THE REGISTERED HOLDER ARE UNABLE TO AGREE ON A MUTUALLY ACCEPTABLE
NEUTRAL WITHIN SUCH PERIOD, EITHER THE COMPANY OR THE REGISTERED HOLDER MAY
REQUEST THE PRESIDENT OF THE CPR INSTITUTE FOR DISPUTE RESOLUTION (“CPR”), 366
MADISON AVENUE, 14TH FLOOR, NEW YORK, NEW YORK 10017, TO SELECT A NEUTRAL
PURSUANT TO THE FOLLOWING PROCEDURES:

(I)            THE CPR SHALL SUBMIT TO THE COMPANY AND THE REGISTERED HOLDER A
LIST OF NOT LESS THAN FIVE CANDIDATES WITHIN 14 DAYS AFTER RECEIPT OF THE
REQUEST, ALONG WITH A CURRICULUM VITAE FOR EACH CANDIDATE.  EACH CANDIDATE SHALL
HAVE AT LEAST FIVE YEARS OF EXPERIENCE IN THE MEDICAL DEVICE MANUFACTURING
FIELDS AND SHALL HAVE NO CONFLICT OF INTEREST IN DECIDING DISPUTES BETWEEN THE
COMPANY AND THE STOCKHOLDERS OF THE COMPANY.  SUCH LIST SHALL INCLUDE A

 

 

9

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STATEMENT OF DISCLOSURE BY EACH CANDIDATE OF ANY CIRCUMSTANCES LIKELY TO AFFECT
HIS OR HER IMPARTIALITY.

(II)           EACH OF THE COMPANY AND THE REGISTERED HOLDER SHALL NUMBER THE
CANDIDATES IN ORDER OF PREFERENCE (WITH THE NUMBER ONE SIGNIFYING THE GREATEST
PREFERENCE) AND SHALL DELIVER THE LIST TO THE CPR WITHIN SEVEN DAYS FOLLOWING
RECEIPT OF THE LIST OF CANDIDATES.  IF EITHER THE COMPANY OR THE REGISTERED
HOLDER BELIEVES A CONFLICT OF INTEREST EXISTS REGARDING ANY OF THE CANDIDATES,
THAT PARTY SHALL PROVIDE A WRITTEN EXPLANATION OF THE CONFLICT TO THE CPR ALONG
WITH ITS LIST SHOWING ITS ORDER OF PREFERENCE FOR THE CANDIDATES.  ANY PARTY
FAILING TO RETURN A LIST OF PREFERENCES ON TIME SHALL BE DEEMED TO HAVE NO ORDER
OF PREFERENCE.

(III)          IF THE COMPANY AND THE REGISTERED HOLDER COLLECTIVELY HAVE
IDENTIFIED FEWER THAN THREE CANDIDATES DEEMED TO HAVE CONFLICTS, THE CPR
IMMEDIATELY SHALL DESIGNATE AS THE NEUTRAL THE CANDIDATE FOR WHOM THE COMPANY
AND THE REGISTERED HOLDER COLLECTIVELY HAVE INDICATED THE GREATEST PREFERENCE. 
IF A TIE SHOULD RESULT BETWEEN TWO CANDIDATES, THE CPR MAY DESIGNATE EITHER
CANDIDATE.  IF THE COMPANY AND THE REGISTERED HOLDER COLLECTIVELY HAVE
IDENTIFIED THREE OR MORE CANDIDATES DEEMED TO HAVE CONFLICTS, THE CPR SHALL
REVIEW THE EXPLANATIONS REGARDING CONFLICTS AND, IN ITS SOLE DISCRETION, MAY
EITHER (A) IMMEDIATELY DESIGNATE AS THE NEUTRAL THE CANDIDATE FOR WHOM THE
COMPANY AND THE REGISTERED HOLDER TOGETHER HAVE INDICATED THE GREATEST
PREFERENCE, OR (B) ISSUE A NEW LIST OF NOT LESS THAN FIVE CANDIDATES, IN WHICH
CASE THE PROCEDURES SET FORTH IN CLAUSES (I) THROUGH (III) OF THIS SECTION 14(D)
SHALL BE REPEATED.

(E)           NO EARLIER THAN 30 DAYS OR LATER THAN 60 DAYS AFTER SELECTION, THE
NEUTRAL SHALL HOLD A HEARING TO RESOLVE EACH OF THE ISSUES IDENTIFIED BY THE
COMPANY AND THE REGISTERED HOLDER.  THE ADR PROCEEDING SHALL TAKE PLACE IN
BOSTON, MASSACHUSETTS AT A PLACE AGREED UPON BY THE COMPANY AND THE REGISTERED
HOLDER.  IF THE COMPANY AND THE REGISTERED HOLDER CANNOT AGREE, THE NEUTRAL
SHALL DESIGNATE A PLACE LOCATED IN BOSTON, MASSACHUSETTS OTHER THAN THE
PRINCIPAL PLACE OF BUSINESS OF EITHER PARTY OR ANY OF THEIR SUBSIDIARIES OR
AFFILIATES.

(F)            AT LEAST SEVEN DAYS PRIOR TO THE HEARING, EACH OF THE COMPANY AND
THE REGISTERED HOLDER SHALL SUBMIT THE FOLLOWING TO THE OTHER PARTY AND THE
NEUTRAL:

(I)            A COPY OF ALL EXHIBITS ON WHICH SUCH PARTY INTENDS TO RELY IN ANY
ORAL OR WRITTEN PRESENTATION TO THE NEUTRAL;

(II)           A LIST OF ANY WITNESSES SUCH PARTY INTENDS TO CALL AT THE
HEARING, AND A SHORT SUMMARY OF THE ANTICIPATED TESTIMONY OF EACH WITNESS;

(III)          A PROPOSED RULING ON EACH ISSUE TO BE RESOLVED, TOGETHER WITH A
REQUEST FOR A SPECIFIC DAMAGE AWARD OR OTHER REMEDY FOR EACH ISSUE. THE PROPOSED
RULINGS AND REMEDIES SHALL NOT CONTAIN ANY RECITATION OF THE FACTS OR ANY LEGAL
ARGUMENTS AND SHALL NOT EXCEED ONE PAGE PER ISSUE; AND

(IV)          A BRIEF IN SUPPORT OF SUCH PARTY’S PROPOSED RULINGS AND REMEDIES,
PROVIDED THAT THE BRIEF SHALL NOT EXCEED 20 PAGES.  THIS PAGE LIMITATION SHALL
APPLY REGARDLESS OF THE NUMBER OF ISSUES RAISED IN THE ADR PROCEEDING.

 

 

10

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(G)           EACH OF THE COMPANY AND THE REGISTERED HOLDER MAY CONDUCT LIMITED
DISCOVERY OF THE OTHER PARTY ONLY AS FOLLOWS:

(I)            EACH PARTY MAY REQUEST THE OTHER PARTY TO RESPOND TO A CUMULATIVE
TOTAL OF NO MORE THAN 20 INTERROGATORIES, SUCH INTERROGATORIES NOT HAVING ANY
SUBQUESTIONS AND GIVING THE OTHER PARTY AT LEAST 10 DAYS TO RESPOND.

(II)           EACH PARTY MAY REQUEST THE OTHER PARTY TO PRODUCE ANY DOCUMENTS
IDENTIFIED OR REFERRED TO BY THE ANSWERS TO INTERROGATORIES, STATEMENT OF ISSUES
OR BY WITNESSES IN DEPOSITIONS, PROVIDED THAT SUCH REQUESTS MAY NOT SEEK GENERAL
CATEGORIES OF DOCUMENTS NOT OTHERWISE IDENTIFIED AND SUCH REQUESTS MUST PROVIDE
THE OTHER PARTY AT LEAST 10 DAYS TO PRODUCE THE DOCUMENTS.  GENERAL REQUESTS FOR
DOCUMENT PRODUCTION IS PROHIBITED IN THE ADR CONTEMPLATED BY HEREBY.

(III)          EACH PARTY MAY TAKE THE DEPOSITIONS OF NOT MORE THAN FOUR
WITNESSES ON NOT LESS THAN FIVE BUSINESS DAYS PRIOR NOTICE, PROVIDED THAT NO
DEPOSITION MAY LAST MORE THAN FOUR HOURS AND WITNESSES SHALL BE REQUIRED TO
ANSWER QUESTIONS OVER OBJECTIONS EXCEPT OBJECTIONS AS TO SELF-INCRIMINATION OR
ATTORNEY-CLIENT PRIVILEGE, AND FURTHER PROVIDED THAT EACH PARTY SHALL MAKE
AVAILABLE FOR DEPOSITION IF REQUESTED AND WITHIN THE ABOVE LIMITS ANY PERSON
EMPLOYED BY THEM.

(IV)          TO THE EXTENT ANY DISPUTE ARISES BETWEEN THE PARTIES REGARDING
THESE LIMITED DISCOVERY PROCEDURES, SUCH DISPUTES SHALL BE FULLY AND FINALLY
RESOLVED BY THE NEUTRAL AFTER A TELEPHONE CONFERENCE WITH THE PARTIES OR THEIR
LEGAL COUNSEL.

(V)           THE NEUTRAL SHALL COOPERATE WITH THE PARTIES TO SCHEDULE THE
MERITS HEARING IN SUCH A WAY AS TO REASONABLY ACCOMMODATE THE REQUESTED
DISCOVERY OF THE PARTIES.

(H)           EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 14(F) AND 14(G) HEREOF,
NO DISCOVERY SHALL BE REQUIRED OR PERMITTED BY ANY MEANS, INCLUDING DEPOSITIONS,
INTERROGATORIES, REQUESTS FOR ADMISSIONS, OR PRODUCTION OF DOCUMENTS.

(I)            THE HEARING SHALL BE CONDUCTED ON TWO CONSECUTIVE DAYS AND SHALL
BE GOVERNED BY THE FOLLOWING RULES:

(I)            EACH OF THE COMPANY AND THE REGISTERED HOLDER SHALL BE ENTITLED
TO FIVE HOURS OF HEARING TIME TO PRESENT ITS CASE.  THE NEUTRAL SHALL DETERMINE
WHETHER EACH PARTY HAS HAD THE FIVE HOURS TO WHICH IT IS ENTITLED.

(II)           EACH OF THE COMPANY AND THE REGISTERED HOLDER SHALL BE ENTITLED,
BUT NOT REQUIRED, TO MAKE AN OPENING STATEMENT, TO PRESENT REGULAR AND REBUTTAL
TESTIMONY, DOCUMENTS OR OTHER EVIDENCE, TO CROSS-EXAMINE WITNESSES, AND TO MAKE
A CLOSING ARGUMENT.  CROSS-EXAMINATION OF WITNESSES SHALL OCCUR IMMEDIATELY
AFTER THEIR DIRECT TESTIMONY, AND CROSS-EXAMINATION TIME SHALL BE CHARGED
AGAINST THE PARTY CONDUCTING THE CROSS-EXAMINATION.

(III)          THE PARTY INITIATING THE ADR SHALL BEGIN THE HEARING AND, IF IT
CHOOSES TO MAKE AN OPENING STATEMENT, SHALL ADDRESS NOT ONLY ISSUES IT RAISED
BUT ALSO ANY ISSUES RAISED BY THE RESPONDING PARTY.  THE RESPONDING PARTY, IF IT
CHOOSES TO MAKE AN OPENING

 

 

11

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STATEMENT, ALSO SHALL ADDRESS ALL ISSUES RAISED IN THE ADR.  THEREAFTER, THE
PRESENTATION OF REGULAR AND REBUTTAL TESTIMONY AND DOCUMENTS, OTHER EVIDENCE,
AND CLOSING ARGUMENTS SHALL PROCEED IN THE SAME SEQUENCE.

(IV)          EXCEPT WHEN TESTIFYING, WITNESSES SHALL BE EXCLUDED FROM THE
HEARING UNTIL CLOSING ARGUMENTS.

(V)           SETTLEMENT NEGOTIATIONS, INCLUDING ANY STATEMENTS MADE THEREIN,
SHALL NOT BE ADMISSIBLE UNDER ANY CIRCUMSTANCES.  AFFIDAVITS PREPARED FOR
PURPOSES OF THE ADR HEARING ALSO SHALL NOT BE ADMISSIBLE.  AS TO ALL OTHER
MATTERS, THE NEUTRAL SHALL HAVE SOLE DISCRETION REGARDING THE ADMISSIBILITY OF
ANY EVIDENCE.

(J)            WITHIN SEVEN DAYS FOLLOWING COMPLETION OF THE HEARING, EACH OF
THE COMPANY AND THE REGISTERED HOLDER MAY SUBMIT TO THE OTHER PARTY AND THE
NEUTRAL A POST-HEARING BRIEF IN SUPPORT OF SUCH PARTY’S PROPOSED RULINGS AND
REMEDIES, PROVIDED THAT SUCH BRIEF SHALL NOT CONTAIN OR DISCUSS ANY NEW EVIDENCE
AND SHALL NOT EXCEED 10 PAGES.  THIS PAGE LIMITATION SHALL APPLY REGARDLESS OF
THE NUMBER OF ISSUES RAISED IN THE ADR PROCEEDING.

(K)           THE NEUTRAL SHALL RULE WITHIN 14 DAYS FOLLOWING COMPLETION OF THE
HEARING, WITH ONLY A FINAL AWARD.  THE NEUTRAL SHALL NOT ISSUE ANY WRITTEN
OPINION OR OTHERWISE EXPLAIN THE BASIS OF THE RULING.

(L)            THE NEUTRAL SHALL BE PAID A REASONABLE FEE PLUS EXPENSES, AND
SUCH FEES AND EXPENSES AND ANY OTHER EXPENSES RELATING TO THE ADR PROCEEDINGS
(OTHER THAN THE FEES AND EXPENSES OF THE PARTIES), SUCH AS FOR A COURT REPORTER
AND THE HEARING ROOM, SHALL BE PAID ONE-HALF BY EACH PARTY.  IN ADDITION, EACH
PARTY SHALL BEAR ITS OWN LEGAL AND OTHER FEES AND EXPENSES (INCLUDING ATTORNEY’S
AND EXPERT WITNESS FEES AND EXPENSES) IN CONNECTION WITH THE ADR PROCEEDINGS. 
NOTWITHSTANDING THE FOREGOING, IN THE EVENT THE NEUTRAL CONCLUDES THAT THE ADR
PROCEEDINGS WERE FRIVOLOUS OR BROUGHT OR PROSECUTED IN BAD FAITH, THE NEUTRAL
SHALL HAVE THE AUTHORITY TO RULE THAT ALL SUCH FEES AND EXPENSES (INCLUDING THE
LEGAL FEES AND EXPENSES OF THE PREVAILING PARTY) SHALL BE PAID BY THE LOSING
PARTY.

(M)          THE RULINGS OF THE NEUTRAL (AND, IF APPLICABLE, THE ALLOCATION OF
FEES AND EXPENSES) SHALL BE BINDING, NON-REVIEWABLE, AND NON-APPEALABLE, AND MAY
BE ENTERED AS A FINAL JUDGMENT IN ANY COURT HAVING JURISDICTION.

(N)           EXCEPT AS REQUIRED BY LAW, THE EXISTENCE OF THE DISPUTE, ANY
SETTLEMENT NEGOTIATIONS, THE ADR HEARING, ANY SUBMISSIONS (INCLUDING EXHIBITS,
TESTIMONY, PROPOSED RULINGS, AND BRIEFS), AND THE RULINGS SHALL BE DEEMED
CONFIDENTIAL INFORMATION.  THE NEUTRAL SHALL HAVE THE AUTHORITY TO IMPOSE
SANCTIONS FOR UNAUTHORIZED DISCLOSURE OF CONFIDENTIAL INFORMATION.

(O)           NOTWITHSTANDING THE PROVISIONS OF SECTION 14(A) HEREOF, EITHER THE
COMPANY OR THE REGISTERED HOLDER MAY INITIATE AN ACTION IN A COURT OF COMPETENT
JURISDICTION AND MAY SEEK TEMPORARY AND PRELIMINARY INJUNCTIVE RELIEF AS
NECESSARY TO PROTECT THE INTERESTS OF THE COMPANY OR THE STOCKHOLDERS OF THE
COMPANY PENDING THE ADR.  IN SUCH CASE, THE COURT SHALL BE FREE TO ACT ON ALL
REQUESTS FOR TEMPORARY AND PRELIMINARY INJUNCTIVE RELIEF, BUT SHALL STAY THE
ACTION IN ALL OTHER RESPECTS PENDING THE ADR (WHICH THE COURT MAY COMPEL).  IF
ANY SUCH ACTION IS STILL PENDING AT THE TIME OF THE NEUTRAL’S RULING, EITHER THE
COMPANY OR THE REGISTERED HOLDER MAY

 

 

12

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APPLY TO SUCH COURT FOR ENTRY OF JUDGMENT ON, AND ENFORCEMENT OF, THE NEUTRAL’S
RULING, INCLUDING WITHOUT LIMITATION ANY EQUITABLE RELIEF AWARDED BY THE
NEUTRAL.

15.           MISCELLANEOUS.

(A)           THIS WARRANT MAY BE AMENDED, MODIFIED, OR SUPPLEMENTED, AND ANY
PROVISION HEREOF MAYBE WAIVED, BY AN INSTRUMENT IN WRITING SIGNED BY THE COMPANY
AND THE REGISTERED HOLDER.

(B)           THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY OTHER JURISDICTION.

(C)           ALL NOTICES AND OTHER COMMUNICATIONS HEREUNDER SHALL BE IN WRITING
AND SHALL BE DEEMED GIVEN IF DELIVERED BY HAND, SENT BY FACSIMILE TRANSMISSION
WITH CONFIRMATION OF RECEIPT FOLLOWED BY CONFIRMATION BY REPUTABLE COURIER
SERVICE, SENT VIA A REPUTABLE COURIER SERVICE WITH CONFIRMATION OF RECEIPT
REQUESTED, OR MAILED BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID AND RETURN
RECEIPT REQUESTED) TO THE PARTIES AT THE FOLLOWING ADDRESSES (OR AT SUCH OTHER
ADDRESS FOR A PARTY AS SHALL BE SPECIFIED BY LIKE NOTICE), AND SHALL BE DEEMED
GIVEN ON THE DATE ON WHICH DELIVERED BY HAND OR OTHERWISE ON THE DATE OF RECEIPT
AS CONFIRMED (WITH RESPECT TO FACSIMILE NOTICES, IT BEING UNDERSTOOD HOWEVER,
THAT SUBJECT TO RECEIPT OF THE COURIER CONFIRMATION, THE NOTICE SHALL BE DEEMED
TO HAVE BEEN GIVEN UPON RECEIPT OF THE FACSIMILE NOTICE AS CONFIRMED):

 

 

To the Company:

 

 

 

 

 

Inverness Medical Innovations, Inc.

 

 

 

51 Sawyer Road, Suite 200

 

 

 

Waltham, MA 02453

 

 

 

Attention:

Ron Zwanziger, Chairman and Chief Executive Officer and

 

 

 

 

Paul T. Hempel, General Counsel

 

 

 

Facsimile No.: 617-647-3939

 

 

 

 

 

with a copy to:

 

 

 

 

 

William R. Kolb, Esq.

 

 

 

Foley Hoag LLP

 

 

 

155 Seaport Boulevard

 

 

 

Boston, Massachusetts 02210

 

 

 

Facsimile: (617) 832-7000

 

 

 

 

 

To the Registered Holder:

 

 

 

 

 

To such Registered Holder’s address for notices as set forth

 

 

 

in the transfer records of the Company

 

(D)           NOTHING IN THIS WARRANT SHALL BE CONSTRUED TO GIVE TO ANY PERSON
OTHER THAN THE COMPANY AND THE REGISTERED HOLDER ANY LEGAL OR EQUITABLE RIGHT,
REMEDY OR CLAIM UNDER THIS

 

 

13

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WARRANT; BUT THIS WARRANT SHALL BE FOR THE SOLE AND EXCLUSIVE BENEFIT OF THE
COMPANY AND THE REGISTERED HOLDER.

(E)           THIS WARRANT MAY BE EXECUTED AND DELIVERED BY FACSIMILE AND IN ONE
OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL AND ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE AND THE SAME DOCUMENT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

14

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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the date
first above written.

 

/s/ Roger N. Piasio

 

 

INVERNESS MEDICAL

ROGER N. PIASIO

 

 

INNOVATIONS, INC.

 

 

 

 

 

 

 

By:

/s/ Anthony J. Bernardo

 

 

 

Name:

Anthony J. Bernardo

 

 

 

 

 

 

 

 

Title:

VP

 

 

 

15

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Exhibit A

PURCHASE FORM

 

INVERNESS MEDICAL INNOVATIONS, INC.

 

                (To be executed upon exercise of this Warrant)

The undersigned hereby irrevocably elects to purchase
                                       Vested Shares covered by the Warrant
enclosed herewith, and purchase the whole number of Warrant Shares issuable upon
the exercise of such Warrant and herewith tenders payment for such Warrant
Shares as follows:

$                     in cash (including by wire transfer of immediately
available funds to an account designated by the Company) or certified or bank
check; or by surrender of Warrant Shares pursuant to a Net Issuance (as defined
in the Warrant) for                                      Warrant Shares.

The undersigned requests that a certificate representing such Warrant Shares be
delivered to:

 

Full Name:

 

 

 

 

 

Address:

 

 

 

 

 

 

Name of Registered Holder:

 

Signature:

 

 

 

 

 

 

(PLEASE PRINT)

 

 

 

 

Dated:

 

 

 

 

 

Address:

 

Tax Identification or Social

 

 

or Social Security Number:

 

 

 

 

 

 

 

 

 

 

 

 

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